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Full text of "Commentaries on the law of partnership : as a branch of commercial and maritime jurisprudence, with occasional illustrations from the civil and foreign law"


UNIVERSITY 

OF CALIFORNIA 

LOS ANGELES 



SCHOOL OF LAW 
LffiRARY 



m 










'OFCALI 



Digitized by tine Internet Arcinive 

in 2008 witin funding from 

IVIicrosoft Corporation 



littp://www.archive.org/details/commentariesonlaOOstor 



COMMENTARIES 



LAW OF PARTNERSHIP, 



AS A BRANCH OP 



COMMEECIAL AND MARITIME JUEISPRUDENCE, 



OCCASIONAL ILLUSTRATIONS FROM THE CIVIL AND 
FOREIGN LAW. 



By JOSEPH STORY, LL.D., 
♦•/ 

ONE OF THE JUSTICES OS THE SUPREME COURT OF THE UNITED STATES, AND DANE 
PROFESSOR OF LAW IN HARVARD UNIVERSITY. 



SIXTH EDITION. 

By JOHN C. GRAY, Jr., 

OF THE BOSTON BAR. 



" In Societatis Contractibus Fides exuberet." — Corf. Lib. 4, tit. 37, 1. 3. 

" Semper enim. non id, quod priyatim interest unius ex Sociis, servari solet, scd quod Societati 
expedit." — Dig-. Lib. 17, tit. 2, 1. 65, § 5. 

"Gaudeo nostra jura ad naturam accommodari ; Majoruiuque Sapientia adraodum delector." — 
Cic. de Legibus, Lib. 2, c. 25. 



BOSTON: 
LITTLE, BROWN, AND COMPANY. 

1868. 



T 

St764p 



Entered according to Act of Congress, in the j^ear 1859, by 

WILLIAM W. STOUY, 

in the Clerk's Office of the District Court of the District of Massachusetts. 



Entered according to Act of Congress, in the year 1S68, by 

WILLIAM W. STUKY, 

in the Clerk's Office of the District Court of the District of Massachusetts. 



C!AMiiitin<;K : 

I'llESB OF .lOIlN W1J,SI>N ANU PON. 



PREFACE TO THE SIXTH EDITION. 



The basis of this edition of Stoiy on Partnership is tlie 
Second Edition ; which was the first published after the author's 
death, and is said in the preface to have been prepared princi- 
pally from his private copy. Subsequent additions have been 
placed in the notes, inclosed in brackets, [ ] ; those made by 
the present editor being distinguished by including them in 
braces, | \ . About nine hundred cases have been for the first 
time added, and considera])le pains has been taken to verify 
and correct the citations made by the author and by previous 
editors. The later works on the subject have been consulted ; 
and acknowledgment is especially due to Mr. Lindley's Treatise, 
and to the notes to the American Leading Cases and the Lead- 
ing Cases in Equity. 

JOHN C. GRAY, Jr. 

BosTOx, June Ist, 1868. 



6714B3 



TO THE HONORABLE 

SAMUEL PUTNAM, LL.D. 

one of the justices of the supreme judicial court 
of massachusetts. 

Sir: 

It is with great satisfaction that I dedicate this work to you. 
It is devoted to the exposition of a branch of that great Sys- 
tem of Commercial Law, which constituted a favorite study in 
your early professional life, and which, since your elevation to 
the bench, you have administered with eminent ability and 
success. No one, therefore, is better qualified than yourself, 
to appreciate the importance and difficulty of such a task, and 
the indulgent consideration, to which even an imperfect exe- 
cution of it may be fairly entitled. But I desire, also, that 
this Dedication may be deemed, on my part, a voluntary trib- 
ute of respect to your personal character, adorned, as it is, by 
the virtues, which support, and the refinements, which grace 
the unsullied dignity of private life. I recollect, with pride 
and pleasure, that I was your pupil in the close of my pre- 
paratory studies for the Bar ; and, even at this distance of 
time, I entertain the most lively gratitude for the various in- 
struction, ready aid, and uniform kindness, by which you 
smoothed the rugged paths of juridical learning, m mastering 
which, an American student might then well feel no little dis- 
couragement, since his own country scarcely afforded any 
means, either by elementary Treatises or Reports, to assist 



VI DEDICATION. 

him ill ascertaining what portion of the Common Law 
was here in force, and how far it had been modified by local 
usages, or by municipal institutions, or by positiYe laws. 

I trust that you may live many years to enjoy the honors of 
your present high station ; and I may be allowed to add, that, 
out of the circle of your own immediate family, no one will be 
more gratified than myself, in continuing to be a witness of 
the increasing favor, with which your judicial labors are 
received by the public, and of your possession of that solid 
popularity, which (to use the significant language of Lord 
Mansfield) follows, and is not run after, in the steady adminis- 
tration of civil justice. 

I am, with the highest respect, truly 
Your obliged friend, 

JOSEPH STORY. 

Cambridge, Massachusetts, 
November, 1841. 



PREFACE. 



In offering another volume of the series of my professional 
labors to the indulgent consideration of the Profession, I 
desire to say a few words in explanation of the plan and its 
execution. The subject is one confessedly of a complicated 
nature, containing many details, and not unattended with 
difficulties in its exposition, sometimes from the character of 
the abstruse and subtile doctrines belonging to it, and some- 
times from the occasional conflict, more or less direct, of 
various adjudications to be found in English and American 
Jurisprudence. I have endeavored, as far as I could, to 
ascertain and state the true result of the authorities, and the 
reasoning, by which they are respectively supported ; and I 
have added explanatory commentaries, sometimes briefly in 
the text, but in general more largely and critically in the 
notes, in order to assist the student in his inquiries, and to 
aid the younger members of the Profession, who may be 
desirous of extending their researches beyond the boundaries 
of their own limited libraries. I have not hesitated, upon 
important occasions, to make large extracts in the notes from 
the opinions of eminent Judges and elementary writers, be- 
lieving that it is the most effectual mode of making the 
reasoning upon which particular doctrines are founded, as 
well as the learning by which they are supported, more clear, 
exact, and satisfactory than the necessary brevity of the text 
would allow. I trust, also, that I shall not be deemed to have 



^1U PREFACE. 

misused the privilege of a commentator, by occasionally ques- 
tioning, in the notes, the authority of a particular case, or the 
soundness of a particular doctrine, or by suggesting the im- 
portance of a more critical inquiry into the true bearing and 
value thereof. Unambitious, and even facile and superficial, 
as this portion of my labors may seem, it has been attended 
with much embarrassment and exhaustion of time and thought ; 
far more, indeed, than a careless observer might suppose could 
properly belong to it. 

I have in the present, as in my former works, endeavored to 
illustrate the principles of our jurisprudence by a comparison 
of it with the leading doctrines of the Roman Law, and with 
those of the systems of the modern commercial States of 
Continental Europe, and especially with that of France, which 
may fairly be deemed to represent and embody the main prin- 
ciples of all the others in a precise and elaborate form. Pothier 
and Yalin, among the earlier Jurists, and Pardessus, Boulay- 
Paty, Duranton, and Duvergier, among the later Jurists, in 
their Comments upon the Civil and Commercial Codes of 
France, have furnished many higlily useful materials. Mr. 
Bell's excellent Commentaries upon the Commercial Law of 
Scotland are at once learned, comprehensive, and exhausting, 
and have afforded me very great assistance. I have also freely 
used the able Treatises of Mr. Watson, Mr. Gow, and Mr. 
Collyer on the subject of Partnership, and have everywhere 
cited the pages of the latest editions of their works in the 
margin, so that the learned reader may have the means of 
verifying the citations, and of extending liis own researches 
by the further lights afforded by the diligence of these accom- 
plished authors. Mr. Chancellor Kent's Commentaries have 
upon this, as upon all other occasions, been diHgcntly con- 
sulted ])y me ; and I need scarcely add, tliat they have never 
failed to instruct me, as well as to lighten my labors. 



PREFACE. IX 



The Roman Law is an inexhaustible treasure of various and 
valualjle learning ; and the principles applicable to the Law of 
Partnership are stated with uncommon clearness and force in 
the leading title of the Listitutes (De Societate), and those of 
the Digest and the Code of Justinian (Pro Socio), and in the 
very able Commentaries of Yinnius, Heineccius, and John 
Yoet thereon. A slight glance at them will at once show the 
true origin and basis of many of the general doctrines, incor- 
porated into the modern jurisprudence of Continental Europe, 
as well as into that of the Common Law. Indeed, it would be 
matter of surprise, if the Roman Law, which may be truly 
said to be the production of the aggregate wisdom and experi- 
ence of the most eminent Jurists of a vast Empire, did not, 
upon this subject, abound with principles, not only founded in 
natural justice, but well adapted to the convenience and policy 
of commercial nations in all ages. It is curious to observe, 
how distinctly many of these principles may be traced in the 
early ordinances of the Maritime States of modern Europe, 
and especially in that venerable collection of the laws and 
usages of the sea, the Consolato del Mare. 

But, after all, the Law of Partnership owes its present com- 
parative perfection and comprehensive character and enlight- 
ened liberality mainly to the learned labors of the English Bar 
and Bench. America, while it has derived from the parent 
country all the elements of that law, has also contributed its 
own share towards expounding and enlarging them, so as to 
meet the new exigencies and progressive enterprises of a widely 
extended international commerce. 

Cambridge, Massachusetts, 
November, 18il. 



CONTENTS. 



Index to Cases Cited p 



AGE XV 



CHAPTER I. 

Section 

Partnership — What constitutes 1-6 



CHAPTER II. 
"Who may be Partners 7-14 

CHAPTER III. 
Partnership between the Parties — Community of Interests . 15-29 

CHAPTER IV. 
Partnership as to Third Persons 30-70 

CHAPTER V. 
Partnership — Different sorts of 71-87 

CHAPTER VI. 

Rights and Interests of Partners in Partnership Property . 88-100 



XU CONTENTS. 



CHAPTER VII. 

Section 

Powers and Authorities of Partners 101-125 



CHAPTER VIII. 

Liabilities and Exemptions of Partners as to Third Per- 
sons 126-168 a 



CHAPTER IX. 

Rights, Duties, and Obligations of Partners between 

themselves 169-186 



CHAPTER X. 

Rights, Duties, and Obligations of Partners under the 

Articles of Partnership 187-215 

CHAPTER XI. 
Remedies between Partners 216-233 

CHAPTER XII. 
Remedies by Partners against Thii-d Persons 234-264 

CHAPTER XIII. 
Dissolution of Partnership 265-319 

CHAPTER XIV. 

Effects and Consequences of a Dissolution, as between the 

Partners 820-356 



CONTENTS. xiii 



CHAPTER XV. 

Section 

Dissolution — Effects and Consequences of, as to the 

Rights of Creditors 357-411 



CHAPTER XVI. 

Part-owners of Chattels — Rights, Powers, and Liabilities of 412-463 



Index page 723 



INDEX TO CASES CITED. 



A. 



Abbot V. Bayley 

V. Smith 

Abbott's Appeal 
Abbott V. l)exter 

V. Johnson 

Abel V. Sutton 
Abell, Ex parte 
Acherley v. Eoe 
Adam, Ex parte 
Adams, Ex parte, 

V. Bankart 

V. Liardet 

Adamson v. Jarvis 
Addaras v. Tutton 
Addison v. Overend 



Section 

10 

219, 222, 260 

93 

114 

125 

160 

376, 377, 379 

233 

388 

390, 394, 405 

114, 115 

288, 290 

220 

218 

256, 454 



Agace, Ex parte 102, 110, 132, 133, 154 
Agar V. Macklew 215 

Airey v. Borham 203 

Akhurst V.Jackson 203 

Albrotcht V. Sussmann 240 

Alcoc'k V. Taylor 84 

Alder V. Fouracre 98, 331 

Alderson v. Pope 130 

V. Temple 238 

Alexander v. Barker 241, 242, 243 

Allcott V. Strong 157, 253 

Allen V. Center Valley Company 

326, 358, 361 

V. Davis 27 

V. Kilbre 329, 339 

V. Wells 261, 263, 311, 363 

Allhnsen v. Borries 275 

Alliance Bank v. Tucker 102 a, 127 

American Linen Thread Co. v. 

Wortendyke 161 

Aniidown v. Osgood 161 

Anderson v. Anderson 225 

V. Lemon 174 

V. Maltby 163 

V. Tompkins 92, 93, 101, 122, 

310 

V. Wallace 212 

Andrew v. Boughey 155 

Andrews v. Brown 92, 93 



Section 
Andrews v. Keith 201, 263 

V. Planters' Bank 127 

Anon. 189 

Anon. Z. v. X. 227, 229, 295, 297 

Anonymous v. Layfield 123 

Ansell V. Waterhouse 219 

Anthony v. Butler 120 

Apollo, The 418, 428, 438 

Apsey, Ex parte 368 

Arden v. Sharpe 132 

Arlington v. Merricke 250 

Armsby v. Farnani 254 

Armstrong v. Armstrong 6 

V. Fahnestock 373 

1". Lewis 6 

V. Robinson 114 

Arnold v. Brown 298, 305, 311, 313 

Arthur v. Dale 141 

Arton V. Booth 115 

Aspinall v. London & N. W. Rail- 
way Co. 115, 311 
Astle V. Wright 203 
Astley V. Weldon 215 
Atherton v. Tilton 47 
Atkins V. Hunt 150 

r. Tredgold 328, 324 a 

Atkinson v. Laing 242 

V. Mackreth 102 a, 108 

V. Maling 416 

Attorney-Gen. v. Burges 106, lt)7 

V. Davy 125 

V. Stannyforth 166 

Atwood V. Meredith 12, 261 

Aubin V. Holt 6 

Ault V. Goodrich 233, 328, 334, 358 

Austen v. Boys 99 

Austin V. Thomson 30 

Ayrault v. Chamberlin 152, 159 



B. 



Backus V. Fobes 

V. Murjjhy 

Bagley v. Smith 



370 
860 
218 



XVI 



INDEX TO CASES CITED. 



Section 

297 

234, 236, 237 

34,56 

228, 231 

338 

133 

65 

358 

106 

454 

324 

263 

455 

93 

107 

Ball V. Dunsterville 120 

Balmain v. Shore 93, 196, 199 

Bank of Australasia v. Breillat 126 

Bank of the Commonwealth v. 

Mudfrett 160 

Bank v. Towle 307 

Bank of X. Y. v. Vanderhorst 319, 344 
Bank of Rochester v. Bowen 127 

V. Monteath 142 

Bank of St. Mary's r. St. John 80 

Bank of Scotland v. Christie 157, 251 
Bank of Unite<l States v. Binney 

(See U. S. Bank v. Binney) 
Banlvs, Ex parte 
V. Gibson 



Bagshaw i-. Parker 
Bailev v. Bancker 

V. Clark 

V. Ford 

V. Vincent 

Baird v. Cochran 

1-. Planque 

Baker's Appeal 
Baker v. Ciiarlton 

r. Jewell 

V. Stackpoole 

V. Wimpee 

Baldney v. Ritchie 
Baldwin r. Johnson 
V. Leonard 



99, 
268, 



384 

100 

233 

264 

■ 250 

101 

263 

63 

275, 290 

1 



Barber t-. Barber 

V. Harrtbrd Bank 

Barclay v. Lucas 
Barcroft v. Snodgrass 
Banlwell v. Perry 
Baring r. Crafts 

'■ V. Dix 

V. Lvman 

Barker v. Goodair 263, 264, 314, 337, 340 

V. Highley 446 

V. Parker 70, 2-30 

V. Richardson 115, 252 

Barklie i'. Scott 70 

Barnardiston c. Chapman 449 

Barnewall, Ex parte 384 

Barr v. Speirs 290 

Barrett v. Swann 139 
Barrow, Ex parte 5, 70, 307 

Barry r. Xesham 36 

Bartle '-. Xutt 6 

lianiett v. Jones 27, 41 
Barton v. Hanson 58, 141, 154 

r. Williams 101, 218 

Bass V. Bass 233 

V. Tavlor 828 

Bate V. Robins 849 

Batcman v. I'iiider 824 

Hattlcy V. Lewis 146 

P.audier, Er parte 377 

B:i.\tor V. Mrown 93 

>•. Conollv 99 

'•. Rodina'n 42, 45 

V. West 288 



Baylis v. Dineley 
Beach v. State Bank 
Beacham v. Eckford 182, 

Beak v. Beak [328, 331, 342, 
Beale v. Mouls 
Beard v. Webb 
Beatty v. Wray 
Beaumont v. ileredith 
Beck V. Kantorowicz 
Beckford v. Wade 
Beckham v. Drake 
V. Knight 



Bedford v. Deakin 
Belknap v. Cram 
Bell V. Ansley 

V. Humphries 

V. Morrison 

V. Nevin 

V. Newman 

V. Phyn 

Bellairs ;•. Ebsworth 
Belote 1-. AYynne 
Benjamin v. Porteus 
Bennet, Ex parte 
Bennett r. Stickney 
Benson, Ex parte 

j;.Ela 

V. Hadfield 

V. Heathorn 

V. Ketclium 



63, 
155, 



Bentley v. Bates 
V. Craven 



Berkeley r. Hardy 
Berry v. Hawes 
Berthold v. Goldsmith 
Besch V. Frolich 
Bevan, Ex parte 
V. Lewis 



Biddlecome i'. Bond 
Biddulph, Ex parte 
Bignold V. Waterhouse 
Bilton V. Blakely 
Binney r. Le Gal 
Bird I'. Morrison 
Birdsall r. Colie 
Bisliop V. Breckles 

V. Countess of Jersey 

V. Hall 



liispham v. Price 
Black's Ajjpcal 
Black V. Black 
Blair v. Agar 

r. Bromley 

Blake's Case 
Blake r. Dorgan 

?•. Xutler 

Plakeiey's Ex'rs, .^.r parte 
Hlakeney v. Dufaur 
Bland, Ex parte 

V. Haselrig 

niansliaril, In re 
Hli'w t'. Wvatt 
Bligli L\ Brent 



10 



Section 
7 

102, 108 
191, 349 
346, 349 

152 
10 
182, 331 
290 
174 
233 

103, 120 
103, 120 
158, 253 

'362 

242 

446 

107, 324 

195 

863 

93 

251 

324 

32,41 

208, 389 

114 

388 

263, 359 

155 

418 

41 

229 

175 

117 

264 

41.49 

295, 297 

386 

140, 263 

214 

108 

107, 130 

844 

114 

93 

330 

275 

168 

241 

233 

376 

92, 93 

232 

I, 108, 168 

268, 271 

288 

92, 93 

201 a 

228, 330 

455 

324 

417, 428 

158 

98 



INDEX TO CASES CITED. 



XVll 



Blisset V. Daniel 
Bloxani v. Hubbard 
Bloxham v. Pell 
Blue V. Leathers 
Blundell v. Winsor 
Boardnian, Ex parte 

V. Gore 

Bodenham v. Purcbas 
Boo;gett V. Frier 
Bolitho, Ex parte 
Bolton, Ex parte 

V. Puller 

Bonbonus, Ex parte 
Bond, Ex parte 

V. Aitkin 

V. Hilton 

V. Pittard 



Bonfield v. Smith 
Bonsteel i-. Vanderbilt 
Booth V. Parks 
Borden v. Cuyler 
Bosanquet, Ex parte 

V. Wray 

Bottomiey v. Xuttall 
Bouldin v. Page 
Bourne v. Freeth 
Boussmaker, Ex parte 
Bovill V. Hammond 

V. Wood 

Bowden, Ex parte 
Bower v. Douglass 
Bowie V. Maddox 
Bowker v. Burdekin 
Bowles's (Lewis) Case 
Bowman v. Bailey 
Bowyer v. Anderson 
Boyce v. Coster 
Boyd V. Emmerson 

V. McCann 

Boydell v Drummond 
Boyers v. Elliott 
Boyington v. Boyington 
Bradbury v. Dickens 
Bradford v. Kimberly 
Bradley v. ChamberUn 

V. White 

Braithwaite v. Britain 
V. Skofield 



Section 

172, 2U, 275 

256, 449, 454 

68 

41, 46 

164 

376 

108 

253 

10 

106, 140, 142 

379 

154, 369, 376 

132, 133, 134, 388 

384, 385 

122 

454 

19,21,23,31,34,42,55, 

56, 59, 60, 61, 64, 69 

64, 134 

40 



150, 



198, 343 

384, 386 

117, 122 

221, 234 

155 

107 

151 

9 

219 

361 

389 

322 

65 

117 

422 

34,41 

41, 43 

92 

219 

161 

324 

93 

114 

99, 100 

182, 185, 331 

198, 331 

34, 41, 43, 49 

253, 323, 324 b 

150, 151 

41, 43 

208 



Briggs, Ex parte 

V. Briggs 

Brigliam v. Dana 
Bright V. Hutton 
Brisban v. Boyd 
Brockway v. I3umap 
Brodie v. Howard 
Bromley v. Elliot 
Brooke v. Enderby 

V. Washington 

Brooks I'. Martin 
Broom v. Broom 
Broome, Ex parte 
Broph}' I'. Holmes 
Brotherson v. Hodges 
Brown, Ex parte 

V. Birdsall 

V. Byers 

V. De Tastet 



V. Douglas 
V. Gordon 
V. Leonard 
V. Litton 



114. 



Braley i-. Goddard 
Brandon r. Robinson 

Brandram i-. Wharton 324 

Brassington v. Aidt 241 

Bray v. Fromont 70 

Breckinridge v. Shrieve 102 o 

Bredow v. Mut. Savings Inst. 344 

Brenan v. Preston 418, 428 

Brett V. Beckwith 30 
Brettel v. Williams 111, 113, 127 

Brewster v. Hamniet 263, 264 

Bridge v. McCullough 363, 376 

Bridges v. Mitchell 233 

Brierly v. Cripps 219 



Section 
68 
159 
34,45 
151 
107, 322, 324 
33 
421, 455 
27, 30, 49 
157, 253, 334 
63, 83, 93 
6 
93 
232 
27 
454 
140, 367, 390 
241 
102 a 
329, 341, 343, 
349 
362 
158, 324 
130, 160 
173, 233, 329, 343, 
348, 349 

V. McFarland 182 

V. Oakshot 93 

V. Tapscott 219, 221 

V. Tarkington 6 

Browne v. Gibbins 148 

Bruen v. Marquand 114, 115 

Brundred v. Muzzy 70 

Brutton v. Burton 114 

Brydges v. Branfill 108 

Bryson v. Whitehead 99 

Buchan v. Sumner 92, 93, 94 

Buchanan r. Curry 114 

Buchoz V. Grandjean 114 

Buck V. Burlingame 379 

V. Winn 93 

Buckingham v. Hanna 86 

Buckley, Ex parte 148 

1-. Barber 328, 342, 344 

V. Buckley 93 

V. Carter 290 

Bucknam v. Barnum 49 

V. Brett 454 

Buckner v. Lee 68, 105, 106, 139 

Buftum V. Bufium 93 

; But'ord V. Xeely 307 

Bulkley ;•. Dayton 115 

Bull V. Schuberth 47 

Bulien V. Sliarp 49, 60, 70 

Bullitt V. Meth. Ep. Church 358 

Bullock v. Crockett 203 

Burckle v. Eckart 41, 49 

Burden v. Burden 182, 185, 331, 

344, 349 
Burdon v. Barkus 93, 205 

Burfield v. Kouch 207 

Burgess v. Atkins 261 

! : V. Burgess 100 

! Burke i-. Winkle 10 



xvm 



INDEX TO CASES CITED. 



Burleigh v. Stott 
Burls V. Smith 
Burn r. Burn 
Burnell v. Hunt 
Burnley v. Rice 
Burnside v. Merrick 
Burrall v. Acker 
Burreil, Ex parte 
Burton, Ex jxirte 

V. Greene 

V. I>>sitt 

V. Wijiley 

V. Wookev 



175, 17" 



Burwcll V. Mandeville's Ex'r 



■ V. Springfield 
-. Allen 
'•. Steinman 



Bury 

Bush 
Bushell, Ex parte 
Butcliart v. Dresser 
Butler V. Stocking 
Buttcrficld, Ex parte 

I'. Hemsley 

Buxton V. Lister 
Byers v. Van Deusen 



Section 
107 
144 
120 
261 
243 
92, 93 
2(52 
390 
403 
261 
160 
215 

178, 348 

201 a, 

319 « 

132 

203, 233 
461 
132 
328 
127 
390 

122, 127 I 
189 

215, 300 I 



Section 

343 

88, 49, 58 

229 

379, 381 

231, 288 

246 

130 

261, 262, 263 

419, 446 

213, 231 

225, 227, 228, 

229, 231, 288 

27, 34, 36, 43 

241 

322 

Chavany v. Van Sommer 275 

Cheap 1-. Cramond 15, 16, 32, 34, 36, 41, 
44, 56, 59, 60, 61 



Chambers v. Howell 
Champion v. Bostwick 
Ciiancey v. May 
Chandler, Ex parte 
Chapman v. Beach 

V. Beckinton 

V. Devereux 

V. Durant 

V. Koops 



Chappell V. Bray 
Cliapple V. Cadell 
Charlton v. Poulter 

Chase v. Barrett 

V. Deming 

V. Kendall 



Caddick v. Skidmore 
Cadwallader v. Kroesen 
Cady V. Shepherd 
Cakiicott v. Griffiths 
Caldwell i\ Leiher 

V. Stileman 

Cam mack r. Johnson 
Campliell v. Mullett 

r. Steen 

r. Thomson 

Candler r. Candjer 

Capen v. Burrows 

Card V. Hope 

Carlisle v. Mulhern 

Carr v. Smith 

Carrol ??. lilencow 

Carroll v. Waters 

Carron Company (Case of the) 

Carter v. Beaman 

V. Home 

V. Whallcy 



83,93 

113 

120, 122, 324 

144, 219 

182, 233, 331 

319 

263, 264, 393 

358, 359, 360, 362 

446 

24 

6 

218, 221, 233 

418, 428, 432 

93 

219 

10 

456 



Cheetham r. Ward 
Child V. Sands 
Chippendale, Ex jxirte 
Christian i\ Ellis 
Christie, Ex parte 

V. Craig 

Christy v. Sherman 
Chuck, Ex jiarte 
Church V. Knox 
V. Sparrow 



168 

454 

113, 182 

263 

143, 442, 454 

428 

114 

45, 68, 69 

263, 264 

126, 140 

99, 100, 329 



Churton v. Douglas 

City Bank of Brooklyn v. McChes 



ney 
Clagett V. Kilbourne 
Claiborne v. Creditors 
Clajjp V. Rogers 

-^ V. Upson 

Clark V. Blackstock 

V. Gilbert 

I'. Leach 

Clarke, Ex parte 

, In re 

— — ^ V. Bickers 

V. Bradshaw 

V. Price 



160, 161 
82. 263 

280, 290 
160 
161 
143 
47 
198 
376 
143 
362 
321 
224 
241 
106 



Carver v. Miller 
Castelli v. Cook 
Castle I'. Bullard 
Caswell V. Cooper 
Catesby, Er parte 
Catskill Hank r. Gray 

V. Stall 

Catt V. Howard 
Cecil '• .luxon 
Cliadbonrne v. Duncan 
Cliadscy V. Harrison 
Clianilicrlain r. Dow 
V. Walker 



133 
174 
159, 160 
422 
428 
166 
219 
394 
14, 43, 49 
127 
152 
11 
4111 
21 '.I 
l.V.i 
219 



Clarkson v. Carter 

Clavering v. Westley 

Clay, Ex jnirte 363, 376, 377, 379, 380 

V. Cottrell 132 

Clegg V. Fish wick 174, 331 

Clegliorn v. Insurance Bank 377 

Clement »'. Brush 117 

V. Hadlock 27, 32 

Clements v. Hall 174, 331 

Clemontson v. IMessig 9, 315 

Cleveland r. Woodward 134 

Cleworth r. Picktbrd 114 

Clough 1-. Ratclifie 290 

t-lowes, ICx parte 370 

Cobliam, Ex parte 377, 379 

(^)(kburn r. Thompson 229 

("ockerell r. Aucomptc 144 

Cocks V. Nasli 168 

1 Coder v. Huling 98 



i:SDEX TO CASES CITED. 



XIX 



Coffee V. Brian 
Coffin V. Jenkins 
Cof'ton (-. Horner 
Colbeck, In re 
Coleman v. Coleman 
Coles V. Coles 

1-. Trecothick 

Collamer v. Foster 
Collins V. Barrett 

V. Jackson 

V. Warren 



Collumb V. Read 
Colt r. Woollaston 
Combs V. Boswell 
Commercial Bank of Lake 
I'. AYestern Reserve Bank 
Commercial Bank v. Warren 

V. Wiikins 

Commonwealth v. Smith 



Section 

219 

42 

225 

69 

219 

92, 93, 94, 98 

117 

219 

257 

24 

93 

93 

285 

328 



Erie 



363 
133 
263 
14 
27,49 
322 



Conklin v. Barton 

V. Og^born 

Conkling v. AVashington University 14, 

70 
Connecticut River Bank v. French 131 
Conro V. Port Henry Iron Co. 334 



Conroy v. Woods 
Const V. Harris 
Converse v. Ferre 

V. Symmes 

Cook, Ex parte 

V. Arthur 

^ V. Batchellor 

' V. Beecli 

V. Catchpole 

V. Collingridge 

Cooke, Ex parte 

V. Cooke 

V. Seeley 

Cookson V. Cookson 
Coomer v. Bromley 
Coope V. Eyre 3, 

Cooper V. Hood 

V. Watlington 

Coover's Appeal 
Copeman v. Gallant 
Copland, Ex parte 

V. Toulmin 

Coppard v. Page 
Corbett v. Poelnitz 
Corpe 1-. Overton 
Coryton v. Litliebye 
Cosio r. De Bernales 
Coslake v. Till 
Coster V. Clarke 

V. Murray 

Cothay v. Fennell 
Cottam V. Partridge 
Cotton V. Evans 
Couch V. Mills 
Course v. Prince 
Coursen v. Hamlin 
Coventry v. Barclay 



363, 



241 



Cowell V. Sikes 
Watt 



Cox V. Delano 

V. Hickman 

V. McBurney 

V. Peters 

v. Reid 

Coxwell V. Bromet 
Crallan v. Oulton 
Crane i'. French 
Crawford v. Hamilton 

V. Stirling 

Cra\vfurd v. Baum 
Crawshay i'. Collins 99, 
198, 233, 313, 322, 325, 
342, 343, 348, 348 a 
V. Maule 



359 

123, 192 

422 

454 

76 

264 

257 

358 

215 

99, 207, 349, 350, 

351 

208 

215 

243 

82, 93, 207 

168 

19, 30, 45, 63, 147 | 

99 

210 

263 

372 

377 

24, 157, 253 

42, 59 

101 

7 

257, 258 

10, 239 ! 

99 

93 

233 

242, 243 

:>33 

114 

168 

219 

182 

192, 206 



195, 196, 201, 231, 269, 
292, 317, 318, 322, 325, 

Cregler v. Durham 
Cremer v. Higginson 
Crisp, Ex parte 
Crockett v. Grain 
Crofi V. Pyke 
Crooker v. Crooker 
Cronne v. Bivens 
Gross V. Cheshire 
Crosthwait v. Ross 
Grottes v. Frigerio 
Cruikshank v. M'Vicar 
Crusader, The 
Cruttwell V. Lye 
GuUum V. Bloodgood 
Gumming v. Forester 
Cummings v. INIills 
Parish 



Cumpston v. McXair 
Gunningliam v. Bragg 
Curling v. Robertson 
Currier v. Rowe 

V. AYebster 

Gushing v. Marston 
Gust, Ex parte 
Gustance v. Bradshaw 
Gutbush V. Cutbush 
Cutler V. AYinsor 
Gutter V. Fanning 



D. 



Section 

253, 363 

83 

30, 49 

1, 49. 70 

92, 93 

330 

455 

349 

324 a, 360 

263 

195 

127 

263 

100, 175, 191, 

329, 331, 341, 

, 349, 350. 351 

]2, 84. 93, 189, 

273, 275, 277, 

329, 330, 346, 

350, 351, 356 

159 

245 

379 

263 

97 

93, 370 

359 

219 

102 a 

219 

221, 325 

42 

99 

101 

242 

21 

117 

280 

322 

421 

219 

219 

254 

392 

93 

201 a 

34, 41, 44, 45 

166 



Dacie v. John 


329, 330 


Dale V. Hamilton 


15, 82, 83, 93 


Dana v. Lull 


101, 310 


0. Stearns 


7 


Dance v. Girdler 


250 


Daniel r. Gross 


158 


,. T^-^.-.^.» 


122 




Darbey v. AA'hitaker 


215 


Darbv o. Baines 


428 


,. l^.-...!,,. 


82, 93 




Darling v. 31arch 


133, 322 



XX 



INDEX TO CASES CITED. 



Section 
Dartmouth College, Trustees of v. 

Woodward 76 

Davenport r. Rackstraw 241 

Davev r. Freiulergrass 248 

David r. EUice 155, 156, 253, 370 



V. Eloi 



Davies v. Hawkins 

V. Hodgson 

Davis & Desauque, Estate of 
Davis V. Allen 

V. Anier 

V. Christian 

V. Evans 

V. Johnston 

V. Jones 

V. Tiie Seneca 

V. White 

Davison v. Robertson 
Deal V. Bogue 
Dean v. McFaul 
De Begnis i'. Arniistead 
De Berenger v. Hainmel 
De Berkoni v. Smith 
Deckert v. Filbert 
Deford v. Reynolds 
De Gaillon v. L'Aigle 
De Jarnette r. McQueen 
Delauney r. Strickland 
Delmonico v. Guillaume 
Deloney v. Hutciieson 
De Lovio v. Boit 
De Mautort v. Saunders 
Deming v. Colt 
Denny v. Cabot 

V. Metcalf 

Dent V. Turpin 

Denton v. Rodie 

De Kibeyre r. Barclay 

Deslia r. Smith 

De Tastet v. Bordenave 

V. Shaw 

Devay nes v. Noble 108, 150, 157, 253, 362 
Deveau y. Fowler 32'J 

Dewey v. Dewey 93 

Dexter v. Arnold 182 

Dickerson v. Wheeler 117 

Dickinson v. Dickinson 207 

V. Gninger 219 

V. Legare 101 

I,-. Valpy 65, 102 «, 113, 12n, 

150, 151 

55 

93, 122 

93 

35H 

215 
'.):', 

194 
41, 45, 56, 61 

422 



456 

125 

99 

322, 328 

160 

329, 330 

93, 201 a 

147, 150 

428, 446 

194 

437, 439 
261 
106 

261, 263 

159 

6 

288 

132 

101 

80, 159 

10 

219 

144 

92, 93 

93 

438, 439 
134 
101 

34, 41, 46, 49 

234 

99, 100 

140, 154 

108 

182 

329, 330 

221, 234 



Digby, Ex parte 
Dillon !». Brown 
Dilworth '•. Mayfield 
Dimon v. IIa>:ard 
DiniMiale r. Robertson 
Divine '•• Mitcimm 
Dix V. Otis 
Dixon V. Coo|)er 
Duane v. Badger 
Do!) V. Halsey 15, 27, 32, 36. 43, 56, 5H, 
127, 132, 133 
Doddington t-. Ilallet 417, 412, 441 



Section 
Doe V. Miles 268, 271 

Dolman v. Orchard 160 

Dommett v. Bedford . 208 

Donald v. Hewitt 446 

Donaldson v. Williams 128 

Donelson i\ Posey 24 

Doner ;;. Staufler 263 

Donnally r. Ryan 148 

Doremus v. McCormick 108 

Doty V. Bates 102 

Doubleday v. Muskett 150 

Dougherty v. Van Nostrand 99, 174, 

185, 331 
Douglas V. Winslow 263 

Dow V. Savward 261 

Downs V. Collins 189, 199, 201, 224 

Drake, Ex parte 407 

V. Beckham 120 

V. Ramey 70 

V. Rogers 101 

Drumright r. Philpot 122 

Drurv v. Rolierts 328, 330 

Dry V. Boswell 19, 32, 34, 41, 44, 45, 

46, 56 

V. Davy 245, 247, 248, 249 

Dubois' Appeal 122 

Dudgeon v. O'Connell .117 

Dufft'. East India Company 403 

Duhring v. Duliriiig 93 

Dumont v. Ruepprecht 285 

Duncan v. Lewis 147 

V. Lowndes 111, 127, 133 

V. Lycm 218, 222' 

Dunham v. Jarvis 417, 444 

V. Murdock 263 

V. Rogers 43, 46, 49 

Dupuy V. Leavenworth 93 

Durbin v. Barber 285 

Duryea v. Whitcomb 30 

Duryee v. Elkins 42 

Dutton V. Morrison 260, 261, 262, 263, 
311, 314, 337, 340, 377, 379 

V. Woo(lman 64 

Dwight V. IVIudge 370 

Dwinel r. Stone 27,30,44 

Dyer v. Clark 92, 93 



E. 

Eager v. Barnes 
Eccleston /•. Clipsham 
Edens r. Williams 
Kdmondson r. Davis 
Edwards, /,'/• purlr 

r. .McFall 

— ; V. I'ilzer 

V. Stevens 

c. University 

I'ygberts V. Wood 
El<Ier V. Hood 
I'. Larrabee 



108 
454 
219 
167 
384 
159 
114 
12 
233 
101 
219 
421, 455 



INDEX TO CASES CITED. 



XXI 



Section 
Elgie V. Webster 219 

Elizabetli and Jane, The 428, 434, 

435, 437, 439 
EUicott V. Nichols 323 

Elliot V. Davis 119 

V. Stevens 372, 393 

Elliott V. Brown 93, 98, 331 

V. Holbrook 114 

V. Roj'al Exch. Ass. Co. 215 

Ellison y. Dezell 115 

Ellsworth V. Pomeroy 30, 41 

V. Tartt 40 

Elton, Ex parte 365, 376, 377, 379 

Ely V. Hair 122 

Emanuel v. Bird 363 

V. Draughn 61 

Emiy, Ex parte 134, 140, 367 

V. Lye 136, 140, 154 

Enderbv, Ex parte 371, 403, 404 

England v. Curling 178, 189, 192, 

227, 229 
Ensign u. Briggs 93 

Erwin's Appeal 93 

Essell V. Hayward 275 

Essex V. Essex 93, 198 

Estwick V. Conningsby 344 

Etheridge v. Binney 63, 105, 106, 139 
Evans v. Coventry 330 

V. Drumraond 155, 156, 158, 

159, 334, 370 

V. Evans 328, 344, 346, 347 

V. Gibson 263 

V. Philadelphia Club 214 

V. Silverlock 254 

Everett v. Coe 55, 58 

Everit v. Strong 122 

V. Watts 12 

Everitt v. Chapman 27, 31, 58 

Evernghim v. Ensworth 132, 133 

Ewing V. Osbaldiston 6 

Exeter Bank v. Sullivan 324 

Eyre, Ex parte 166, 168 



F. 



Fairlie, Ex parte 

V. Hastings 

Fairtliorne v. Weston 
Faith V. Richmond 



370 
323 
229 
102, 136, 142, 
202, 243 
Fall River Union Bank v. Sturtevant 132 

Whaling Co. v. Borden 82, 

83, 92, 93 
Fanning v. Chadwick . 219 

Farlow, Ex parte 377 

Farmers' Bank v. Bayless 138, 140, 142 
Farnum v. Boutelle 253 

Farr v. Johnson 24 

V. Pearce 99 

Farrar v. Beswick 24 

V. Deflinne 156, 159 

. — V. Hutchinson 110, 132 



Section 

304 

114 

27 

174, 232 

Featherstone v. Hunt 158 

Featherstonhaugh v. Fenwick 84, 98, 

99, 174, 176, 198, 2U7, 

269, 279, 351 



Fauntleroy (Case of) 
Faver v. Briggs 
Fawcett v. Osborn 

Whiteliouse 



■ V. Turner 



Felichy v. Hamilton 
Fell, Ex parte 

Fellows V. Wyman 
Felton V. Reid 
Fenn v. Harrison 
Fennings v. Lord Grenville 
Fereday v. Hordern 
V. Wightwick 



Fern v. Cushing 
Person v. Monroe 
Field, Ex parte 
Figes V. Cutler 
Filley v. Piielps 
Finckle v. Stacey 
Fisher v. Minot 

V. Murray 

V. Pender 

V. Tayler 



Fisk V. Herrick 
Fitch V. Hall 

Harrington 



182, 203, 
275, 343 
18, 147 
326, 358, 359, ;,60, 
401, 402, 403 
238, 272, 280, 321 
346 
132 
42 
23, 45, 68 
82, 93, 231, 
350, 407 
340 
358, 359 
376 
215 
261 
18, 30, 59 
367, 372 
101 
119 
102, 122 a 
264 
41 
49,65 
7' 
144 
377 
372 
288 
107, 140 
,127, 133 
101 
65 
93 
101 
■ 222 
151 
83, 93 
257 
102 a 
93 
218, 219 
848 
233 
446 
93 
322 
Fox V. Clifton 64, 150, 151 

V. Ilanburv 94, 126, 261, 311, 313, 

314, 328, 339, 351 

V. Norton 122 

V. Rose 256 

Frankland i'. McGusty 133 

Franklin v. Lord Brownlow 336, 338 



Fitts V. Hall 
Flemyng v. Hector 
Flintum, Ex parte 
Flyn, Ex parte 
Fogg V. Johnston 
Folk V. Wilson 
Foot V. Sabin 
Forbes v. Scannell 
Ford V. Whitmarsh 
Forde v. Herron 
Forkner i'. Stuart 
Fornian v. Homiray 
Forrester v. Bell 
Forster v. Hale 

V. Lawson 

V. Mackreth 



Forsyth v. Clark 
Foster v. Allanson 

V. Donald 

V. Hodgson 

V. U. S. Ins. 



Co. 



Fowler t'. Bailley 

V. Richardson 



XXll 



INDEX TO CASES CITED. 



Franklin r. Robinson 

, The 

Franklyn v. Thomas 
Eraser v. Kershaw 
Frederick v. Cooper 
Freeland v. Stansfeld 
Freeman, Er parte 

V. Carhart 

V. Carpenter 

French v. Backhouse 

V. Chase 

r. Rowe 

V. Stvring 

Friendschaft", The 
Friendship, The 
Frink c. Branei; 
Fromont i\ Coupland 
Frost V. Moulton 
Fry, Ex parte 
Furnival v. Weston 
Furze i'. Sharwood 



G. 



182, 



Section 

185, 331 

9, 316 

264 

339 

93 

203, 341 

359, 368, 370, 394 

114 

113 

446 

263 

108 

, 30, 219 

316 

454 

93 

, 58, 219 

277 

370 

114, 115 

106, 139 



Section 
Gilpin V. Enderbey 23, 55, 60, 61, 

68,69 
Glasscock i-. Smith 344 

Glassington r. Thwaites 178, 179, 209, 
213, 222, 227, 231, 288 



Glossop V. Colman 
Glover r. Tuck 
Goddard v. Pratt 
Godfrey v. TurnbuU 
Godson r. Good 
Goldsmid, Er parte 

i\ Cazenove 

Goodburn v. Stevens 



27, 57, 



103, 



Gabriel v. Evill 
Gage V. Rollins 
Gaines r. Catron 
Gainsborough r. Stork 
Gaibraith i-. Gedge 
Gale V. Leckie 

V. Miller 

Gal way (Lord) v. Matthew 

Gannett i\ Cunningham 
Gansevoort v. Williams 
Garbett v. Vealc 
Gardiner r. Childs 
Gardner v. McCutcheon 
Gardom, E.r parte 
Garey v. Pyke 
Garland, Ex jmrte 
Garret i: Taylor 
Garrctson r. Weaver 
Garrett v. Handley 
Gartli V. Howard 
Gay V. Bowen 

(•. Johnson 

Geddes v. Wallace 

Gellar, Ex parte 
Geller, Ex parte 
Geortner ?'. Trustees of Canajoha- 

rie 322, 325 

German Mining Co., In re 182 

Gibbons v. Wilcox 41 

Gibson V. Lupton 3, 30, 145 

V. Moore 219 

r. Stevens 70, 2C1, 2<;3 

?'. Stone 67 

(iililersleeve v. Mahony I.'*:! 

(fill r. (Jeyer 349 

(iillespie v. Hamilton 317 



150 

241 i 

92' 

190 I 

92, 93 

219 

133 

102, 123, 

130, 143 ! 

328 

132, 133 

263 

147, 149 

174 

111, 126, 127 

32 

70, 201 o, 319 (/ 

155 

231 

242, 243 

323 

324 

263 

30,32, 59, 61. 63, 

191, 192, 219 

27, 59 

389 



241 
218 
159 
65. 160 
361 
388 
388 
93, 343 

Goode V. Harrison 7, 64, 255 

Goodman, Ex parte 389 

V. Whitcomb 181, 218, 225, 

229, 231, 287, 288, 356 
Goodwin v. Richardson 93 

Gordon r. Bankard 107 

V. Howden 6 

Gorham v. Thompson 160 

Gough V. Davis 158 

Gould V. Gould 24 

V. Horner 198 

Goulding, Ex parte 132, 133 

Gouthwaite v. Duckworth 147, 148, 

150 
Gowan v. Jeffries 330 

Grace v. Smith 



19, 36, 48, 49, 56, 58, 
59, 60, 61, 66, 67, 68 
Graham v. Hope 65, 160 

V. Robertson 219, 338 

Gram v. Caldwell 132 

V. Seton 120, 122 

Granger v. McGilvra 328 

Grant v. Austen 254 

Graser v. Steihvagen 101 

Gratz V. Bayard 195, 196, 201 a, 288 



Gray v. Chiswell 

V. Ward 

Grazebrook, Ex parte 
Greatrex v. Greatrex 
Greeley v. Wycth 
Green v. Barrett 

V. Beals 

V. Beesley 



V. Briggs 

1'. Chapman 

V. Dcakin 

V. Miller 

1'. Tanner 

V. Waring 

Greene v. (Jraham 

: I'. Greene 

Greenham i-. (Jray 
Greenslade v. Dower 

Greenwood's Case 
Ciregory v. I'anl 
(iridley v. Dole 
Griffith ;;. Buffum 
Grindley v. Barker 



362, 363 

102 a 

406 

227 

238 

232, 285 

117 

19, 30, 41, 42, 45, 

55, 57, 58, 60 

441, 442 

234 

132, 133 

125 

134, 140 

215, 301 

93 

93 

27 

102 rt, 126, 147, 

148 

130, 164 

10 

219 

63, 64 

. 125 



INDEX TO CASES CITED. 



XXIU 



Section | 
Gnswold i\ Haven 108 

V. Waddineton 9, 65, 240, 

269, 280, 281, 290, 295, 303, 305, 
306, 312, 313, 315, 316, 336 j 
Grosvenor v. Lloyd 159 | 

Grove v. Dubois 242 

Guidon v. Robson 65, 241, 242 , 

Gulick V. Gulick 21^ 



H. 

Habershon v. Blurton 311 

Hackley i-. Patrick 324 

Hagar v. Stone 134 

Hagedorn v. Oiiverson 242 

Hague V. RoUeston 314, 339 

Hale V. Hale 330 

V. Henrie 83, 93 

V. Plunimer 93 

Half hide v. Fenning 215 

Halkett, Ex parte 416 

Hall, Ex parte 406 

, Re 150 

V. Barrows 99, 100 

V. Digby 90 

V. Hall 99, 227, 229, 231, 272 

V. Huffam 342 

V. Leigh 3, 27, 30 

V. Smith 102, 143, 242 

Hallack f. March 114 

Hallet V. Desban 41, 49 

Hallett V. DowdaU 164 

Halls V. Coe 132 

Halsey v. Whitney 115, 120 

Haly V. Goodson 428 
Hambidge ;;. De la Croue'e 114, 115 

Hamersley v. Lambert 362 

Hamil v. Stokes 232 

Hamill v. Purvis 127 

Hamilton v. Hamilton 219 
Hammond v. Douglas 99, 100, 343, 349 
Hamper, Ex parte 27, 32, 35, 36, 38, 

45, 69, 261, 263, 372 

Hanff ?;. Howard 83, 93 

Hankey v. Garratt 362 

V. Hammock 201 a 

Hanna i'. Flint 41 

Hannay v. Stewart 323 

Harding v. Foxcroft 80, 45 

V. Glover 329, 330 

Hardy v. Sproule 421, 455 

Hargrave r. Smee 248 

Hargreaves, Ex parte 394 

Harman v. Fishar 238 

V. Johnson 102 a, 108 

Harmon v. Clark 359, 360, 372, 389 

Harrington I?. Higham 114 
B.SiVvis'l Ex parte 130, 390, 391, 392, 

403, 442 

V. Bevington 256 

V. FarweU 155, 156, 158 

V. Harris 219 



Section 
Harris v. Lindsay 155, 158, 254 

Harrison v. Armitage 222, 229, 231 

V. Gardner 99, 211 

V. Jackson 114, 117, 119, 122, 

126 

V. Sterrv 24, 101, 122 

V. Tennant 280 

Hart V. Alexander 155, 156, 158 

Hart V. Clarke 272 

V. Fitzgerald 454 

Hartley v. Manton 168 

Hartz V. Schrader 231, 344, 347 

Harvey v. Crickett 221, 263, 314, 328, 

339, 341, 342 

V. Kay 150, 234 

Harwood i-. Edwards 114 

Hasbrouck v. ChUds 24, 25, 26 

Hasell, Ex parte 233 

Haskell v. Adams 219 

Haskins v. Everett 261, 263 

Hasleham v. Young 111, 127 

Hastings v. Hopkinson 128 

Hatch V. Wood 241 

Hatton V. Royle 114 

Haven v. Goodel 322 

Havens r. Hussey 101, 310 

Hawes v. Tillinghast 46, 408 

V. Waltham 264 

Hawken v. Bourne 101, 126 

Ha\\(iiins v. Appleby 108 

V. Hawkins 344, 373 

Hawkshaw v. Parkins 115, 119, 252, 264 
Hawtayne v. Bourne 113, 126 

Hay, Ex parte 370 

Haydon, Ex parte Bll 

Hayes v. Heyer 101 

Haynes v. Seachrest 93, 122 

Haythorn v. Lawson 257 

Haywood v. Harmon 107 

Hazard v. Hazard 30, 32, 35, 55 

Heap V. Dobson 30 

Heath v. Hall 387 

V. Hubbard 449, 454 

V. Sansom 159, 160, 269,272, 299, 

300, 308, 334 
Heathcote v. Hulme 329, 330, 331, 343 
Heberton v. Jepherson 322, 344 

Hedley v. Bainbridge 102 a 

Heenan v. Nash 102 

Heimstreet v. Howland 41 

Helme u. Smith 219 

Helsby v. Mears 107, 152 

Henderson v. Hudson 93 

Henecy, Ex parte 208 

Henley v. Soper 219 

Henn v. Walsh 231 

Hennessy v. Western Bank 101 

Henry v. Gates 117 

Herbert v. Hanrick 122 

V. Odlin 107 

Hercy v. Birch 89 

Herrick v. Ames 178 

Herris v. Jamieson 260 



XXIV 



INDEX TO CASES CITED. 



Section 
Hesham, Ex parte 304 

Hesketh v. Bianchard 16, 27, 32, 40, 43, 
45, 53, 57, 58, 63 
Ilewett I'. Buck 446 

Heydon v. Heydon 261 

Hevhoe v. Biirge 34 

Hiard v. Big? 141, 154 

Hibbert V. Hibbert 189 

Hicbens v. Congreve 174, 220 

Hickerson v. McFaddin 329 

Hickman v. Cox 70 

Higgins, Ex parte 155, 370 

Higinbotiiam v. Holme 20S 

Hill, Ex parte 208, 377, 380, 388, 442 

V. Beach 406, 407 

V. Bumham 349 

V. King 182 

V. Voorhies 63, 155 

V. Wiggin 261 

Hinton, Ex parte 208 

Hitcbcock V. St. John 101, 310 

Hitcbings v. Ellis 27, 46 

Hoare v. Dawes 3, 19, 30, 53, 55, 63, 
64, 80, 138 
Hobyt,'. Roebuck 153 

Hodi^es V. Parker 182 

Hodgkinson, Ex parte 32, 53, 55, 56, 370 



Hodgman v. Smith 
Hodgson, Ex parte 
Hogg V. Kirby 

V. Skeen 

Holbrook v. Lackey 
Holdane v. Biitterworth 
Ilolilen V. M'Makin 
Holderness v. Shackels 



30 

208, 377, 379 

4*259 

133 

346 

160, 161 

99 

326, 337, 360, 



400, 407, 408, 441, 442 
Holland v. Fuller 93 

V. King 201 

Holloway v. Holloway 100 

Holmes v. Blogg 7 

V. Hawos 329 

r. Higgins 219,221 

r. Mentze 261, 2f)3 

Old Colony R. R. Co. 43,49 



r. Porter 

V. Unit. Ins. Co. 

V. Williamson 

Ilolroyd v. Ilolroyd 

Holt /•. Kernodle 

lloltoii V. Ilolton 

Holyliiml V. De Mendez 

llolyoke v. Mayo 

iloiner v. VVooil 

Ilomlray v. Kotborgill 

llonorc i\ (.'olmesnil 

Hood /'. iVston 

Hooj), Tlie 

Hooper v. Lushy 

Hope '■. CuHt 102, 111, 127, 132^ 13:', 

Hopkins w. Forsyth 417 

V. Ken't 241 

V. Watt 172 

Jlopkinson ?). Marquis of ICxotcr 214 



139 

3, 30, 55, 56 

219 

93 

47 

376 

68 

218, 219 

238 

207 

1K2 

227, 259 

315, 316 

102,4 16 



Ipo 



Hopkinson v. Smith 
Hornblower v. Proud 
Horneffer v. Duress 
Horrell v. Witts 
Horton v. Saver 
V. Wikle 



Horton's Appeal 
Hosack V. Rogers 
Houghton V. Houghton 
House V. Thompson 
Houseal's Appeal 
Houser v. Irvine 
Houston V. Darling 
Howard v. Priest 
Howden, Ex parte 
Howe V. Lawrence 
Howell V. Brodie 
Hoxie IK Carr 
Hubbard, Ex parte 

V. Curtis 

V. Guild 

Hubbell V. Woolf 
Hughes I'. Ellison 
Human v. Cuniffe 
Hume V. Bolland 
Hunt V. Benson 

V. Bridghara 

Hunter, Ex parte 
V. Parker 



Huntington v. Potter 
Hurst V. Hill 
Ilutcheson v. Smith 
Hutclunson v. Smith 
Hutton v. Thompson 
Hjat V. Hare 
Hyleing t'. Hastings 
Hynes v. Stewart 



Ide V. Ingraham 
Indian Cliicf, The 
Inglis V. Haigh 
Innes v. Dunlop 
Irvin V. Conklin 
Irvine v. Forbes 
Isler V. Baker 
Ives V. Miller 



Jacaud v. French 
Jackson, Ex pitrte 

, lie 

V. Alexander 

V. Cornell 

)'. Fairbank 

r. Jackson 

;'. Robinson 

IK Scilgwick 

IK Stanford 

V. Stoplicrd 



140, 
120, 



Section 

59 

403 

12 

344 

125 

114 

307 

255 

93 

364 

394 

322, 323, 324, 328 

42 

92, 93 

102 

358, 380 

150, 151 

82, 92, 93, 339 

381 

263, 264 

341 

139 

101 

122 

108 

93 

324 

367, 390 

121, 122 

328 

322 

182 

344 

151 

126 

324 

285 



324, 328 
9, 316 
238 
244 
65 
164 
295 
219 



236, 252 

152, 368 

6 

241 

376 

324 

90, 92, 93, 98, 215 

3, 30 

191, 192, 213, 349 

<»4 

219 



INDEX TO CASES CITED. 



XXV 



Section 

Jackson v. Woolley 324 u 

Jacky V. Butler 261 

Jaconib v. Harwood 3(32 

Jaggers v. Binnings 453 

James v. Bixby 455 

Janes v. Whitbread 70 

Janson, Ex parte 363, 380 

Jaques v. Marquand 140, 142 

Jarman r. Ellis ■ 119 

Jarvis v. Brooks 92, 93, 263, 359, 376 

V. Noyes 449 

Jebb V. McKierman 219 

Jeffereys v. Small 90, 93. 342 

Jefferys v. Smith 82, 150, 183, 231 

Jennings v. Baddeley 290 

Jervis v. White 227, 259 

Jestons f. Brooke 18 

John and Siegniund, The 445 

John of London, The 428 

Johns, Ex parte 894, 405 

V. Battin 122 

Johnson v. Byerly 238 

V. Evans 263 

V. Helleley 99 

V. King 264 

V. Miller 46 

V. Peck 238 

Johnston v. Button 123 

Jones V. Clayton 260 

V. Dwyer 399 

V. Gibbons 403 

V. Jones 182 

V. Lusk 358 

V. Maund 253 

V. McMichael 27, 83 

V. Moore 324 

V. Neale 82, 92, 93, 373 

V. Noy 292, 295, 297 

V. Yates 221, 23^, 234, 238 

Jonge Pieter, The 9 

Tobias, The 447 

Jordan v. Wilkins 31, 61 

Joseph V. Pebrer 164 

Judson V. Adams 41, 43, 46 

Juggeewundas Keeka Shah v. 

Ramdas Brijbooken Das 93 

Julia, The 9, 240, 315 

Julio V. Ingalls 27, 30, 44 



K. 

Karthaus v. Ferrer 114 

Kay V. Duchesse de Pienne 10 

Keating!'. Marsh 108 

Keane v. Boycott 7 

Keble v. Thompson 368 

Kell V. Nainbv 241, 242, 255 

Kelley v. Hurlburt 138 

Kellogg V. Griswold 46 

Kelluni V. Emerson 449 

Kemble v. Kean 224 

Kemeys v. Richards 132 



Section 

101 

322 

253,360,361,362, 

364, 405 

380 

99 

Kensington, Ex parte 245, 363, 377, 380 



Kemp V. Carnley 

V. Coffin 

Kendall, Ex parte 

Kennedy, Ex parte 
V. Lee 



Kent, The 

Kershaw o. Mathews 
.Ketcham v. Clark 
Ketchum v. Durkee 
Kieran v. Sanders 
Kiffin V. Willis 
Kilby V. Wilson 
Kilgour V. Finlyson 
Kill V. HoUister 
Kilshaw v. Jukes 
Kimball v. Blanc 

V. Hamilton Ins 

V. Thompson 

Whitney 



166, 
160, 322, 



Co. 



Kimberley v. Jennings 
Kimbro v. Bullitt 
Kmg V. Chuck 

V. Faber 

V. Hamilton 

V. Lowry 

V. Wartelle 

V. Smith 

(The) V. Beeston 

V. Collector 



Customs 
Kingman v. Spurr 
Kirby v. Carr 

— V. Ingersoll 

V. Schoonmaker 

Kirk V. Blurton 

V. Hodgson 

Kirkham v. Newstead 
Kirkley v. Hodgson 
Kirkman v. Booth 

V. Snodgrass 

Kirwan v. Kirwan 
Knebell v. White 
Knight V. Coates 

I'. Marjoribanks 

Knott V. Morgan 
Knowles v. Houghton 
Knox V. Summers 
Kramer u. Arthurs 
Kuhne v. Law 



L. 

Lacy V. Hall 

V. McNeile 

V. Woolcott 

La Forest, Ex parte 
Lake v. Craddock 

V. Duke of Argyll 

V. Gibson 

Lamb v. Durant 



445 

201 

160, 272, 307, 308 

134, 146, 153, 358 

241 

168 

238 

396 

215 

49 

456 

101 

358 

362 

224 

102 a 

198 

138 

182 

455 

233 

254 

125 

the 

342, 417 



of 



B07 

295, 297 

101 

97, 326 

102, 142 
123 
155 

403, 404 

201a 

161 

152, 155 

222, 229 
449 
172 

100, 259 

229 

263 

82,93 

263, 376 



93 
107 

336, 339 

388 

92, 93 

65, 150 

342 

416 



XXVI 



INDEX TO CASES CITED. 



Lamb v. Grover 
Lambden v. Sbarp 
Lanipbir i-. Crcod 
Lancaster Bank v. 
Lane ;•. Williams 
Lang V. Waring 
Langan v. Hewett 
Langdale, Ex parte 



Myley 



Lange r. Kennedy 
Lansing r. Gaine 
Latham i\ Simmons 
Laughlin v. Lorenz's Adm'r 
Laverty v. Burr 
Law, /i.r parte 

V. Ford 

Lawrence v. Taylor 

V. Trustees of Orphau 



Section 

46 

122 

11 

82, 92, 263 

362 

92, 93, 132 

127 

19, 32, 35, 36, 56, 

60, 61, 64 

322. 

127, 133, 160 

263 

199, 201 a 

127 



139 

330 

93 



House 
Lawson v. Bank of London 

V. Morgan 

■ Layfield, v. 

Leacli ;-'. Leach 



Leaf, Ex parte 

V. Coles 

Lean v. Schutz 
Leary v. Shout 
Lee, In re 

V. Laslibrooke 

V. Page 

Lees V. Lat'orest 
Le Fanu v. Malcomson 257 

Lefever v. Underwood 169 

Leicestershire Banking Co., Ex 

parte, 889 

Leighton v. Wales 218 

Leonard r. Huntington 455 

Le Boy v. Johnson 102, 126, 130, 134, 

160 



362 
100 
227 
123 
331 
380 

295, 351 

10 

288 

377, 380 
182 

203, 215 
331 



Leveck v. Shaftoe 
Leverson i'. Lane 
Levi V. Carrick 
Levy V. Cadet 
Lewis V. Chapman 

V. Langdon 

V. MoHc'tt 

Heilly 



241 
133 
182, 349 
3-4 
257 
6,100, 202, 329, 346 
182 



Liardet v. Adams 
Linger! v. Simpson 
Linton v. Hurley 
Little V. Clarke 

('. Ilazzaril 

Littlewood v. Caldwell 



Livingston 



TJoyd, h'x jiorlr 

r. Archliowle 

V. Aslihy 



322 
288 
329 
166 
161 
122 
227, 288 
81 
127, 133 
125 
Pittsburgh K.K. Co. 113 
Ralli 215 

Koosevelt 102,126,127, 
132, 133 
93 
241 
153 



V. Cox 
V. Ilastie 
V. Lynch 



Lloyd V. Bellis 

V. Freshfield 

V. Loaring 



Lobb, Ex parte 
Lock V. Lynam 

V. Pardon 

Locke, V. Stearns 
Lockwood i\ Comstock 
Lockyer v. Savage 
Lodge, Ex parte 

V. Dicas 

V. Prichard 

Logan V. Mason 



Section 

166 

130, 133, 134, 140 

123, 125 



370 
178 
218 
108 
322 
208 
390 
155, 156, 253 
363, 376 
157 
London Assm-ance Co. v. Bold 251 



Long V. Majestre 
Longman v. Pole 
Loomis V. Marshall 
Lord V. Baldwin 

V. Davison 

V. Parker 

Loscombe v. Russell 

Loudon Society v. Hagerstown Bank 

113 
263 
120 
458 
93 
122 
449 
107 
264 

Lucena v. Craufurd 242 

Ludlow V. Cooper 82, 92, 93 

Lumberman's Bank v. Pratt 322 

Lusk V. Smith 322 

Lyman v. Lyman 72, 182, 331 

Lyndon v. Gorhara 264 

Lyon V. Johnson 160 

V. Knowles 34, 43 

Lyth V. Ault 155, 156 



Lovejoy v. Bowers 
Lovelace's (Lord) Case 
Low V. IMumford 
Lowe V. Alexander 
Lowery v. Drew 
Lowthorp V. Smitli 
Lucas V. De la Cour 
. V. Laws 



178 

238, 256 

34, 35, 45, 49 

241, 263 

12 

12 

222, 229, 288 



9S 



M. 

Mabbett v. Winto 
Mackay v. Bloodgood 
Mackenzie v. Poolcy 
Maclae v. Sutherland 
Macy V. Combs 
V. De Wolf 



V. Wheeler 



Maddeford v. Austwick 
Madgwick r. Wimble 
Mainwaring /•. Newman 
Mair v. Glennie 27, 

Major V. Ilawkes 
Malt by r. N. W. Va. R. R. 
Maiidel v. Peay 
Manning r. Wadsworth 
Manuf. and Mech. Rank v. 



101 

120 

455 

143 

41 

417, 421, 441, 

444, 455 

455 

172 

201, 231, 844 
221 

30, 32, 41. 42, 
46, 56 
328 
113 
868 
189 
108 



Co. 



Gore 



V. Winship 106 



INDEX TO CASES CITED. 



XXVI 1 



Section 

March v. Ward 143 

Marcliine;ton v. Vernon 242 

Marengo, The 428, 449 

Marine Bank v. Ogden 14 

Markliain v. Merrett 93 

Maries v. Hill 358 

Marlett v. Jackman 319, 336 
Marquand v. N. Y. Mannf. Co. 269, 272, 
275, 307, 308, 313 

V. "Webb 455 

Marsh v. Hutchinson 10 

r. Robinson 242 

Marshall v. Colnian 202, 226, 229, 288 

V. Marshall 277 

V. Watson 227, 329 

Marten v. Van Schaick 99, 330 

Martin, Ex parte 403 

i: Crompe 342, 346 

V. Heathcote 233 

Martyn v. Gray 64 

Marwick, In re 380 

Mason v. Potter 46 

V. Rumsey 102 

Massey v. Tingle 233 
Master i'. Kirton 227, 269, 288 

Matliewson v. Clark 5 

Matlack v. James 93 

Matlock V. Matlock 93 

Maude, Ex pcnie 394, 406 

Mawman v. Gillett 241 

Mayhew v. Merrick 218 

Maynard v. Fellows 264 

McAlister v. Montgomery 93 

IMcAllester v. Sprague 168 

M'Alpine v. Mangnall 70 

McClelland v. Remsen 101 

M'CoU r. Oliver 219 

M'Connell v. Hector 240, 316 

McCormick v. Gray 372 

McCreadj' v. WoodhuU 446 

M'Cullough V. Sommerville 101 

M'Dermot v. Laurence 93 

McDonald v. Eggleston 117, 122 

V. Millaudon 67 

McDougald v. Banks 192 

McGill V. McGill 344 

M'Gregor v. Bainbrigge 24 

McGuire v. Ramsey 92 
M'lver V. Humble 36, 55, 64 

McKnight v. Ratcliff 166 

M'Lanahan v. Ellery 254, 255 

McMahon v. Davidson 416 

McNaughten v. Partridge 117, 155 

McNeillie v. Acton 201 a 

McNutt V. Strayhorn 360 

McPherson v. Pemberton 6, 263 

McQuewans v. Hamlin 114, 127 

Meaghan, In re 208 
Mealier v. Cox 27, 288, 290 

Mechanics' Bank v. Hildreth 358 

V. Livingston 160 

Mellersh v. Keen 99, 272, 297 

IMerrick v. Brainard 307 



Section 

Merrick v. Gordon 34, 40, 58 a 

Merrill v. Bartlett 444 

Merryweather v. Nixan 6, 219, 220 

Metcalf V. Bruin 250 

V. Taylor 416 

Metcalfe v. Rycroft 115, 119, 244 
MetropoHtan Omnibus Co. v. Haw- 
kins ■ 257 
Meyer v. Sharpe 15, 27, 41, 55, 56, 57 
Meyers v. Field 30 
Mifflin V. Smith 106, 138, 139, 

198 279 

Milbank v. Revett 228,' 231 

Milburn v. Codd 219 

r. Guyther 449 

Miles V. Thomas 202, 224, 225, 227, 

229 269 

Millar v. Craig 180,' 182 

Millaudon v. Sylvestre 182 

Miller v. Bartlet 35, 41, 45, 49 

V. Hughes 30 

V. Mackay 418 

V. Price 238 

V. Sims 7 

Milliken v. Loring 328 

Millington v. Fox 100, 259 

Mills V. Barber 101 

Milne V. Bartlet 295 

Milton V. Mosher 122 

Minchin, Ex parte 376 

Minnit v. Whinery 123, 130 

Mitchell V. Dall 80 

V. Tarbutt 166 

Mitcheson v. Oliver 455 
Mobley v. Lombat 264 
Moderwell v. MuUison 93 
Moffatt V. Farquharson 449 
V. Van Millingen 221, 234 



Mohawk & Hudson R. R. Co. v. Niles 

41, 58 a 
Moline Water Power Co. v. Web- 
ster 363 
Moller V. Lambert 250 
Molton V. Camroux 7 
Monro, Ex parte 403 
Moody V. Buck 449 

V. Payne 263, 264, 311 

Moor V. Hill 244 

Moore, Ex parte 406 

V. Bare 24 

V. Pennell 263 

V. Sample 264 

V. Smith 41, 46 

Moran v. Palmer 93 

Moravia v. Levy 219 

Moreau v. Saifarans 92, 93 

Moreton v. Hardern 166 

Morgan v. Marquis 339 

V.Richardson 114 

V. Tarbell 253 

Morison v. Moat 227, 344 
Morley v. Gaisford 166 
V. Newman 215 



XXVlll 



INDEX TO CASES CITED. 



Morris, Ex parte 

V. Allen 

r. Barrett 

r. Colman 

V. Harrison 

V. Kearsley 

Morrison v. Blodgett 
^lorrow V. Riley 
Morse v. Wilson 
Morton v. Blodgett 
Motley V. Downinan 
Muirliead v. Salter 
Muldon V. Whitlock 
jVIuUany v. Keenan 
Mullett V. Hufhinson 
Mumt'ord v. Xlcoll 
Munson v. Sears 
Murphy, In re 
Murray v. Bogert 

V. Mumford 

V. Murray 

V. Somerville 

Murrill v. Xeill 
Musier v. Trompbour 
Mutual Savings Inst. v. 
Muzzy i;. Whitney 
Myers v. Edge 

V. Standart 

V. Willis 



Section ' 
876 
182 
92, y.s 
224 
201 
93 I 
261, 262, 263 
219 : 
69 [ 
2631 
100, 259 
61 
455 
218 
126 
59, M4 = 
30 
208 
307 i 
325, 328 I 
339, 341, 363 i 
134; 
263, 376 [ 
27, 31 
Enslin 344 

32, 43, 45 ! 
245 
324 
455 



Norfolk, Ex parte 
North V. Bloss 
V. Mudse 



Section 

393 

80, 241 

114 



North Bank of Kentucky i". Keizer 376 
Northern Coal Mining Co., In re 201 a 
Northern Penn. Coal Co.'s Appeal 93 
Norway v. Rowe 231, 288 

Nottidge V. Prichard 115 

Noyes v. Cushman 2, 8, 4 

V. N. H., N. L., & Stonington 

R.R. Co. 115,123 



N. 

Napier v. Catron 

V. MeLeod 

National Bank v. Norton 
Natusch V. Irving 125, 
Neal V. SiieaflBeld 
Neale v. Turton 
Nerot V. Burnand 
Nesbitt V. Meyer 
New Draper, The 
Newell V. Humphrey 
Newhall v. Buckingham 
Newman v. Bagley 

V. Bean 

New march v. Clay 
Newsome v. Coles 
Newton v. Belcher 

I'. Boodle 

New York Fire Ins. Co. 

nett 
Niciiolson I'. Ricketts 
Nicoll i;. Glennie 
V. Mumford 

V. f)Kden 

Niday v. Harvey 
Niven v. Spickerman 
Nixon i». Nash 
Nockel.t V. Crosby 
Nokes, Ex parte 
Nolle, Ex parte 



117, 122 

115 

322, 334 

193, 222, 325 

117 

219, 221, 234 

269, 306, 356 

189 

445 

331 

261, 264 

263 

41, 262 

155, 157, 159 

160 

151 

102, 142, 202 

V. Ben- 

127, 130 

102 a, 142 

166 

261, 263, 307, 

311,417 

98 

155 

221 

2r,3 

219 

84 

111, 127 



o. 

Oakford v. Eur. & Am, 

Co. 
Oakley v. Pasheller 
Ocean, The 
Ogden V. Aster 
Ogle, Ex parte 
Old V. Eagle Ins. Co. 
Olcott V. Wing 
Oldaker v. Lavender 
Oldknow, Ex parte 
Oliphant v. Mathews 
Oliver v. Gray 

V. Hamilton 



Ord V. Portal 
Ordiorne v. Woodman 
Orleans (Steamboat) v. 
Orr V. Chase 
Osborne v. Harper 
V. JuUiun 



Ostrom V. Jacobs 
Otis V. Sill 
Ouston V. Hebden 
Owen, Ex piaiie 

V. Body 

V. Van Uster 

Owens I'. Collins 
Owston V. Ogle 
Oxley, Ex parte 



P. 

Page, Ex parte 

V. Brant 

V. Carpenter 

V. Cox 

Paldman t'. Graves 
Paine v. Thachcr 
Palmer v. Dodge 

V. Myers 

V. Stephens 

Pariente v. Lubbock 
Park I'. Wooten 
Parker, Ex jKirte 

V. Barker 

V. Cousins 

V. Gossage 



Steamship 

158 

156, 158, 370 

449 

343 

376 

416, 417 

88 

206, 232 

377 

139 

30 

228, 231 

244 

219 

Phoebus 427,428 

119 

244 

150 

142, 324 

98 

437, 438 

372 

70 

86, 143, 151 

93 

449 

208 



377 
161, 241 
262 
201 
368 
219 
322 
101 
142 
245, 249 
159 
390 
64 
322 
214 



INDEX TO CASES CITED. 



XXIX 



Parker v. IMacomber 

V. Monell 

V. Muggridge 

V. Pistor 

V. Ranisbottom 

Parkhurst i". Muir 
Parkin v. Carruthers 

Parr, Ex parte 
Parry, Ex parte 
Parsons v. Crosby 

V. Ha V ward 

Patch V. Wheatland 
Patten v. Gurnej' 
Patterson i-. Blake 

V. Brewster 

V. Gandasequi 

V. Silliman 

Pattison v. Blanchard 3, 34, 40, 58, 219 
Payne v. Hornby 346 

V. Ives 127 

V. Matthews 363 

V. State 324 

Peacock, Ex parte 389 

V. Peacock 15, 24, 32, 59, 84, 

181, 231, 269, 275, 322, 325 
Peake, Ex parte 163, 358, 377, 380 

Pearce v. Chamberlain 195, 196, 295, 



Section 
321, 322 
823 
341 
263, 264 
163 
228 
65, 140, 160, 
334, 335 
887, 389 
444 
241 
198 
102 
458 
93 
362 
455 
214 



83, 



V. Lindsay 
V. Piper 



Pearpoint v. Graham 
Pearson v. Skelton 



Pease v. Hewitt 

V. Hirst 

Peck V. Fisher 

Peel V. Thomas 

Peele, Ex parte 

Pemberton v. Oakes 

Penninian v. Munson 

Penny v. Black 

Perens v. Johnson 172, 263 

Perren r. Keene 

Perrine v. Hankinson 



316, 317 

272 

290 

101, 275, 310 

34, 61, 219, 220 

222, 408 

203 

244, 248 

92, 93 

151, 164 

152, 359, 368, 370 

246, 253 



311 



Perrott v. Bryant 
Perry v. Butt 

V. Jackson 

Petit V. Chevelier 
Pettee v. Orser 
Pettes V. Spalding 
Pettyt V. Janeson 
Peyton r. Lewis 
Phelps V. Brewer 
Philips V. Philips 
Phillips r. Ames 

V. Atkinson 

V. Clagett 

I'. Cook 

r. Phillips 

Pickard v. Sears 
Pierce v. Jackson 
V. Trigg 



41 

205 

331 

322 

38, 43 



41, 42, 55, 59 

15, 30 

252 

225 

101 

264 

191, 349 

15b 

114 

344 

369 

344 

114 

261, 264 

98 

. 398 

261, 263 

93 



Pierce v. Wood 
Pierson v. Hooker 

Steinmeyer 



30, 



Pigott V. Bagley 
Pine, Ex parte 
Pinkney v. Hall 
Piper V. Smith 
Pitchford v. Davis 
Pitkin V. Pitkin 
Pitt, The 
Pittam r. Poster 
Pitts V. Waugh 
Place V. Sweetzer 
Plumer v. Lord 
Plummer, In re 
Pollock V. Paterson 
Pond V. Clark 
Ponton V. Dunn 
Pope V. Haman 

V. Risley 

Porter v. M'Clure 
Porter v. Wheeler 
Post V. Kimberly 

Potter V. Greene 

V. McCoy 

V. Moses 

Pott V. Evton 
Potts V. Bell 

r. BlackweU 

Powell V. Messer 
Pow^les V. Page 
Pratt V. Langdon 

V. Page 

Prentice v. Prentice 
Preston v. Strutton 

V. Tamplin 

Price V. Barker 

V. Groom 

V. Williams 

Pugh V. Currie 
Purdy V. Powers 
Purple V. Cook 
Purviance r. IM'Clintee 

1-. Sutherland 

Putnam v. Dobbins 



V. Wise 



Section 

108 
115 
33, 49, 67 
201 
390 
132 
93, 182 
150 
201 a, 319 a 
428 
107 
83, 93, 138 
264 
12 
376, 385, 387, 389 
295 
182 
200 
261 
107, 160, 161 
3, 45 
331 
45, 56, 61, 147, 
280 
64 
120, 155 
277 
86, 41, 43 
9,315 
358 
133 
160, 164 
49 
160 
351 
219 
418, 455 
168 
70 
215 
93 
138 
263, 376 
49 
122 
93 
5,43 



R. 



Raba v. Ryland 
Rackstraw r. Imber 
Radclif^e v. Rushworth 
Radenhurst v. Bates 
Randall v. Randall 
Randolph v. Daly 
Ransom v. Van Deventer 
Rapid, The 
Rapp V. Latham 
Rathbone v. Drakeford 
Rawlins v. Wickham 
Rawlinson i;. Clarke ! 



107 



126 

268 

30 

244, 254 

82, 93 

260 

358 

9, 315 

108, 166 

114 

232 

41, 43, 47, 

49, 221 



XXX 



INDEX TO CASES CITED. 



Raynard i'. Chase 
Read v. Bowers 
Reade c. Bentley 
Reboul V. Chalker 
Reed v. Howard 

V. Hussey 

V. Sliepardson 



Section 
6 
231 
277 
194 
261 
42 
261, 263 



V. White 155, 156, 158, 870, 455 
Reeve, Ex parte 376, 390, 405, 406. 407 

V. Parkins 290 

Reeves c. Avers 93 

Reid, Ex pake 392, 393 

r. HoUinshead 15, 66, 27, 126 

Reiliy v. Smith 161 

Reinheimer v. Hemingway 261, 263 
Remington v. Cummiugs 117 

Rentan i-. Chaplain 263, 311, 330 

Reppert v. Colvin 324 

Revens v. Lewis 421, 428 



Robbins v. Fuller 
Robertson v. Baker 

V. Lockie 

r. Quiddington 



166 
122 
166 
166 
166 
151 
404 
49, 70 
182 
34, 44, 56 
362 
41, 42, 43. 45, 261 
72, 92, 93, 360, 381 
343, 362 
454 
455 
222, 229, 231 
254 
361 
Richardson, Ex jxirte 201 a, 319 a, 399 

V. Bank of England 

229, 348 a 

r. Farmer 

V. Hastings 

V. Moics 

f.Tobey 

Riflimond v. Heapy 
Ricketts v. Beiuiett 



Rex V. Almon 

V. Inliab. of Austrey 

V. Marsh 

V. Pearce 

i-'. Tophara 

Reynell v. Lewis 
Reynolds v. Bowley 

V. Hicks 

V. Mardis 

V. Toppan 

Rice, In re 

V. Austin 

V. Ijaniard 

V. Gordon 

V. Siiute 

Rich I'. Coe 
Richards v. Davies 

V. Fisher 

V. Heather 



Ridgely v. Carey 
Riilgway's Appeal 
Ridgway r. Clare 
Ridley v. Taylor 
Rigilen i;. Pierce 
Ring, Ex piirle 
liipley V. Cronker 

V. Watorworth 

Ritchie v. Coupor 
Roa(;h v. Perry 
Roberts v. Ebcrhardt 

V. Fitlcr 

V. McCarty 

r. I{()bcrt8 

'•. Strang 

]{obb V. Mudge 



138 
229 
160 
358 
238 
126 

97 
92, 93 
363 
133 
207, 350 
394 
449 

98 
418 

24 

93, 231, 330 

219 

92 

263 

16« 

321, 322, 359 



Robbins v. Laswell 
Robinson, Ex parte 

I'. Aldridge 

V. Alexander 

V. Anderson 

V. Crowder 

V. Gregory 

V. Marchant 

V. Taylor 

V. Wilkinson 



Section 

328 

93 

297 

99, 100 

23,27 

339 

133 

233 

24 

101 

101 

256, 257 

322, 328 

138, 158 

24 

243, 244, 249 

219 



Robley v. Brooke 

Robson V. Druramond 

Rockwell V. Wilder 

Rodgers i-. Meranda 363, 365, 376, 390 

Rodriguez v. Hefl'ernan 272, 307, 311 

Roe V. Galliers 208 

Rogers v. Batchelor 132, 133 

I'. Harvey 93 

V. Kichline 241 

Rolfe V. Flower 152, 389 

Rolleston v. Hibbert 416 

Rollins V. Stevens 127 

Roosevelt v. Mark ' 324 

Pvooth V. Quin 123 

Ross V. Decy 241 

V. Drinker 45 

Roth V. Colvin 133 

Roth well r. Humphreys 126 

Rowe r. Wood 181 

Rowland, In re 372 

V. Boozer 93 

Rowlands t*. Evans 295 

Rowlandson, Ex parte 35, 45, 53, 55, 

56, 358, 384, 385, 402 

Rowley v. Adams 93 

Roxby, Ex parte 370, 385 

Ruddock's Case 115 

Ruffin, Ex parte 97, 260, 263, 325, 326, 

342, 347, 358, 359, 360, 361, 362, 372, 

373, 401, 403 

Russ r. Fay 263 

Russell V. Austwick 174 

V. Leland 272 

i\ Pelligrini 215 

I'. Perkins 247 



Rutland's (Countess of) Case 268, 271 
l?yall r. Rowlos 403 

Ryan v. Mackmath 329 



S. 



Sadler, Ex parte 

V. Lee 

V. Nixon 



Sage V. Ciiollar 

(». Ensign 

V. Sherman 



363, 380 

108, 168 a, 207 

219 

358 

162, 324 

82, 92, 103 



INDEX TO CASES CITED. 



XXXI 



St. Aubvn V. Smart 
St. Barbe 

Sale V. Disliman's Ex'rs 
Salmon v. Davis 
Sander v. Sander 
Sandilands v. Marsh 



Section 
108 

394, 405 
122 
115 

295, 297 



Sawyer v. Freeman 

V. Goodwin 

Sayer v. Bennet 
Sciieiffelin v. Stevens 
Sclieraeliorn v. Loines 
Scholefield v. Eichelberger 



V. Heafield 



102, 103,- 111 

127, 131 

San Jose Indiano, The 316 

Saville v. Kobertson 34, 56, 138, 14G, 

147, 148 

446 

108 

295, 316 

161 

455 

9, 195, 

201 a, 315, 317 

346 

215 

215 

6 

233 

263 

7 

241 

370 

219 

256, 454 

445 

231 

127 

93 

437, 439 

231 



Fulton Bank 



Scott V. Avery 

V. Liverpool 

V. Miller 

V. Milne 

Scudder r. Delashmut 

Seaver v. Phelps 

Secor V. Keller 

Seddon, Ex parte 

Sedgwick v. Daniell 

Sedgwortli v. Overend 

See Renter, The 

Seeley v. Boehm 

Selden v. Bank of Commerce 

Selkrig v. Davies 

Seneca, The 

Senhouse ?•. Christian 

Servante v. James 

Sexton V. Sexton 

Shackle v. Baker 

Sharon Canal Co. 

Sharp V. Milligan 

V. Warren 

Shattuck i\ Lawson 

Shedd r. Bank of Brattleboro 

V. Wilson 

Shelly r. Hiatt 
Shelton v. Cocke 
Shepperd v. < )xenford 
Sheridan v. Medara 
Shipton V. Thornton 
Shirreff y. Wilks 127 

Shoemaker v. Benedict 
Shott V. Strealfield 
Sichel V. Mosenthal 
Siegel V. Chidsey 
Sifikin V. Walker 
Sigourney v. Munn 
Sikes V. Work 
Silk V. Prime 
Sillitoe, Ex parte 
Simpson's Case 
Simpson v. Chapman 

V. Feltz 

V. Geddes 

Sims V. Brittain 



449 

172 

99 

14 

93 

219 

219 

114 

263 

343 

324 

231, 330 

67, 69 

202 

132, 133, 152 

324 

65 

189 

313, 358 



136, 



140, 154 

:, 93, 351 

30, 219 

363 

390, 394 

316 

343 

182 

324 

418 



Sims V. Brutton 

V. AVilling 

Simson r. Cooke 
V. Ingham 



Section 

108 

27, 30, 145 

247, 250, 251 

157, 250, 253 

416 

264 



Sisters, The 

vSitler V. Walker 

Skinner v. Dayton 117, 119, 120, 122, 

275 

V. Stocks 241, 242, 454 

V. Tinker 275 

Skii)p V. Harwood 97, 261, 263, 264, 

311 
Skirving v. Williams 199 

Skrine v. The Sloop Hope 439 

Slater, Ex parte 370 

V. Lawson 324 a 

Sloan 1-. Moore 101, 231 

Smead v. Lacey 152 

Smith, Ex parte 205, 313, 314, 399 

, In re 261, 263, 264 

— ■ V. Barrow 219 

V. Black 155 

V. Burnham 88, 93, 138 

I'. Cooker 257 

V. Craven 142, 147 

V. Danvers 92 

V. De Silva 441, 444 

V. Emerson 261 

V. Everett 99, 100 

r. Fromont 229, 231 

V. Hill 59 

V. Jackson 93 

V. Jameson 868 

V. Jeyes 191, 227, 231, 288 

V. Kerr 122 

V. Lay 418 

V. Ludlow 324 

V. :\Iules 214, 288, 351 

V. Mulock 275 

V. Oriell 328, 342 

V. Rogers 158 

V. Smith 68, 64, 93, 205 

V. Tarlton 83, 93 

V. Watson 27, 30, 40, 41, 42. 56 

V. Wigley 157 

V. Winter 120, 160 

V. Wright 3, 30, 32 

Snaith v. Burridge 132 

Snodgrass' Appeal 263 

Snow r. Howard 143 

Snvder v. May 117 

Solly V. Forbes 168 

Somerset Works v. Minot 380 

Somerville v. Mackay 233 

Soule' i\ Hayward 27 

Southard v. Steele 114 

South Carolina Bank v. Case 102, 

106, 139, 140, 142 
South worth v. Smith 428 

Sparrow r. Carruthers 10 

V. Chisman 237 

Spaulding v. Ludlow Woollen Mill 107 
Speake v. White 323 



XXXll 



INDEX TO CASES CITED. 



Section 

211) 

228, 330 

245 

373 

233 

143 

65 

128 

134 

70 

157, 199, 201 a 

419, 441, 449 

107 

307 

114, 115 

427, 428 
346 
421, 455 
121 
155 
153 
157, 233 
6 
249 
27, 166 
439 
203 
24, 191, 192 
6 
455 
249, 254, 444 
Stockdale v. Ullery 227 

Stocken v. Dawson 180, 182, 331, 343, 

360, 372 
Stocker v. Brockelbank 27, 32, 41, 

45, 56 
Stockton V. Frey 166 

Stock well V. Diilingliatn 139 

Stoddard r. Wood 221 

Stone 1-. Marsh 108, 166 

Storer v. Hunter 399 

Storrs c. Barker 398 

Story c. L(jrd Winsor 82, 231 

Stoughton V. Lynch 173, 176, 178, 

182, 233, 329 
Strange ". Lee 246, 247, 250 

Strangtbrd n. Green 114 

Street r. Highy 215, 299 

Sunitney v. I'atton 93 

Sumner v. Ilampson 93 

V. I'Mwell 362 

SutclilU- r. Dohrtnan 261 

Sutton /•. Irwine 127 

V. Buck 416 

Swan /'. Stechnan 122 

V. Steele " 102, 103, 106, 126. 

133 
Sweetscr v. rrencii 127 

Sweetzer r. Mead 122 

Sylray v. Wiiite 219 

Syhx'bter v. Smith 134 



Spear v. Newell 
Speiglits V. Peters 
Spiers c. Houston 
Sprague, Ex parte 
Spring V. Gray 
Staats v. Howlett 
Stables r. Eley 
Stainer v. Tysen 
Stansfeld v. Levy 
Stanton Iron Co., Re 
Stanwood v. Owen 
Starbuck v. Shaw 
State v. Linaweaver 

V. Quick 

Stead V. Salt 
Steamboat Orleans v. 

Phoebus 
Stearns r. Houghton 
Stedman r. Feidler 
Steiglitz v. Eggington 
Stephens v. Tliompson 
Sternburg v. Callanan 
Sterndale v. Ilankinson 
Sterry v. Clifton 
Stevens v. Benning 

;•. Faucet 

V. The Sandwich 

V. Yeatman 

Stewart v. Forbes 

V. Gibson 

V. Hall 

i". Iiosrers 



T. 

Taft V. Buffum 
Taggard i'. Loring 
Taitt, Ex jxiite 
Tapley v. Butterfield 
Tappan v. Bailey 

V. Blaisdell 

V. Kimball 



Tasker v. Bartlett 
V. Sheplierd 



Tassey i\ Church 
Tatam v. Williams 
Tate, Ex parte 

Tattersall v. Groote , 

Taunton Iron Co. v. Eichmond 
Taylor, Ex parte 

V. Church 

V. Coryell 

('. Davies 

V. Davis 

V. Fields 

u. Hillyer 

V. Jones 

V. Kicliards 

V. Salmon 

V. Terme 

Teague v. Hubbard 
Teed v. Baring 

V. Elworthy 

Temple v. Seaver 
Tenant v. Gold win 
Tench v. Roberts 
Tenney v. Johnson 
Terrell, Ex parte 
Terrett v. Taylor 
Thicknesse v. Bromilow 
Thomas ;;. Minot 
Thouiason 



Section 

307 

41, 44, 416 

377, 379, 381, 383 

93, 101, 122, 310 

102 rt 

263 

162, 324 

122 

249 

323, 324 

233 

378 

215, 232, 285 

324 

7 

257 

114 

229 

227 

261, 263, 264, 407 

133 

166 

428 

229 

49 

219, 221, 234 

455 

241, 255 

322 

422 

6, 32, 56, 59, 61 

263, 359 

407 

76 

106, 126 

376 



Frere 314, 336, 337, 338, 
3:;9 
Thompson r. Andrews 201 a, 319 a 

c. Franks 113 

V. Frist 264 

V. Waithman 324 a 

Thomson r. Campbell's Trustees 24 

V. Davenport 138, 455 

V. Finden 455 

V. Iloskins 454 

V. Lay 7 

V. Lewis 263, 264 

V. Percival 155, 156, 158, 253, 

255. 370 



V. Snow 

V. Williamson 

Thornbury v. Be v ill 
Thornton v. Di.xon 

I', lllingworth 

V. Proctor 



Thori)e, Ex parte 

(,'. Jackson 

Til)l)atts V. Tibl)atts 
Tiernan r. Jackson 
'i'ilford i\ l{amsey 
Tillingliast v. Champlin 



34,45 

24 

6 

93 

255 

182, 185, 831 

132 

362 

46 

244, 254 

13:!, 142 

93, 263, 360 



INDEX TO CASES CITED. 



XXXUl 



Tobias v. Blin 
Todd V. Emly 

Tombeckbee Bank v. Dumell 
Tonilin v. Lawrence 
Toombs V. Hill 
Towle V. Meserve 
Towne v. Leach 
Townend v. Townend 
Townsend v. Devaj'nes 
Townshend v. Towusliend 
Travis v. Milne 
Treadwell v. Brown 

V. "Williams 

Tredwen v. Bourne 
Tremlett v. Hooper 
Trougliton v. Hunter 
Trowbridge v. Cushman 
Trueman v. Loder 
Trull V. Trull 
Tucker v. Moreland 
Oxley 



Section 

41 

144 

160, 322 

252 

363, 376 

221 

264 

180, 343 

98 

233 

343 

261, 264, 376 

93 

126, 151 

367 

162 

263 

134, 142 

368 

7,255 

363 

439, 449 

126 

122 



Tunno v. The Betsina 
Tupper V. Haythorne 
Turbeville v. Ryan 
Turner v. BisseU 32, 34, 35, 36, 41, 42, 
43, 45, 46 
V. Major 



Tutt V. Adams 
Twiss V. Massey 
Tyng V. Thayer 
Tyrell v. Washburn 



99 
127 

363, 376, 379 

349 

( 317 



u. 

Union Bank v. Knapp 233 

United States i>. Astley 117 

United States Bank v. Binney 63, 72, 
80, 101, 102, 103, 105, 106, 126, 138, 
139, 140, 198, 278, 279 
University of Cambridge v. Bald- 
win 250 
Upham V. Naylor 264 
Usborne, Ex parte 403 



V. 

Van Amringe v. EUmaker 219 

Vance v. Blair 219 

V. Cowing 362 

Vanderburgh v. Hull 47 
Van Keuren v. Parmelee 324 
Van Kuren v. Trenton Co. 14 
Van Ness v. Forrest 219 
Van Sandau v. Moore 189 
Van Valen v. Russell 263, 393 
Van Valkenburgh v. Bradley 322 
Venable v. Levick 132 
Venning v. Leckie 219 
Venus, The 316 
Vere Ex parte 208 
V. Ashby 152, 153 







Section 


Vice V. Anson 




151 


V. Fleming 




123 


Victoria, The 




445 


Vigers v. Pike 




133 rt 


Vigilantia, The 




316 


Voguel, Ex parte 




377 


Voorhees v. Jones 




43, 49 


Vulliamy v. Noble 


162, 195, 


253, 317, 




319 


336,343 



w. 



Wade V. Jenkins 
Wadsworth v. Manning 
Waggoner v. Gray 
Wait, In re 

V. Brewster 

V. Dodge 

Waite V. Foster 
Waithman v. Miles 
Waland v. Elkins 
Walburn v. Ingilby 
Walden v. Sherburne 
Walker, Ex parte 

V. Duberry 

V. Eyth 

V. House 

V. Trott 

Balcom 



99 
27 

182 
261, 262, 337, 340 

161 



80, 241 
160 
271 
58 
164, 229 
59, 324 
388 
324 
363 
231, 344 
330 
67 
264 
115, 121, 238 
215 
222, 228, 229 
115 
261 
391 
242, 243 
324 
27,44 
227 
160 
24 
75, 83, 93, 142, 202 
159 
131 
219 
Washburn v. Bank of Bellows 

Falls 263, 360, 376 

V. Goodman 319, 331, 343 

Waterman r. Hunt 358 

Waters r. Taylor 228, 231, 262, 263, 
275, 288, 290, 292, 295 



Wall V 
Wallace v. Hull 

?'. JvelsaU 

Wallis V. Hirsch 
Walhvorth v. Holt 
Walmsley ?■. Cooper 
Walsh V. Adams 
Walton V. Butler 

V. Dodson 

V. Robinson 



Ward V. Thompson 
Warder v. Stilwell 
Wardwell v. Haiglit 
Warner v. Smith 
Warren, In re 

V. Ball 

V. French 

V. Wheelock 



Watney v. Wells 
Watson, Ex parte 

V. Fletcher 



182, 288, 329, 349 
32, 35, 36, 41, 45, 
64, 251, 368, 393 
6 
154 
2, 15, 16, 18, 30, 
32, 34, 36, 48, 49, 53, 55, 58, 59, 
60, 61, 64, 66, 67, 68, 147 
Way V. Bassett 324 a, 324 6 

Waydell«. Luer 155 



Watt V. Kirby 
Waugh V. Carver 



XXXIY 



INDEX TO CASES CITED. 



Section 
Weaver v. Rogers 238 

V. Weaver 380 

Webster v. Brav 24 

V. Webster 100, 202, 319, 329 

WecMerbiirnr.Weclderburn 99, 180,343 
Welch V. Knott 100 

Weller r. Baker 258 

Welles r. March 101 

Wellington v. jNIcIntosh 215 

102 
107 
114 
90, 97, 261, 401 
175 
455 
219 



Wells V. Masterman 

V. Turner 

Wesson v. Newton 
West V. Skip 
Westc'ott V. Tyson 
AVesterdell v. Dale 
Westerlo v. Evertson 
AVestern Bank of Scotland v. 

Needell 
Western Stage Co. v. Walker 
Weston r. Barton 
Wetniore ?•. Baker 
Weyer v. Thornburgh 
WlioMtcrot't r. Hickman 
Wheatley i'. Calhoun 
Wheeler v. Rice 
Sage 



159 

123 

246, 247 

58 

363, 376, 380 

70 

93 

133 

174 

454 

132 

107, 323, 324 

218 



Wheelwright v. Depeyster 
Whitaker v. Brown 
Whitc'omb r. Whiting 
White V. Ansdell 

V. Harlow 219 

V. Jones 261 

V. Smith 167 

V. Tudor 322 

V. Woodward 264 

Whitehead v. Chadwell's Adm'r 376 

Whitewright v. Stirapson 228 
Whitley I'. Lowe 233,324 a 

Whitman r. B. & M. R. R. Co. 93 

V. Leonard 65, 298, 305, 322 

V. Robinson 330 

Whitmore, Rr parte 152, 370 

Whitnev r. Dutch 255 

V. Ladd 261 

V. Munroe 264 

Whittenton Mills v. Upton 14 
Whittle V. M'Farlane 182, 185. 331 

Whitwell V. Perrin 455 

Whifworth r. Harris 189 

Wickham r. Wickliam 107,388 

Wiggin /•. Cumings 219 

V. Tudor 168 

Wightman v. Townroe 70 

Will.raham r. Snow 263 

Wilcox r. Ivellogg 361 

r. Wilcox 93 

Wild /•. Dean 370 

'•. Mihic «■')() 

Wilde V. Keep 142 

NN'ildcs I'. (,'hai)maii 35') 

Wildes V. FesHcndeii 155 

Wildman, Kr jmrli' KH5 

Wilkins V. iVarcv 103 



Wilkinson v. Frasier 

r. Henderson 

V. Page 



Wilks V. Davis 
Willett.f. Blanford 
V. Chambers 



William Bagaley, The 
Williams, Ex jiarte 



Section 

82,42 

253, 362 

215 

215 

329, 343, 349 

74, 75, 108, 

132 

453 

97, 263, 322, 



325, 326, 346, 358, 359, 360, 
361, 362, 368, 370, 372, 
394, 401, 402, 403 
Attenborough 82, 231 



Barton 

V. Bingley 

V. Branihall 

V. Brimhall 

V. Butler 

V. Everett 

1\ Henshaw 

V. Jones 

V. Keats 

V. Love 

V. Soutter 

V. Williams 

V. Wilson 

Williamson v. Fox 
r. Johnson 



Wilhngs V. Blight 
Wilhs V. Dyson 
Freeman 



Willison V. Patteson 
Wilmer v. Currey 
Wilsford V. Wood 
Wilson V. Conine 
V. Cutting 

V. Dickson 

i'. Fitchter 

V. Greenwood 



218 

227 

132 

395 

86 

254 

219 

6, 146, 152, 194 

160, 335 

93 

67 

212 

99 

161 

142 

428, 434 

123, 130 

93, 268 

9 

862 

244, 254 

261 

219, 449 

453 

330 

207, 208, 228, 



229, 231, 313, 322, 325, 329, 
330, 346, 396 



V. Hunter 

V. Reed 

V. Robertson 

V. So])er 

V. Wallace 

V. Whitehead 

V. Williams 

Winch V. Keeley 
Winship v. Bank of U. S. 



93, 122 

449 

358 

101, 346 

241 

148, 149 

127, 132, 133 

372 

55, 63, 



Winsor v. Cutts 
Savage 



Winter v. Imies 

r. White 

Wintle r. Crowther 
Wish r. Small 
Withington r. Herring 
Wiflmell r. (Jartham 
Wider V. Richards 
Woddrop V. Ward 
AVolliiTt I'. Harris 
Wood, h'.r jHirte 



102, 103, 105 
44 
182 
158, 253, 323, ?24 b 
219 
133 
32, 41, 45 
41,46 
126 
263 
376 
228 
371, 376,404 



INDEX TO CASES CITED. 



XXXV 



Wood V. Braddick 

V. Duke of Argyll 

V. Gault 

V. Holbeck 

V. Merritt 

V. O'Kelley 

V. Pennell 

V. Robson 

V. Rutland Ins. Co. 

V. Scoles 

V. Shepherd 

V. A^allette 

V. Wilson 

Woodbridge v. Swann 
Woodward v. Cowing 
Wooldridge v. Wilkins 
Worrall v. Grayson 
Wray v. Hutchinson 218 



V. Milestone 



Wren v. Kirton 
Wrexham v. Huddleston 



Section 

324, 344 

65, 1.50 

268 

133 

449 

241 

65 

215 

254 

182 

114 

38, 49, 67 

215 

328, 342 

75, 89, 94 

93 

219 

219, 287, 

288, 292 

218, 219 

82 

292, 295 



Wright V. Cumpsty 
V. Hiuiter 

V. Michie 

I'. Pulliara 

Russell 



Wrightson v. Pullan 
Wyatt V. Marquis of Hertford 
WycofFt'. Purnell 
Wylie V. Wylie 



250, 



Section 
219 
454 
219 
160 
251 
160 
455 
219 
93 



Yale V. Eames 
Yarnell v. Anderson 
Yates V. Bell 
Yeatman v. Woods 
Yonge, Ex parte 
Young, Ex parte 



208, 



V. Axtell 
V. Hunter 



160 

158 

254 

93 

181, 892, 406 

348, 417, 442, 

443, 444 

61, 64, 65, 68 

147, 150, 387 



LAW OF PARTNERSHIP. 



COMMENTARIES 



PARTNERSHIP. 



CHAPTEK I. 

PARTNERSHIP WHAT CONSTITUTES. 

{ § 1. Partnership and agency. 

2. Definition of partnership. 

3. Partnership founded in contract. 

4. Roman law. 

5. Delectus personarum. 

6. Partnership must be founded in good faith, and for a lawful purpose.} 

§ 1. Having completed our Review of the Law of 
Agency, we are naturally conducted, in the next place, 
to the consideration of the Law of Partnership ; for 
every Partner is an agent of the Partnership ; and his 
rights, powers, duties, and obligations, are in many re- 
spects governed by the same rules and principles, as 
those of an agent. A partner, indeed, virtually em- 
braces the character both of a principal and of an 
agent. ^ So far as he acts for himself and his own inter- 
est in the common concerns of the partnership, he may 

^ { " The law as to partnership is undoubtedly a branch of the law of prin- 
cipal and agent; and it would tend to simplify ajid make more easy of 
solution the questions which arise on this subject, if this true principle were 
more constantly kept in view. Mr. Justice Story lays it down in the first 
section of his work on Partnership." Per Lord Wensleydale, in Cox v. 
Hickman, 8 II. L. Cas. 268, 312.} 



4 PARTNERSHIP. [cHAP. 1. 

properly be deemed a principal ; and so far as lie acts 
for his partners he may as properly be deemed an 
agent/ The principal distinction between him and a 
mere agent is, that he has a community of interest with 
the other partners in the whole property and business 
and responsibilities of the partnership ; whereas an 
agent, as such, has no interest in either. Pothier con- 
siders partnership, as but a species of mandate, saying : 
Contractus societatis, non seats ac contractus man- 
datl.^ 

§ 2. Partnership, often called copartnership, is usu- 
ally defined to be a voluntary contract between two or 
more competent persons to place their money, effects, 
labor, and skill, or some or all of them, in lawful com- 
merce or business, with the understanding, that there 
shall be a communion of the profits thereof between 
them,^ Pufendorf has given a definition substantially 
the same. Contractus societatis est, quo duo pluresve 
inter se pecuniam, res, aui operas conferunt, eo fine, ut 
quod inde redit lucri inter singulos pro rata dividatur^ 
Pothier says, that partnership is a contract, whereby two 
or more persons put, or contract to put, something in 
common to make a lawful profit in common, and recip- 
rocally engage with each other to render an account 
thereof:^ or, as he has expressed it in another place, 
Societas est contractus de conferendis bona fide rebus 
aut 02')eris, animo lucri quod lionestum sit ac licitum 
in cornmwie faciendi.^ Domat says, that partnership 

' Baring v. Lyman, 1 Story, 390. " Poth. Pand. 17, 2, Intr. 

' 3 Kent, 23, 24 ; Wats, on P. 1, 2d ed. ; Gow on P. 1, 3d ed. ; Coll. on 
P. B. 1, c. 1, p. 2, 2d ed.; Mont, on P. B. 1, Pt. 1, p. 1, 2d ed. [Noyes v. 
Cushnian, 25 Vt. 390.] 

♦ Puf. Law of Nat. B. 5, c. 8, § 1 ; Wats, on P. 2, 2d ed. ; Gow on P. c. 1, 
p. 1, 3d i;d.; Waugh v. Carver, 2 IL Bl. 235, 240. 

' Poth. de Soc. art. prel. n. 1. « Poth. Paud. 17, 2. 



CHAP. I.] WHAT CONSTITUTES. 5 

is a contract between two or more persons, by which 
they join in common either their whole substance or 
a part of it, or unite in carrying on some commerce, 
or some work, or some other business, that they may 
share among them all the profit or loss, which they may 
have by the joint stock, which they have put into part- 
nership.^ Vinnius says : Societas est contractus, quo in- 
ter aliquos res aut o^^erce commimiccmtur, lucri in com- 
mune faciendi gratia.^ The Civil Code of France defines 
it thus : Partnershi]) is a contract, by which two or more 
persons agree to put something in common, with a view 
of dividing the benefit which may result from it.^ Lan- 
guage nearly equivalent has been adopted by many other 
foreign writers."^ 

§ 3. Let us consider some of the more important ingre- 
dients, which are involved in this definition or description 
of partnership, and may be said to constitute its essence. 
In the first place, it is founded in the voluntary contract 
of the parties, as contradistinguished from the relations 
which may arise between the parties by mere operation 
of law, independent of such contract.^ Vinnius on this 
point says : Societas est consortium voluntarlum ; nisi 
enhn consensu et tractatu de ea re hahito communio sus- 
cepta sit, non est societas.^ There are many cases in which 

' Domat, Civ. Law, 1, 8, 1, art. prel. - Vinn. ad Inst. 3, 2G, Intr. 
^ Code Civil, art. 1832. 

* J. Voet, Coram. 17, 2, § 1 ; Ersk. Inst. B. 3, tit. 3, § 18 ; Tapia, Elem. 
de Jur. Merc. p. 86, § 1, ed. Madrid, 1829 ; 5 Duvergier, Droit Civil Franc, 
tit. 9; Contr. de Soc. c. 1, n. 17, p. 31, 32; Persil, des Soc. Coram, n. 2, 
p. 6, 7; 2 Bell, Coram. B. 7, p. 611, 5th ed. ; -1 Pardessus, Droit Comra. art. 
966 ; Van Leeuwen's Coram, c. 23, § 1 ; Asso & Manuel, Inst, of Laws of 
Spain, B. 2, tit. 15. 

* 4 Pardessus, Droit Comra. art. 969, 973; 5 Duvergier, de Soc. n. 33, 
39, 40, 65; 17 Duranton, Droit Franc, Liv. 3, tit. 9, art. 320; Coll. 
on P. B. 1, c. 1, § 1, p. 4, 2d ed. ; Wats, on P. c. 1, p. 5, 6, 2d ed. ; 
Id. 27. 

« Vinn. ad Inst. 3, 2G, Intr. 



6 PARTNERSHIP. [cHAP. I, 

a community of interest is created by law between par- 
ties, as, for example, in cases of joint tenancy or tenancy 
in common in lands, or goods, or chattels, under devises 
and bequests in last wills and testaments, and deeds and 
donations inter vivos, and inheritances and successions. 
But no partnership arises therefrom ; for they are not 
strictly founded in contract, although they may exist by 
the original or subsequent consent of the parties who re- 
ceive the benefit thereof.^ It has been well said by 
Pothier, that partnership and community are not the 
same thing. La societe et la co7nmunaute 7ie sont pas 
nieme chose.^ The first is founded upon the contract of 
the parties, which thus creates the community ; the last 
may exist independent of any contract whatsoever. And 
Pothier goes on to illustrate the distinction by putting the 
cases of joint heirs and joint legatees, where there is 
a community of interest, but there is no partnership.^ 
Another illustration may be seen in the case of the part- 
owners of a ship, who are treated as tenants in common 
thereof, each having a distinct although an undivided in- 
terest in the whole. They thus may properly be said to 
have an undivided interest in the ship ; and yet that inter- 
est does not make them partners.'^ So, if two joint own- 
ers of the merchandise should consign it for sale abroad 
to the same consignee, giving him separate instructions, 
each for his own share, their interests are several, and 



' See 2 Bl. Comm. 180-188 ; Id. 399, 400; Com. Dig. Estates, K. 1, K. 
6 ; Story on Ag. § 39 ; Wats, on P. c. 1, p. 5, G, 2d ed. ; 3 Kent, 25. 

* Poth. de Soc. n. 2. See 5 Duvergier, de Soo. n. 33-35, 40 ; 4 Par- 
dessus, Droit Comm. art. 969 ; 17 Duranton, Droit Fi-anc. art. 320. 

3 Poth. de Soc. n. 2, n. 182-184; Voet, ad Pand. 17, 2, n. 2, Tom. 
1, p. 748. 

* Abbott on Ship. Pt. 1, c. 3, p. 68, ed. 1829 ; Wats, on P. c. 1, p. 5, 6; 
Id. c. 2, p. 67, 2d ed.; 3 Kent, 25 ; Ersk. Inst. B. 3, tit. 3, § 18 ; 2 Bell, 
Comm. p. 655, 5th ed. ; 1 Stair, Inst. B. 1, tit. 16, § 1, p. 156 ; Porter v. M'- 
Clure, 15 Wend. 187. [Noyes v. Cushman, 25 Vt. 390.] 



CHAP. I.] WHAT CONSTITUTES. 7 

they are not to be treated as partners in the adven- 
ture.^ The same result takes place, where a purchase 
is made for several distinct persons by a broker or other 
agent of certain goods, each being to take a certain por- 
tion, or quantity, but they are not to be sold for their 
joint account or profit. In such a case no partnership 
exists, although there is a community of interest in the 
goods purchased.^ In short, every partnership is founded 
in a community of interest ; but every community of in- 
terest does not constitute a partnership ; or, as Duranton 
expresses it : La sociefe aussi produit une communaute ; 
en un mot, toute soeiete est bien une communaute ; mais 
toute communaute n'est point une soeiete. Ilfaut pour 
cela la volonte des parties? 

§ 4. The Roman Law has recognized the same distmc- 
tion : Ut sit pro socio actio, societatem intercedere oportet; 
nee enim sufficit rem esse communem, nisi societas inter- 
cedit. Communiter auteon res agi jjotest etiam citra socie- 
tatem ; ut puta, cum non affectione societatis iyicidimus in 
communionem, ut evenit in re duohus legata; item si a 
duohus simul empta res sit ; aut si hereditas vel donatio 
communiter nobis obvenit ; aut si a duobus separati7n 
emimus p)artes eorum,non sociifuturi} JSfam cum trac- 
tatu hahiio societas co'ita est, j^ro socio actio est; cum 
sine tractatu in re ipsa et negotio, communiter gestum 



' Hall V. Leigh, 8 Cranch, 50 ; Jackson v. Robinson, 3 Mason, 138. {See 
§ 27, 30. 1 [So, where two persons agree to divide the profit and loss upon 
the purchases and sales of certain articles of merchandise, each person to 
make his own purchases and sales, and entirely with his own funds, and in 
his own name, they are not partners either to third persons, or inter sese. 
Smith V. Wright, 5 Sand. 113. And see Pattison v. Blanchard, 1 Seld. 186.] 

* Hoare v. Dawes, Doug. 371 ; Coope v. Eyre, 1 H. Bl. 37 ; 3 Kent, 25 ; 
Gibson v. Lupton, 9 Bing. 29 7; Holmes v. Unit. Ins. Co. 2 Johns. Cas. 
329, 331. 

* 17 Duranton, Droit Franc, art. 320; Potli. de Soc. n. 2. 

* D. 17, 2, 31 ; Poth. Pand. 17, 2, n. 30 ; Vinn. ad Inst. 3, 26, lutr. 



8 PARTNERSHIP. [cHAP. I. 

videiur} And again: Qui nolunt inter se contendere, 
Solent per nuntium rem emere in commune, quod a socie- 
tate longe remotum est.^ 

§ 5. Hence it is an established principle of the com- 
mon law, that as a partnership can commence only by 
the voluntary contract of the parties, so, when it is once 
formed, no third person can be afterwards introduced into 
the firm, as a partner, without the concurrence of all the 
partners, who compose the original firm.^ It is not suffi- 
cient to constitute the new relation, that one or more of 
the firm shall have assented to his introduction ; for the 
dissent of a single partner will exclude him, since it 
would, in effect, otherwise amount to a right of one or 
more of the partners to change the nature, and terms, 
and obligations of the original contract, and to take away 
the delectus personce, which is essential to the constitu- 
tion of a partnership.^ So stubborn indeed is this rule, 
that even the executors and other personal representa- 
tives of a partner do not, in that capacity, succeed to the 
state and condition of that partner.^ The Roman law is 
direct to the same purpose. Qui admittitur socius, ei 
tantum socius est, qui adynisit; et recte; cum enim sod- 
etas consensu contrahatur, socius mihi esse non potest, 
quem ego socium esse nolui. Quid ergo, si socius mens 
eum admisit f Ei soli socius est.^ It even pressed the 

' D. 1 7, 2, 32 ; Poth. Pand. 1 7, 2, n. 30. See also 1 Swans. 609, note (a). 

^ D. 1 7, 2, 33. 

' I See § 307-309, and note at end of chap. iv. } [But if the term of the 
partnership has expired, the interest of one partner therein may be assigned 
to a stranger, and such assignee may maintain a bill for an account against 
the other partners. Mathewson v. Clarke, 6 How. 122.] 

* Coll. on P. B. 1, c. 1, § 1, p. 4, 5, 2d ed. ; Ex parte Barrow, 2 Rose, 252, 
255 ; Crawshay v. Maule, 1 Swans. 50S, 509, and the learned note of the 
Reporter, n. (a), p. 509 ; Putnam v. Wise, 1 Hill, (N. Y.) 234. 

s Ibid. 

« D. 17, 2, 19 ; Poth. Pand. 17, 2, n. 28 ; 1 Domat, 1, 8, 2, art. 5; Poth. 
de Soc. n. 145. See 1 Swans. 509, note (a). 



CHAP. I.] WHAT CONSTITUTES. 9 

rule to a still further extent, and held, that a positive 
stipulation between the partners at the commencement 
of the partnership, that the heir or personal representa- 
tive of a partner should succeed him in the partnership, 
was inoperative and incapable of being enforced. Adeo 
morte soc'ii solvUur societas, ut nee ah initio pacisci pos- 
sumus, lit heres succedat societcUi. Nemo potest societa- 
tem heredl sico sic parere, ut ip)se heres socius sit} The 
common law, however, treats such a stipulation as valid 
and obligatory.^ This also, according to Pothier, was 
the doctrine of the old French law ; ^ and the modern 
code of France has expressly adopted it, in opposition 
to the Roman law.^ Such also is the law of Scotland.-^ 
§ 6. It is also upon the like ground, that partnership 
is a contract founded purely upon the consent of the 
parties, that jurists are accustomed to attach to it the 
ordinary incidents and attributes of contracts. It is ac- 
cordingly treated by them, as in its very nature and 
character a contract arising from and governed by the 
principles of natural law and justice.^ Accordingly it 
must, in the first place, be founded in good faith and the 
positive consent of the parties ; secondly, it must be for 
a lawful object and purpose ; and thirdly, it must be 
between parties sui juris and competent to enter into 
such a contract. John Voet therefore affirms : Societas 
est contractus juris gentium, home Jidei, consensu con- 
sta7is, super re honesta, de lucri et damni commimione ; 
quam inire possunt omnes libeixini hahentes rerum 

» D. 1 7, 2, 59 ; Id. 1 7, 235 ; Poth. Panel. 1 7, 2, n. 56, 35 ; 1 Domat, 1 , 8, 2, art. 4. 
2 Coll. on P. B. 1, c. 1, § 1, p. 5, 6, 2d ed. ; 2 Bell, Comm. G34, 
5th ed. {See §196.} 

* Poth. de Soc. n. 145. 

* 1 Locre, Esprit du Code de Comm. tit. 3, art. 18, n. 3, p, 10&; Code 
Civil, art. 1868; 17 Duranton, Droit Franc, de Soc. n. 471; 5 Duvergier, 
Droit Civil Franc, de Soc. n. 433, 444. 

* 2 Bell, Comm. 620, 5th ed. « Poth. de Soc. n. 4. 



10 PARTNERSHIP. [cHAP. I. 

suarum adminisirationem} Hence, if the contract be 
founded in fraud or imposition, either upon one of the 
parties, or upon third persons, it is utterly void.- And 
on this point the Roman law speaks the general sense 
of nations. Societas, si dolo mcdo, cad frcmdandi causa 
co'ita sit, ipso jure mdlius momenti est; qida fides bona 
contraria est fraudi et dolo.^ And again: Qida nee 
societas aid mandatum flagitiosce rei ullas vires hahet^ 
The same rule applies to cases, where the partnership 
is for immoral or illegal purposes," or is in contravention 
of the positive law,^ or of the public policy of the 
country. Thus, if the partnership be for illegal gaming,' 
or illegal insurances, or wagers, or to carry on contra- 
band trade, or to support a house of ill-fame or de- 
bauchery ; in these and the like cases, the contract will 
be deemed a mere nullity, and is equally denounced, as 
such, by the Roman law, and the foreign law, and the 
common law.^ The Roman law is very expressive on 

' 1 Voet, Comm. 1 7, 2, § 1 . See also Poth. de Soc. n. 4. 
^ 1 Story, Eq. Jur. § 222-240. {See § 285.} 
3 D. 17, 2, 3, 3; Poth. Pand. 17, 2, n. 1. 

* D. 18, 1, 35, 2; Poth. Pand. 18, 1, n. 15; Id. 17, 2, n. 5 ; 1 Voet, ad 
Pand. 17, 2, n. 7, p. 750. 

* [See McPherson v. Pemberton, 1 Jones, (N. C.) 378.] 
« [Gordon v. Howden, 12 CI. & Fin. 237.] 

' [See AVatson v. Fletcher, 7 Gratt. 1.] 

8 Gow on P. c. 1, p. 4, 5, ed. 1837 ; Coll. on P. B. 1, c. 1, § 1, p. 29-54, 
2d ed. ; Wats, on P. c. 1, p. 35-46 ; 3 Kent, 28 ; Poth. de Soc. n. 14; Storj-, 
Confl. of Laws, § 2-14-260; 1 Bell, Comm. p. 297-306, 5th ed. ; Code Civil 
of France, art. 1833; 17 Duranton, Droit Civil Franc, de Soc. tit. 9, c. 1, § 1, 
n. 327; 5 Duvergier, Droit Civil Franc. 9, de Soc. c. 1, n. 24, 25, { See 
Lind. on P. 136-162. A traditionary case of a bill in equity brought by one 
highwayman against another for an account is given in 2 Poth. on Obi. 
(Evans' ed.) 3, n. The use of a fictitious name is not illegal. Aubin v. Holt, 
2 Kay & J. 66; Lewis v. Langdon, 7 Sim. 421. But see Thornbury v. 
Bevill, 1 You. & C. C. C. 554. Under a statute requiring every person car- 
rying on the business of pawnbroking to have his name printed over the door 
of his shop, an agreement for a pawnbroking partnership with dormant mem- 
bers was held illegal. Armstrong v. Armstrong, 3 Myl. & K. 45, 53 ; Arm- 



CHAP. I.] WHAT CONSTITUTES. 11 

this point. Nee enim ulla socieias 7nalejiciorum^ vel 
communicatio justa damni ex malejicio est} Again: 
Quod autem ex furto vel ex alio malejicio qumsitum 
est, in societatem non opo7'tere conferri, 2Jcdam est ; quia 
delictorum tiirpis atque fceda commwiio e'st.^ 

strong V. Lewis, 2 Cr. & M. 274. Under a statute forbidding any person, 
not duly qualified, from acting as an attorney, it has been held, that an 
unqualified person may receive a share of an attorney's profits, if he does not 
receive them in consideration of acting as an attorney, e. g. if such person is 
the widow of a deceased partner. Candler v. Candler, Jac. 225 ; Sterry v. 
Clifton, 9 C. B. 110; Scott v. Miller, H. R. V. Johns. 220. See Raynard v. 
Chase, 1 Buit. 2. But an agreement between a qualified and an unqual- 
ified person to carry on the business of attorneys is illegal ; Williams t'. Jones, 
5 B. & C. 108, even if the agreement be that the unqualified person shall re- 
ceive a share of the profits as salary, and shall not be a partner. Tench v. 
Roberts, 6 Madd. 145; Re Jackson, 1 B. & C. 270. On the question 
whether joint stock companies are illegal, see § 164. 

The members of an illegal partnership have no remedies against each 
other in respect to the illegal transactions; either at law, De Begnis v. 
Armistead, 10 Bing. 107; or in equity, Stewart v. Gibson, 7 CI. & Fin. 707; 
Ewing V. Osbaldiston, 2 Myl. & C. 53 ; Bartle v. Nutt, 4 Pet. 184. How far 
this rule applies to collateral transactions the immediate consideration of 
which is not illegal seems not clearly settled. Metcalf on Contr. 262-269. 
Merry weather v. Nixan, and notes, 2 Sm. Lead. Cas. 456. See Brooks v. 
Martin, 2 Wallace, 70; Brown v. Tarkington, 3 Wallace, 377.} 

' D. 27, 3, 1, 14 ; Poth. Pand. 17, 2, n. 5. 
D. 17, 2, 53 ; Poth. Pand. 17, 2, n. 18. 



12 PARTNERSHIP. [CHAP. II. 



CHAPTEE II. 

WHO MAY BE PARTNERS. 

{ § 7. Infants and lunatics. 

8. Foreign law. 

9. Aliens. 

10. Rights of married women at law. 

11. In equity. 

12. Whether a married woman can be a partner. 

13. Roman law. 

14. Foreign law. 
Note. — Corporations. | 

§ 7. In the next place, as to the persons who are 
capable of entering into a partnership. The general 
rule of the common law is, that every person of sound 
mind, sui jiiris,^ and not otherwise restrained by law, 
may enter into a contract of partnership.^ As to infants, 
they are not by the common law incapable of enter- 
ing into a partnership, since it cannot be universally 
affirmed, that it may not be for their benefit.^ And 
here we have another illustration of the analogy between 
partnership and other common contracts ; for although 
the contract of partnership by an infant is not abso- 

' { A partnership is not dissolved by the lunacy of a partner, see § 295- 
297; therefore a lunatic may he a partner. Whether a contract by a lunatic 
to become a partner can in all cases be avoided by him, is perhaps unsettled. 
In England it is held, that if one contracts with a lunatic, not knowing him to 
be so, and the contract is executed, the lunatic cannot avoid it. Molton v. 
Camroux, 2 Exch. 487; s. c. 4 Exch. 17; but this doctrine has not been 
universally adopted in America. Seaver v. Phelps, 11 Pick. 304.} 

2 Coll. on P. B. 1, c. 1, § 1, p. 8, 2d ed. ; Gow on P. c. 1, p. 1, 2, 3d ed. 
1837; 1 Story, Eq. Jur. § 222-239. 

* See Goode v. Harrison, 5 B. & Aid. 14 7, 156-159; 1 Story, Eq. Jur. 
§ 240-243 ; [Dana i'. Stearns, 3 Cush. 3 7 2. J 



CHAP. 11.] WHO MAY BE PARTNERS. 13 

lutely void ; yet it is not, on the other hand, positively 
binding upon him, but is voidable, and may be avoided 
by him, when he comes of age, according to the known 
distinction, so well stated by Lord Chief Justice Eyre, 
that such contracts made by an infant, as the Court may 
pronounce to be to his prejudice, are merely void ; such 
as are of an uncertain nature as to the benefit or pre- 
judice, are voidable only, and it is at the election of the 
infant to affirm them or not ; and such as are clearly 
for his benefit (as a contract for necessaries), are valid 
and obligatory.^ If an infant, however, engages in a 
partnership, he must at or within a reasonable time 
after his arrival of age notif}^ his disaffirmance thereof, 
otherwise he will be deemed to have confirmed it, and 
will be bound by subsequent contracts made on the 
credit of the partnership.^ If, upon his arrival of age, 
he elects to continue the partnership, and does continue 
it, he will be then held liable as a partner.^ Indeed, 
if an infant should hold himself out as a partner during 
his infancy, although in reality not so, and should not 
after his arrival of age notify his disaffirmance thereof, 
he would be liable to third persons, trusting the part- 
nership, to the same extent, as if he were actually a 
partner; for his conduct would, under such circum- 
stances, amount to a delusion or deceit upon such third 

' Keane v. Boycott, 2 H. Bl. 511, 514, 515; Comyns, Dig. Enfant, B. 5, 
6, C. 1-4, 9 ; Holmes v. Blogg, 8 Taunt. 35 ; Id. 508 ; 1 Story, Eq. Jur. § 
240-242; Baylis v. DIneley, 3 M. & S. 477; Tucker v. Moreland, 10 Pet. 58, 
66-70 ; 2 Kent, 233-245. 

* {If an infant pays a premium on entering a partnership, and before com- 
ing of age disaffirms the contract, he cannot recover the premium back. Ex 
parte Taylor, 8 De G. M. & G. 254. But see Corpe v. Overton, 10 Bing. 
252.} 

3 Goode V. Harrison, 5 B. & Aid. 147, 156-160; Holmes v. Blogg, 8 
Taunt. 35 ; Thompson v. Lay, 4 Pick. 48 ; 2 Kent, 233-245 ; [Miller v. Sims, 
2 Hill, (S. C.) 479.] 



14 PARTNERSHIP. [cHAP. II. 

persons ; and where one of two innocent parties must 
suffer, he ought to do so, whose negligence or misconduct 
has occasioned the loss.^ 

§ 8. The like principle will be found recognized in 
the foreign law. The essence of the contract of part- 
nership, like that of other contracts, consisting in con- 
sent, it follows, that if a person is incapable of giving 
his consent, he is not bound by the contract.^ And 
Pothier says, that this rule equally applies to cases of 
partnership, as to other cases of contract.^ Hence per- 
sons of unsound mind, or in a state of drunkenness, or 
under guardianship, or otherwise incapable, as are luna- 
tics, minors, and prodigals, cannot become partners.^ 
The French law holds minors and persons under guar- 
dianship as rather incapable of binding themselves by 
contract, than incapable of contracting. They may 
oblige others to them ; although they cannot oblige 
themselves to others ; ^ and so is the doctrine of the 
Institutes. JSfamque i^lacuit 7nello7'em quidem condi- 
tionem Ucere eis facere, etiam sine tutoris auctoritaie.^ 
The Scottish law adopts a similar doctrine.^ 

§ 9. As to aliens, there is no doubt, that alien friends 
may lawfully contract a partnership in one country, 
although some or all of the partners are resident in 
another country. But alien enemies are disabled dur- 
ing war from entering into any partnership with each 
other, as indeed they are from entering into any other 
commercial contract.® A state of hostility puts an end 

' Goode V. Harrison, 5 B. & Aid. 147, 152, 157, 158. See also Fitts r. 
Hall, 9 N. H. 441 ; [Bingham on Infancy (Bennett's ed.) and note.] {On 
the question whether if an infant partner disaffirms a contract, the conti'act 
can be treated as the separate contract of the other partners, see § 255.} 

2 Poth. Obi. n. 49-53. 

•■' Poth. de Soc. n. 77; 17 Duranton, Droit Franc, n. 321. 

" Poth. Obi. n. 49-53. * Poth. Obi. n. 52. « Inst. 1, 21, Intr. 

7 2 Bell, Comm. 024, 5th ed. « Coll. on P. B. 1, c. 1, p. 9, 2d ed. 



CHAP. II.] WHO MAY BE PARTNERS. 15 

to the rights of commercial intercourse, trade, and busi- 
ness between the respective subjects of the belligerent 
nations, who are domiciled therein.^ Nay, the principle 
goes further, and an antecedent partnership, existing 
between persons domiciled in different countries, is 
dissolved by the breaking out of war between those 
countries ; for the whole rights, duties, obligations, 
relations, and interests of the partnership, as such, 
become changed thereby, and the objects of the partner- 
ship are no longer legally attainable, or capable of exe- 
cution.^ 

§ 10. As to married women, they are by the com- 
mon law incapable of forming a partnership, since they 
are disabled generally to contract, or to engage in 
trade.^ It sometimes, however, happens in practice, 
that, with the consent of their husbands, they become 
entitled to shares in banking partnerships, and other 
commercial establishments ; but in such cases their 
husbands are entitled to their shares, and become part- 
ners in their stead.^ There are, however, some excep- 
tions to this rule, even at the common law. Thus, for 
example, by the custom of London, a married woman 



' 1 Kent, 66-69 ; Potts v. Bell, 8 T. R. 548 ; Willison v. Patteson, 7 
Taunt. 439; The Indian Chief, 3 Rob. 22; The Jonge Pieter, 4 Rob. 79; 
The Franklin, 6 Rob. 127; Griswold v. Waddington, 15 Johns. 57; s. c. 16 
Johns. 438; Ex parte Boussmaker, 13 Ves. 71 ; The Rapid, 8 Cranch, 155; 
The Julia, Id. 181 ; Scholefield v. Eichelberger, 7 Pet. 586. 

* Griswold r. Waddington, 16 Johns. 438. — The masterly judgment of 
Mr. Chancellor Kent in this case examines and exhausts the whole learning 
on the subject. See also, 1 Domat, 1, 8, 5, art. 11, 12, 15. {See § 315, 316, 
and Clemonston r. Blessig, 11 Exch. 135, n.} 

^ 2 Kent, 54-64. {Marriage of a female partner dissolves a partnership, 
§306.} 

* Gow on P. 2, 3d ed. 1837; Coll. on P. B. 1, c. 1, § 1, p. 9, 10, 2d ed. ; 
Coslo V. De Bernales, 1 Car. & P. 266 ; s. C. Ry. & M. 102 ; 1 Story, Eq. Jur. 
§ 243 ; 2 Ibid. § 136 7-13 73 ; 1 Bl. Comm. 442-444 ; Wats, on P. c. 7, p. 384, 
2ded. 



16 PARTNERSHIP. [cHAP. II. 

is authorized to carry on trade as a feme sole / and 
thence it has been inferred, that she may enter into a 
partnership in her trade in that city.^ So, a wife may 
acquire a separate character and power to contract by 
the civil death of her husband, as by his exile, banish- 
ment, profession, or abjuration of the realm. ^ The 
same rule has been applied, where the husband has, in 
pursuance of a criminal sentence, been transported to 
foreign parts for a term of years.^ The ground of these 
exceptions is, that, by operation of law, the husband 
is disabled to return ; and his matrimonial rights are 
therefore consequently suspended during his exile, ban- 
ishment, or transportation.'* In the cases of abjuration 
and profession he is treated as cmU'iter mortuus.^ The 
same rule has also been applied in England to the 
case of a woman, the wife of a foreigner, who had 
never been in England, who was thereby held entitled 
to contract, and to sue and be sued as 2ifeme sole.^ 

§ 11. Such is the doctrine of the common law in 
respect to married women. But a far more extended 
rule is adopted in Courts of Equity, where, if the wife 
possesses or is entitled to any property for her sole and 
separate use, either by agreement with her husba,nd, or 

> Coll. on P. B. 1, c. 1, § 1, p. 10. See Beard r. W^ebb, 2 B. & P. 93 ; 
Burke v. Winkle, 2 S. & R. 189 ; 2 Roper on Husb. & W. c. 16, § 5, p. 
126, 127. 

2 Beard v. Webb, 2 B. & P. 93, 105; Lean v. Sehutz, 2 W. Bl. 1195 ; 1 
Bl. Coram. 443 ; 2 Roper on Husb. & AV. c. 16, § 5, p. 123, 124. 

' 2 Roper on Husb. & W. c. 16, § 5, p. 123, 124 ; Sparrow v. Carruthers, 
cited 2 W. Bl. 1197, and in Corbett v. Poelnitz, 1 T. R. 5, 7, and in De Gail- 
Ion V. L'Aigle, 1 B. & P. 357 ; Carrol v. Blencow, 4 Esp. 27; s. C. cited in 
Boggett V. Frier, 11 East, 303 ; Marsh v. Hutchinson, 2 B. & P. 226, 231-233 ; 
Clancy on Married Women, c. 4, p. 54-56, 63; Co. Litt. 133 a, 133 b ; 
Gregory v. Paul, 15 Mass. 31 ; 2 Kent, 154-164. 

* Ibid. * Marsh v. Hutchinson, 2 B. & P. 231. 

^ De Gaillon v. L'Aigle, 1 B. & P. 35 7 ; Kay v. Duchesse de Pienne, 3 
Camp. 123 ; Gregory v. Paul, 15 Mass. 31 ; Abbot v. Bayley, 6 Pick. 89. 



CHAP. II.] WHO MAY BE PARTNERS. 17 

otherwise, she is generally treated, as to such property, 
as a feriie sole, and may dispose of the same accordingly, 
and bind herself by contract touching the same.^ A 
full discussion of this topic properly belongs to a trea- 
tise on the jurisdiction of Courts of Equity.^ It may, 
however, be proper here to state, that if, by an ante- 
nuptial or postnuptial agreement for a valuable con- 
sideration, the husband contracts to allow his wife to 
carry on trade for her sole and separate rise, if the 
property is vested in trustees, it will be held secure 
against the husband and his creditors even at law ; and, 
if no trustees are interposed, it will be open to the like 
protection in equity.^ If the agreement is voluntary, 
it will be good, and will be enforced in equity against 
the husband ; but not against his creditors.^ In like 
manner, if a husband should desert his wife, and she 
should be enabled, by the aid of her friends, to carry 
on a separate trade (such as that of a milliner) for her 
own support, and that of her family, her earnings in 
that trade will, in equity, be held to belong to her sepa- 
rate use, and be enforced accordingly against the claims 
of her husband.^ 

§ 12. Although, as we have seen,*" it has been thought, 
that a /erne covert, having authority to carry on trade 
as a, feme sole, by the custom of London, may enter into, 
a partnership in such trade ; yet it does not appear 



1 2 Story, Eq. Jur. § 1370-1402 ; 2 Kent, 162-172. 

2 2 Story, Eq. Jar. § 1370-1402. 

3 2 Story, Eq. Jur. § 1385, 1387; 2 Roper oa Husb. & W. c. 18, § 4, 
p. 16 7-175. 

* 2 Story, Eq. Jur. § 1386, 1387; 2 Roper on Husb. & W. c. 18, § 4, 
p. 167-175. 

' 2 Story, Eq. Jur. § 1387; 2 Roper on Husb. & W. c. 18, § 4, p. 174, 
175 ; Cecil v. Juxon, 1 Atk. 278 ; Lamphir v. Creed, 8 Ves. 599 ; Comyns' 
Dig. Chancery, 2 M. 11. 

8 Ante, § 10. 

2 



18 PARTNERSHIP. [CHAP. II. 

ever to have been decided, that the authority of a ferae 
covert to carry on trade as a feme sole, arising from the 
consent or agreement of her husband, positively entitles 
her to engage in a partnership in the trade. If, indeed, 
the trade cannot otherwise be carried on, either neces- 
sarily, or conveniently, or beneficially, his consent to the 
partnership might, perhaps, be inferred. But the con- 
sent of the husband, that his wife may carry on trade 
for her sole and separate use, does not necessarily im- 
port, that she may involve herself in the complex trans- 
actions, responsibilities, and duties of partnership. In 
cases where the law treats the marriage as suspended, 
and entitles her to act as ^fertie sole (as in cases of ban- 
ishment, abjuration, or transportation), there may be 
just ground to presume, that, as she is thereby generally 
restored to her rights as ?i feme sole, she may enter into 
a partnership in trade. But the question never having 
undergone any direct adjudication, must be deemed still 
open for discussion and decision.^ 

§ 13. In the Roman law the same positive union 
and unity of rights and interests between husband and 
wife are not recognized, which exist under the common 
law ; ^ for in the Roman law, the husband and wife 

' { Under a statute of Massachusetts, Gen. Sts. c. 108, §1,3, which pro- 
vides that a married woman may sell her separate property, enter into any 
contracts in reference to the same, and carry on any trade or business on her 
sole and separate account in the same manner as if she were sole, it has been 
held, that a woman may belong to a trading partnership, if her husband is not 
a member thereof, but not if he is a member. Plumer v. Lord, 5 All. 460 ; 
s. c. 7 All. 481 ; s. c. 9 All. 455; Lord v. Parker, 3 All. 127 ; Lord v. Davi- 
son, Id. 131 ; Edwards v. Stevens, Id. 315. If a married woman invests her 
separate property in a partnership business to be conducted by her and others, 
and property is bought and delivered to such partners, a mere trespasser can- 
not defend himself by denying her capacity to carry on such partnership busi- 
ness. Horneffer v. Duress, 13 Wis. 603. See Everit v. Watts, 10 Paige, 82 ; 
Atwood V. Meredith, 37 Miss. 635. See post, § 239.} 

2 1 Burge, Col. & For. Law, Pt. 1, c. 7, § 1, p. 263, 264; Poth. Pand. 1, 6, 
n. 9, 21. 



CHAP. II.] WHO MAY BE PARTNERS. 19 

constitute separate and distinct persons, and are sepa- 
rately capable of contracting, under certain limitations 
and restrictions, with each other, as well as with third 
persons.^ Mr. Justice Blackstone has expressed the 
same doctrine still more broadly, and says : " In the 
civil law the husband and wife are considered as two 
distinct persons, and may have separate estates, con- 
tracts, debts, and injuries."^ Hence, the contracts of 
the husband did not bind the wife, unless she ex- 
pressly assented thereto. Frustra disjmtas (says the 
Code) de contractibiis, cum marito tuo habitis, utrumne 
jure steterint, an minime : turn tibi siifficicd, si 2'>T02:)rio 
nomine nulhim cordr actum hahuisti, quominus pro marito 
tuo conveniri jjossis.^ 

§ 14. In the modern foreign law the same principle 
has been adopted with various modifications, adapted to 
local institutions, usages, and policy. The law of Scot- 
land most nearly approaches the English law. Inde- 
pendently of special contract, the husband and wife, by 
entering into marriage, are joined in the strictest society 
or partnership, which draws after it a communication of 
their mutual civil interests, styled, in that law, the com- 
munion of goods, and, in the foreign law generally, the 
property in community. During the marriage, the wife 
is placed under the dkection of the husband, who has, 
jure mariii, the sole authority of administering the prop- 
erty in communion ; and so absolute is this right, that he 
may solely dispose of the property, and it may be attached 
by his creditors. In consequence of this right and power, 
the husband becomes liable also to the personal debts of 

1 See Domat, 1, 0, 6, art. 1-7 ; 1 BI. Comm, 444 ; Ayliffe's Pand. B. 2, 
tit. G, p. 81, 82 ; 1 Bro. Civ. & Adm. Law, 82 ; 1 Burge, Col. & For. J.a\v, 
B. 1, Pt. 1, c. 7,§ 1, p. 2G3, 269, 272-274. 

2 1 Bl. Comm. 444. => Cod. 4, 12, 1. 



20 PARTNERSHIP. [cHAP. II. 

his wife.^ The wife does not seem entitled to enter into 
any contract independent of his consent. The law of 
France recognizes still more extensively the distinct char- 
acters and rights of the husband and wife. The husband 
and wife, independently of any special convention, hold 
their property in community, and the husband is the sole 
administrator of the property of the community.^ The 
wife can do no act in law without the authority of her 
husband, even though she shall be a public trader, or not 
in community, or separate in her property.^ Hence, she 
is incapable of contracting without his authority and con- 
sent.^ She cannot become a sole trader without his con- 
sent.^ But, if authorized by him to act as a sole trader, 
she may make herself liable for all the concerns of her 
mercantile transactions ; and in that case she also renders 
her husband liable, if there be a community of goods be- 
tween them.*" It has thence been supposed that his consent 
and authority may extend to a contract of partnership by 
her in trade."^ The law of Louisiana coincides with that of 
France.^ The law of Holland and of Spain, and proba- 
bly that also of most of the continental states of Europe, 
contains provisions in many respects similar.^ 

1 Ersk, Inst. B. 1, tit. 6, § 12-18; 1 Bell, Comm. 631-G35, 5th ed. ; 1 
Burge, Col. & For. Law, Pt. 1, c. 7, p. 423-462. 

2 Code Civil, art. 1400, 1421. 

^ Code Civil, art. 215, 217; Locrd, Esprit du Code de Comm. art. 4, 
p. 27-30. 

* Poth. Obi. n. 52. 

5 Locre, Esprit du Code de Comm. tit. 1, art. 4, p. 26-29, 36-38, 42. 

^ Code de Comm. art. 4, 5 ; Code Civil, art. 220. 

7 Poth. de Soc. n. 77. « q^^^ of Louisiana, 1825, art. 121-131. 

9 1 Burge, Col. & For. Law, Pt. 1, c. 7, § 2, p. 276, 293-303; Id. § 4, 
p. 413, 418-423. 

{ Note. — There are dicta that a corporation cannot be a member of a 
partnership; Sharon Canal Co. v. Fulton Bank, 7 Wend. 412; Marine Bank 
V. Ogden, 29 111. 248. See Angell & Ames on Corp. § 272. In Van 
Kuren v. Trenton Co. 2 Beasl. 302, the point was raised, but not decided. In 



CHAP. II.] WHO MAY BE PARTNERS. 21 

Whittenton Mills v. Upton, 10 Gray, 582, it was held, that a manufacturing 
corporation established under the laws of Massachusetts could not be a mem- 
ber of a partnership ; and the reasoning of the court seems applicable to all 
corporations. See Comm. v. Smith, 10 All. 448, 4.'>6. In Catskill Rank v. 
Gray, 14 Barb. 471, it was held, that a corporation might make itself liable to 
thii'd persons by sharing the profits of a jjartnership; but in Whittenton Mills 
V. Upton, ubi sup., where a corporation and an individual had held themselves 
out as partners, it was held, that the corporation and the individual could not, 
on the petition of the latter, be put Into insolvency as a partnership. See, 
further, Conkling v. Washington University, 2 Md. Ch. 497.} 



22 PARTNERSHIP. [cHAP. III. 



CHAPTER III. 



PARTNERSHIP BETWEEN THE PARTIES COMMUNITY OF 

INTERESTS. 

I § 15. Contribution of property or labor. 

16. Community of partnership property. 

1 7. Foreign law. 

18. Communion of profit. 

19. Whether communion of losses is necessary. 

20. Roman law. 

21. Modern law. 

22. Statement of Pothier. 

23. Equal sharing in profit and loss not necessary. 

24. Presumption of equality. 

25. Roman and foreign law. 

26. French law. 

27. There may be community of profits without community of property. 

28. Doctrine of Pufendorf. 

29. Doctrine of Pothier and of the Roman law.} 

§ 15. In the next place, every partnership presupposes 
that there must be something brought into the common 
stock or fund by each party.^ But it is not necessary, 
that each should contribute or contract to contribute mon- 
ey, goods, effects, or other property, towards the common 
stock ; for one may contribute labor or skill, and another 
may contribute property, and another may contribute 
money, according as they shall agree." And for this there 
is good reason ; and it is well put in the Roman law : 

' 3 Kent, 24, 25. 

2 Coll. on P. B. 1, c. 1, § 1, p. 10, 2d ed.; Peacock v. Peacock, 16 Ves. 
49; Reid v. HoUinshead, 4 B. & C. 878; Meyer v. Sharpe, 5 Taunt. 74; 
Waugh V. Carver, 2 H. Bl. 235, 246; 2 Bell, Coram. B. 7, c. 1, p. 614, 5th 
ed. ; 1 Stair, Inst. B. 1, tit. 16, § 2; Domat, 1, 8, 1, art. 7; Dob v. Halsey, 16 
Johns. 34. [Dale v. Hamilton, 5 Hare, 393 ; Perry v. Butt, 14 Ga. 699.] 



CHAP. III.] COMMUNITY OF INTERESTS. 23 

Plerumque enim tanta est indiistria socii, ut plus societati 
conferaf, quam pecimia ; item, si solus navlget, si solus 
peregrinetur, jjericula subeat solus} Sometimes it hap- 
pens, that each partner contributes only skill or labor, or 
services for the common benefit ; as, for example, house- 
wrights, or shipbuilders, or riggers, who are partners ; 
or commission merchants, brokers, or other agents, whose 
partnership only extends to the profits of their business, 
and who have no capital stock embarked in the enter- 
prise.^ But all must contribute something; and thus 
join together either money, or goods, or other property, 
or labor, or skill ; ^ or, as Pothier expresses it : II est de 
r essence du contrat de society, que chacune des parties ap- 
porte ou s' oblige d'apporter quelque chose a la societe ; 
ou de Vargent, ou d'autres effets, ou son travail et son 
industries The Roman law pronounces the same rule : 
Societatem, uno j^ecuniam conferente, alio operam, posse 
contrahi, magis ohtinuit.^ And, indeed, it may be said to 
be universally adopted in modern times.^ 

§ 16. In the next place, from what has been already 
said,^ it is apparent, that in every case of partnership 
there is a community of the property of the partnership 

J D. 17, 2, 29, 1 ; Potb. Panel. 17, 2, n. 3; Inst. 3, 26, 2; Domat, 1, 8, 
1, art. 7. 

2 Coll. on P. B. 1, c. 1, § 1, p. 10, 11, 2d ed. ; Cheap v. Cramond, 4 B. & 
Aid. 663 ; Waugh v. Carver, 2 H. Bl. 235. 

3 Coll. on P. B. 1, c. 1, § 1, p. 10, 11, 2d ed.; 3 Kent, 24, 25. In Waugh 
V. Carver, 2 H. Bl. 235, 246, Lord Chief Justice Eyre said: "A case may be 
stated, in which it is the clear sense of the parties to the contract, that they 
shall not contribute ; that A. is to contribute neither labor nor money, and, to 
go still farther, not to receive any profits. But if he will lend his name as a 
partner, he becomes as to all the rest of the world a partner." 

* Poth. de Soc. n.'8-lO; 4 Pardessus, Droit Comra. art. 983, 984. 

^ Cod. 4, 37, 1 ; Poth. Pand. 17, 2, n. 2; Inst. 3, 26, 2; Vinn. ad Inst. 3, 
26, 2, u. 3, 

« See 2 Bell, Comm. B. 7, p. 611, 5th ed.; Poth. de Soc. n. 8-10 ; Vinn. 
ad Inst. 3, 26, Intr. p. 693 ; Domat, 1, 8, 1, art. 7. 

7 Ante, § 3. 



24 PARTNERSHIP. [cHAP. III. 

between the parties, as soon as it becomes part of the 
common stock, although it may before that time have ex- 
clusively belonged to one or more of them.^ In this 
case, however, it is to be understood, that we are speak- 
ing of a partnership, designed to be such between the 
parties themselves; and not merely of a partnership 
which may by construction of law exist as to third per- 
sons, although not intended between the parties, of which 
more will presently be said.- Partners, therefore, are to 
be treated, in a qualified sense, as joint-tenants of the 
partnership property, having an interest therein j9er m?/ 
et per tout (as the phrase of our ancient law is), that is, 
having an interest therein by the half or moiety, and by 
all ; or, more accurately speaking, they, each of them, 
have an interest in, and the entire possession, as well of 
every parcel, as of the whole. ^ 

§ 17. This principle is equally recognized in the for- 
eign law ; and indeed seems to result directly from the 
nature of the contract of partnership, which supposes, 
that the property brought into it is put into community 
by the joint consent of the parties, xiccordingly Pothier 
insists upon this as a leading distinction. La societe est 
le contratpar lequel deux ou jjlusieicrs j^ersonnes convien- 
nent de mettre quelque chose en cornmiin;^ and the same 
distinction is fully supported by other jurists.^ Mr. Bell 
says, that the property of the partnership is common, 

' 3 Kent, 24-26; 4 Pardessus, Droit Comm. art. 969-972. | But prop- 
erty employed ia partnership transactions may belong to one partner only, 
§ 27. On what is partnership property, see § 98, 99, 371-373.} 

* Waugh V. Carver, 2 H. Bl. 235, 246 ; Hesketh v. Blanchard, 4 East, 
144; Cheap v. Cramond, 4 B. & Aid. 663; Reid v. Hollinshead, 4 B. & 
C. 867. 

3 2 Bl. Comm. 182. 

* Poth. de Soc. n. 2; Poth. Pand. 17, 2, Intr. to n. 1. 

* 5 Duvergier, Droit Civ. Franc, tit. 9, n. 33-40 ; Vinn. ad Inst. 3, 26, Intr. 
p. 693. 



CHAP. III.] C•OMMU^'ITY OF INTERESTS. 25 

and held^?"o indiviso by all the partners as a stock and 
in trust. ^ So Vinnius says : Ut sit societas, 7iecesse est ali- 
quicl niutuo conferri et commmiicari: nisi quid idrinque 
in commune conferatur, societas non intelUgitur.^ The 
Roman law adopted the same prmciple. In societate 
omnium honorwn omnes res^ quae coeuntimn sunt, con- 
timio communicantur .^ 

§ 18. In the next place, every real partnership, so in- 
tended between the parties tliemselves, imports, ex m 
termini, a community of interest in the profits of the 
business of the partnership, that is to say, a joint and 
mutual interest in the profits thereof, or a communion 
of profit. And this is of the very essence of the con- 
tract ; for, without this communion of profit, a partner- 
ship cannot, in the contemplation of law, exist."* And 

> 2 Bell, Comm. B. 7, c. 1, p. G12, 613, otli ed. ; Stair, Inst. B. 1, 
c. 16, § 1. 

2 VInn. ad Inst. 3, 26, Intr. p. 693. 

3 D. 17, 2, 1 ; Id. 17, 2, 3, 1 ; Both. Band. 17, 2, n. 13, 14; Uomat, 1 
8, 1, art. 2. 

* Coll. on B. B. 1, c. 1, § 1, p. 11, 2d ed. ; 4 Pardessus, Droit Comm. art. 
969 ; 5 Duvergier, Droit Civ. Franc, tit. 9, n. 11 ; 3 Kenl^ 24, 25 ; Wats, on 

B. c. 1, p. 33-35; Id. p. 56, 57, 2d ed. ; Felichy v. Hamilton, 1 Wash. 

C. C. 491; Gow on B. c. 4, p. 153, 154, 3d ed. — Mr. CoUyer expresses 
the doctrine in the following terms. " To constitute a partnership between 
the partners themselves, ther3 must be a communion of profit between them. 
A communion of profit implies a communion of loss ; for every man, who has 
a share in the profits of a trade, ought also to bear his share of the loss." 
Again : " By a communion of profit is intended a joint and mutual interest 
in profit." Coll. on B. B. 1, c. 1, § 1, p. 11, 2d ed. By joint interest, as he 
afterwards explains, he means a joint interest in the profits arising from the 
sale of the goods; and by mutual interest, that each party has a specific in- 
terest in the profits, as a principal trader. Id. p. 1 1 , 1 7. Mr. Collyer after- 
wards states a curious case from Select Cases In Chancery (p. 9), where 
work was jointly undertaken by two persons, and they were to divide the 
money therefor ; and they were held not to be partners. His language is : 
" Ao-ain, upon principles similar to those of the foregoing cases, if two persons 
jointly agi'ee to do a particular piece of work, but the money received for 
such work is not to be employed on their joint account, the persons so con- 
tracting are not partners. Thus, in the case of Finckle v. Stacey (Sel. 
Ca. 5), joint articles were entered into by the plaintiff and defendant for 



26 PARTNERSHIP. [cHAP. III. 

SO Pothier has laid down the doctrine. II est de T essence 
de ce contrat, que la societe soit contractee pour V inter et 
commun des parities} If the contract be for the sole and 
exclusive benefit of one party, it is not properly a case of 
partnership, but must fall under some other denomina- 
tion, such as a mandate.^ Hence, if in a pretended 
contract of partnership, it should be agreed, .that one of 
the parties should take all the profit, without the others 
having any share thereof, it would be a mere nullity, 
and constitute no partnership.^ The Roman jurists 

"doing a particular piece of work for tlie Duke of Marlborough, on account 
of which several sums of money had been jointly received by them, and im- 
mediately divided between them. There being a sum demanded by them 
in arrear, which the duke refused to pay, as being unreasonable, Stacey 
applied to Finckle to join him in a suit to recover what was in arrear ; which 
he refused to do, declaring that he had several advantageous works under 
the duke, which he should lose, should he join in a suit ; on which Stacey 
applied, and got his own half of the sum, which was due to the two. A bill was 
then brought for a moiety of the money so received ; and it was insisted it 
should be considered as a partnership in trade, and this money as so much 
received on the joint account. But the court were of opinion it was not to 
be considered as a partnership, but only an agreement to do a particular act, 
between which there is great difference ; and that it is so is plain, for the 
money, which they had received, they immediately divided, and did not /a?/ 
out on a common account. The bill was dismissed with costs. Upon this 
case, however, it is to be observed, that if no application had been made 
to the plaintiff to sue the duke, a bill for an account, supposing an account 
necessary, would clearly have been sustainable against the defendant on 
other grounds than those of partnership. Here, however, the plaintiff, for 
his own private ends, had absolutely refused to join in suing for the money ; 
and the court observed : ' It is pretty extraordinary, that he sliould come here 
to have the benefit of another's act, in which he refused to join ; which 
refusal was with a corrupt view for his own advantage, and not on a common 
account, the money due on which he would rather sacrifice than forego 
his own particular advantage. And here is no insolvency in the duke ; if 
there had been, perhaps it would have deserved consideration.' " 
' Poth. de Soc. n. 11. 

2 Poth. de Soc. n. 12 ; Waugh v. Carver, 2 H.BI. 235, 246. 

3 Poth. de Soc. n. 12; 3 Kent, 29, 30; D. 17, 2, 30; Poth. Pand. 17, 2, n. 3 ; 
Vinn. ad Inst. 3, 26, Intr. p. 693 ; Jestons v. Brooke, Cowp. 793. In many 
cases of this sort the contract would be treated as a mere cover for usury. 
Ibid. ; Poth. de Soc. n. 22. 



CHAP. III.] COMMUNITY OF INTERESTS. 27 

branded such a contract with the odious epithet of Soci- 
etas Leonina, in aUusion to the fable of the lion, who, 
having entered into a partnership with the other wild 
beasts for hunting, appropriated the whole prey to him- 
self^ And the Roman law declared, Societatem talem 
coiri 7ion posse^ ut alter Iticrum tantum, alter damnum 
sentiret ; et hanc societatem leoninam solitum appellare. 
Et nos conseiitimus talem societatem nullum esse, ut 
alter lucrum, sentiret, alter vero nullum lucrum, sed 
damnum sentiret; Liiquissimum enim genus societa- 
tis est, ex qua quis damnum, non etiam lucrum, spec- 
tet.^ The modern Code of France has expressly pro- 
mulgated the same doctrine. It declares that the 
contract, which shall give to one of the partners the en- 
tirety of the profits, is nuU.^ Nay, it has gone further, 
and added, that it is the same of a stipulation, which 
shall free from all contribution to losses the moneys or 
effects brought into the partnership fund by one or more 
partners.'* 

§ 19. So strong and inflexible is this rule, that it is 
often laid down in elementary works, as well as in the 
common law authorities, that to constitute a partnership 
there must be a communion of profits and losses between 
the partners.^ And this in a qualified sense is perfectly 
true, when it is understood with the proper limitations 

1 Poth. de Soc. n. 12 ; 3 Kent, 29, 30. 

2 D. 17, 2, 29, 2; Poth. Panel. 17, 2, n. 3; Poth. de Soc. n. 19; Domat, 
1, 8, 1, art. 6-10; Id. 1, 8, 2, art. 12. 

3 Code Civil, art. 1855. * Code Civil, art. 1855. 

* See Coll. on P. B. 1, e. 1, § 1, p. 11 ; Gow on P. c. 1, p. 1, 3d ed. 

3 Kent, 23, 24 ; Mont, on P. B. 1, Pt. 1, p. 2 ; Grace v. Smith, 2 W. Bl. 998 
Wats, on P. c. 1, p. 1; Id. p. 56, 2d ed. ; Ersk. Inst. B. 3, tit. 3, § 18 
1 Domat, 1, 8, 1, art. 1 ; Poth. de Soc. n. 19, 20; 1 Stair, Inst. B. 1, tit. 16 
§ 3; Coope v. Eyre, 1 H. Bl. 37; Bond v. Pittard, 3 M. & W. 357, 360 

4 Pardessus, Droit Comm. n. 996 ; 5 Duvergier, Droit Civ. Franc, n. 17 ; Ex 
parte Langdale, 18 Ves. 300; Green v. Beesley, 2 Bing. N. C. 108, 112; 
Dry V. Boswell, 1 Camp. 329 ; Hoare v. DaAves, Doug. 371. 



28 PARTNERSHIP. [CHAP. III. 

belonging to the statement. The doctrine will be found 
in the E-oman law. Societas cum contrahitur, tarn 
hcan quam damni commmiio initur} Sicuti lucrum ita 
damnum quoque commune esse oi^ortet.^ Modern foreign 
jurists often use expressions to the same effect.^ The 
Roman law carried this equitable presumption still fur- 
ther, and declared, that if the partners expressly men- 
tioned their shares in one respect only, either solely as 
to the profit, or solely as to the loss, their shares of that, 
which was omitted, should be regulated by what was ex- 
pressed. Illud expeditum est ; si in una causa pars fuerit 
expressa^ vehiti in solo lucro, vel in solo damno, in altera 
vero omissa^ in eo quoque, quod j)i"(^€te7^inissuni est, ean- 
dem partem servari.'^ But all this language is to be 
interpreted in a limited and qualified sense ; and so 
understood, it admits of no real dispute. 

§ 20. In the first place, every partnership imports, 
in the absence of all contrary stipulations, that the profit 
and loss are to be borne by all the partners, according 
to their respective proportions thereof.^ And the ques- 
tion was much discussed in the Roman law, whether a 
stipulation, that one partner only should bear all the 
losses, and both should share the profits, was valid or 
not. It was finally settled, according to the opinion of 
Servius Sulpitius, that it was valid,*and that one partner 
might, by agreement, be entitled to share in the profits, 
and not be accountable for any part of the loss.^ But 

1 D. 17, 2, 67; Poth. Pand. 17, 2, n. 38; Domat, 1, 8, 1,-art. 1. 

2 D. 17, 2, 52, 4 ; Poth. Pand. 17, 2, n. 39 ; Domat, 1, 8, 1, art. 1. 

2 5 Duvergier, Droit Civ. Franc, tit. 9, n. 13-18; 4 Pardessus, Droit 
Comm. art. 996. 

4 Inst. 3, 26, 3 ; Vinn. ad Inst. 3, 26, 3 ; Domat, 1,8, 1, art. 5. 

" Wats, on P. c. 1, p. 59, GO, 2d ed. ; Coll. on P. B. 1, c. 1, § 2, p. 105, 106, 
2d cd.; 1 Voet, ad Pand. 17, 2, n. 8, p. 751 ; Domat, 1, 8, 1, art. 7, 8. 

6 Inst. 3, 26, 2; Wats, on P. c. I, p. 56, 57, 2d ed. ; Domat, 1, 8, 1, 
art. 6-9. 



CHAP. III.] COMMUNITY OF INTERESTS. 29 

then every such stipulation was understood to be with 
this reserve, that the losses were first to be deducted 
from the profits ; and that if profits accrued from one 
species of things, and losses from another, what remained 
only after the losses were deducted was to be deemed 
profits.^ So that, in fact, each partner in this way, who 
shared a part of the profits, shared, by deduction from 
the gross profits, his proportion of the losses also, as far 
as there were any profits. Ita coiri societatem posse 
(says the Digest), ut niillius partem damni alter sentiat, 
lucrum vero commune sit, Cassius ^jz^/«/. Quod ita 
demum valehit (id et Sahinus scribit), si tanti sit opera, 
quanti damnum est.^ And again : Mucius scribit, non 
posse societatem coiri, ut aliarii damni, aliam lucri par- 
tem socius ferat. Servius in notcdis Mucii ait, nee posse 
societatem ita contraJii ; neque enim lucrum intelligitur, 
nisi omni damno deducto ; neque damnuin, 7iisi omni 
lucro dediicto. Sed potest coiri societas ita, ut ejus 
lucri, quod reliquum in societate sit, omni damno de- 
ducto, pars cdia feratur ; et ejus damni, cpiod similiter 
relinquatur, pars alia capiatur.^ The Institutes express 
the same doctrine still more succinctly : Et adeo, contra 
Quinti Mutii sententiam obtinuit, ut illud quocpue con- 
stiterit, posse convenire, id quis lucri partem ferat, de 
damno non teneatur. Quod tamen ita intelligi oportet, 
ut si in alia re lucrum, in alia damnum illcdum sit, 
Gompensatione facta, solum, cpiod superest, intelUgatur 
lucro esse.^ 

§ 21. It is in this sense, that the proposition has been 
generally understood by jurists in modern times, and 
adopted into the common law ; that each partner must 

' Domat, 1, 8, 1, art. 7, 8. 
^ D. 17, 2, 29, 1 ; Poth. Pand. 17, 2, n. 3. 

3D. 17, 2, 30; Poth. Pand. 17, 2, n. 3: Poth. de Soc. n. 21; Domat, 
1, 8, 1, art. 7-9. 
* Inst. 3, 26, 2. 



30 PARTNERSHIP. [cHAP. 



III. 



at all events share in the losses, so far, at least, as they 
constitute a charge upon, and diminution or deduction 
from, the profits ; and in this sense it is regularly true.^ 

» Coll. on P. B. 1, c. 1, § 1, p. 11, 2d ed. ; Potli. de Soc. n. 13, 19, 21 ; 5 
Duvergier, Droit Civ. Franc, n. 13-18; Id. n. 220-222; Bond «. Pittard, 3 
M. & W. 35 7, 360; Vinn. ad Inst. 3, 26, 2; 4 Pardessus, Droit Comm. QdQ- 
999; 1 Stair, Inst. B. 1, tit. 16, § 3. {See Cummings v. Mills, 1 Daly, 520. 
Mr. Lindley explains clearly the different meanings of the word " profits." 
(Lind. on P. 10.) "By ■writers on Political Economy, the word profit is 
used to denote the difference between the value of advances, and the value 
of returns made by their employment. Profits are divided by these writers 
into gross or net ; gross profits being the whole of the above difference, and 
net profits being so much of that difference as is attributable solely to the 
capital employed. The remainder of the difference, or in other words the 
gross profits, minus the net profits, has no particular name, but it represents 
the profits attributable to industry, skill, and enterprise. (As will be noticed 
hereafter, lawyers are accustomed to call gross returns gross profits.) 

" If the term profit be used to denote the difference between the value of 
advances and the value of returns, the profit arising from any trade, business, 
or adventure will be a positive or a negative quantity, or neither, according as 
the value of the returns is greater or less than, or equal to, the value of the 
advances. Using the term pi'ofit in this sense, persons who share the profits 
of any business necessarily share its losses, if losses are incurred ; for if they 
do not, what they share is not the difference above alluded to, but something 
else ; as, for example, that difference if it happens to be a gain. 

" But the word profit is generally used in a less extensive signification, and 
presupposes an excess of the value of returns over the value of advances. 
Using the word profit in this more limited and popular sense, persons who 
share profits do not necessarily share losses, for they may stipulate for a 
division of gain, if any, and yet some one or more of them may. by agree- 
ment be entitled to be indemnified against losses by the others ; so that 
whilst all share profits, some only bear losses. 

" The actual or gross returns obtained by advances obviously include profits 
(in the sense of gain), if profits have been made. But those returns do 
not include losses, if losses are incurred ; for_losses are the excess of the 
advances over the actual returns, and come out of the advances, and not 
out of the returns. Hence, persons who share gross returns share profits 
in the sense of gain ; but they do not, by sharing the returns, share losses, 
for these fall entirely on those making the advances. Moreover, although 
a division of gross returns is a division of profits, if there are any, it is only 
so incidentally, and because such profits are included in what is divided ; 
it is not a division of profits as such ; and under an agreement for a divi- 
sion of gross returns, whatever is returned must be divided, whether there 
be profit or loss, or neither. 

" These considerations have led to the distinction in Entrlish law between 



CHAP. III.] COMMUNITY OF INTERESTS. 31 

§ 22. Potliier states this doctrine with uncommon 
clearness and accuracy. After remarking, that, consist- 
ently with equity, it may be agreed between the part- 
ners, that one should bear a less proportion, or even no 
part of the loss of the partnership, he adds, that this is 
not to be understood in the sense, that one partner is 
to have a share of the profit of each particular trans- 
action, which shall be advantageous to the partnership, 
without contributing any thing to the losses, which the 
partnership may sustain from other transactions, which 
shall be unprofitable to it ; for that would manifestly ) 
be unjust. But it is to be understood in this sense, that,' 
after the dissolution of the partnership, an account is to 
be taken of all the profits of the partnership, and a like 
account of all the losses on all the business undertaken 
by the partnership ; and if the totality of the profits 
exceeds the totality of the losses, the partner shall take 
his share of the excess. And if, on the contrary, the 
totality of the losses exceeds that of the profits, the 
partner shall have neither profit nor loss.^ And this is 
in accordance with the Roman law : Neque enhn lucrum 
intelligitur, nisi omni damno deducto ; neque damnum^ 
nisi omni lucro deducto.^ 

§ 23. Hence it may be laid down, as a general rule of 

agreements to share profits and agreements to sliare gross returns, and to the 
doctrine that whilst an agreement to share profits creates a partnership, an 
agreement to share gross returns does not." 

An agreement, by one or more partners, to indemnify the others against 
loss entitles each of the partners to a share of the excess of the returns over 
the advances, while it entitles some of the partners to be indemnified by the 
others for all losses beyond the advances. If the parties are indemnified, and 
indemnified not only against losses beyond the advances, but also against the 
loss of the advances themselves, the contract becomes one of loan, and 
ceases to be one of partnership, at least as between the parties themselves, 
though it may be so as to third persons. See Lind. on P. 17.} 

' Poth. de Soc. n. 21. See 5 Duvergier, Droit Civ. Franc, n. 13-18. 

- B. 17, 2, 30; Poth. Pand. 17, 2, n. 3. 



32 PARTNERSHIP. [CH.^ 



AP. III. 



the common law, that, in order to constitute a partner- 
ship, it is not essential that the partners should equally 
share the profits and losses. It is sufficient, if they are 
to share in the profits of the business, after a deduction 
of the losses ; or, in other words, that they should share 
in the net profits according to their respective propor- 
tions. It is, therefore, competent for the partners by 
their stipulations to agree, that the profits shall be divided, 
and if there be no profits, but a loss, that the loss shall 
be borne by one or more of the partners exclusively, and 
that the others shall, inter sese, be exempted therefrom.^ 
So, the proportion in which they are to share the profits, 
or losses, may be varied at their pleasure, whether they 
contributed equally to the common stock, or not; and 
the same rule is applicable to the proportions in which 
they are to bear the losses.^ Thus, they may agree, that 
one or more partners shall take a greater proportion of 
the profits than the others, and shall, if there be no prof- 
its, share a less proportion of the losses, or even be wholly 
exempted therefrom.^ The reason of all this is, that the 
inequality of skill, of labor, or of experience, which the 
partners may bring into the particular business, may not 
only justify, but positively require this inequality of com- 
pensation, and of exemption from loss, as a matter of 
justice and equity between the parties. And the law has, 
therefore, wisely not prohibited it ; but has left it to the 
parties to exercise their own discretion in these matters, 
taking care that no fraud, imposition, or undue advan- 

1 Coll. on P. B. 1, c. 1, § 1, p. 11, 2d ed. ; Gow on P. c. 1, p. 9, 3d ed. ; 
Bond V. Pittard, 3 M. & W. 357, 359; Gilpin v. Enderbey, 5 B. & Aid. 
954. {Bobbins v. Laswell, 27 111. 365.} 

^ Wats, on P. c. 1, p. 56, 57, 2d ed. 

3 Coll. on P. B. 1, c. 1, § 1, p. 11, 2d ed.; Gow on P. c. 1, p. 9, 3d ed.; 
Gilpin V. Enderbey, 5 B. & Aid. 954, 964 ; Bond v. Pittard, 3 M. & W. 
357, 360; Wats, on P. c. 1, p. 56,57, 2d ed. ; Fereday v. Hordern, Jac. 
144. 



CHAP. III.] COMMUNITY OF INTERESTS. 33 

tage is taken of the other side.^ In fact (as has been 
well observed by a learned writer), by the common law, 
the various stipulations and provisions relating to the com- 
mencement of the partnership, the manner in which the 
business is to be conducted, the space of time for which 
the partnership is to endure, the capital which each is to 
bring into the trade, the proportion in which the profits 
and losses are to be divided, the time and manner agreed 
upon for settling the accounts, the powers and duties of 
the partners in regard to conducting the business, and 
entering into engagements which may affect the partner- 
ship, the mode in which the partnership may be dissolved, 
together with the various covenants adapted to the cir- 
cumstances of each particular case, are purely and en- 
tirely the subject of personal and private agreement and 
arrangement ; and in whatever way they may ultimately 
be settled, they cannot be impeached, unless they inter- 
fere with, or contravene some rule or principle of law.'^ 

§ 24. In the absence, however, of all precise stipula- 
tions between the partners, as to their respective shares 
in the profits and losses, and in the absence of all other 
controlling evidence and circumstances, the rule of the 
common law is, that they are to share equally of both ; 
for in such a case equcility would seem to be equity.^ 
And the circumstance that each partner has brought an 
unequal amount of capital into the common stock, or 
that one or more has brought in the whole capital, and 

^ See Poth. de Soc. n. 18, 19. See also, 5 Duvergier, Droit Civ. Franc, 
n. 13-18 ; 4 Pardessus, Droit Comm. n. 997 ; Van Leeuwen's Comm. B. 4, c. 
23, § 10. 

* Gow on P. c. 1, p. 9, 3d ed. 

3 Wats, on P. c. 1, p. 59, 60, 2d ed. ; Coll. on P. B. 1, c. 1, § 2, p. 105, lOG, 
2d ed.; 3 Kent, 28. [Roach u. Perry, 16 111. 37; Donelson v. Posey, 13 Ala. 
752.] Gould V. Gould, 6 Wend. 263. But sec Thompson v. Williamson, 7 
Bligh, N. s. 432; s. c. xuh nam. Thomson v. Campbell's Trustee's; 5 W. & 
Shaw, 16; 2 Moreau & Carl. Partidas, Pt. 5, 1. 3, 4, p. 766, 767. 

3 



34 PARTNERSHIP. [CHAP. III. 

the others have only brought industry, skill, and experi- 
ence, would not seem to furnish any substantial or deci- 
sive ground of difference, as to the distribution. On the 
contrary, the very silence of the partners, as to any par- 
ticular stipulation, might seem fairly to import, either, 
that there was not, all things considered, any real ine- 
quality in the benefits to the partnership in the case, or 
that the matter was waived upon grounds of good-will, or 
affection, or liberality, or expediency.^ It is true, that it 
has sometimes been asserted, that in cases of this sort, 
there is no natural presumption that the partners are to 
share equally ; and that it is a matter of fact to be settled 
by a jury, or by a court, according to all the circum- 
stances, what would be a reasonable apportionment. 
Thus, it was held by Lord Ellenborough, that if a father 
and son should be partners, no presumption would arise, 
that they were to share in moieties in the absence of all 
positive stipulations ; but, that the shares were to be as- 
certained by a jury, if the case were at law.^ But this 
doctrine was afterwards positively disapproved of by Lord 
Eldon, who held that even in the case of a father and 
son, who are partners, if no distinct shares are ascer- 
tained by force of any express contract, they must of ne- 
cessity be equal partners, and are entitled to moieties.^ 

» Coll. on P. B. 2, c. 1, § 2, p. 105-107, 2cl ed. ; 3 Kent, 28 ; Wats, on P. 
c. 1, p. 56-60, 2d ed ; Gould v. Gould, 6 Wend. 2G3. See Van Leeuwen's 
Comm. B. 4, c. 23, § 10. 

* Peacock v. Peacock, 2 Camp. 45. 

^ Peacock v. Peacock, 16 Ves. 49, 56 ; [Webster v. Bray. 7 Hare, 159, 1 79] ; 
Farrar v. Beswick, 1 Moo. & R. 527; Coll. on P. B. 1, c. 1, § 2, p. 105, 106, 
2d ed. ; Gow on P. c. 1, p. 8, 9, 3d ed. ; 2 Bell, Comm. B. 7, c. 1, p. 614, 
615, 5th ed. — In Farrar v. Beswick, 1 Moo. and R. 527, Mr. Justice Parke 
held the same doctrine as Lord Eldon, and said : " Where a partnership is 
found to exist between persons, but no evidence is given to show in what 
proportions the parties are interested, it is to be pi-esumed, that they are 
interested in equal moieties." It is true, that in the case of Thompson v. 
Williamson, 7 Bligh, N. s. 1, 432 ; s. c. 5 W. & Shaw, 16, a doubt was thrown 



CHAP. III.] COMMUNITY OF INTERESTS. 35 

However, it must be still deemed an open question in 
England, since a recent decision in the House of Lords 

upon this doctrine, as a doctrine of the common law, by Lord Wynford and 
Lord Brougham ; but I cannot think, that it is successfully maintained by the 
reasoning contained in their opinions. Each of these learned judges ad- 
mitted on that occasion, that if there is nothing to guide the judgment of the 
court to give unequal shares, there is no rule for them to go by, but to give in 
equal shares. What is this but affirming, that in the absence of all controll- 
ing circumstances, leading to a different conclusion, the presumption of law 
is, that the partners are to take in equal shares? But it is not an irresistible 
presumption ; for where there are circumstances, which demonstrate, that the 
partners in the particular case did in fact intend, or from the general habit 
and custom of their trade and business, under the like circumstances, must be 
fairly presumed to have intended, to share in a different proportion, there 
is not the slightest difficulty in admitting, that the presumption of law ought 
to yield to the presumption of fact, as legal presumptions ordinarily do in 
other cases. And this is what seems to have been intended by Lord Eldon, 
in his opinion in Peacock t). Peacock, 16 Ves. 49, 56; and was explicitly 
avowed by Mr. Baron Parke, in Farrar v. Beswick, 1 Moo. & R. 527. The 
real difficulty lies in holding, that, where there is an inequality in the stock, 
or skill, or services, or experience of the different partners, any one or more 
of those circumstances alone, or in conjunction with other circumstances, 
equally indeterminate and equivocal, should overcome the ordinary presump- 
tion of law of equality of shares between the partners. Now, Lord Ellen- 
borough, in Peacock v. Peacock, 2 Camp. 45, seems to have acted upon the 
ground, that, in every such case of inequality, there was no such presump- 
tion of law whatever to govern it; but that it was open for the jury to take 
into consideration all the circumstances, if the suit were at law, or for the 
court, if the suit were in equity, and to adjudge the proportions, not upon 
any supposed contract between parties actually established, but as it were ex 
cequo ei bono, as upon a quantum meruit. It was in this view, that Lord Eldou 
seems to have expressed his disapprobation of the doctrine ; because it 
assumed to overthrow a presumption of law (and it would not have been 
materially different, if it were a presumption of fact), upon indeterminate 
circumstances, which might be urged with more or less effect to a jury, but 
which carried no certainty, as to the positive intent or contract of the parties. 
His Lordship on that occasion said : " The father employed his son in his 
business; and, as is frequently done by a father, meaning to introduce his 
son, the business was carried on in the name of ' Peacock and Co.' It 
appeared to me, that the son, insisting that he had a beneficial interest, 
must be entitled to an equal moiety, or to nothing; that, as no distinct share 
was ascertained by force of any express contract between them, they must of 
necessity be equal partners, if partners in any thing. In that view the re- 
sult of the issue, that was directed, appears to be extraordinary. The propo- 
sition being, that the son was interested in some share, not exceeding a 



36 PARTNERSHIP. [cHAP. III. 

has questioned, if it has not shaken, the doctrine of Lord 
Eldon, and affirmed that of Lord Ellenborough.^ In 

moiety, the jury in some way, upon the footing of quantum meruit, held him 
entitled to a quarter. I have no conception, how that principle can be 
applied to a partnership. The parties, however, consider themselves bound 
by that verdict." If, by the custom of any particular trade or business under 
the like circumstances, the rule was general to give a fi.xed proportion, as, 
for example, a fourth to one partner, and three fourths to another, on 
account of the inequality of capital, or skill, or experience, or age, or the 
relation of parent and child, that might properly control the presumption of 
law ; for it would amount to strong presumptive evidence, that the partners 
intended to contract upon the usual terms. But where there are no such 
circumstances, and nothing determinate in the evidence, but all rests upon 
conjecture, at best admitting of various force and application, what ground is 
there to presume a contract for a quantum meruit ? The more reasonable 
ground would seem to be, that the parties meant to treat with each other 
upon a footing of equality, or to waive the inequality, as a matter of liber- 
ality', or bounty, or parental or filial affection, or proximity of blood or 
personal friendship. There seems also to be very great uncertainty in the 
application of the doctrine; for from such indeterminate and A'ague circum- 
stances very different conclusions might be drawn by different juries and 
different courts; and it seems far more convenient to adopt a general rule of 
interpretation of the intention of the parties, in the absence of any express 
or implied agreement or usage, as to the apportionment of the profits. Cases 
may indeed arise, where the presumption fairly would be, that the parties 
were to share the profits only in moieties, and not the capital ; as, for example, 
in the case of a partnership between a father and a son, where the father 
supplied the whole capital. However this may be, the Judges of the Scot- 
tish Court of Session adopted the doctrine of Lord Eldon, in the case of 
Thompson v. Williamson, 7 Bligh, N. s. 432; s. c. 5 W. & Shaw, 16; 7 
Shaw & D. No. 333 ; but it was overturned in the House of Lords by the de- 
cision of Lords Wynford and Brougham. Mr. Bell and Mr. Erskine main- 
tain the same doctrine as the Court of Session (2 Bell, Comm. B. 7, c. 1, p. 
614, 615, 5th ed. ; Ersk. Inst. B. 3, tit. 3, § 19). Nor does it appear to me 
that the doctrine of Lord Stair (1 Stair, Inst. B. 1, tit. 16, § 3), is intended to 
be different, notwithstanding the suggestion of Lord Wynford. In Gould v. 
Gould, 6 Wend. 263, the Court of Errors of New York held, that, in the ab- 
sence of all proof to the contrary, partners will be presumed to be equally 
interested in the partnership funds. See Harrison v. Sterry, 5 Cranch, 289. 
' Thompsons. Williamson, 7 Bligh, n. s. 432; s. C. 5 W. & Shaw, 16. 
[Rut see a later decision by Vice Chancellor Wigram, Webster v. Bray, 7 
Hare, 159, 177, and another by Lord Cottenham, Stewart v. Forbes, 1 Hall & 
Tw. 461, 4 72 ; .s. c. 1 Macn. & G. 137. In the latter case the Lord Chancellor 
refers to Peacock v. Peacock, and says : " In that case it was properly held, 
that, in the absence of any contract between the parties, or any dealing from 



CHAP. III.] COMMUNITY OF INTERESTS. 37 

America the authorities, as far as they go, seem decidedly 
to favor the doctrine of Lord Eldon.^ 

which a contract might be inferred, it would be assumed, that the parties had 

carried on business on terms of an equal partnership But what would 

have been the decision in Peacock v. Peacock, if the books and accounts, 
instead of absolute silence as to the shares of the partners in each year, had 
described the shares in which the partners were interested in the business, 
and had attributed to the plaintiff four sixteenths only of the shares of the 
business ? These entries are as conclusive of the rights of the parties, as if 
they had been found prescribed in a regular contract."] { Thompson v. Wil- 
liamson (7 Bligh, N. s. 432) was a decision on the Scotch, not on the 
En<rlish law. From the report of this case in the Scotch Court of Session 
(au6 nom. Campbell v. Thomson, 7 Court of Sess. cases, No. 333, p. 650) 
it appears that the defender contended " that there was no universal rule of 
law establishing a presumption of equality in partnership ; that it was a ques- 
tion of circumstances to be decided by a jury," while the pursuers maintained 
"that in the absence of any written evidence to establish the extent of a 
partner's share, the presumption by the law of Scotland was equality." The 
court found for the pursuers, and as Lord Wynford says (7 Bligh, x. s. 433) 
"took upon themselves to declare that when there is no express contract" 
the partnership property and profits must be equally divided, or in the words 
of Lord Brougham (7 Bligh, N. s. 440) they decided that "unless there be 
a special contract to exclude the legal presumption, the legal presumption 
shall give him [the partner] an equal share of the profits, and shall exclude 
all evidence of the fact ; excluding all consideration of the particular circum- 
stances of the case." It was this decision "taking it simply as a question of 
Scotch law, deciding nothing further, as it is our rule, or ought to be our rule, 
in no case to go further than the simple question before us," (7 Bligh, N. s. 
446) which was reversed ; and that Thompson v. Williamson has not been con- 
sidered as deciding that there is no presumption of equality seems clear from 
several more recent cases which have decided that there is such a presump- 
tion, without an intimation that such decision is in conflict with the judgment 
of the House of Lords. Collins v. Jackson, 31 Beav. 645; Robinson v. An- 
derson, 20 Beav. 98, s. c. 7 De G. M. & G. 239. In this latter case. Sir 
J. L. Knight-Bruce, L. J., says : " The evidence satisfies us that the result of 
it cannot be represented more favorably for the defendant, than that the 
statements on one side neutralize those on the other. So putting it, I con- 
ceive that the presumption of law remains, which is equality ; " and Sir G. J. 
Turner, L. J. : " In the absence of evidence of an agreement for a different divi- 
sion, the presumption is in favor of equality." See, also, Lind. on P. 573-576 ; 
Robley r. Brooke, 7 Bligh, n. s. 90; M'Gregor i\ Bainbrigge, 7 Hare, 164, n.; 
Copland V. Toulmin, 7 CI. & Fin. 349 ; Warner v. Smith, 1 De G.J. & S. 337.} 

' 3 Kent, p. 28; Gould v. Gould, 6 Wend. 263. { Donelson v. Posey, 13 
Ala. 752; Roach v. Perry, 16 III. 3 7. Fan- r. Johnson, 25 III. 522 ; Moore 
0. Bare, 11 Iowa, 198. But see dissenting opinion of Hoffman, J., in Ilas- 
brouck V. Childs, 3 Bosw. 105.} 



38 PARTNERSHIP. [cHAP. III. 

§ 25. The Roman law promulgates the like doc- 
trine. If no express agreement were made by the 
partners concerning their shares of the profit and loss, 
the profit and loss were shared equally between them. 
If there was any such agreement, that was to be faith- 
fully observed. Et quidem (say the Institutes), si nihil 
de j^artihiis lucri et damni nomincdim convenerit, cequales 
scilicet partes et in lucro et in damno spectantur. Quod si 
ex2Jresscefu€rint2)artes, hce servari dehent} So the Digest. 
Si non fiierint partes societati adjectce, cequas eas esse con- 
stat.^ This also seems to be the rule adopted into the mod- 
ern commercial law ; but then it is received, not without 
some modifications and qualifications.^ Thus, Vinnius 
says, that this doctrine is commonly and rightly under- 
stood to be true, when the partners have contributed 
an equal amount to the capital stock ; for if they have 
contributed unequal amounts, then they are to share 
according to the proportions furnished by each. Pufen- 
dorf and Noodt adopt the like interpretation ;'* although 
it must be admitted, that there are other jurists, who 
construe the Roman law as indiscriminately applicable to 
all cases, whether of equal or of unequal contributions, 
either in capital or stock, or in labor or services, or in a 
mixed proportion of each.^ 

1 Inst. 3, 26, 1 ; 1 Voet, ad Pand. 17, 2, n. 8, p. 751 ; Vinn. Sel. Quest. 
Jur. c. 53, 54 ; Domat, 1, 8, 1, art. 4. 

" D. 1 7, 2, 29 ; Poth. Pand. 1 7, 2, n. 7. 

^ See Vinn. ad Inst. ed. Ileinecc. 3, 26, 3, p. 695, Comm. ; Van Leeu- 
wen's Comm. B. 4, c. 23, § 10. 

* Puf. on Law of Nat. B. 5, c. 8, § 1 , 2 ; 2 Noodt, Opera, Comm. ad Dig. 1 7, 
2, 29, 2, p. 297, 298, ed. 1767. But see Vinn. Sel. Quest. Jur. c. 53, 54; Vinn. 
ad Inst. 3, 26, 2. See Asso & Manuel's Inst, of Laws of Spain, B. 2, tit. 15. 

^ Ibid.; 5 Duvergier, Droit Civ. Franc, n. 224. — lieineccius pays this 
beautiful tribute to the memory of Noodt, speaking of his then recent death : 
" Quern eximium jure consultum, dum hsec scribo, ad Superos e.xcessisse, non 
sine dolore audio. Mortuum saltern nemo dixerit, qui tot egregiis operibus 
immortalem sibi gloriam peperit, et jam vivus, quodammodo interfuit posteri- 
tati." Ilein. Vinn. ad Inst. 3, 26, 1, note. {See Hasbrouck v. Childs, 3 
Bosw. 105.J 



CHAP. HI.] COMMUNITY OF INTERESTS. 39 

§ 26. Pothier himself, while he admits the correctness 
of the general rule of the Roman law, suggests some 
modifications, or rather qualifications of it, in its actual 
application.^ Where each partner has contributed mon- 
ey or effects of a value fixed between them at the time, 
there, he says, that they are to share in proportion to the 
value so fixed ; and that they are to share equally, only 
when no such value is fixed. Where the money or effects 
brought into the partnership are so estimated at a fixed 
value, his opinion is, that it ought to make no difference 
as to the partners sharing in proportion to such value, 
although one may also bring a higher, or peculiar skill 
or industry into the firm.^ The Civil Code of France 
provides that the share of each partner in the profits or 
losses is, in the absence of any other agreement in the 
articles of partnership, to be in proportion to what he 
brings into the partnership funds ; and in the like case, 
if one partner brings skill only, his share of the profits 
or losses is regulated, as if what he brought in had been 
equal to that of the partner who has brought the least.^ 
The Code of Louisiana more closely adheres to the Ro- 
man law, and declares, that when the contract of part- 
nership does not determine the share of each partner in 
the profits or losses, each one shall be entitled to an 
equal share of the profits, and must contribute equally 
to the losses.^ 

1 Potli. de Soc. n. 15-20; Id. n. 73. 

^ Poth. de Soc. n. 15-21 ; Id. n. 7.3. See also, 5 Duvergler, Droit Civ. 
Franc, n. 12, n. 224; 13 TouUier, Droit Civ. Franc, n. 411, 412. 

3 Code Civil, art. 1853. {See Hasbrouck v. Childs, 3 Bosw. 105.} 

*■ Code of Louisiana (1825), art. 2896. — Mr. Watson has made some re- 
marks on this subject, which show the difficulty of making a suitable appor- 
tionment of profits, in many cases, where there is no express agreement 
between the parties, and that presumptions of very different force and 
importance may arise from the circumstances, often nicely balancing each 
other. "But with respect to the profit and loss" (says he), "to be derived 
from a partnership, the subject of which comprises the capital, stock, and 



I 



40 PARTNERSHIP. [CHAP. III. 

§ 27. These two circumstances, that there is a commu- 
nity of interest in the capital stock, and also a commu- 

interest of each partner therein, together with the labor and skill to be em- 
ployed, and the division thereof, what natui-ally occurs on point of distribu- 
tion seems to be this, that if each partner contributes an equal proportion 
of capital, stock, and labor, and skill, then each must, according to justice, 
receive an equal share in the profit and loss; but where they contribute 
imequally, certain rules should be prescribed according to the circumstances 
of the partnership, for the purpose of adjusting the respective shares of all 
the partners. For instance, if one partner furnishes labor, and the other 
money, whatever the produce of such partnership trade may amount to, it 
should seem right to divide it, after deducting the sum advanced, in the 
proportion of the interest of the money to the wages of the labor, allowing 
such a rate of interest as money might be borrowed for upon the same species 
of security, and such wages or allowance as a skilful workman would be 
entitled to, for the same degree of labor and a similar trust, according to the 
principle laid down in the civil law, which says, that no man doubts, but 
that partnership may be entered into by two persons, when one of them 
only finds money, inasmuch as it often happens, that the work and labor of 
the other amounts to the value of it, and supplies its place. For in partner- 
ships, where on the one side labor is contributed, and on the other, only the 
use of money, that partner, who contributed the money, does not always 
admit the other to a share of the principal, but only to his share of the 
profit, which such labor and money joined together might produce. And if 
A. for instance, who furnishes labor only, hath no title to any part of the 
money advanced upon dissolving the partnership, so B. alone should be liable 
to the risk of the money, as owner thereof; for in such a case it is not 
the money itself, but the risk, which it runs, and the probable gain, which 
may accrue from it, that are to be compared with the labor. Therefore, 
when the profits of such a partnership are to be shared, it would be out of 
all proportion in point of reciprocal advantage, if the labor were to be com- 
pared with the principal sum advanced ; and the only fair criterion to judge 
by is a true comparison between the value of the labor on one side, and the 
risk and hazard which the money advanced is exposed to on the other. 
And perhaps the better way in forming partnerships of this sort, is to rate 
the risk of the principal, and the hopes of the profit, according to the in- 
terest that is generally given for money so borrowed upon risk. Suppos- 
ing, then, this interest to be £5 per cent ; if one party contributes labor 
worth £50, and the other advances £1,000 in money, each partner will share 
equally the profit. According to this rule, if there should be nothing 
gained by the partnership concern, A. would lose his labor, and B. his in- 
terest, which would be equal and just. And should the original stock be 
diminished, by the same rule A. loses only his labor, whereas B. would lose 
his interest and a part of the principal ; for which eventual disadvantage B. 
is compensated by having the interest of his money computed at five pounds 



CHAP. III.] COMMUNITY OF INTERESTS. 41 

nity of profit and loss, in the sense already stated, in all 
the partners, where they exist, are decisive that the case 

per cent in the division of the profits, where there are any. But it some- 
times happens in partnershij) concerns, that labor and money are so blended 
or interwoven together, as to give to him, that contributed only his labor, a 
share in the principal; the labor contributed by one partner, and the 
money advanced by the other, being so intermixed as to make one general 
mass. As for example, one partner spends the money advanced by him in 
buying up unwrought materials, and the other furnishes personal skill and 
labor to work them up and manage them, which very ol'ten happens in large 
manufacturing towns. Thus, again, if I supply a weaver with £100 to buy 
wool, and he makes cloth of it, computing his labor at £lOO, it is manifest, 
that here both of us have an equal interest in the cloth, and when it is sold, 
the money must be equally divided ; nor in fairness could I deduct the £100 
contributed at first, and then divide the remainder with him. This rule 
obtains in other things as well as money ; as when one allows ground for a 
building, on condition that he, who builds thereon, shall have a moiety ; or, 
when one trusts a flock to be fed on condition, that, if it be sold within a 
limited time, the money shall be proportionably divided amongst the part- 
ners. Therefore, the profit or loss to be derived from trade by partners 
ought always to be arranged and provided for at the commencement of 
their partnership, according to certain agreed proportions." Wats, on P. c. 
1, p. 57-59, 2d ed. See also on the same jwiut Voet, ad Pand. 17, 2, n. 8 ; 
and Vinn. Sel. Quest. Jur. c. 53, 54 ; Duvergier, Droit Civil Franc, n. 244- 
288; 17 Duranton, Droit Civil Franc, n. 415-433; Poth. de Soc. n. 15-20 ; 
Coll. on P. B. 2, c. 1, § 2, p. 106, 107, 2d ed., cites Puf. Lib. 5, c. 8 ; Van 
Leeuwen's Comm. B. 4, c. 23, § 10; Asso & Manuel's Inst, of Laws of Spain, 
B. 2, tit. 15. Mr. Rutherforth, in his Institutes (B. 1, c. 13, § 32-3(i), has 
fully discussed the subject; and his remarks are so just and appropriate, that 
they are here cited. " In partnerships of trade, goods, or money, or labor, 
under which I Include skill, or management, ai-e by the consent of their re- 
spective owners, united into one common stock. Each partner has in view a 
benefit to be received for a benefit which he gives. The separate stock of any 
of the partners alone might be too small to trade with, in the manner pro- 
posed ; or the nature of the undertaking may require not only more goods 
or more money than any one of them could supply, but more labor or more 
skill than any one of them is equal to. The gain, arising from the common 
stock of goods or money, is the price obtained for the use of those goods or 
money ; and the gain, arising from their joint labor, is the wages obtained 
for such labor. If we consider the gain in this view, it is easy to determine 
what proportion of it each partner ougiit to receive. In whatever proj)or- 
tion the use of one partner's goods is more valuable than the use of the other 
partner's goods, so much more of the gain belongs to the former, than to the 
latter. I do not mean, that in dividing the gain, any regard is to be had to 
the particular share of it, which arose accidentally from the goods contrib- 



42 PARTNERSHIP. [cHAP. III. 

is one of real partnership between the parties them- 
selves.^ But it is not essential in all cases, to constitute 

uted by this or that partner ; but that after the goods are united in a joint 
stock by agreement, each partner has a claim to the gain arising from it, in 
proportion to what was the probable value of the use of his goods, if he had 
traded with them separately. And as the probable value of the use is in 
proportion to the value of the goods themselves, each partner's claim upon 
the gain will be in the same proportion. In like manner, where there is a 
joint labor, since the profits arising from it are the wages of that joint labor, 
each partner has a claim, not to that particular part of the gain which his 
labor earned, for then it would be no partnership, but to such a compara- 
tive share out of the common wages or gain, as is proportional to the value 
of his labor, when compared with the labor of the other. As the gain of 
each partner, so likewise the loss of each ought to be proportionable to the 
value of what he contributes. As much as the goods, which one partner 
contributes, exceed in their value the goods, which the other contributes, so 
much greater is the claim of the former upon the joint stock, than the claim 
of the latter. Since, therefore, their respective claims upon the whole stock 
are in jiroportion to the share of that stock, which came originally from 
each of them, their claim upon each part of the whole must be in the same 
proportion. And, consequently, if any part of the stock is lost, each part- 
ner having a claim upon such part lost in proportion to his original share, 
loses a claim in the same proportion, that is, the loss of each is in proportion 
to the original share which he contributed towards the common stock. This, 
then, is the rule for adjusting the gain and loss in partnerships, where no ex- 
press agreement has been made to the contrary. Each partner is to receive 
such a share of the gain, or to bear such a share of the loss, as has the same 
proportion to what any other of the partners receives or bears, that the share 
contributed by the former has to the share contributed by the latter. The 
interest or claim of each upon the whole stock is in this proportion; and, con- 
sequently, the interest or claim of each in the increase or decrease of it, in any 
part added to it by way of gain, or in any part taken from it by way of loss, 
ought to be in the same proportion. If the parties agree, that one of them 
shall have a share in the gain, but shall bear no share in the loss, the contract 
is a mixed one ; it is partly partnership, and partly insurance. As they are 
all of them to have a share in the gain, it is partnership ; but he or they, who 
are to bear all the loss, insure the principal stock of him who is to bear none 
of it. To adjust the shares, which each party, in such a mixed contract, is to 
receive in the gain, we are to consider what it is worth to insure his principal, 
■who is not subject to any loss. And when the value of such insurance is de- 



' Dob V. Halsey, 16 Johns. 34 ; 3 Kent, 24 ; Coll. on P. B. 1, c. 1, § 1, p. 
11-17; 2d ed. ; Ex parte Gellar, 1 Rose, 297. [See also Rawlinson v. Clarke, 
15 M. & W. 292 ; Allen v. Davis, 8 Eng. (Ark.) 28.] {As to what constitutes 
persons partners inter sese, as well as to third persons, see the next chapter. } 



CHAP. III.j COMMUNITY OF IN'TERESTS. 43 

such a partnership, that both should concur, that is, that 
there should exist, as between the parties themselves, a 

ducted from the whole gain, and assigned to those who were to have borne 
all the loss, if there had been any, the remaining portion is to be divided, in 
proportion to each party's share in the capital stock. It is generally main- 
tained to be contrary to the nature of partnerships, that, where a capital stock 
is made by mutual consent, the parties so forming a capital stock should agree, 
that one of them should have all the gain, and the other bear all the loss. 
And certainly such an agreement is contrary to the nature of partnership, if 
we define partnership} to be a contract, which gives the parties a common claim 
to the joint stock ; because, where they have a common claim to the stock, 
they must, in consequence, have a common claim to the gain arising from it, 
and to the losses sustained in it. But such an agreement, though it may be 
inconsistent with the nature of partnership, is not inconsistent with the law of 
common justice. A man wants five hundred pounds capital stock, to enter 
upon a certain branch of trade ; he has only three hundred pounds of his own. 
I agree to let him have two hundred pounds to make up his capital, upon con- 
dition, that he shall have all the advantage arising from the whole ; that, if 
he saves the whole capital, my money shall be returned, but that if any part 
of it is lost. 1 will bear the loss, as far as the two hundred pounds, which 
I have advanced. There can, I think, be no question, whether the law of 
nature would allow of such an act of humanity as this. You may say, that 
such an agreement is contrary to the law of partnership. I grant it is, and 
therefore am satisfied, that it should not be called a partnei-ship. I only 
insist, that the agreement is not contrary to the law of nature, and leave it 
to you to call it by what name you please. Perhaps you may have no name 
for it; but a contract is not the more unlawful for wanting a name. In 
partnership, where work is contributed on one side, and money on the 
other, the partner, from whom the money comes, may contribute either the 
use only of the money, or the property of it. If he contributes only the use 
of it, and still keeps his property in the principal, so that the joint stock is 
to be considered as made up of the labor of one partner, and of the use of 
the other's money; it is plain, that, supposing the principal to be safe, it be- 
longs to him, and that, supposing it to be lost, he alone is to bear such loss. 
The other partner, who contributes work, since, as the case is put, he had 
no claim to the principal money, or to any part of it, cannot be obliged to 
make good any part of that loss, or to bear any share in it. But if he con- 
tributes the property of his money, so that the joint stock, upon which each 
of them has a common claim, is made up of his principal money, and of the 
other's labor, then the partner, who labors, has a claim upon the principal 
money itself; and, consequently, whenever the partnership is dissolved, if 
the principal money, or any part of it is safe, he ought to have a share in it ; 
and if the principal is lost, he is a sufferer by losing such share. In the 
former case, where he, from whom the money comes, still keeps his jjroj)- 
erty in it, and has a right to the whole principal, you may ask, what it is, 



44 PARTNERSHIP. [cHAP. III. 

community or communion of interest in the capital stock, 
and also in the profit and loss.^ For, if the whole capital 
stock, embarked in an enterprise or adventure, belongs to, 
and is, by agreement, to remain the exclusive property of 
one of the parties ; yet, if there is a community of profit 
or of profit and loss, in the enterprise or adventure, be- 
tween all the parties, they will be partners in the profit, 
or the profit and loss, between themselves, as well as to 
third persons, although not partners in the capital stock.^ 
The one does not necessarily include the other, and there- 
fore we are carefully to distinguish between the cases. 
Where there is a positive agreement between the parties 

■which he contributes. But the answer is obvious. He contributes the use 
of his money ; that is, he contributes the clear gain, which he might proba- 
bly have made of it himself. This, however, is not all. He contributes, 
besides this, the hazard of his principal; because, if the whole or any part of 
it should be lost, the loss is his. In order, therefore, to adjust the share 
which each partner ought to have in the gain, if there is any, you are to 
value the work of one, and the use and hazard of the other's money; and 
in proportion to the value contributed by each of them, upon such an esti- 
mate, their respective gains are to be settled. In the other case, where he, 
from whom the money comes, contributes the property of it, and the other 
contributes his labor, in adjusting their respective shares of the gain, you are 
to value the money of one and the labor of the other. And when the com- 
parative values of what each has contributed are thus settled, their respective 
shares in the gain are to be in the same proportion." 

1 {Meaheru. Cox, 37 Ala. 201.} 

« Ex parte Hamper, 17 Ves. 403. {See § 55-58, 205; Lind. on P. 16, 
17, 551 ; Greenham v. Gray, 4 Ir. C. L. 501 ; Fromont v. Coupland, 2 Bing. 
170 ; French v. Styring, 2 C. B. N. s. 357 ; Ward v. Thompson, 22 How. 330 ; 
Bromley v. Elliot, 38 N. H. 287, 309; Stevens v. Faucet, 24 III. 483; Rob- 
bins r. Laswell, 27 111. 365; Fawcett v. Osborn, 32 111. 411 : Bartlett t\ Jones, 
2 Strobh. 471 ; Jones v. McMichael, 12 Rich. Law, 176. This doctrine is de- 
nied in Dwinel v. Stone, 30 Me. 384. Chase v. Barrett, 4 Paige, 148, is also 
sometimes referred to as an authority in opposition to the views of the text. 
But it is to be observed that, though Chancellor Walworth saj's that to con- 
stitute a partnership there must be a joint ownership of the partnership funds, 
yet the point decided was, that A., an alleged partner, could not share in the 
capital stock, and the decision can be sustained not only on the ground that 
A. was not a partner, but also on the ground that though he was a partner, 
yet that the capital stock remained, in the words of the text, " the exclusive 
property" of his copartner. See Conklin v. Barton, 43 Barb. 435.} 



CHAP. III.] COMMUNITY OF INTERESTS. 45 

on this point, that "will govern ; where there is no such 
agreement, and no implication from the circumstances of 
the particular case, leading to a different conclusion, there 
will be presumed to be a community of interest in the 
property, as well as in the profit and loss.^ Where the 
property of one partner only is, by agreement, actually 
put into community, as partnership property, there, in the 
absence of any controlling stipulations, the like commu- 
nity in the profit and loss will be intended to exist between 
the parties, as incident to the community of property.® 
But where the agreement merely in terms expresses that 
the property is furnished by one partner, and the parties 
are to have a community of interest, and share in the prof- 
it and loss, the like inference is not ordinarily or necessa- 
rily deducible.^ And accordingly it has been held at the 
common law, that if A. is the owner of goods, and agrees 
with B., that B. shall be interested in a particular por- 
tion of the profit and loss of the adventure or voyage 
abroad, in which the goods are to be embarked, such an 
agreement will not alone make A. and B. partners in the 
goods, as between themselves, but only partners in the 
profits.^ But, if the goods themselves are purchased on 
joint account, or are treated as a joint concern, or both 
parties are, by their agreement, to be interested therein ; 
there, a very different inference will arise, and the parties 
will be treated as partners in the goods, as well as in the 

' Coll. on P. B. 2. c. 1, § 2, p. 106-113, 2cl ed. See Brophy v. Holmes, 
2 Molloy. 1. {See Julio v. Ingalls, 1 All. 41.} 

2 Reid v. HoUinshead, 4 B. & C. 867. 

3 Coll. on P. B. 2, c. 1, § 2, p. 106-112, 2d ed. ; Mair v. Glennie, 4 M. & 
S. 240. 

" Meyer v. Sliarpe, 5 Taunt. 74: Smith v. Watson, 2 B. & C. 401 ; Coll. 
on P. B. 2. c. 1, § 2, p. 107-112, 2d ed. ; Hesketh v. Blanchard. 4 East. 144 ; 
Ex parte Hamper, 1 7 Ves. 403 ; ]\Iair v. Glennie, 4 M. & S. 240; [E.xplained 
In Stocker r. Brockelbank, 3 Macn. & G. 250 ; 5 Eng. L. & Eq. 67]; Hall v. 
Leigh, 8 Craneh, 50; [Clement v. Hadlock, 13 N. H. 185.] 



46 PARTNERSHIP. [cHAP. III. 

profits and losses.^ The like doctrine will apply, where 
each of the parties contributes labor and services and 
materials in the manufacture of any articles of trade, and 
the articles, when made, are to be equally or proportion- 
ably shared between them ; they will be deemed partners, 
inter sese ; for the articles manufactured, and so to be 
divided, may well be deemed the profits or losses of their 
joint undertaking and business. It is not a mere division 
of a capital stock jointly purchased, but of a capital 
stock in new proceeds or products." 

§ 28. The like distinction is recognized and maintained 
by foreign jurists. Pufendorf says : " Upon breaking up 
of partnership, if each party only contributed money, it 
is plain, upon a division, that each must receive accord- 
ing to his contribution. But if both money and labor 
were contributed, it must be considered after what man- 
ner the contribution or collection was made ; for when 
labor is contributed on one side, and only the use of mon- 
ey on the other, he who contributed the money, does not 
admit the other to a share in the principal, but only to 
his proportion of the gain that might be made of the 
money and labor joined together. And in this case, as 
he that contributed only labor, has no title to any part of 
the money, when they break off" partnership, so the other 
alone, as owner, is concerned in the risk that the money 
is exposed to ; and in such a partnership as this, not the 
money itself, but the risk that it runs, and the gain, that 
may be probably expected from it, is compared with the 
labor." ^ He afterwards adds : " But sometimes the labor 

> Reid V. Hollinshead, 4 B. & C. 867 ; Coll. on P. B. 2, c. 1, § 2, p. 112, 
113, 2d ed.; Ex parte Gellar, 1 Rose, 297; [Soule v. Ilayward, 1 Cal. 345]; 
{Sims V. Willing, 8 S. & R. 103.} 

* Rlusier v. Trumpbour, 5 Wend. 274 ; Everitt v. Chapman, 6 Conn. 34 7 ; 
[Wadsworth v. Manning, 4 Md. 59] ; 3 Kent, 24, 25. {But see Hitchings v. 
Ellis, 12 Gray, 449.} 

^ Puf. B. 5, c. 8, § 2, by Kennet, and Barbeyrac's note. 



CHAP. III.] COMMUNITY OF INTERESTS. 47 

and money are so interwoven together, as to give him that 
contributed only his labor, a share even in the principal ; 
the labor of the one, and the money of the other, being in 
a manner united into one mass. As when one lays out his 
money upon unwrought commodities, and another spends 
his labor in working them up, and managing them. 
Thus, if I give a weaver £100 to buy wool, and he makes 
cloth of it, computing his labor at £100, it is manifest 
that here both of us have an equal interest in the cloth ; 
and, when it is sold, the money must be equally divided. 
Nor ought I to subtract the money that I contributed at 
first, and then divide the remainder with him." ^ 

§ 29. The like distinction is asserted by Pothier. 
" When " (says he) " two persons contract a partnership 
between themselves, to sell in common certain goods, 
which belong to one of them, and to share the proceeds, 
it is necessary carefully to examine what is their inten- 
tion. If the intention is to put the very goods into part- 
nership, the partnership will extend to the same ; and if 
a part of the goods perish before the sale proposed by the 
parties is made, the loss will be borne as a common loss. 
But, if the intention is to put into partnership, not the 
goods themselves, but the price which shall be obtained 
therefor, the entire loss will fall upon the partner to whom 
the goods belonged." ^ And Pothier adds, that the like 
rule will apply to the case of two merchants, who are 
associated for the sale of merchandise, which each of 
them has in his own shop. It will depend upon the na- 
ture of their agreement, as to the goods being brought 
into partnership, or only the proceeds, when sold, wheth- 
er, if a loss takes place, it is to be borne by both as a 
common loss, or by the original owner only.^ The Ro- 
man law was equally direct and expressive. Cum ires 

' Puf. B. 5, c. 8, § 2, by Konnct, and Barbeyrac's note. 
* Toth. de Soc. n. 54. ^ Ibid. 



48 PARTNERSHIP. [cHAP. III. 

equos haberes, et ego imum, societatem coimus, itt, accepto 
equo uneo^ quadrigam vender es, et ex pretio quartam mihi 
redderes. /Si igitur ante venditionem equus mens mor- 
tuus sit, non putare se, Celsus ait, societatem, manere, 
nee ex pretio equoruni tuorutn partem deheri ; nee enim 
habendoi quadrigae, sed vendendce coitam societatem. 
Ceterum, si id actuin dicatur ut quadriga Jieret, eaque 
commimicareticr, tuque in ea tres partes haheres, ego 
quartam, non duhie adhuc socii sumus} We here see 
the distinction clearly laid down between a partnership 
in the capital stock, and a partnership in the profits or 
losses arising from the sale. Ulpian also says : Coiri 
societatem et simpliciter licet ; et si non fuerit distinc- 
tum, videtur coita esse universorum, qum ex qucestu 
veniunt ; hoc est, si quod lucrum ex em2)tione, venditione, 
locatione, conductione, descendit.^ Vinniiis has put the 
same distinction in a clear light : Possunt igitur duo so- 
cietatem sic coire, ut unus ^^ec^wziom conferat, unde 
merces emantur et negotiaiio exerceatur ; alter operanfi 
duntaxat, qui proficiscatur ad merces emendas, emat et 
vendat, ut sic deinde lucrum commune sit. Ceterum hcec 
collationon icno modojii ; nam aut opera confertur cum 
solo p>ecunim usu, quo casu sors domino peril, et si salva 
est, domino salva est ; aut oj^era confertur cum ipso do- 
minio j^ecunice, quo casu qui operam impendit,p)articepsjit 
sortis. In 2')rima specie comparatur cum opera non sors, 
sed pericidum amittendce sortis, et lucrum, quod ex ea 
prohahiliter sperari poierat. In altera operoi pretium, 
hahetur, quasi sorti adjectum, et pro eo, quod valet, in 
ipsa sorte partem hahet, qui operam j)rcestat.^ 

' D. 17, 2, 58; Id. 17, 2, 58, 1 ; Poth. Pand. 17, 2, n. 22; Domat, 1, 8, 4, 
art. 14 ; Coll. on P. B. 1, c. 2, § 2, p. 109, 2d cd. 

2 D. 17, 2, 7 ; Poth. Pand. 17, 2, n. 20; Domat, 1, 8, 3, art. 2. 
' Vinn. ad Inst. 3, 26, 2, n. 3, p. 697. 



CHAP. IV.] AS TO THIRD PERSONS. 49 



CHAPTER IV. 

PARTNERSHIP AS TO THIRD PERSONS.^ 

30. Community of property does not of itself constitute a partnership. 

31. Cases where it may constitute a partnership. 

32. Community of profit does not of itself constitute a partnership, 

33. When participation in the profits makes one a partner. 

34. Meaning of an interest in the profits, as profits. 

35. Lord Eldon on the rule that interest in the profits, as profits, makes 

one a partner. 

36. Remarks on the rule. 

37. Roman and foreign law. 

38. That participation in the profits makes one a partner is a presumptive 

rule only. 

39. The cases will be found in harmony. 

40. Cases of joint shipment and purchase. 

41. Cases of brokers and other agents. 

42. Cases of masters and seamen of vessels. 

43. American cases. 

44. American cases of masters of vessels. 

45. 46. American cases of the manufacture of goods. 

47. American cases of agency. 

48. A mere agent is not a partner. 

49. The intention of the parties should govern. 

50. Roman law. 

51. French law, 

52. The distinction of the common law defensible. 

53. Liability of a partner to third persons. 

54. Classification of cases of such liability. 

55. (1) Community of profit and loss, though not in property. 
56-58. Illustrative cases. 

59. (2) Community of profit and loss, where there is no property. 

60. (3) Participation in profits, but not in losses. 

61. Illustrative cases. 

62. Roman law. 

63. These three classes include dormant partnerships. 

64. (4) Holding out as partner. 



' {In this chapter, notwithstanding its title, the author treats not only of 
cases in which persons are partners as to third parties, but also discusses 
largely the cases in which they are partners inter sese. \ 

4 



50 PARTNERSHIP. [cHAP. IV. 

§ 65. How such holding out may arise. 

66. (5) Loans and annuities. 

67. Test of liability in such cases. 

68. 69. Illustrative cases. 

70. Liability of trustees and executors as partners. 
Note. — Subpartnership.} 

§ 30. In considering the question, when and under 
what circumstances a partnership may exist, as to third 
persons, although not between the parties themselves, 
we are led to the remark, that there may be a community 
of interest in property, without any community in the 
profits thereof, as well as a community of interest in the 
profits, without any community in the property, out of 
which they are to arise. ^ The absence of both ingre- 
dients is necessarily decisive that no real partnership 
exists. But a nice and difficult question may arise, and, 
indeed, often does arise. When and under what circum- 
stances, notwithstanding the absence of one of these in- 
gredients, the presence of the other will still be deemed 
to create a partnership between the parties themselves ; ~ 
or, if not between themselves, yet it will be deemed to 

1 {That a partnership may exist without community in property, see§ 27. | 
^ { Who are partners inter sese. The community of both profit and loss 
constitutes a partnership. Green v. Beesley, 2 Bing. N. C. 108; Brett v. 
Beckwith, 3 Jur. x. s. 3L In Duryea v. Whitcomb, 31 Yt. 395, an agree- 
ment to jointly own property and to share in the profit and loss of the busi- 
ness was held to be by necessary legal construction an agreement for part- 
nership, though nothing was said by the parties about a partnership, and 
though they were not aware that the legal effect of the agreement was to 
create one. See Meyers v. Field, 37 Mo. 434. Mr. Lindley (Lind. on P. 13) 
says, he " is not aware of any case in which persons who have agreed to 
share profit and loss have been held not to be partners." The only case in 
the Supreme Court of any of the United States in which such persons seem 
held not to be partners is Dwinel v. Stone, 30 Me. 384. There persons who 
shared profit and loss were held not to be partners, for the reason that they 
had no community of interest in the property (a reason not supported by the 
•weight of authority, see § 27.) The facts in Dwinel v. Stone are not 
fully disclosed, and it is possible that the agreement to share profit and loss 
■was really an agreement to share gross returns, as Mr. Lindley suggests to 
have been the case in Mair v. Glennie, 4 M. & S. 240 ; if this was so, the 



CHAP. IV.] AS TO THIRD PERSONS. 51 

exist as to third persons.^ It may be laid down as a 
general rule, that in all such cases no partnership will 
be created between the parties themselves, if it would 
be contrary to their real intentions and objects. And 
none will be created between themselves and third per- 
sons, if the whole transactions are clearly susceptible of 
a different interpretation, or exclude some of the essen- 
tial ingredients of partnership.^ Thus, for example, as 
has been already intimated, if two persons should agree 

decision that no partnership existed was in accordance with the current of 
authority; vide infra. See Smith v. Wright, 5 Sand. 113. 

Though nothing be said about losses, yet an agreement to share profits is 
presumptively an agreement to share losses also, and therefore constitutes a 
partnership. Hodgman v. Smith, 13 Barb. 302; Cox v. Delano, 3 Dev. 89; 
Perry v. Butt, 14 Ga. 699 ; Miller v. Hughes, 1 A. K. Marsh. 181 ; Lind. on 
P. 13. But even though indemnity against losses is stipulated tor, yet prima 
facie an agreement to share profits is an agreement for j^ai'tnership. Lind. 
on P. 1 7. Whether persons are to be partners, at any rate inter sese, in this 
class of cases depends on intention. To determine whether the intention was 
to create a partnership or not, the fact whether a community of property has 
or has not been created is strong though not conclusive evidence. Lind. on 
P. 16 ; Julio V. Ingalls, I All. 41 ; Ellsworth v. Pomeroy, 26 Ind. 158. Per- 
sons may not be partners although they call themselves so. R-idclitfe v. Rush- 
worth, 33 Beav. 484; Oliver v. Gray, 4 Ark. 425. 

The chief classes of cases in which sharino; in profits has been held not to 
make persons partners inter sese are — 1. Sharing in gross returns (see § 
34) ; 2. Sharing in joint shipments and purchases ; 3. Sharing by agents ; 
4. Sharing by seamen and masters of vessels; 5. Sharing by landlords; 
6. Sharing by manufacturers of goods ; 7. Sharing by carriers (classes 
2-7 are considered in § 40-47, 58 a); 8. Sharing by lenders and annui- 
tants (see § 66-69) ; 9. Sharing by creditors, trustees, &c. (See § 70.) 
See further on the subject, § 146-151. 

As persons who are partners inter sese are liable as partners to third per- 
sons, cases in which persons have been held not liable as partners to third 
persons are a fortiori authorities to show that they were not partners inter 
sese. Cases in which persons who are not partners inter sese have yet been 
held liable as such to third persons will be considered infra. Note to § 49.} 

' See Gibson v. Lupton, 9 Bing. 297; Post r. Kimberly, 9 Johns. 4 70; 
Geddes r. Wallace, 2 Bligh, 270; Hazard v. Hazard, 1 Story, 371. See 1 
Sm. Lead. Cas. 504, &c., 2d ed., note to Waugh v. Carver. 

* {This rule of the author is disapproved by Mr. Justice Bell in Bromley 
V. Elliot, 38 N. H.287, 306, "as laid down by a plausible writer, but often 
superficial thinker."] 



52 PARTNERSHIP. [cHAP. IV. 

to purchase goods on joint account in certain propor- 
tions, without any intention to sell them on joint account, 
or to be jointly concerned in the future sale, this will 
give them a community of interest in the property, when 
purchased, but will not make them partners ; and they 
will be joint tenants or tenants in common thereof, ac- 
cording to circumstances.^ And it will make no differ- 
ence, whether the purchase is made in their joint names, 
or in the name of one of them, or through the instru- 
mentality of an agent." In cases of this sort one essen- 
tial ingredient, that of a communion of profit and loss, 
is wanting.^ Upon similar principles, if two persons 
agree to do a particular piece of work, but the money 
received for the work is not to be employed on their 
joint account, or for their joint benefit, the persons so 
contracting are not partners, but merely joint contract- 
ors.^ So, if two joint owners of merchandise should 
consign it to the same consignee for sale, informing him, 
that each owns a moiety thereof, and should give him 
separate and distinct instructions, each for his own share, 
as to the sales and returns, they would not be partners 
in the adventure ; but each would be deemed entitled to 

' Ante, § 3 ; 3 Kent, 25, 2G ; Coope t'. Eyre, 1 H. Bl. 37 ; Gow on P. c. 1, 
p. 10, 11, 3d ed. ; Id. c. 4, p. 153, 154 ; Smith v. Watson, 2 B. & C. 401 ; 
Harding i\ Foxcroft, 6 Greenl. 76 ; Jackson v. Robinson, 3 Mason, 138. {So 
a joint purchase of land, Sikes v. Work, 6 Gray, 433 ; Munson r. Sears, 12 
Iowa, 1 72. Tenants in common of a race-horse who share liis winnings and 
divide the expenses of his keep are not partners in the horse. French v. 
Styring, 2 C. B. N. s. 357. See Oliver v. Gray, 4 Ark. 425.} 

* 3 Kent, 25, 26; Hoare v. Dawes, Doug. 371 ; Coope v. Eyre, 1 H. Bl. 
37; Post r. Kimberly, 9 Johns. 470 ; Holmes v. Unit. Ins. Co. 2 Johns. Cas. 
329 ; Harding v. Foxcroft, 6 Greenl. 76. 

=• Coope V. Eyre, 1 H. Bl. 37; Gow on P. c. 1, p. 10, 3d ed. ; Coll. on P. 
B. 1, c. 1, § 1, p. 11-15, 2d ed.; Gibson v. Lupton, 9 Bing. 297. {A club 
is not a partnership. See § 144. See also Austin v. Thomson, 45 N. H. 
113.} 

* Coll. on P. B. 1, c. 1, § 1, p. 15, 16, 2d ed. ; Finckle v. Stacey, Sel. Ca. 9 ; 
[Dwinel v. Stone, 30 Me. 384.] 



CHAP. IV.] AS TO THIRD PERSONS. 53 

a separate account, and a separate action against the 
consignee, if he should disobey his own orders.^ 

§ 31. But cases may nevertheless occur, where a com- 
munity of interest in the property may draw after it the 
establishment of a partnership between the parties, 
although a sale of the property for the joint profit may 
not be contemplated by the parties. Thus, as in the ex- 
ample already suggested, if two persons should agree 
together, to furnish an equal quantity of materials to 
manufacture articles of a particular description, and to 
employ their mutual skill, labor, and services, in man- 
ufacturing the articles ; and then the articles were to 
be equally divided between them, and sold by each on 
his separate account, there, a partnership in the prop- 
erty and manufactured articles would be deemed to 
exist.^ 

§ 32. On the other hand, there may be a community 
of interest in the profits between the parties, without 
any community of interest in the property itself.^ But 
this participation in the profits will not (as we have 
seen"*) create a partnership between the parties them- 

' Hall V. Leigh, 8 Cranch, 50; Jackson v. Robinson, 3 Mason, 138. {A., 
B. and C. agreed that each should furnish 3,000/. worth of goods to be shipped 
on joint adventure, the profits to be divided in proportion to the shipments. 
Held, no partnership. Heap v. Dobson, 15 C. B. x. s. 460. But see Sims v. 
Willing, 8 S. &R. 103.} 

- Ante, § 27; Musier v. Trumpbour, 5 Wend. 274 ; Everitt v. Chapman, 
6 Conn. 347; Bond v. Pittard, 3 j\I. & W. 357 ; 3 Kent, 24-26. See also, 
Jordan r. Wilkins, 3 Wash. C. C. 110. 

' [Thus, when two mercantile firms agree to share profits and loss upon 
contracts for the purchase or sale of merchandise in a particular branch of 
their business, to be made by each firm separately in its own name, and to be 
executed with its separate fund, this does not constitute them partners, cither 
as between themselves or to third persons ; since each firm would be sepa- 
rately bound to fulfil its own contracts, and there would be no union of funds, 
services, or property, but only a division of profit and loss. Smith v. Wright, 
5 Sand. 143.] 

* Ante, § 27, 28 ; Hazard v. Hazard, 1 Story, 371. In this case the court 
said : " Now, upon the point, whether there was a partnership or not between 



54 PARTNERSHIP. [CHAP. IV. 

selves, as to the property, as well as the profits, contrary 
to their intentions.^ Nor will it necessarily create such 
a partnership in all cases, as to third persons. The 

these parties in the factory business, under the agreement, it is necessary to 
take notice of a ■vvell-known distinction between cases, where, as to third 
persons, there is held to be a partnership, and cases where there is a partner- 
ship between the parties themselves. The former may arise between the 
parties by mere operation of law against the intention of the parties ; whereas, 
the latter exists only when such is the actual intention of the parties. Thus, 
if A. and B. should agree to carry on any business for their joint profit, and to 
divide the profits equally between them, but B. should bear all the losses, 
and should agree, that there should be no partnership between them ; as 
to third persons dealing with the firm, they would be held partners, although 
inter sese, they would be held not to be partners. This distinction is often 
taken in the authorities. It was very fully discussed and recognized in Waugh 
V. Carver. 2 H. Bl. 235; Cheap v. Cramond, 4 B. & Aid. G63; Peacock v. 
Peacock, 16 Ves. 49; Ex parte Hamper, 17 Ves. 403; E'a; parte Hodgkinson, 
19 Ves. 291 ; Ex parte Langdale, 18 Ves. 300 ; Tench v. Roberts, 6 Madd, 
145, note ; Hesketh r. Blanchard, 4 East, 144 ; jMuzzy v. Whitney, 10 Johns. 
226 ; Dob v. Halsey, 16 Johns. 34. The question before us is, not as to the 
liability to third persons ; but it is solely whether between themselves the 
agreement was intended to create and did create a partnership. I have 
looked over the agreement carefully, and my opinion is, that no partnership 
whatsoever was intended between the parties; but that Benjamin Hazard 
was to be employed as a mere superintendent, and not as a partner ; and was 
to be paid the stipulated portion of the profits for his services as superintend- 
ent. This, it is said, in the agreement, was to be the sole reward for his 
services ; and, if there were no profits, then he was to submit to lose the value 
of his services. It is not anj'where said in the agreement, that the parties 
are to be partners in the business ; nor that Benjamin Hazard is to pay any 
part of the losses. But language is used, from which, I think, it may fairly 
be inferred, as the full understanding of the parties, that the whole capital 
stock was to be held by T. R. Hazard, as his sole and e.\clusive property, 
and that the stock was to be furnished by him, and the proceeds thereof were 
to be delivered and sold by him, and charged to him, as his individual prop- 
erty, and debts and credits. Now, if this be so, there is no pretence to say, 
that the parties intended a partnership. A mere participation in the profits 
will not make the parties partners inter sese, whatever it may do as to third 
persons, unless they so intend it. If A. agrees to give B. one-third of the 
profits of a particular transaction in business, for his labor and services 



> Wish V. Small, 1 Camp. 331, note; Dry v. Boswell, 1 Camp. 329, 330; 
Mair V. Glennie, 4 M. & S. 240 ; [Explained in Stocker v. Brockelbank, 3 
Macn. & G. 250, 5 Eng. Law & Eq. 6 7 ; Clement v. Hadlock, 1 3 N. H. 1 85] ; post, 
§ 41, 42. 



CHAP. lY.] AS TO THIRD TERSONS. 55 

various cases, in which a partnership may exist, as to 
third persons, although not between the parties them- 
selves, will presently come under our consideration ; ' 
and therefore, what is here said, will principally respect 
the question, when no partnership is created either way. 
Thus, if a party has no interest whatsoever in the capital 
stock, and as between himself and the other parties has 
also no rights as a partner, or no mutuality of powers 
and duties, but is simply employed as an agent, and is 
to receive either a given sum out of the profits, or a pro- 
portion of the profits, or a residuum of the profits 

therein, that may make both liable to third persons as partners; but not 
as between themselves. This was the very point adjudged in Hesketh v. 
Blanchard, 4 East, 144, where Lord Ellenborough said: 'The distinction 
taken in Waugh v. Carver and others, applies to this case. Quoad tliird 
persons it was a partnership, for the plaintiff was to share half the profits. 
But, as between themselves, it was only an agreement for so much, as a com- 
pensation for the plaintiff's trouble, and for lending R. his credit.' The same 
doctrine was fully recognized in Muzzy r. "Whitney, 10 Johns. 226. It is not 
necessary, in the present case, to decide, whether Benjamin Hazard was, 
under the agreement, a partner as to third persons. That question may be 
left for decision, until it shall properly arise in judgment. And before it is 
decided, it might be necessary to examine a very nice and curious class of 
cases, standing, certainly, upon a very thin distinction, if it is a clearly dis- 
cernible distinction, between cases of partnership as to third persons, and 
cases of mere agency, where the remuneration is to be by a portion of the 
profits. This distinction is alluded to by Lord Eldon, in Ex parte Hamper, 
17 Ves. 403, and by Lord Chief Justice Abbott in Cheap v. Cramond, 4 B. & 
Aid. 663, 670. In the latter case, the Chief Justice said: ' Such an agree- 
ment is perfectly distinct from the cases, put in the argument before us, of 
remuneration made to a traveller, or other clerk or agent (in proportion to 
the profits), by a portion of the sums received by the master or principal, in 
lieu of a fixed salary, which is only a mode of payment adopted to increase 
or secure exertion.' It was also acted upon in Muzzy v. Whitney, 10 Johns. 
226; Dry v. Boswell, 1 Camp. 320; Wish v. Small, Id., note ; Benjamin v. 
Porteus, 2 H. Bl. 590; Wilkinson v. Frasier, 4 Esp. 182; and Mair v. 
Glennie, 4 M. & S. 240, 244. My judgment is, that in the present case 
the parties never intended any partnership in the capital stock ; but a mere 
participation of interest in the profits ; and that the one-third or one-fourth 
of the profits, allowed by the agreement to Benjamin Hazard, was merely a 
mode of paying him as agent for his superlntendency of the factories." 
1 Post, § 53-70. 



66 PARTNERSHIP. [CHAP. IV. 

beyond a certain sum, as a compensation for his labor 
and services, as agent of the concern, and not otherwise ; 
he will not be deemed a partner in the concern from that 
fact alone ; not a partner with the others inter sese, for 
that would be contrary to their intentions and objects ; ^ 
nor as to third persons, because the transaction admits 
of a different interpretation, and may justly be deemed a 
mere mode of ascertaining and paying the compensation 
of an agent, as in a naked case of agency. In such a 
case, it may be properly enough said, that the agent is 
entitled to a share or portion in the profits, liquidated 
or unliquidated, and, therefore, that he has, in a certain 
sense, a community of interest therein, with the actual 
partners. But he does not participate therein, as an 
owner ^:>ro tanto, or as possessed thereof, ^er my et per 
tout, or as clothed with the rights, and powers, and duties 
of a partner. He has only a limited interest therein, 
either as entitled to a fixed sum, to be paid out of the 
profits, or as entitled to a lien thereon, or as possessed 
of an undivided portion thereof as a tenant in common. 
§ 33. The distinction between the cases, where a par- 
ticipation in the profits will make a man liable to third 
persons, as a partner, or not, is sometimes laid down by 
elementary writers in different language. Thus it has 
been said by a learned writer : " A distinction, however, 
prevails between an interest in the profits themselves, as 
profits, and the payment of a given sum of money in 
proportion to a given quantum of the profits, as the re- 
ward of, and as a compensation for, labor and services." ^ 

1 Gow on P. c, 1, p. 10, 11 ; Gecldes v. Wallace, 2 Bligh, 270; Benjamin 
V. Portcus, 2 H. Bl. 590; Dry v. Boswell, 1 Camp. 329, 330; Wish v. Small, 
1 Camp. 331, note; Ex parte Watson, 19 Ves. 459; Muzzy v. Whitney, 10 
Johns. 22G; Turner v. Bissell, 14 Pick. 192. See Garey v. Pyke, 10 Ad. & 
E. 512; post, § 33-36, 38-40, 

« Gow on P.O. 1, p. 18,3d ed. ; [Brockway v. Burnap, 16 Barb. 309; 
Pierson v. Steinmyer, 4 Rich. 309.] 



CHAP. IV.] AS TO THIRD PERSONS. 57 

Another learned writer has expressed himself in the fol- 
lowing terms: "In order to constitute a communion of 
profit between the parties, the interest in the profit must 
be mutual, that is, each person must have a specific in- 
terest in the profits as a principal trader. He is not a 
partner, if he merely receives out of the profits a com- 
pensation for his trouble, in the character of an agent or 
servant of the concern." ^ 

§ 34. The distinction, as thus presented, does certainly 
wear the appearance of no small subtlety and refine- 
ment, and scarcely meets the mind in a clear and unam- 
biguous form ; ^ for the question must still recur ; when 
may a party properly be said to have " an interest in the 
profits, as profits " ^ When also may it properly be said, 
that " the interest in the profits is mutual," and that 
" each person has a specific interest in the profits, as a 
pi^incipal trader " ? No absolute test is given to distin- 
guish the cases from each other, and it is not easy to 
grasp it, when stated in so abstract a form. The true 
meaning of the language, " an interest in the profits, as 
profits (which has probably been borrowed from the 
subtle and refined statement of an eminent judge ),^ seems 
to be, that the party is to participate, indirectly at least, 
in the losses, as well as in the profits, or, in other words, 
that he is to share in the net profits, and not in the gross 
profits.^ If he is to share in the net profits, which sup- 
poses him to have a participation of profit and loss, that 
will constitute him a partner ; if in the gross profits, 
then it will be otherwise.^ Thus, where an agreement 
was made between the owner of a lighter, and B., a 

1 Coll. on P. B. 1, c. 1, § 1, p. 17, 18, 2(1 ed. 
"^ Coll. on P. B. 1, c. 1, § 1, p. 23, 2d ed. 
=> Lord Eldon. " Post, § 56. 

* Bond V. Pittard, 3 M. & W. 357; post, § 220, and note; post, § 41, 
42, 48. 



58 PARTNERSHIP. [CHAP. IV. 

lighter-man, that, in consideration of his working the 
hghter, he should have half her gross earnings, it was 
held to be only a mode of paying B. wages for his labor, 
and not a partnership ; but, that if the profits were to be 
equally divided between them, there the participation of 
the parties of the profit and loss would make the agree- 
ment a partnership/ 

§ 35. Lord Eldon has adverted to the like distinc- 
tion, and disapproved of it in strong terms. On one 
occasion his Lordship said : " The cases have gone fur- 
ther to this nicety, upon a distinction so thin, that I 
cannot state it as established upon due consideration ; 
that if a trader agrees to pay another person, for his 
labor in the concern, a sum of money, even in propor- 
tion to the profits, equal to a certain share, that will not 
make him a partner ; but, if he has a specific interest 
in the profits themselves, as profits, he is a partner." ^ 
On another occasion, he said, referring to the case be- 
fore him, " That it was impossible to say, that as to 

» Dry V. Boswell, 1 Camp. 329, 330; Cheap v. Cramond, 4 B, & Aid. 663, 
670. See also Waugh v. Carver, 2 H. Bl. 235, 246, 247; Saville v. Robert- 
son, 4 T, R. 720; Bond v. Pittard, 3 M. & W. 357; Pearson v. Skelton, 1 M. 
& W. 504; s.c. Tyrw. & G. 848; {Hej'hoe v. Burge, 9 C. B. 431.} See 
also Cutler v. Winsor, 6 Pick. 335; Bailey v. Clark, 6 Pick. 372; Turnery. 
Bissell, 14 Pick. 192 ; Chase v. Barrett, 4 Paige, 148, 159 ; Brigham v. Dana, 
29 Vt. 1,9; post, § 53-69, 220. — In this case the distinction is clearly pointed 
out between participation in the gross profits and participation in the net 
profits. See post, § 220, note ; |§ 21, note ; Lind. on P. 19 ; Lyon v. Knowles, 
3 B. & S. 556 ; Bowman v. Bailey, 11 Vt. 170 ; Pattison v. Blancluird, 1 Seld. 
186 ; Merrick v. Gordon, 20 N. Y. 93.} See 1 Sm. Lead. Cas. 504, 2d ed., 
note to Waugh v. Carver. The case of Thompson v. Snow, 4 Greenl. 264, 
seems to be contrary ; for it makes no distinction between sharing the net 
earnings and sharing the gross earnings; post, § 44, and Reynolds v. Toppan, 
15 Mass. 3 70. See also Loomis v. Marshall, 12 Conn. 69 ; post, § 45 ; [Denny 
V. Cabot, 6 Met. 82; Bradley w. White, 10 Met. 303]; {Parsons on P. p. 88, 
n. (q.)} 

* Ex parte Hamper, 17 Ves. 403 ; Coll. on P. B. 1, c. 1, § 1, p. 23, 24, 2d 
ed. ; Ex parte Watson, 19 Ves. 459 ; Turner v. Bissell, 14 Pick. 192; Loomis 
V. Marshall, 12 Conn. 69 ; 1 Sm. Lead. Cas. 504, note, 2d ed. 



i 



CHAP. IV.] AS TO THIRD PERSONS. 59 

third persons, they (the parties) were not partners, the 
ground being settled, that if a man, as a reward for his 
labor, chooses to stipulate for an interest in the profits 
of a business, instead of a certain sum proportioned to 
those profits, he is, as to third persons, a partner ; and 
no arrangement between the parties themselves could 
prevent it." ^ 

§ 36. But however nice the distinction may be in 
itself, and however difficult it may be successfully to 
apply it to the circumstances of particular cases, it is 
by no means clear, that there is not a very just and 
satisfactory foundation on which it may well rest.^ The 
question in all this class of cases is first to arrive at the 
intention of the parties inter sese ; and secondly, if 
between themselves there is no intention to create a 
partnership either in the capital stock, or in the profits, 
whether there is any stubborn rule of law, which will 
nevertheless, as to third persons, make a mere partici- 
pation in the profits conclusive, that there is a partner- 
ship. If there is any such rule of law, the next inquiry 
is, as to the nature, and foundation, and true extent 
thereof. Now, it is incumbent upon those who insist 
that a partnership exists between the parties, as to 
third persons, by mere operation of law, in opposition 
to their own intention, to establish, that in the given 
case, under all the circumstances, there is such a rule, 
and that it is strictly applicable. What then is the rule 
of law relied on for the purpose "? It is said, that the 
true criterion is, whether the parties are to participate 
in profit ; ^ or, according to the language used on an- 

> Ex parte Rowlandson, 1 Rose, 89, 91, 92 ; Coll. on P. B. 1, c. 1, § 1, 
p. 24-29, 2d ed. ; Ex parte Langdale, 18 Ves. 300. See also the remarks of 
Mr. Chief Justice Gibson in Miller v. Bartlet, 15 S. & R. 137, See Hazard 
V. Hazard, 1 Story, 371-376; ante, § 32, note. 

" See 3 Kent, 33, 34. 

^ Lord Eldon in Ex parte Langdale, 18 Ves. 300. 



60 PARTNERSHIP. [CHAP. IV. 

other occasion, "Every man, who has a share in the 
profits of a trade, ought also to bear his share of the 
loss as a partner." ^ In a just sense this language is 
sufficiently expressive of the general rule of law ; but 
it is assuming the very point in controversy to assert, 
that it is universally true, or that there are no qualifi- 
cations, or limitations, or exceptions to it. On the 
contrary, the very cases alluded to by Lord Eldon, in 
the clearest terms establish, that such qualifications, 
limitations, and exceptions do exist; and are either 
contemporaneous with the promulgation of the general 
rule, or are necessary to its just application and use. 
It is, therefore, far from being universally true, that a 
mere participation in the profits constitutes the party 
a partner ; at most, it is true only sub modo. Indeed, 
as an original question, it might admit of very grave 
doubt, whether it would not have been more con- 
venient, and more conformable to true principles, as 
well as to public policy, to have held, that no partner- 
ship should be deemed to exist at all, even as to third 
persons, unless such were the intention of the parties, 
or unless they had so held themselves out to the pub- 
lic.^ But the common law has already settled it 
otherwise ; and therefore it is useless to speculate upon 
the subject^ 

' Grace v. Smith, 2 W. Bl. 998, 1000; Ex parte Hamper, 17 Ves. 403; 
Ex parte Watson, 19 Ves. 459, 461 ; Waugh v. Carver, 2 H. Bl. 247 ; Tur- 
ner u. Bissell, 14 Pick. 192. 

' See the remarks of Mr. Chancellor Walworth, in Chase v. Barrett, 4 
Paige, 148, 159, IGO ; post, § 48, 49. 

3 The ground upon which the participation in the profits of a trade, although 
no partnership is intended to exist between the parties, shall make them 
partners as to third persons, is thus stated by Lord Chief Justice De Grey, in 
Grace v. Smith, 2 W. Bl. 998, 1000. " Every man, who has a share of the 
profits of a trade, ought also to bear his share of the loss. And if any one 
takes part of the profit, he takes a part of that fund on which the credi'tor 
relies for his payment. If any one advances or lends money to a trader, it 



CHAP. IV.] AS TO THIRD PERSONS. 61 

§ 37. The Roman law and the modern foreign law 
do not appear to have created a partnership between 
the parties, as to third persons, without their consent, 

is only lent on his general personal security, and yet the lender is generally 
interested in those profits. He relies on them for repayment." Now, to 
say the least of it, this reasoning is very artificial ; for if the creditor trusts 
to the personal security of his debtor generally, for advances made, or 
goods sold, and he has no lien on the property or profits of the trade for 
repayment, it seems difficult to perceive why other persons should be liable 
to him on account of their receipt of a portion of the profits, there being 
no privity of contract and no partnership existing In the advances of money 
or goods sold between the parties. Why should a mere participant in the 
profits, contrary to the intent of the agreement between himself and his co- 
contractor, be held responsible to a creditor of the latter, when the latter has 
trusted to his personal security, and only had a general confidence, that he 
was doing a profitable business? Why should the creditor's contract displace 
the contract of the immediate parties ? The rule might have some show of 
equity, if the party were only held liable to the extent of the profits re- 
ceived by him. But the rule makes him liable to pay all the losses, and all 
the debts, whether he has recived any profits or not. There is great force on 
this point in the argument of the counsel for the defendants in Waugh v. 
Carver, 2 H. Bl. 244, 245. It was there said : " The profits are not a capital, 
unless carried on as capital, and not divided. Ship agents are not traders, 
but their employment is merely to manage the concerns of such ships in 
port as are addressed to them. Suppose two fishermen were to agree to 
share the profits of the fish that each might catch, one would not be liable for 
mending the nets of the other. So, if two watermen agree to divide their 
fares, neither would be answerable for repairing the other's boat. Nor would 
any artificers, who entered Into similar agreements to share the produce of 
their separate labor, be obliged to i)ay for each other's tools or materials. 
And this is not an agreement as to the agency of all shijis, with which the 
parties were concerned, for such as came to the particular address of one 
were to be the sole profit of that one. It was, indeed, clearly the intent of 
the parties to the agreement, and is so expressed, that neither should be 
answerable for the losses, acts, or deeds of the other, and that the agreement 
should not extend to their separate mercantile concerns. It must, therefore, 
be a strong and invariable rule of law, that can make the parties to the 
agreement responsible for each other, against their express intent. But all 
cases of partnership, which have been hitherto decided, have proceeded ou 
one or other of the following grounds : — 1. Either there has been an avowed 
authority given to one party to contract for the rest ; 2. Or, there has been 
a joint capital or stock ; 3. Or, in cases of dormant partners, there has 
been an appearance of fraud in holding out false colors to the world." See 
also' post, § 48-52. However, the doctrine is (as is fully stated in the text) 
completely established, upon the very ground asserted in Grace r. Smith. 



62 PARTNERSHIP. [cHAP. IV. 

or against the stipulations of their own contract ; and, 
therefore, the common law seems to have pressed its 
principles on this subject to an extent not required by, 
even if it is consistent with, natural justice.^ Indeed, 
the Roman law deemed all contracts to be made only 
between the immediate parties thereto ; and no direct 
remedy was generally furnished to or against third per- 
sons, even where one of the immediate parties was a 
mere agent of such third persons, and it required the 
interference of the Preetor to enlarge the remedy by an 
equitable extension to reach them.^ 

§ 38. Admitting, however, that a participation in the 
profits will ordinarily establish the existence of a part- 
nership between the parties in favor of third persons, 
in the absence of all other opposing circumstances, it 

See Waugh v. Carver, 2 H. Bl. 235, 246, 247 ; Cheap v. Cramoiid, 4 B. & 
Aid. 663; Dob v. Halsey, 16 Johns. 34; M'lver v. Humble, 16 East, 169, 
174, 175; 3 Kent, 24, 25, 27; Ex parte Langdale, 18 Yes. 300; [Pott v. 
Eyton, 3 C. B. 32; Barry v. Nesham, Id. 641.] |"I hope I shall stand 
excused, if I venture to discuss the reasoning in Waugh v. Carver. What 
was it? It was that ' he who takes a share of the profits of a business, takes 
part of the fund on which creditors rely for payment.' Can any thing be con- 
ceived more false ? Creditors neither can nor do rely on profits for payment. 
Profits do not exist until ci'editors are paid. Look at any individual transaction. 
A. sells goods to B. for lOOZ. ; B. resells them for llOl. There is 10/. profit. 
Does the creditor look to this 10/. for the payment of his 1 00/. '? No : he looks to 
the 100/. That sum would pay him, and is the proper fund to pay him. The 
10/. would not. The 10/. evidently belongs to B., and is the fund to enable 
him to pay the outgoings of his trade and subsist himself and his family." 
Testimony of Mr. Commissioner Fane before a Committee of the House of 
Commons, given in Lind. on P. 40, n. (/.). In fact, what a creditor does rely 
on as a fund of payment are the gross returns, not the net profits. Yet it is 
declared that one who shares gross returns is not, while one who shares net 
profits is, a partner, because the latter takes from the fund on which creditors 
rely. Perhaps there is no other instance in commercial law, where so many 
confessedly harsh decisions have been based on so obvious a fallacy. } 

' See Domat, 1, 8, 2, art. 1 ; Id. 1, 8, 4, art. 18; Civil Code of France, 
art. 1862-1865 ; Vinn. ad Inst. 3, 26, 2, n. 3 ; 17 Duranton, Droit Civil, n. 
328-331 ; 5 Duvergier, Droit Civ. Franc, n. 45 ; Id. n. 385-387 ; 4 Pardessus, 
Droit Comm. n. 96i) ; post, § 50. 

* Story on Ag. § 165, 261, 271, 425. 



CHAP. IV.] AS TO THIRD PERSONS. 63 

remains to consider, whether the rule ought to be 
regarded, as any thing more than mere presumptive 
proof thereof, and therefore hable to be repelled, and 
overcome by other circumstances, and not as of itself 
overcoming or controlling them.^ In other words, the 
question is, whether the circumstances, under which 
the participation in the profits exists, may not qualify 
the presumption, and satisfactorily prove, that the por- 
tion of the profits is taken, not in the character of a 
partner, but in the character of an agent, as a mere 
compensation for labor and services. If the latter be 
the true predicament of the party, and the whole trans- 
action admits, nay, requires, that very interpretation, 
where is the rule of law, which forces upon the trans- 
action the opposite interpretation, and requires the 
Court to pronounce an agency to be a partnership, con- 
trary to the truth of the facts, and the intention of 
the parties ] Xow, . it is precisely upon this very 
ground, that no such absolute rule exists, and that it is 
a mere presumption of law, which prevails in the ab- 
sence of controlling circumstances, but is controlled by 
them, that the doctrine in the authorities alluded to is 
founded. If the participation in the profits can be 
clearly shown to be in the character of agent, then the 
presumption of partnership is repelled. In this way 
the law carries into eff"ect the actual intention of the 
parties, and violates none of its own established rules. 
It simply refuses to make a person a partner, who is 
but an agent for a compensation payable out of the 
profits ; and there is no hardship upon third persons, 
since the party does not hold himself out as more than 

' [In Wood V. Vallette, 7 Ohio St. 172, it was held that a contract be- 
tween parties to share in the net profits of a business, to the carrying on of 
which they respectively contribute, necessarily makes them partners as to third 
persons dealing with the firm.] 



64 PARTNERSHIP. [cHAP. IV. 

an agent. This qualification of the rule (the rule itself 
being built upon an artificial foundation) is, in truth, 
but carrying into effect the real intention of the parties, 
and would seem far more consonant to justice and 
equity, than to enforce an opposite doctrine, which 
must always carry in its train serious mischiefs or ruin- 
ous results, never contemplated by the parties. In this 
view the distinction, taken in the authorities above 
alluded to, has a reasonable and just foundation, and is 
entirely consistent with the equities, which ought to pre- 
vail in all reciprocal contracts.^ 

' Mr. Chancellor Walworth has expressed himself in favor of the distinc- 
tion as well founded, in the case of Champion v. Bostwick, 18 Wend. 175, 184. 
He there said : " There is a class of cases, in which it has been held that a 
person, who merely receives a compensation for his labor in proportion to 
the gross profits of the business in which he is employed, is not a partner 
with his employer even as to third persons. The distinction appears to be 
between the stipulation for a compensation proportioned to the profits, and 
a stipulation for an interest in such profits, so as to entitle him to an account 
as a partner (1 Rose, 91) ; a distinction, whieh Lord Eldon says is so thin, 
that he cannot state it as settled upon due consideration. But he says, 
it is clearly settled as to third persons, though he regrets it, ' that if a 
man stipulates, that as the reward of his labor he shall have, not a specific 
interest in the business, but a given sum of money, even in proportion to 
the quantum of profits, that will not make him a partner ; but if he agrees 
for a part of the profits, as such, giving him a right to an account, though 
having no property in the capital, he is as to third persons a partner; and 
no arrangement between the parties themselves can prevent it.' Ex parte 
Hamper, Stark's Law of P. 137. Cary, however, defends the principle, 
upon which this distinction is based. He insists, that as the person, who is 
to receive a compensation for his labor in proportion to the profits of the 
business, without having a specific lien upon such profits to the exclusion of 
other creditors, it is for their interest that he should be compensated in that 
■way, instead of receiving a fixed compensation, whether the business pro- 
duced profits or otherwise ; on the other hand, that, if he stipulates for an 
interest in the profits of the business, which would entitle him to an account, 
and give him a specific lien or a preference in payment over other creditors, 
and giving him the full benefit of the increased profits of the business, with- 
out any corresponding risk in case of loss, it would operate unjustly as to 
other creditors ; and therefore that it is perfectly right in principle, that he 
should be holden to be liable to third parties, as a partner in the latter case, 
but not in the first. Cary on P. 11, note i. I am inclined to think this 



CHAP. IV.] AS TO THIRD PERSONS. G5 

§ 39. Keeping this distinction in view, all the sup- 
posed repugnancy or difficulty of the various decided 
cases vanishes, and they are in harmony with each other, 

distinction is a sound one, as regards the rights of third persons. But as 
between the parties themselves, it is perfectly competent for them to agree, 
that one shall have his full share of the anticipated profits, as a compensa- 
tion for his labor or skill, without running any risk of absolute loss, except 
as to third persons, if instead of producing profits the business should prove 
a losing concern. Many of the cases cited by the counsel for the plaintiffs 
in error, were those, in which the question arose between the immediate 
parties to the agreement, which was supposed to make them partners as 
between themselves ; and they may therefore be reconciled with other cases, 
in which they were held to be liable as partners to third persons upon the 
principles before stated." ]\Ir. Gary in the passage alluded to says : " It is 
not within the original object of this work to enter into any contested points, 
or to broach an opinion not immediately sanctioned by judicial decisions. 
In the pi'esent case, however, it may be allowable to depart from this rule, 
as the principle, on which the above distinction is grounded, seems to the 
author of this work perfectly clear and just. On the one hand, suppose a 
person is to receive a proportion of a given quantum of profits, by way of 
recompense for his labor, this cannot be productive of injustice to any of the 
creditors of the trader, for the trader's own interest will not suffer him to 
give a greater proportion of the profits than the particular adventure will 
well afford. As if the risk is worth ten per cent he will not be satisfied 
with securing five per cent only as his own return, but will probably offer 
an equal share of the profits above the five per cent. But suppose the 
adventure fails, and there is none or very little profit to be divided, the cred- 
itor is obviously in a better condition than if a sum certain had been given 
as wages ; for as every undertaking must be attended with some expense, 
and it is usual to pay agents or servants before any return of profit can be 
fairly calculated upon, it would be unreasonable to say, that an agent or 
servant shall not be paid, until the trader's other creditors are satisfied, and 
whether those Avages are paid by a proportion of the profits, or by a sum 
certain, which must be deducted from the profits, cannot be very material 
to the creditors. On the other hand, if the agent agrees for a part of the 
profits as such, and stipulates for an interest in the profits of a business, 
instead of a certain sum proportioned to those profits, he obtains the right 
of an account, and to the prejudice of the creditors may institute a suit 
against his employer, not for the recovery of his wages, but for an account 
of profits; and supposing him not to be thereby constituted a partner, 
might take his full share of the profits, having an obvious advantage over 
the other creditors ; for in case of the trader's insolvency, his claim (still 
supposing him not to be a partner) would be prior to that of other creditors, 
whereas in the former case he has not a determinate interest in the profits, 
but on the event of the trader's becoming bankrupt, would be on the same 

5 



66 PARTNERSHIP. [CHAP. IV. 

as well as with common sense.^ Let us proceed then to 
illustrate the doctrine by adverting to some of the more 
striking cases, in which it has been judicially recognized 
and confirmed. 

§ 40. Thus, where A., having neither money nor 
credit, offered to B., that if he would order certain goods 
to be shipped with A., upon adventure to foreign parts, 
if any profit should arise therefrom, B. should have one- 
half for his trouble ; and B. accepted the offer, and the 
goods were purchased accordingly, and charged to both 
A. and B. as joint debtors; and B., having been after- 
wards compelled to pay the whole debt, brought a suit 
against A.'s executors, to recover the value of the goods 
so purchased; on an objection taken, that A. and B. 
were partners in the adventure, and the action was not 
therefore maintainable, the court overruled the objec- 
tion, and held, that quoad third persons, this was a part- 
nership, for the plaintiff B. was to share half the profits ; 
but, as between themselves, it was only an agreement for 
so much, as a compensation for the plaintiff's trouble, 
and for lending A. his credit.^ In this case the purchase 
was on joint account, for the purpose of selling the same 
goods and dividing the profits ; and therefore it might 
well be deemed a partnership, as to third persons, as for 
example, in favor of the seller of the goods, consistently 
with the distinction above stated.^ 

footing with other simple contract creditors." See also Perrine v. Hankorson, • 
6 Halst. 181 ; 3 Kent, 25, note (b), where the learned commentator adopts 
■with approbation the doctrine of Mr. Chancellor AValworth. See also Story 
on Contracts, § 352, 353, 357, and note. 

' See Mont, on P. B. 1, Pt. 1, p. 10-12, 2d ed., where many of the cases 
are collected. 

« Hesketh v. Blanchard, 4 East, 144, 146 ; Smith v. Watson, 2 B, & C. 
401 ; Post, § 5G, 57. 

' [So where several persons Avere engaged in running a line of stages 
from A. to B., and by the agreement between them one was to run at his 
own expense a portion of the route, and the others, in like manner, the 
residue ; each being authorized to collect fare over the whole or any part of 



CHAP. IV.] AS TO THIRD PERSONS. G7 

§ 41. But a case, bringing the distinction to its strict- 
est test, may easily be put, of factors, brokers, and other 
agents, who are employed to sell goods on account of 
their principals, and are to receive a commission out of 
the profits, or a proportion of the profits, or a particular 
percentage out of the price, or a part or the whole of 
the price, beyond a certain sum, for which the goods are 
sold, as a compensation for their services. In all such 
cases it has been constantly held, that the factors, brok- 
ers, and other agents, are not partners with their prin- 
cipals, as to third persons, and a fortiori^ not between 
themselves and their principals.^ It might be different, 
as to third persons (as we shall hereafter see), if the 
factor, broker, or other agent, were not only thus to 
receive a proportion of the profits, but also to bear 
a proportion of the losses.^ So, where a lighterman 

the route ; the parties to settle monthly, and the fare so received to be 
divided in proportion to the length of each one's route, the party found to 
have received more than his share, to pay over to the other the balance on 
each monthly settlement, this was held not to constitute a partnership be- 
tween the parties, whatever it might be as between them and third persons. 
Pattison v. Blanchard, 1 Seld. 186. And see Ellsworth v. Tartt, 26 Ala. 
733: Bonsteel ?;. Vanderbilt, 21 Barb. 26] ; {Merrick v. Gordon, 20 N. Y. 
93. See§58«.} 

1 Coll, on P. B. 1, c. 1, § I, p. 18-29. See Dixon v. Cooper, 3 Wils. 40 ; 
Benjamin v. Porteus, 2 H. Bl. 590 ; Meyer v. Sharpe, 5 Taunt. 74 ; Rice v. 
Austin, 17 Mass. 197, 206; 3 Kent, 33 ; 2 Bell, Comm. B. 7, p. 623, 5th ed. ; 
Withington v. Herring, 3 Moo. & P. 30 ; Gibbons v. Wilcox, 2 Stark. 43 ; 
[Tobias v. Blin, 21 Vt. 544] ; Gow on P. c. 1, p. 18-20, 3d ed. ; Ex parte 
•Watson, 19 Ves. 459; Turner v. Bissell, 14 Pick. 192; [Denny v. Cabot, 6 
Met. 82; Bradley v. White, 10 Met. 303; Judson v. Adams, 8 Cush. 556; 
Pottr. Eyton,3 C. B. 32; Burckle r. Eckart, 1 Denio,337; s. c. 3 Comst. 132]; 
{Fitch V. Hall, 25 Barb. 13 ; Hanna t'. Flint, 14 Cal. 73; Berthold v. Gold- 
smith, 24 How. 536 ; Hallet v. Desban, 14 La. An. 529 ; Ellsworth v. Pomeroy, 
26 Ind. 158. See also Braley v. Goddard, 49 Me. 115; Benson r. Ketchum, 
14 Md. 331.} 

* Smith r. AVatson, 2 B. & C. 401 ; Coll. on P. B. 1, c. 1, § 1, p. 19, 2d ed. ; 
Green v. Beesley, 2 Bing. N. C. 108. But see Mair v. Glennie, 4 M. & S. 
240 ; [Explained in Stocker v. Brockelbank, 3 Macn. & G. 250, 5 Eng. L. & 
Eq. 67] ; Perrott v. Bryant, 2 You. & C. Ex. 61, 67, 68. 



68 PARTNERSHIP. [CHAP. IV. 

agreed with the owner of a lighter to work the 
lighter, and to receive half of the gross earnings, as his 
compensation therefor, he was held not to be a partner, 
even as to third persons ; but it was merely a mode of 
compensation of his services.^ So, where a person 
agreed to give his attendance and services in a grocery 
store, and for such attendance and services he was to 
receive a fixed salary, and also a commission of seven 
per cent upon the profits of the business, from the 
owners, it was held, that this did not constitute him a 
partner, upon the ground, that a commission on the 
profits was distinct from an interest in the profits.^ It 
might perhaps be more accurately said, that it was a 
mere mode of compensation for an agency. The like 
rule would apply, where a person should agree to de- 
pasture cattle on the lands of another, who was to be 
repaid for fattening the same, by equally dividing all the 
profits with the owner, above £20, the estimated value 
of the cattle, uj)on a resale.^ 

' Ante, § 34 ; Dry t\ Boswell, 1 Camp. 329 ; Coll. on P. B. 1, c. 1, § 1, 
p. 21, 2(1 ed. ; Gow on P. p. 19, 20, 3d ed. ; Taggard v. Loring, 16 Mass. 336 ; 
Cutler V. Winsor, 6 Pick. 335; Cheap v. Cramond, 4 B. & Aid. 663, 670; 
[Heirastreet r. Howland, 5 Denio, 68.] See also Mohawk & Hudson R. R. 
Co. V. Niles, 3 Hill, (N. Y.) 162 ; {Bowman v. Bailey, 10 Vt. 170; Bowyer 
V. Anderson, 2 Leigh, 550.} 

* Miller v. Bartlet, 15 S. & R. 137 ; [Pott v. Eyton, 3 C. B. 32] ; {New- 
man i\ Bean, 1 Fost. 93 ; Bartlett v. Jones, 2 Strobh. 4 71 ; Macy v. Combs, 
15 Ind. 469.} 

3 Wish V. Small, 1 Camp. 331, note; Gow on P. p. 19, 20, 3d ed. ; [Raw- 
linson v. Clarke, 15 M. & W. 292. And where A. agrees to furnish a 
farm with a certain amount of teams and labor, and B. is to manage the 
farm, and give certain labor, the crops to be divided between them, this does 
not constitute a partnership. Blue v. Leathers, 15 111. 31 ; {Moore v. Smith, 
19 Ala. 774; post, § 46, note.} So, where a patentee of an article con- 
tracted with tlie defendant to act as manager of the business of manufacturing 
the article which was to be marked with the patentee's name, the defendant 
furnishing all the capital, but the patentee having the management of the 
work, employing the workmen, making the purchases, &c., and was to receive 
a remuneration equal to forty per cent on the capital stock, deducting all 



CHAP. IV.] AS TO THIRD PERSONS. G9 

§ 42. It is upon the like ground, that if the master of 
a ship contracts with the owner to receive a certain pro- 
portion of the profits of the voyage, in Heu of wages and 
primage, this alone will not constitute him a partner 
with the owner m the adventure inter sese, whatever may 
be the case as to third persons.^ So, seamen engaged 

liabilities, but by express terms was not to be a partner with the defendant, 
this was held not to make the patentee a partner with the defendant, although 
his remuneration depended distinctly upon the amount of profits. Stocker 
V. Brockelbank, 3 Macn. & G. 250, 5 Eng. L. & Eq. 67, But if the joint 
owners of a patent agree to make a common interest to sell, and to divide the 
net proceeds equally, a partnership is thereby created. Penniman v. Munson, 
26 Vt. 164 ; and see Noyes v. Cushman, 25 Vt. 390.] 

' Mair v. Glennie, 4 M. & S. 240. — In this case, by agreement, the 
master of the ship was to have, in lieu of wages, primage, &c., one-fifth 
share of the profit or loss of the intended voyage on ship and cargo, and 
was to follow the instructions of the owner of the ship and cargo, and do 
all the business himself that he could do, and for the rest make the best 
bargains he could. The voyage was to Havana, and to take in a return 
cargo for the Baltic. The owner became bankrupt during the voyage, and 
had mortgaged the ship to A. & Co. for advances ; who had not taken pos- 
session of the ship upon her return, and had also become bankrupts. The 
ship and cargo had been sold, and the suit was by the assignees of the 
owner against the assignees of the mortgagees, for the proceeds. One 
question was, whether the master, under the agreement, was a partner 
in the ship and cargo, for the voyage. The court held that he was not. 
On this occasion Lord EUenborough said : " And upon this point, it has 
been contended, that the caj^tain was virtually a partner. But on what 
ground has it been so contended? The ground is, because payment of 
the captain's wages was to depend, as to its amount, upon a reference to the 
value of the cargo, but, according to that mode of argument, every seaman 
in a Greenland voyage would become a partner in a fishing concern. There 
is no pretence, therefore, for saying, tliat the captain was a partner, because 
his wages were to be regulated and paid by reference to a calculation on the 
profits of the adventure." [This case was commented upon and approved 
in Stocker v. Brockelbank, 3 Mac. & G. 250, 5 Eng. L. & Eq. 67.] This 
language is certainly very general ; and perhaps in its application it ought 
to be limited to the very case before the court, which involved the point 
only whether there was a partnership between the parties ; not whetlier there 
was a partnership as to third persons. It is indeed difficult, even with this 
qualification, to reconcile this case with the doctrine pronudgated in some 
other cases ; for as the master was to share both in the profit and losses of 
the voyage, it would seem that the owner and master were, i7iter sese, part- 
ners in the ship and cargo for the voyage, as well as in regard to tliird 



70 PARTMERSHIP. [cHAP. IV. 

in the whale fisheries, who are to receive a certain pro- 
portion of the profits or proceeds of the voyage after the 
sale thereof, in lieu of wages, are not deemed inter sese, 
or as to third persons, partners with the owner and 
master therein ; but their shares are treated, as in the 
nature of wages, unliquidated at the time, but capable of 
being reduced to a certainty, on the sale of the oil or 
fish, when it has taken place ; and thus they become en- 
titled to wages to the extent of their proportion in the 
produce of the voyage.^ It would be manifestly against 
the common understanding in all such voyages, to con- 
sider them partners inter sese.^ And it would be equally 
against the common usage to treat them as partners as 
to third persons, and liable thereby for the outfits, ad- 
vances, and other charges for the voyage to third per- 
sons, who should give credit for them. On the contrary, 
in all such voyages the owner of the ship is treated as 
solely responsible therefor, and the masters, officers, and 
crew are not even deemed tenants in common in the 

persons. At least there are authorities which sustain this view of the matter. 
See ante, § 27, 32, 34, 41 ; post, § 43, 44, 55-58. {But in Mair v. Glennie, 
the expression profit or loss seems to have been used for gross returns. See 
§ 30, note} ; Smith v. Watson, 2 B. & C. 401 ; Bond v. Pittard, 3 M. & W. 
357; Green v. Beesley, 2 Bing. N. C. 108; Perrott v. Bryant, 2 You. 
& C. Ex. 61, 68 ; Coll. on P. B. 1, c. 1, § l,|p. 20-24, 2d ed. 

' Wilkinson v. Frasier, 4 Esp. 182 ; Baxter v. Rodman, 3 Pick. 435, 
438, 439 ; Turner v. Bissell, 14 Pick. 192, 195 ; {Coffin v. Jenkins, 3 Story, 
108 ; The Crusader, Ware, 437 ; Reed v. Hussey, Bl. & Howl, 525 ; Duryee 
V. Elkins, Abbotts, Adm. 529. } 

'^ Rice V. Austin, 17 Mass. 197, 205, 206. — Mr. Justice Putnam, in de- 
livering the opinion of the court in this case, said : "It cannot, however, be 
true, that all who participate in the profits are to be considered as partners, 
in respect to the concern or adventure, from which the profits of the voyage 
arise. Seamen, for example, who are employed in the whale fisheries, are 
usually compensated for their services by a certain part of the profits of the 
voyage. Nevertheless, it has not been supposed, that this circumstance 
made the mariner a partner with the ship-owner, so as to render it lawful 
for a creditor of the mariner to take the whole cargo of oil for his private 
debt." See also Turner v. Bissell, 14 Pick. 192. 



CHAP. IV.] AS TO THIRD PERSONS. 71 

voyage ; but are rather deemed entitled to several and 
distinct proportions of the proceeds thereof, as in the 
nature of wages, and in no sense as partners.^ The case 
therefore is one where the seamen are to participate in 
the profits, if any, but are to bear no part of the losses, 
if the profits are not sufficient to repay the owner.^ In 
like manner, where persons, who are engaged as dredg- 
ers in the oyster fisheries, have no interest in the boats, 
nor in the fish caught, but the latter belong wholly to 

' See Fennings v. Lord Gi'enville, 1 Taunt. 241. — In Baxter v. Rodman, 
3 Pick. 435, 438, Mr. Chief Justice Parker, in delivering the opinion of the 
court, it being a case growing out of a contract for a. whaling voyage, said : 
" The first objection is, that as by virtue of the contract, on which the 
master and crew engage in the voyage, they are to receive their pay out of 
the proceeds of the oil, they are joint owners and quasi partners, and so 
ought all to have joined in the action. If this were the law, it would be 
found to be exceedingly inconvenient, and would, no doubt, entirely break 
up the peculiar mode of conducting these voyages, which have been found 
to be so beneficial to those who carry them on, and to the country. That 
every seaman should be tenant in common with all the other seamen, the 
master, and the owners of the vessel, in all the oil, which may be taken on 
a whaling vo3'age, so that no action could be brought respecting it without 
joining all, and none could be sued without the whole, giving every seaman 
a right to discontinue the action, or to release the claim, or to receive pay- 
ment for the whole, would be a state of things not suspected by the wise 
and enterprising men who have carried on the whale fishery. But we think 
it is not the law. The owners of the vessel and projectors of the voyage 
are the owners of the product of the voyage. The true meaning of the 
shipping contract is, that the men shall be paid out of the proceeds in a 
stipulated proportion. It is an agreement as to the mode of compensation, 
and gives them no property in the oil, but only regulates the amount of 
compensation." In the common cod fisheries a different usage seems to 
prevail. There the fishermen generally share the fish caught, and the pro- 
ceeds thereof, when sold by the owner, in certain fixed proportions. This 
has never been supposed to constitute them partners inter sese, or as to third 
persons, in the adventure. At most they could be deemed no more than 
tenants in common of the fish caught with the owner. The act of Congress 
manifestly contemplates them as having rights and interests in severalty, 
and gives each fisherman a several remedy against the vessel for his share of 
the fish caught, and of the proceeds when sold. Act of 19 June, 1813, c. 2. 
See Houston v. Darling, 16 Me. 413. 

* See Coppard v. Page, Forrest, 1 ; Perrott v. Bryant, 2 You. & C. Ex. 
61, 67, 68. 



72 PARTNERSHIP. [cHAP. IV. 

the owners of the boats ; and the dredgers are to receive 
a share of the profits ; such persons are not deemed 
partners in the adventure, either inter sese, or as to third 
persons ; but it is treated as a mere mode of calculating 
the amount of wages due to them from the owners of 
the boats.^ But it might be otherwise, if the dredgers 
were to share in the profits and losses according to 
certain agreed proportions.^ 

§ 43. In America the doctrine has been applied to 
other analogous cases, and pressed somewhat further. 
Thus, where a party was to receive, by way of rent, a 
portion of the profits of a farm or tavern, let to hire by 
him, it was held, that he ought not to be deemed a part- 
ner in the concern ; but that it was to be treated as a 
mode of receiving compensation only.^ Upon the like 
analogy, where A. advanced his funds to be invested by 
B. in live oak in Florida, to be procured, cut, and trans- 
ported at the expense of B., but on account and risk of 
A., to the navy yard of the United States, and for his 
services and disbursements, B. was to receive half the 
profits, and A., for his risk and advances, was to have 
the residue of the profits ; it was held, that the parties 
were not partners in the timber, nor could third persons 
be at liberty to treat it as partnership property. On 
that occasion the court said, that it was not true, that all, 
who participated in the profits, are to be considered as 
partners in respect to the concern or adventure, from 
which the profits arise. And the case was put of ship- 

' Perrott v. Bryant, 2 You. & C. Ex. 61, 67. 

* Coppard V. Page, Forrest, 1 ; Perrott v. Bryant, 2 You. & C. Ex. 61, 68. 
But see Mair v. Glennie, 4 M. & S. 2-40; [Stocker v. Brockelbank, SMacn. 
& Q. 250, 5 Eng.. L. & Eq. 67.] 

3 Perrine v. Hankinson, 6 Ilalst. 181; 3 Kent, 33; {Lyon v. Knowles, 
3 B. & S. 556 ; Putnam v. Wise, 1 Hill, (X. Y.) 234 ; Bowyer v. Anderson, 
2 Leigh, 550; Chase v. Barrett, 4 Paige, 148. But see Catskill Bank v. 
Gray, 14 Barb. 471. | 



CHAP. IV.] AS TO THIRD PERSONS. 73 

ments to India upon half profits (which are so generally 
practised in this country), in which it has never been 
supposed, that thereby the shippers and the owners of 
the ship became answerable for each other, or were in 
any way interested, as partners, in respect to the pro- 
perty, which constituted the original adventure, and 
w^hich was undertaken to be carried to India for half 
profits, or in the return cargo, in which the proceeds 
were invested ; but that the half profits were treated 
only as a mode of compensation for freight, disburse- 
ments, and charges in the course of the voyage.^ So, 
where A. and B. having entered into a contract with a 
turnpike company to make and complete a certain road, 
afterwards agreed w^ith C. to let him have a share of the 
profits, if any, in making the second ten miles of the 
road, in proportion to the help he aflforded in complet- 

' Rice V. Austin, 17 Mass. 197, 206 ; Turner v. Bissell, 14 Pick. 192, 
195 ; 3 Kent, 3-1 ; {Braley i'. Goddard, 49 Me. 115. } [So, where an agree- 
ment was entered into between D. and W., under which D. was to furnish 
goods for a store, and pay all the expenses, and W. was to transact the 
business of the store, and receive half of the profits, as a compensation for 
his service, it was held that they were not partners, and that D. only was 
liable for goods furnished. Bradley v. White, 10 Met. 303. See also Pott 
V. Eyton, 3 C. B. 32; Dunham v. Rogers, 1 Penn. St. 255; Rawlinson v. 
Clark, 15 M. & W. 292. The like rule was followed, where A. agreed to 
manufacture articles for B., who agreed to furnish the raw materials, and to 
pay A. such amount as should arise from the profits of the business, de- 
ducting the materials and incidental expenses of B., together with ten per 
cent on the amount of sales. Judson v. Adams, 8 Cush. 556. So where a 
railroad corporation leased to A. a public house, owned by the company, he 
paying a certain sum annually out of the net profits for the use of the fur- 
niture, and " one-half of the net proceeds arising from keeping the house 
as a hotel," and keeping an account, open to their inspection, and giving 
his own time and attention, and having free passage over their road for 
himself and all persons employed by him, and all articles used by him in 
keeping the house, it was held, that the corporation did not thereby become 
a partner, and liable for supplies furnished the house by third persons. 
Holmes v. Old Colony Railroad Co., 5 Gray, 58. The question does 
not seem to have been raised in this case, whether the railroad company had 
any corporate power to engage in the business of hotel keeping.] 



74 PARTNERSHIP. [cHAP. IV. 

ing the same, the one-half to be taken from A.'s part, 
and the other half from B.'s part ; it was held, that this 
agreement did not create a partnership between A., B., 
and C, but was only a mode of paying C. for his help 
and lab or. ^ 

§ 44. So, where the master of a ship agreed with 
the owner to take her for the purpose of getting 
employment in the freighting business, and engaged 
to victual and man her, and pay half the port charges, 
pilotage, &c. ; and the owner was to pay the other half, 
together with eight dollars per month for one man's 
wages, and to put the vessel in sufficient order for busi- 
ness ; and all the money so stocked in the vessel was to 
be equally divided between the master and the owner, 
each party accounting for the above ; it was held, that 
the master was, ^9ro hac vice, owner for the voyage un- 
dertaken, and the owner was not a partner, even as to 
third persons ; for the agreement amounted to no more 
than a compensation out of the earnings of the vessel, 
after deducting certain fixed charges.^ In this case the 
deduction was from the gross earnings. In another case 
the same principle was applied to the case of the net 
earnings. Thus, w^here the vessel was let to charter to 
the master for the season, and she was by the agreement 
to be at the risk of the owner, and after deducting the 
first cost of the lumber, or whatever she might carry, the 
owner was to receive two-fifths of the net proceeds, 

' Muzzy V. Whitney, 10 Johns. 226. — In this last case, as in Hesketh v. 
Blan chard, 4 East, 144, the real question before the court was, whether the 
parties were partners inter sese ; and the court did not decide, whether 
the pai'ties were partners as to third persons, as the court did in Ilesketh 
V. Blanchard. But the inference deducible from the language of the court 
leads to the conclusion that they were not partners either way. 3 Kent, 34. 
But see Dob v. Ilalsoy, 16 Johns. 34; jVoorhees v. Jones, 5 Dutch. 270.} 

" Cutler V. Winsor, 6 Pick. 335 ; Taggard v. Loring, 16 Mass. 336. See 
Dry V. Boswell, 1 Camp. 329, 330; [Dwinel v. Stone, 30 Me. 384.] 



CHAP. IV.] AS TO THIRD PERSONS. '75 

and the master was to purchase the cargoes at his 
own expense, to victual and man the vessel, and to 
pay the two-fifths at the end of each trip ; it was 
held, that the master was, p?*o hac vice, owner for the 
season ; and that the general owner was not liahle 
to third persons, as a partner on account of other 
shipments, not made within the scope of the agree- 
ment.^ 

§ 45. Other cases have arisen, where the same dis- 
tinction has been still more strikingly adopted. Thus, 
where A., residing at a distance from a factory of cloths, 
occupied by B., entered into an agreement with B., in 
substance as follows : A. was to furnish a full supply of 
wool for the factory for two years ; and B. was to man- 
ufacture such wool into broadcloths and satinets, in a 
good and workmanlike manner, according to the direc- 
tions of A., and to devote the entire use of his factory 
to that purpose for the term ; and the net proceeds of 
the cloths, after deducting the incidental expenses and 
charges of sale, were to be divided, so that A. should 
have fifty-five per cent, and B. forty-five per cent 
thereof ; and in the manufacture of satinets from such 
wool, A. was to pay fifty-five per cent, and B. forty-five 
per cent of the cost of the warp ; and the expense of 
insurance on the work and cloth was to be borne by A. 
and B., in the same ratio as their interest was in the 
final division of the avails of the cloths ; and in case of 

' Reynolds v. Toppan, 15 Mass. 370. — This case seems to have turned 
upon its own peculiar circumstances ; otherwise, it might not seem easy at 
first view to reconcile it with the doctrine of Lord EUenborough, in Dry v. 
Boswell, 1 Camp. 329, 330, where the distinction is expressly taken between 
sharing the gross earnings and sharing the net earnings. The former is 
not, the latter is, the case of a partnership. Ante, § 34, and note ; post, 
§ 56. See also Cheap v. Cramond, 4 B. & Aid. 6G3, 668, cited post, § 56, 
note; {Ward v. Thompson, 22 How. 330; Winsor v. Cutts, 7 Greenl. 261. 
But see Julio v. Ingalls, 1 All. 41.} 



76 PARTNERSHIP. [cHAP. IV. 

the destruction of any work or cloth by fire, the amount 
received of the insurers was to be divided between A. 
and B., according to the loss sustained by each ; it was 
held, that under this agreement, A. and B. were not 
partners, either inter se, or as to third persons, and that 
B. had no other interest in the profits, than a compen- 
sation for his labor and materials by a percentage on the 
avails of the cloths.^ 

' Loomis V. Marshall, 12 Conn. 69. — The general reasoning of the cases 
on this subject was so fully gone into upon this occasion, that it may be 
acceptable to the learned reader to have an opportunity to examine it. Mr. 
Justice Huntingdon, in delivering 'the opinion of the court, said: "That 
the parties to this agreement did not intend to create a partnership, either 
as between themselves or thii'd persons, is, we think, very obvious from the 
facts set forth in the motion, connected with the stipulations contained in 
the agreement ; and if they are liable as partners, they are made so by 
construction of law. Those who were to furnish the wool, supposed they 
alone were responsible for the purchase-money ; and those who were to 
perform the labor and provide the materials necessary to complete the man- 
ufacture of it, believed they alone were liable for the price of the labor and 
materials. If they are all jointly liable, their liability arises from the fact, 
that they have entered into a contract, which, as between themselves and 
the plaintiff, controls their clear intention, if not express stipulation, to the 
contrary. And it is undoubtedly true that a person may expressly refuse 
to be responsible as partner, and yet, in the same instrument which con- 
tains that refusal, may agree to such terms as will in law constitute him a 
partner. Whether these defendants have entered into such terms, is to be 
determined by a fair construction of the agreement which they have executed. 
While, on the one hand, we should be careful to adopt no rule of construction, 
which would enable parties, who are interested in the profits of business, as 
profits, to deprive the creditors of any portion of the fund, on which they 
have a just claim for the payment of the debts due to them ; so, on the other 
hand (to use the language of Kent, C. J., in Post v. Kimberly, 9 Johns. 
504), ' we must be careful not to carry the doctrine of constructive partner- 
ship so far as to render it a trap for the unwary.' We must in this, as other 
cases, look to the entire transaction, in order to judge correctly of its nature 
and tendency. And we think (as is said by Gould, J., in Coope v. Eyre, 
1 H. Bl. 44), 'Cases of this nature should stand on broad lines, not on 
subtleties and refinements, the source of litigation and disputes.' A com- 
munity of interest in land does not, of itself, constitute a partnership ; nor 
does a mere community of interest in personal estate. There must be some 
joint adventure, and an agreement to share in the profit of the undertaking. 
Porter v. M'Clure, 15 Wend. 187 ; Green v. Beesley, 2 Bing. N. C. 108 ; 



CHAP. IV.] AS TO THIRD PERSONS. 77 

§ 46. The like decision was made under the follow- 
ing circumstances. By a written agreement A. agreed 
to furnish B. for one year with wool to be worked into 

Fereday r. IIordoiTi, Jac. 144. This community of profit is the test to tlu- 
termine whether the contract be one of partnership ; and to constitute it, a 
partner must not only share in the profits, but share in them as a principal ; 
for the rule is now well established, that a party, who stipulates to receive a 
sum of money in proportion to a given quantum of the profits, as a reward 
for his labor, is not chargeable as a partner. The cases are collected and 
well arranged by Collyer, in his Treatise on Partnership, 14, 15, et seq., 
and by Gary (on Partn.), 8-11. They embrace factors and brokers, who 
receive a commission out of the profits of the goods sold by them ; masters 
of vessels, who share in the profit and loss of the adventure in lieu of 
wages ; seamen employed in the whale fisheries ; shipments from this country 
to India on half profits ; those who receive, in the form of rent, a portion of 
the profits of a farm or tavern ; and a variety of other adventures, to which 
it is unnecessary particularly to refer. Dry v. Boswell, 1 Camp. 329 ; AVish 
V. Small, 1 Camp. 331, note; Hesketh v. Blanchard, 4 East, 144; Mair v. 
Glennie, 4M. & S. 240 ; Dixon v. Cooper, 3 Wils. 40 ; Withington v. Herring, 

5 Bing. 442 ; Rice v. Austin, 17 Mass. 197 ; Baxters. Rodman, 3 Pick. 435 ; 
Cutler V. Winsor, 6 Pick. 335 ; Turner i'. Bissell, 14 Pick. 192 ; Muzzy v. 
Whitney, 10 Johns. 226 ; Ross v. Drinker, 2 Hall, 415 ; Harding v. Foxcroft, 

6 Greenl. 76 ; Thompson v. Snow, 4 Greenl. 264 ; Miller v. Bartlet, 15 S. & 
R. 137. The rule, which these and other cases establish, is founded on the 
distinction which has been taken between agreements, by which the parties 
have a specific interest in the profits themselves, as profits, and such as give 
to the party sought to be charged as a partner, not a specific interest in the 
business or profits, as such, but a stipulated proportion of the profits, as a 
compensation for his labor and services. Ex parte Chuck, 8 Bing. 469. 
We are aware that this distinction has not received the approbation of Lord 
Eldon, Avho says, in Ex parte Hamper, 17 Ves. 403: 'The cases have gone 
further to this nicety, upon a distinction 'so thin, that I cannot state it as 
established upon due consideration, that if a trader agrees to pay another 
person for his labor in the concern a sum of money even in proportion to 
the profits, equal to a certain share, that will not make him a partner; but 
if he has a specific interest in the profits themselves, as profits, he is a partner. 
It is clearly settled, though I regret it, that if a man stipulates, that, as the 
reward of his labor, he shall have, not a specific interest in the business, but a 
given sura of money, even in proportion to a given quantum of the profits, 
that will not make him a partner ; but if he agrees for a part of the profits, as 
such, giving him a right to an account, though having no property in the 
capital, he is, as to third persons, a partner.' Id. 412 ; Ex ^yarte Rowlandson, 
1 Rose, 91 ; Ex parte Watson, 19 Ves. 459. We do not propose to examine 
the reason-ableness of the doubts expressed by this distingui;ihed judge. 
Such inquiry we consider closed by a series of precedents, which we do 



78 PARTNERSHIP. [CHAP. IV. 

satinets, and B. was to deliver to A. all the satinets, 
which the wool would make, and to find and pay for 
warps for the same ; A. was to pay B., for working the 
wool, finding the warps, &c., forty per cent on the sale 
of the satinets ; each was to pay half the charges ; A. 
was to have the whole direction of the sales, and if he 
should make sales himself, he was to have one and a 
half per cent upon forty per cent of the sales. It 
was held, that A. and B. were not partners inter sese, or 
as to third persons.^ 

not feel at liberty to disregard. They have settled principles, which have 
for a long period regulated the agreements of parties, in cases to which 
they are applicable ; and they ought not now to be questioned. The dis- 
tinction, to which we have referred in our opinion, embraces the present 
case. The object of Marshall and his associates was to have the wool man- 
ufactured into cloth. They resided at a distance from the factory occupied 
by French and Hubbell, and were unacquainted with the business of manu- 
facturing. They were willing to avail themselves of the opportunity, which 
the possession of the factory by French afforded, of having their wool 
worked into cloth, and of the skill of French and Hubbell, to prepare it for 
market. To secure and increase exertion, they agreed to give them, as a 
reward for their services and the materials, which they should furnish, 
a certain proportion of the ' net proceeds of all the cloths, after deducting 
incidental and necessary expenses of transporting and other proper charges 
of sale.'' It is not expressed, in terms, to be for such compensation ; but 
this is its legal meaning. In many of the cases, to which we have referred, 
the language of the agreements was not more explicit than in the one now 
under consideration ; but looking at the entire transaction, such was con- 
sidered the obvious meaning of the parties. French and Hubbell had no 
other interest in the profits than such as arose from the agreement to pay 
them for their labor, &c., in a specific proportion of the amount of the sale 
of the manufactured article." [See Brigham v. Dana, 29 Vt. 1, 9.] 

' Turner v. Bissell, 14 Pick. 192. — On this occasion Mr. Justice Wilde, 
in delivering the opinion of the court, said: " The question submitted is, 
whether the defendants are liable in this suit as partners. It is admitted, 
that they were not partners inter se ; for by the terms of their agreement, 
they had not a mutual interest in the profits and loss of the business, to 
which it related, which is essential to render a partnership complete. But 
the plaintiff 's counsel contend, that both of the defendants participated in 
the profits of the business, and were thereby chargeable with respect to 
third persons. And it is certainly a well-established principle, that whoever 
participates in the profits of a trade, or has a specific interest in the profits 



CHAP. IV.] AS TO THIRD PERSONS. 79 

§ 47. So, where a person was employed as an agent 
in conducting the husiness of a foundry for iron cast- 
ings, at a fixed salary of ^300, and in addition thereto, 
he was to receive one-third of the profits of the foundry, 

themselves, as profits, is chargeable as a partner with respect to tliird 
persons. Gow on P. 14. But it is equally well established, that, where a 
party is entitled to or receives a given sum of money, in proportion to a given 
quantum of the profits, as a compensation for his labor and services, he is 
not thereby liable to be charged as a partner. Gow on P. 19. Thus, 
in Dry v. Boswell, 1 Camp. o29, the proprietor of a lighter agreed with a 
person to work his lighter, and to allow him therefor one-half of the gross 
earnings, as a compensation for his labor ; and it was ruled by Lord Ellen- 
borough, that such an agreement did not constitute a partnership. The cases 
of the seamen employed in the whale fisheries, and of shipments to India on 
half profits, come witliin the same distinction. So factors and other agents, 
who receive commissions in proportion to the amount of sales, are inter- 
ested in the profits, but as they have no interest in them, excepting so far 
as they may determine the amount of compensation for their services, thev 
do not thereby become partners. And we are of opinion, that the present 
case falls within this distinction. The object of Bissell was to have his 
wool worked into cloth, and he agreed to allow Root, as compensation for 
manufacturing, an amount of money to be regulated by the amount of 
sales ; and in no other manner was Root interested in the profits. The 
circumstance, that Root was to find warps, does not affect the principle, upon 
which the distinction as to compensation is founded. If Bissell had agreed 
with Root to pay him a certain sum for his services, and for supplying the 
warps, there could be no pretence for holding them as partners ; and we can 
perceive no difl'erenee in principle, arising from the circumstance, that the 
compensation was to be determined according to the amount of sales." 
[And see Hawes v. Tillinghast, 1 Gray, 289; {Denny v. Cabot, 6 Met. 82; 
Judson V. Adams, 8 Cush. 556; Hitchings v. Ellis, 12 Gray, 4-49; Kellogg 
V. Griswold, 12 Vt. 291 ; Mason v. Potter, 26 Yt. 722 ; Lamb v. Grover, 
47 Barb. 317 ; Dunham v. Rogers, 1 Penn. St. 255 ; Johnson v. Miller, 16 
Ohio, 431. See § 41.} So where A. agreed to serve B. as overseer on 
his farm for one year, A. to furnish a certain number of hands and horses, 
and to defray his and their expenses himself, and they were to be worked 
on B.'s farm in connection with B.'s hands and horses, and A. was to have 
one-fourth of the crop for his compensation, this was held to constitute no 
partnership inter sese, as A. was to share only in the gross profits, and not 
at all in the loss. Moore v. Smith, 19 Ala. 774 ; {Blue v. Leathers. 15 111. 
31; ante, § 41, note.} But where A. gave B. possession of a stock-farm 
for a term of years to improve, B. to have one-third of tiie profits, and to 
pay no rent, the current expenses to be paid by the concern, and six per 
cent interest to be allowed on advances made by either party, this contract 
was held to be a partnership. Tibbatts v. Tibbatts, G McLean, 80.] 



80 PARTNERSHIP. [cHAP. IV. 

if any were made, and he had nothing to do with the 
losses ; and his employers were to find all the capital 
stock, and he was to give his services ; it was held, 
that the agent was not, either as to his employers, or 
as to third persons, a partner ; but that the case fell 
within that class of decisions, where the agent was to 
receive a share of the profits as a compensation for his 
labor and services.^ 

§ 48. These may suffice as illustrations of the dis- 
tinction above alluded to. The whole foundation, on 
which it rests, is, that no partnership is intended to be 
created by the parties inter sese ; that the agent is not 
clothed with the general powers, rights, or duties of a 
partner ; that the share in the profits given to him is 
not designed to make him a partner, either in the 
capital stock, or in the profits, but to excite his dili- 
gence, and secure his personal skill and exertions, as 
an agent of the concern, and is contemplated merely 
as a compensation therefor. It is, therefore, not only 
susceptible of being treated purely as a case of agency ; 
but in reality it is positively and absolutely so, as far 
as the intention of the parties can accomplish the 
object. Under such circumstances, what ground is 
there in reason, or in equity, or in natural justice, why 
in favor of third persons this intention should be over- 
thrown, and another rule substituted, which must work 
a manifest injustice to the agent, and has not operated 
either as a fraud, or a deceit, or an intentional wrong 
upon third persons ? Why should the agent, who is by 
this very agreement deprived of all power over the 
capital stock, and the disposal of the funds, and even 

» Vanderburgh v. Hull, 20 Wend. 70. See 1 Smith, Lead. Cas. 504, 
and note, 2d ed. ; [Ilawlinson v. Clarke, 15 M. & W. 292] ; {§ 41 ; Clark 
V. Gilbert, ^2 Barb. 57G ; Atherton v. Tilton, 44 N. H. 452; Bull v. Schu- 
bcrth, 2 Md. 38. But see Holt v. Kernodle, 1 Ired. 191).} 



CHAP. IV.] AS TO THIRD PERSONS. 81 

of the ordinary rights of a partner to a levy ^ thereon, 
and an account thereof, be thus subjected to an un- 
Hmited responsibihty to third persons, from whom he 
has taken no more of the funds or profits (and, indeed, 
ordinarily less so) than he would have taken, if the 
compensation had been fixed and absolute, instead of 
being contingent?^ If there be any stubborn rule of 
law, which establishes such a doctrine, it must be 
obeyed; but if none such exists, then it is assuming 
the very ground in controversy to assert, that it flows 
from general analogies or principles. On the contrary, 
it may be far more correctly said, that even admitting 
(what as a matter unafl"ected by decisions, and to be 
reasoned out upon original principles, might well be 
doubted ^), that where each party is to take a share of 
the profits indefinitely, and is to bear a proportion of the 
losses, each having an equal right to act as a principal, 
as to the profits, although the capital stock might belong 
to one only,^ it shall constitute, as to third persons, a 
case of partnership ; yet that rule ought not to apply to 
cases, where one party is to act manifestly as the mere 
agent for another, and is to receive a compensation for 
his skill and services only, and not to share as a partner, 
or to possess the rights and powers of a partner. 

§ 49. In short, the true rule, ex cecfiio et bono, would 
seem to be, that the agreement and intention of the 
parties themselves should govern all the cases. If they 
intended a partnership in the capital stock, or in the 
profits, or in both, then, that the same rule should 
apply in favor of third persons, even if the agreement 

> { Qu. lien ? } 

« Gary on P. 11, note (i) ; ante, § 37, note (1). 
=» Ante, § 36, 37. 

* Grace v. Smith, 2 W. Bl. 998 ; Waugh v. Carver, 2 II. Bl. 235 ; ante, 
§ 27, 28. 



82 PARTNERSHIP. [cHAP. IV. 

were unknown to them. And, on the other hand, if no 
such partnership were intended between the parties, 
then, that there should be none as to third persons, 
unless where the parties had held themselves out as 
partners to the public, or their conduct operated as a 
fraud or deceit upon third persons. It is upon this 
foundation, that the decisions rest, which affirm the 
truth and correctness of the distinction already con- 
sidered, as a qualification of the more general doctrine 
contended for. And in this view it is difficult to per- 
ceive, why it has not a just support in reason, and 
equity, and public policy. Wherever the profits and 
losses are to be shared by the parties in fixed propor- 
tions and shares, and each is intended to be clothed 
with the powers, and rights, and duties, and responsi- 
bilities of a principal, either as to the capital stock, or 
the profits, or both, there may be a just ground to 
assert, in the absence of all controlling stipulations and 
circumstances, that they intend a partnership. But 
where one party is stripped of the powers and rights 
of a partner, and clothed only with the more limited 
powers and rights of an agent, it seems harsh, if not 
unreasonable, to crowd upon him the duties and 
responsibilities of a partner, which he has never as- 
sumed, and for which he has no reciprocity of reward 
or interest. It has, therefore, been well said by Mr. 
Chancellor Kent, in his learned Commentaries, that 
" to be a partner, one must have such an interest in 
the profits, as will entitle him to an account, and give 
him a specific lien or preference in payment over other 
creditors. There is a distinction between a stipulation 
for a compensation for labor proportioned to the profits, 
which does not make a person a partner ; and a stipu- 
lation for an interest in such profits, which entitles the 



CHAP. IV.J AS TO THIRD PERSONS. 83 

party to an account, as a partner." ' And Mr. Collyer 
has given the same doctrine in equally expressive 
terms, when he says, that in order to constitute a com- 
munion of profits between the parties, which shall 
make them partners, the interest in the profits must be 
mutual ; that is, each person must have a specific inter- 
est in the profits, as a principal trader.^ 

' 3 Kent, 25, note (b) ; Gary on P. 11, note (i) ; ante, § 37, note (1) ; 
post, § 57. [See Rawlinson v. Clarke, 15 M. & W. 292.] 

* Coll. on P. B. 1, c. 1, § 1, p. 17, 2d ed.; Id. p. 11; Id. p. 23. {The 
doctrine that participation in profits makes one liable as a partner to third 
persons by operation of Into, first distinctly enunciated in Waugh v. Carver, 2 
H. Bl. 235, after being disapproved by almost all text-writers, reluctantly 
followed by courts and broken in upon by subtle exceptions and limitations, 
has been finally overthrown in England. A series of cases has decided that 
the law of partnership is a branch of the law of agency ; that the test to 
determine the liability of one sought to be charged as a partner, is whether 
the trade is carried on in his behalf; and that participation In the profits is 
not decisive of that question, except so far as it is evidence of the relation of 
principal and agent between the persons taking the profits and those actually 
carrying on the business. Cox v. Hickman, 18 C B. 617; s. c. 8 H. L. C. 
2G8; Kilshaw i'. Jukes, 3 B. & S. 847; Bullen v. Sharp, (Exch. Ch.) Law 
Rep. 1 C. P. 86. 

In the last case Mr. Justice Blackburn says, p. 109: "The first point 
therefore to be determined In the present case, is what really was the effect 
of the decision of the House of Lords in Cox v. Hickman, 8 H. L. C. 268. 
Prior to that decision, the dictum of De Grey, C. J., In Grace v. Smith, 2 W. 
Bl. 998, 'that every man who has a share of the profits of a trade ought 
also to bear a share of the loss," had been adopted as the ground of judgment 
In Waugh v. Carver, 2 H. Bl. 235, where It was laid down 'that he who 
takes a moiety of all profits Indefinitely shall, by operation of law, be made 
liable to losses if losses arise, upon the principle that, by taking a part of the 
profits, he takes from the creditors a part of that fund which Is the proper 
security to them for the payment of their debts.' This decision had never 
been overruled. The reasoning on which It proceeds seems to have been 
generally acquiesced In at the time : and when, more recently. It was dis- 
puted, it was a common opinion (in which I for one participated) that the 
doctrine had become so Inveterately part of the law of England that it would 
require legislation to reverse It. In Cox r. Hickman, the creditors of a trade 
had agreed that their debtor's trade should be carried on for the purpose of 
paying them their debts out of the profits; and the composition deed, to wliich 
they were parties, secured to them a property In the profits. The rule laid 
down In Waugh v. Carver, if logically followed out, led to the conclusion 



84 PARTNERSHIP. [cHAP. IV. 

§ 50. The Koman law fully recognized the same dis- 
tinction, treating the case as a mandate, and not as a 

thai all tlie creditors ■who assented to this deed, and by so doing agreed 
to take the profits, were individually liable as partners; but, when it was 
sought to apply the rule to such an extreme case, it was questioned whether 
the rule itself was really established. There was a very great difference of 
opinion amongst the judges who decided the case in its various stages below, 
and also amongst those consulted in the House of Lords. In the result, the 
House of Lords, — consisting of Lord Campbell, C, and Lords Brougham, 
Cranworth, Wensleydale, and Chelmsford, — unanimously decided that the 
creditors were not partners. The judgments of Lord Cranworth and of 
Lord Wensleydale bear internal evidence of having been written. Lord 
Campbell, C, and Lords Brougham and Chelmsford said a few words 
expressing their concurrence. It is, therefore, in the written judgments, and 
more especially in the elaborate judgment of Lord Cranworth, that we must 
look for the 7-atio decidendi. Now, we find Lord Cranworth says, 8 H. L. C. 
306 : ' It was argued, that, as they would be interested in the profits, therefore 
they would be partners. But this is a fallacy. It is often said that the test, 
or one of the tests, whether a person not ostensibly a partner is nevertheless, 
in contemplation of law, a partner, is, whether he is entitled to participate, in 
the profits. This, no doubt, is in general a sufficiently accurate test; for a 
right to participate in profits affords cogent, often conclusive, evidence that 
the trade in which the profits have been made was carried on in part for or 
on behalf of the person setting up such a claim. But the real ground of the 
liability is, that the trade has been carried on by persons acting on his behalf; 
when that is the case, he is liable to the trade obligations, and entitled to its 
profits, or to a share of them. It is not strictly correct to say that his right to 
share in the profits makes him liable to the debts of the trade. The correct 
mode of stating the proposition is, to say that the same thing which entitles 
him to the one makes him liable to the other, viz. the fact that the trade has 
been carried on on his behalf, i. e. that he stood in the relation of principal 
towards the persons acting ostensibly as the traders by whom the liabilities 
have been incurred, and under whose management the profits have been 
made. Taking this to be the ground of liability as a partner, it seems to me 
to follow that the mere concurrence of creditors in an arrangement under 
which they permit their debtor, or trustees for their debtor, to continue his 
trade, applying the profits in discharge of their demands, does not make 
them partners with their debtor or the trustees. The debtor is still the 
person solely interested in the profits, save only that he has mortgaged them 
to his creditors. He receives the benefit of the profits as they accrue, 
though he has precluded himself from applying them to any other purpose 
than the discharge of his debts. The trade is not carried on by or on 
account of the creditors ; though their consent is necessary in such a case ; 
for, without it, all the property might be seized by them in execution. But 
the trade still remains the trade of the debtor or his trustees ; the debtor or 



CHAP. IV.] AS TO THIRD PERSONS. 85 

partnership, unless the hitter was the intention of the 
parties themselves, where one person was employed to 

the trustees are the person by or on behalf of whom it is carried on.' He 
afterwards adds, 8 H. L. C. 309 : ' The authorities cited in argument did 
not throw much light upon the subject. I can find no case in which a 
person has been made liable as a dormant or sleeping partner, where the 
trade might not fairly be said to have been carried on for him, together with 
those ostensibly conducting it, and when therefore he would stand in the 
position of principal towards the ostensible members of the firm as his agents.' 
And Lord Wensleydale says, 8 H. L. C. 312: 'A man who allows another 
to carry on trade, whether in his own name or not, to buy and sell, and 
to pay over all the profits to him, is undoubtedly the principal, and the 
person so employed is the agent, and the principal is liable for the agent's 
contracts in the course of his employment. So, if two or more agree that 
they shall carry on a trade, and share the profits of it, each is a principal, and 
each is an agent for the other; and each is bound by the other's contracts in 
carrying on the trade, as much as a single principal would be by the act of 
an agent who was to give the whole of the profits to his employer. Hence, 
it becomes a test of the liability of one for the contract of another that he is 
to receive the whole or a part of the profits arising from that contract, by 
virtue of the agreement made at the time of the employment. I believe this 
is the true principle of partnership liability. Perhaps the maxim that he who 
partakes the advantage ought to bear the loss, often stated in the earlier cases 
on the subject, is only the consequence, not the cause, why a man is made 
liable as a partner. Can we, then, collect from the trust deed that each of 
the subscribing creditors is a partner with the trustees, and by the mere sig- 
nature of the deed constitutes them his agents for carrj'ing on the business on 
the account of himself and the rest of the creditors ? I think not.' And 
he afterwards gives as the reason of his decision, that in the particular case, 
there was not 'such a participation of profits as to constitute the relation of 
principal and agent between the creditors (the defendants) and the trustees, 
who actually made the contract sued on.' 

"I think that the ratio decidendi is, that the proposition laid down in 
Waugh V. Carver, viz. that a participation in the profits of a business does of 
itself, by operation of law, constitute a partnership, is not a correct state- 
ment of the law of England ; but that the true question is, as stated by Lord 
Cranworth, whether the trade is carried on on behalf of the person sought to 
be charged as a partner, the particij)ation in the profits being a most im- 
portant element in determining that question, but not being in itself decisive ; 
the test being, in the language of Lord Wensleydale, whether it is such a par- 
ticipation of profits as to constitute the relation of principal and agent between 
the person taking the profits and those actually carrying on the business." 

And in the same case, p. 125, Mr. Baron Bramwell says: "They 
say that the defendant is a partner with his son ; and that, if not part- 
ners inter se, they are so as regards third parties. A most remarkable 



86 PARTNERSHIP. [CHAP. IV. 

sell the goods of another, and was to receive for his ser- 
vices a portion of the profits, or the whole or a part of 

expression ! Partnership means a certain relation between two parties. How, 
then, can it be correct to say that A. and B. are not in partnership as 
between themselves, they have not held themselves out as being so, and yet 
a third person has a right to say they are so as relates to him V But that 
must mean vifer se, for partnership is a relation inter se, and the word 
cannot be used except to signify that relation. A. is not the agent of B. ; B. 
has never held him out as such ; yet C. is entitled, as between himself and B., 
to say that A. is the agent of B. ! Why is he so entitled, if the fact is not so, 
and B. has not so represented? But 'partnership,' and a 'right to call 
persons partners as regards third parties' are words, and the tJiing must 
be looked at, viz. the taking or sharing of profits, which it is said gives C. a 
right as against B., to say B. is a partner of A. Why should it ? I trust, 
that, in the present state of authority, this question may be freely handled 
without presumption, and that the goodness of such a rule may be examined ; 
because, though we are bound to administer the law as we find it, yet, when 
we are considering what is the law, we may not improperly inquire into the 
reasonableness of that suggested. Why, then, does a taking or sharing of 
A.'s profits by B. entitle C. to demand payment by B. of A.'s debts in the 
trade ? How, if there is such taking or sharing in this case, does it prove 
that the defendant ' subscribed the policy and became an insurer ' ? If A. 
agrees with B. to share profits and losses, but not to interfere with the busi- 
ness, and not to buy nor sell, and does not interfere, nor buy nor sell, and C. 
knowing this, deals with B., he would have no claim on A. AVhy should he, 
if he does not know of it ? Why, upon finding out something between A. 
and B., which has in no way affected or influenced him, should he who has 
dealt with B. have a claim on A. ? It is said, because profits are what the 
creditor trusts to, they are his fund for payment. This would be a bad 
reason, if true in fact. A man who trusts another generally, has a claim on 
his profits and capital too. How does a man who trusts the former only more 
afiect the creditor's fund ? But, further, it really is not true in substance, 
only in words. It is not a receipt of profits, in substance, that makes a man 
liable. If I agree to receive a sum in proportion to profits, as, for instance, 
a sum equal to a tenth, I am not liable. If I receive a tenth, I am. What 
is the difference, except in words, at least as far as creditors are concerned ? 
How can one set of words between A. and B., give C. a right, and the same 
thing in other words not? How many men in a thousand, not lawyers, 
could be got to understand, that, of the two servants of a firm, the one who 
received a tenth of the profits was liable for its debts, and the other who 
received a sum equal to a tenth was not? This Mr. Justice Story calls 
'satisfactory.' Story on P. § 32. Satisfactory in what sense? In a practi- 
cal business sense ? No ; but in the sense of an acute and subtle lawyer, 
who is pleased with refined distinctions, interesting as intellectual exercises, 
though unintelligible to ordinary men, and mischievous when applied to the 



CHAP. IV.] AS TO THIRD PERSONS. 87 

the excess of price beyond a given sum.^ Si margarita 
tibi vendenda dedei^o, ut, si ea decern vendidisses, red- 

ordinary affairs of life. Lord Eldon did not think it satisfactory. Ex parte 
Hamper, 17 Ves. 404. Such a law is a law of surprise and injustice, and 
against good policy. It fixes a liability on a man contrary to his intent and 
expectation, and without reason, and gives a benefit to another which he did 
not bargain for and ought not to have, and prevents that free use of capital 
and enterprise which is so important. It is said that this is true of a dor- 
mant partner. It is not : his existence may be unknown to the creditor ; but 
the dormant partner knows he is liable, and means to be ; and the creditor 
trusts all such persons ; he means to deal with all real persons. It may be 
said, that, if this reasoning is right, a man might bargain to receive all the 
profits of a business, and not be liable. The answer is, the thing is impossi- 
ble. There never was, and never will be, a bona fide agreement by one man 
to carry on a business, bear all its losses, and pay over all its profits. Should 
such an agreement appear, it would obviously be colorable. Where there is 
a chance of profit to the trader, there such an agreement may be honest ; 
and, where honest, ought not to make him liable who is certainly to receive 
some of the profits, and perhaps all. 

"I have hitherto dealt with the case on principle. I proceed to examine 
the authorities. The labor formerly needful is now rendered unnecessary by 
Cox V. Hickman, 8 H. L. C. 268. That case has settled the law, I may be 
permitted, I hope, to say, in a perfectly satisfactory manner. . . . But, 
even if we assume that the law supposed to exist before Cox v. Hickman, 
remains untouched, that is to say, the supposed law of Waugh v. Carver, 2 
H. Bl. 235, I think the same conclusion ought to be come to. Lord Wensley- 
dale does not notice that case. Lord Cranworth does, and, with submission, 
gives a better reason for the decision than is to be found in the case itself. 
The Chief Justice there says the question is whether they have not consti- 
tuted themselves partners in respect to other persons, and puts his decision on 
the ground that, ' he who takes a moiety of all the profits indefinitely, shall by 
operation of law be liable to losses.' Let us hope that this notion is over- 
ruled, — one which I believe has cau.sed more injustice and mischief than 
any bad law in our books. ... I hope I shall not be charged with arro- 
gance for the way in which I have spoken of bygone opinions. The law had 
drifted into the condition from which it was rescued by Cox v. Hickman. 
No one in particular was responsible for, and probably no one person could 
have put it at once in the position it was in. But the true line had been de- 
parted from, at first but a little, and for a good reason ; and every subse- 
quent move took it further away in a wrong direction, till it was happily 
brought back by Cox v. Hickman." 

In America there is much conflict among the authorities. It has been 
generally considered that a mere participation in the profits, even the net 
profits, will not necessarily constitute one a partner ; and even the Pennsyl- 

' Ante, §37. 



88 PARTNERSHIP. [cHAP. IT. 

deres mihi decern ; si 2^^uris^ quod excedit tit haheres ; 
mihi videtur (says Ulpian) si animo contr^ahendce socie- 

vania courts, though they have complained greatly of the rule that a commis- 
sion on profits is not such an interest as constitutes partnership, have yet 
followed it. Miller v. Bartlet, 15 S. & R. 137 ; Dunham f. Rogers, 1 Penn. 
St. 255. But this doctrine has not been universally received. In a case in 
Maryland, in 1815, Taylor v. Terme, 3 Harr. & J. 505, the plaintiff con- 
tended that an agent who received a share of the profits was liable as a 
partner; the defendant admitted that the English cases were so, but con- 
tended that as they were decided since the revolution they should not govern 
in this country. The court gave judgment for the plaintiff. There is no 
opinion. The Supreme Court of Ohio in Wood v. Vallette, 7 Ohio St. 172, 
say, "that even an agent cannot stipulate with his employer to receive an 
interest in the profits, other than of gross profits, as a remuneration for 
his services, without thereby becoming a partner as to third persons." In 
this case, however, the agreement between the parties was probably such as 
to constitute them partners it^tei' sese. In Bromley v. Elliot, 38 N. H. 287, 
the Supreme Court of New Hampshire say that the case in which the person 
dealing with the alleged partners knows or ought to know that they are not 
partners "seems the only exception which can be admitted to the general 
rule that he who shares profits must share losses and responsibilities, with 
safety to the public, or to those who deal with such parties." "It is said, they 
must share the profits as profits, to render them liable. The principle thus 
cited rests on a distinction long since disapproved as too thin to be satisfac- 
tory." " Again it is said, that a person may receive a share of the profits of 
a business, by way of salary or compensation for services, without being held 
liable as a partner to third persons. This principle has not been adopted 
here, and, unless received with the qualification that the true character of the 
agreements between the parties is made known to those who may have deal- 
ings with them, or the apparent relations of the parties are so evidently those 
of principal and agent, or rather of master and servant, that no person could 
be misled or defrauded in consequence of the connection, it seems to us 
it would be of most unsafe and dangerous tendency, and wholly unfit to 
be adopted." These remarks seem, however, to be uncalled for, as the court 
was of opinion that the facts constituted the defendants partners inter sese. 
In Pierson v. Steinmeyer, 4 Rich. 309, 319, it is said that the only excep- 
tion to the rule that he who shares profits is liable as a partner to third per- 
sons, is in the case of agents and servants, and the court refused to extend 
the exception to cover the case of one who had made advances to the firm. 

On the other hand, some cases come very near, if not quite up to the 
modern English rule. In the leading case of Loomis v. Marshall, 12 Conn. 
69 (see § 45, ante), the court say, " a partner must not only share in the 
profits, but share in them as a principal," and in Bucknam v. Barnum, 15 
Conn. 67, 73, attention is called to the fact that the decision in Loomis i'. Mar- 
shall was placed on this ground. So in Hallet v. Desban, 14 La. An. 529, 
and Berthold v. Goldsmith, 24 How. 636, though in this case the actual 



CHAP. IV.] AS TO THIRD PERSONS. 89 

tads id actum sit^j^^o socio actionem; si minus ^ j'^'^^^' 
scriptis verbis.^ In short, the Roman law seems prin- 

relations betweon the alleged partners were known to third persons. See 
Burckle v. Eckhart, 3 Comst. 132. 

In some American cases, he who shares in profits is said to be liable 
to third persons, on the ground that he takes a part of the fund on which 
creditors rely. Purviance v. M'Clintee, 6 S. & R. 259 ; see ante, § 36. 
The test, however, commonly proposed in the American cases is, whether 
the alleged partner has a specific lien on the profits to the exclusion of 
other creditors, and the i-ight to an account. This is laid down in Cham- 
pion V. Bostwick, IS Wend. 175, § 38, ante; and is followed by a series of 
decisions in Massachusetts. Denny v. Cabot, 6 Met. 82 ; Bradley v. White, 
10 Met. 803 ; Holmes v. Old Colony R. R. Co. 5 Gray, 58 ; Fitch v. Har- 
rington, 13 Gray, 468 ; Pratt v. Langdon, 12 All. 544. In this last case 
it is said that "the decisive fact is, that each had a lien on the stock for 
his share of the profits." So, Catskill Bank v. Gray, 14 Barb. 471; Voor- 
hees V. Jones, 5 Dutch. 270; Reynolds v. Hicks, 19 Ind. 113. See Cox v. 
Delano, 3 Dev. 89 ; Conklin v. Barton, 43 Barb. 435. 

Undoubtedly the fact that a person has a lien on the profits is " cogent, 
often conclusive, evidence" that he is a partner; but it maybe doubted 
whether, as an ultimate test to be applied in all cases, it is entirely satis- 
factory. It is said in the leading case of Champion v. Bostwick, 18 Wend. 
175, in language which has been often adopted in subsequent decisions, 
that if one stipulates for an interest in the profits of a business which would 
entitle him to an account, and give him a specific lien or a preference in 
payment over other creditors, giving him the full benefit of the increased 
profits without any corresponding risk in case of loss, it would operate 
unjustly as to other creditors. But the creditors to whom he is preferred 
are only the separate creditors of the actual partners ; he has no preference 
over the partnership creditors, for there are no profits till they are paid, 
and it is only out of the profits that his remuneration is to come. Why 
should the fact that he has a priority over one set of creditors, make him 
liable " to his last shilling" to another set of creditors? A second mort- 
gagee has a priority over the mortgagor''s general creditors ; but has it 
been ever ai'gued that ^/^ej-e/bre his whole property, of every kind, sliould be 
liable for the first mortgage debt ? Yet the cases would seem very analogous. 

And though a partner is entitled to an account, yet a person may well be 
entitled to an account, and yet not be a partner. If he is to receive a 
sum equal to a share of the profits, he is, by the great weight of authority, 
clearly no partner ; yet how can he secure the payment of the compensa- 
tion agreed upon unless he has an account? See also Holmes v. Old 
Colony R. R. Co., 5 Gray, 58. See 2 Am. Law Rev. 1, 193. } 

* D. 17, 2, 44 ; Poth. Pand. 17, 2, n. 4, and note, ibid. ; 17 Duranton, Droit 
Franc, de Societe, n. 332; Poth. de Soc. n. 13; 5 Duvergier, Droit Civil 
Franc, n. 45. 



90 PARTNERSHIP. [cHAP. IV. 

cipally, if not altogether, to have treated the case of 
partnership only as between the parties themselves, and 
does not even affect to give rights to third persons 
against them, founded upon any responsibility not con- 
templated by the partnership contract.^ Voet, in 
speaking on the subject, manifestly deems every part- 
nership, whether express or implied, to be a matter of 
consent between the parties. Societas dwiditur j^Timo 
(says he) in eoc/pressam^ quce, expressa conventione fit^ et 
tacitam, quce re contrahi dicitur, dum rehus ipsis et 
factis, simulemendo, vendendo, lucra et damna dividendo, 
socii ineundce societatis voluntatem declarant^ 

§ 51. The same distinction is well known and fully 
recognized in the French law. Pothier has not, indeed, 
spoken with his usual clearness, or exactness, on the 
subject.^ But Pardessus has expressed his opinion in 
the most direct and satisfactory manner. Thus (he 
says), whenever a merchant, instead of a fixed salary, 
agrees to give his agent a certain part of the annual 
profit, the agent is a letter of his services under an 
aleatory condition ; but he is not a partner. He can- 
not make claim in that quality to any proprietary in- 
terest in the merchandise, bought with the funds of his 
principal, although he partakes of the profits thereof. 
He cannot, at least without an express stipulation, 
have any voice in the deliberations of the partnership ; 
and he will not be subjected to the contracts of the 
partnership in respect to third persons, unless, indeed, 
he has exceeded his powers, and then he is responsible 
as a mandatary.^ So, when one person has trusted 

> See 17 Duranton, Droit Franc, de Societe, n. 334; Poth. Pand. 17, 2, 
n. 30-40; ante, § 37. 

^ Voet, ad Pand. 1 7, 2, § 2. 

' See Potb. Pand. 17, 2, n. 4, and Pothier's notes, ibid. Poth. de Soc. n. 
13 ; 5 Duvergier, Droit Civ. Franc, n. 45 ; ante, § 37. 

* Pardessus, Droit Comm. Tom. 4, n. 969 ; Id. Tom. 2, n. 560. 



CHAP. IV.] AS TO THIRD PERSONS. 91 

goods to another to be sold for him, and has agreed 
to give him the whole or a part of the price, which 
shall exceed a certain sum, this will not create a part- 
nership between them ; but only be a salaried man- 
date, or commission to the agent, thus undertaking the 
business.^ Duvergier holds the same opinion, and has 
reasoned out the grounds thereof with uncommon 
acuteness and ability.^ And, indeed, it seems to be 

^ Pardessus, Droit Comm. Tom. 4, n. 969. See, also, Id. Tom. 2, n. 306 ; 
Id. Tom. 3, n. 702. 

^ 5 Duvergier, Droit Civ. Franc, n. 48-56. — The following quotation 
clearly exhibits his views. " Enfin, il y a un usage fort repandu parmi 
les commercans, qui consiste a donner, a titre d'appointemens, a leur 
commis ou employes, une quote part des benefices de leur commerce. Cette 
stipulation semble, au premier coup-d'ceil, reunir tons les elemens de la 
societe ; elle a d'un autre cote, beaucoup d'analogie avec le mandat salarie. 
On comprend combien il est utile de savoir a laquelle de ces deux classes 
de contrats elle appartient reellement. II est inutile de citer d'autres exem- 
ples. Ceux que je viens de presenter montrent assez, qu'il est tres difficile 
de demeler le veritable caractere de ces conventions qui paraissent partici- 
per egalement de la societe, du mandat salarie, et du louage d'ouvrage. 
Recherchons maintenant les principes, qui doivent diriger dans cette appre- 
ciation. La definition qui a ete precedemment donnee du contrat de societe, 
me semble jeter sur ces delicates questions une lumiere suffisante. Elle pre- 
sente deux idees principales ; elle montre dans le contrat de societe deux 
elemens essentiels ; d'abord, un fonds commun compose des mises particu- 
lieres ; en second lieu, une participation aux benefices produits par le fond 
social ainsi forme. Si done j'analyse une convention, et que je ne voie point, 
qu'elle ait fait des choses, dont chacun des contractans etait proprietaire 
exclusif, une chose commune k tous, je suis autorise a conclure, qu'elle n'est 
point une societe. Je suis conduit a la meme consequence, quoique un droit 
de propriete soit etabli par I'efTet de la stii^ulation, si les contractans n'ont 
point eu en vue de se partager des benefices resultant de I'etat de commu- 
naute, qu'ils ont cree. II ne suffit done pas, qu'ils aient mis leurs proprietds 
en contact, sans les confondre, et qu'ils se soient procures par h\ certains 
avantages, pour qu'ils soient associes; il ne suflit pas meme, que les pro- 
prietds soient confondues, et que cette communication de droits ait acciden- 
tellement des resultats profitables ; il faut que ce soit precisement en vuo de 
ces resultats que la convention ait ^te formee. L'application de ces princi- 
pes aux diverses hypotheses, dont il vient d'etre parl^, montre que, dans 
aucune d'elles, il n'y a societe. Entre le proprietaire de pierrerics ou 
d'autres objets, et celui qui se charge de les vendre, moyennant la portion 
du prix, qui e.xc^dera une limite ddterminee, il n'y a point de propri^td com- 



92 PARTNERSHIP. [cHAP. IV. 

the established doctrine of the French tribunals. This 
coincidence of doctrine, founded upon gejieral reason- 

mune. L'industrie de I'un s'exerce sur une chose, qui ne cesse point d'ap- 
partenir a I'autre. II n'y a point, a proprement parler, de benefice, qui se 
partage entre eux; la somme totale, moyeunant laquelle la vente est faite, 
est le prix des objets vendus ; elle est la representation, d'abord de la valeur 
intrinseque de ces objets, et en second lieu des peines, des soins et meme des 
frais qui ont pu etre necessaires pour les fairs parvenir a un acheteur. Dans 
toute vente, le prix se compose de ces deux elemens ; lorsque les marches se 
concluent, sans intermediaire entre I'acheteur et le vendeur, ce dernier 
touche les deux parties du prix ; au cas contraire, I'une est pergue par le 
proprietaire, I'autre par I'entremetteur. On devrait en dire autant, alors 
meme, que le salarie de I'agent place entre le vendeur et I'acheteur, con- 
sisterait en une certaine quotite du prix, a quelque somme qu'il s'elevat. 
C'est precisement ce qui se passe, tons les jours, dans les ventes ou autres 
negociations, qui se font par I'intermediaire de (tourtiers. La commission ou 
droit de courtage est de tant pour cent sur le produit des operations ; et Ton 
n'a jamais songe a voir la des soeietds, parce qu'on a bien senti, que la chose 
dont la vente est faite, ne devient point la copropriete du vendeur et du 
courtier ; qu'il n'y a point de benefices proprement dits dans une pareille 
operation, car il n'y a point augmentation de valeur produite par I'eifet 
d'une mise en communaute ; que seulement, il y a vente et distribution du 
prix entre deux personnes, qui y ont droit, a titre different. Lorsque qua- 
tre chevaux appartenant a deux maitres sont reunis pour etre vendus, la 
propriete de chacun restant separee, il est egalement e'vident, qu'il n'y a 
point de societe ; car il n'y a rien de mis en commun, il n'y a point de copro- 
priete formee par la reunion de proprietes distinctes. A la verite, la com- 
binaison des contractans a pour but et pour resultat d'augmenter la valeur 
venale des choses, qui leur appartiennent ; mais la societe suppose I'existence 
d'une masse commune de benefices, k laquelle chacun vient puiser selon son 
droit. Ici, chacun et reste proprietaire de ce, qui lui appartenait avant la 
convention, il profile seulement de I'excedant de valeur, qui est survenu a 
sa chose. Dans la troisieme espece, oil Ton a voulu voir une societe, il n'y 
a reellement qu'un mandat, ou I'etablissement d'un etat de communaute 
transitoire. Le fait, sur lequel s'explique la loi romaine citee par Pothier, 
n'est pas presente avec une precision parfaite, et lorsqu'on veut indiquer ses 
consequences avec I'exactitude convenable, on est oblige d'admettre une 
distinction. Si les deux voisins, qui ont eu la pensee d'acheter un fonds 
place pres de leurs heritages, sont d'accord sur la portion, que chacun y doit 
prendre ; celui qui fait I'acquisition agit, pour partie, en son nom personnel, 
et, pour partie, comme mandataire. II n'y a pas I'apparence d'une societe ; 
il n'y a pas meme communaute, puisque le partage est fait a I'avance. Si 
le lot de chacun n'est pas determine, la propriete du fonds sera indivise; 
mais, on le sait, I'indivision ne suffit point pour constituer la societe ; elle 
6tablit seulement une communaute. Ce n'est pour les contractans qu'un 



CHAP. IV.] AS TO THIRD PERSONS. 93 

ing, between foreign jurists and the municipal juris- 
prudence of the common law, as to the propriety of 

etat transitoire ; leur but est le partage, et non la perception des b^n^fices, 
que la chose commune peut produire. L'avantage que trouve cliafiue ache- 
teur, dans la reunion a son heritage d'une partie du fonds acquis en com- 
mun, n'est pas un veritable benefice social. II est meme possible, qu'il y ait 
pour eux perte materielle dans I'acquisition, que le fonds ne vaille pas ce 
qu'ils I'ont pave et cju'ils aient sciemment fait un marche desavantageux, 
pour eloigner un voisinage desagreable, ou pour executer des ameliorations 
purement voluptuaires. On ne saurait trop insister sur la necessite de con- 
server au mot benefices son sens exact et rigoureux ; car c'est parce que 
Ton regarde benefices et avantages comme des expressions equivalentes, que 
Ton se meprend sur le caractere d'une foule de conventions. Si toutes 
celles qui procurent quelques avantages aux contractans, etaient des societes, 
cette qualification conviendrait a un nombre infini de contrats. L'arrange- 
ment que font les commer^ans avec leurs commis, lorsqu'ils donnent a ceux-ci, 
au lieu d'appointemens, une portion des benefices de leur maison, parait, plus 
que tout autre, reunir les elemens constitutifs de la societe. L'industrie du 
commis ne forrae-t-elle pas sa mise ? Ne prend-il point part aux benefices, 
dans la veritable acception du mot ? Ne concourt-il pas aux pertes, puisque 
s'il n'y a pas de benefices il perd son travail ? Malgre cette reunion de oir- 
constances, les auteurs et les tribunaux decident, qu'il ne faut pas confondre 
un commis interesse avec un veritable associe. lis font ressortir les diffe- 
rences, qui existent entre leur position et leurs droits. Le commis n'a point, 
disent-ils, la copropriete du fonds social ; il n'en dispose point librement et 
en maitre ; il reste soumis a I'autorite et aux ordres de son patron ; il peut 
etre renvoye par lui, sauf dedommagement ; il ne participe point aux pertes ; 
il n'est point person nellement tenu envers les tiers ; ainsi il n'a ni les pre- 
rogatives ni les obligations d'un associe. Ces observations sont justes ; 
eependant seules elles ne seraient pas decisives et Ton pourrait, a la rigueur, 
concevoir un associe redult, par des conventions particuliercs, a une situa- 
tion k peu pr. s semblable a celle qui vient d'etre decrite. Rien n'empeche, 
en effet, de stipuler, que les choses mises dans la societe resteront la pro- 
priete de I'un des associes, et que I'administration lui sera exclusivement 
reservee ; que I'autre participera aux pertes, en ne recevant rien pour son 
travail; et qu'en cas d'insuffisance du fonds "social, il ne sera point person- 
nellement oblige au paieraent des dettes. INIais la reunion de ces clauses 
fort extraordinaires n'etablirait pas encore une similitude parfaite entre 
I'associe et le commis. D'une part, lors meme que les choses mises en 
societe restent la propri6te de celui, qui les y apporte, leur jouissance au 
moins est mise en commun et chacun des associes y a droit. Or le commis 
interesse n'est point coproprietaire des capitaux de celui qui I'emploie, quoi- 
que ces capitaux soient fournis en pleine propriete, et non pas seulement 
pour la jouissance. D'un autre cote, I'associe, qui donne son Industrie comme 
mise sociale, s'engage a faire un travail determine mais independant ; il a 



94 PARTNERSHIP. [CHAP. IV. 

the distinction above stated, certainly affords no slight 
confirmation of its accuracy and entire conformity to the 
true principles, which ought to regulate the subject. 

§ 52. Thus much, at least, seemed proper to be said 
in vindication of the distinction at the common law, 
and the cases in support of it, which have been treated 
by some learned minds (as we have seen), as founded 
in too much subtlety and refinement, and as not recon- 
cilable with acknowledged principles, or just juridical 
reasoning.^ The charge might be fairly retorted, and 
the reasoning pressed, that the rule itself, to which 
the distinction is applied as an exception, is open 
to the same objection, and to others of a more serious 
nature. 

8 53. But waivinsr all such discussions, let us now 
proceed to the consideration of the various cases, in 
which the parties have been held to be partners, as to 
third persons, even when they were clearly not so, as 
between themselves.^ It is unnecessary to consider the 
cases, where the parties intend a partnership between 
themselves ; for in such cases they clearly are, or at 

des devoirs a rempllr envers la soeiete, mais il n'a point d'ordres ^ recevoir 
de ces co-associes. Le commis, au contraire, s'oblige a executer la volonte 
du chef de la maison ; il est, relativement a lui, dans un etat d'inf(£riorite et 
de subordination incompatible avec le caract^re et les droits d'un associe. 
Ce rapprochement, qu'il serait facile de pousser plus avant, montre que, 
sous des apparences semblables, sont cachees des differences bien tranchees ; 
qu'il ne faut pas, encore une fois, voir dans la participation a des benefices, 
un sigue infallible de I'existence d'une soeiete. L'associe et le commis 
interesse ont cela de commun, qu'ils sont I'un et I'autre appeles a recueillir 
une portion de benefices; mais la nature de leurs droits et la source A 
laquelle ils les puisent, n'en restent pas moins distinctes et separees; I'un 
participe au gain, parce qu'il est copropriefaire de la chose qui le produit ; 
et I'autre, parce qu'il a fait un travail pour lequel on lui a promis cette 
esp^ce de salaire." See also the decisions of the French tribunals, cited by 
Duvergier, Id. p. 68, n. (2). See also Duranton, Droit Civ. Franc. Tom. 
17, n. 320-331. 

1 Ante, § 48-51. M^ee § 49, note.} 



CHAP. IV.] AS TO THIRD PERSONS. 95 

least may be held to be partners, as to third persons.^ 
The converse rule, however, does not reciprocally apply 
at the common law ; for persons are often held part- 
ners, as to third persons, where, either expressly or by 
just implication, they are not to be deemed partners 
between themselves.^ 

§ 54. The cases in which this liability as partners 
as to third persons exists, may be distributed into the 
following classes.^ First, where, although there is no 

^ Ex parte Hodgkinson, 19 Ves. 291, 294. 

" Mr. Collyer seems to entertain some doubt as to the terms, nature, and 
extent of the doctrine on this point, and says : " In the preceding cases, 
although the parties manifested, by their agreement, an intention not to 
contract the relation of partnership, yet it was held, that such intention 
could not prevail against an exj)ress stipulation to share the profits ; a 
stipulation, which, as we have already seen, is the primary test of a part- 
nership between the parties, and renders them liable to third persons. But 
the authorities have gone still further, and it has even been held, that an 
agreement to share the profits of an adventure, although not so expressed as 
to create a partnership between the parties, may nevertheless create a part- 
nership, as between them and the world. In Waugh v. Carver, there are 
several expressions of Lord Chief Justice Eyre, which lead to this conclu- 
sion ; and on the authority of those expressions, the case of Hesketh v. 
Blanchard was decided, in which it was held, that the agreement might con- 
stitute the parties as partners, quoad third persons, although under the cir- 
cumstances it did not place them in that situation inter se." And again : 
" Upon the Avhole, notwithstanding the doctrine laid down in Hesketh v. 
Blanchard, and some other cases, the general result of the authorities seems 
to be, that persons, who share the profits of the concern are prima facie 
liable as partners to third persons ; but they may repel the presumption of 
partnership by showing that the legal relation of partnership inter sese does 
not exist. With reference to the last of these two positions, it may be ob- 
served, that, in Hoare v. Dawes, the defendants, who were charged as dor- 
mant partners, rebutted the presumption of partnersliip, by showing that they 
had no communion of profit with the broker. So, where a person was 
charged as a dormant partner in the profits of a lighter, but it turned out, 
that he was to have only half the gross earnings as wages, it was held, that 
he was not a partner with the lighter-man, and therefore not liable for the 
repairs." Coll. on F. B. 1, c. 1, § 3, 4, p. 59, 60, 2d ed. It does not aj)pear 
to me, that the authorities (juite justify the conclusion of !Mr. Collyer, how- 
ever reasonable it may seem to be. See post, § 56-59 ; Ex parte llowland- 
son, 1 Rose, 89-91 ; Waugh v. Carver, 2 II. Bl. 235, 246. 

^ {Though the author pi'ofesses, in the preceding section, that he is pro- 



96 PARTNERSHIP. [cHAP. IV. 

community of interest in the capital stock ; yet the 
parties agree to have a community of interest or par- 
ticipation in the profit and loss of the business or 
adventure, as principals, either indefinitely, or in fixed 
proportions. Secondly, where there is, strictly speak- 
ing, no capital stock ; but labor, skill, and industry are 
to be contributed by each in the business, as principals, 
and the profit and loss thereof are to be shared in like 
manner. Thirdly, where the profit is to be shared 
between the parties, as principals, in like manner ; but 
the loss, if any occurs beyond the profit, is to be borne 
exclusively by one party only. Fourthly, where the 
parties are not in reality partners ; but hold themselves 
out, or at least are held out by the party sought to be 
charged, as partners to third persons, who give credit 
to them accordingly. Fifthly, where one of the parties 
is to receive an annuity out of the profits, or as a part 
thereof. 

§ 55. And first, as to cases where there is no com- 
munity of interest in the capital stock ; but there is a 
community of interest or participation in the profit 
and loss of the business or adventure, as principals.^ 
It is this circumstance, that the parties are to act and 
share, as lyrincipals^ which forms a prominent distinction 
between this class of cases and that where an agency 
exists, with a compensation therefor out of the profits. 
But the other circumstance is also important, that the 

ceeding to consider the cases " in which the parties have been held to be 
partners as to third persons, even when they were clearly not so as between 
themselves," it would seem that in the first two classes the parties are partners 
inter scse, as well as to third persons. See § 30, note. As to the third class, 
see § 60, note.) 

' {See § 54, note} ; Coll. on P. B. 1, c. 1, § 1, p. 25 ; Id. § 2, p. 53-55, 
58, 2d ed. ; Wat. on P. c. 1, p. 11, 12, 2d ed. ; Id. p. 33 ; Ex parte Digby, 1 
Deac. 341 ; s. C. 2 Mont. & A. 735 ; 3 Kent, 31, 32 ; Ex parte Ilodgkinson, 
19 Yes. 291 ; Winship v. Bank of U. S. 5 Pet. 529, 561 ; Ex parte Rowland- 
son, 1 Rose, 89; Hazard v. Hazard, 1 Story, 371. 



CHAP. IV.] AS TO THIRD PERSONS. 97 

parties are to share in the loss, as well as in the profit. 
Indeed, this is ordinarily laid down, as the true test of 
partnership in this class of cases. ^ A communion of 
profit generally implies a communion of loss in the 
limited sense already suggested, that is, that there can 
be no ascertained profits, until after all the losses are 
deducted therefrom.^ There may, however, be, and 
often is, a stipulation in partnership contracts, that all 
the losses beyond what^ the profits will meet, shall be 
borne by one party only, or borne in a different pro- 
portion between the parties, from what they take in 
the profits.^ But where the agreement either expressly, 
or by fair implication, admits, that the parties are to 
share in losses, as well as in profits, that circumstance 
will ordinarily, at the common law, be held to make 
them partners as to third persons, and in many cases 
also between themselves, upon the ground, that such 
is the proper and essential accompaniment of a part- 
nership, and that it is inconsistent with the notion, that 
the share of the profits is designed to be a mere remu- 
neration for services.'* 

§ 56. A few examples may serve to illustrate the 
principle. Thus, if the owners of a ship, owned by 
them as tenants in common, should employ the ship in 
a particular trade or adventure upon joint account, and 
were to participate in proportion to their interests in the 
profits and losses of the trade or adventure ; they would 

* Green r. Beesley, 2 Bing. N. C. 108; Waugh r. Carver, 2 H. Bl. 235, 
247; Holmes v. Unit. Ins. Co. 2 Johns. Cas. 329, 331 ; Perrott v. Bryant, 2 
You. & C. Ex. 61, 68; Meyer v. Sharpe, 5 Taunt. 74. 

- Ante, § 20-23. 

' Ante, § 23, 24; Coll. on P. B. 1, c. 1, § 1, p. 11, 2d cd. ; Gilpin v. 
Enderbey, 5 B. & Aid. 954; Bond v. Pittard, 3 M. & W. 357. 

♦ Coll. on P. B. 1, c. 1, § 1, p. 19; Green v. Beesley, Bing. N. C. 108; 
M'lver V. Humble, 16 East, 173 ; 3 Kent, 26 ; [Everett v. Coe, 5 Denio, 
180.] 



98 PARTNERSHIP. [cHAP. IV. 

be partners in the adventure inter sese, as well as to 
third persons, although they might still remain tenants 
in common of the ship.^ The like result would arise, 
if several tenants in common of goods should ship them, 
to be sold on joint account, and their respective shares 
in the proceeds were to be invested in other goods on 
their several and not joint account, on the return voy- 
ages, they would be partners in the adventure on the 
outward voyage, but not in the return voyage, unless 
the return goods were to be sold on joint account.^ So, 
if the owner of a ship should agree with the master, 
that the vessel should be employed on a particular ad- 
venture or voyage for the benefit of both parties, and 
they were to share the profits and losses (not the gross 
profits or proceeds), indefinitely, or in certain fixed pro- 
portions ; there, although the owner would still remain 
sole owner for the adventure, or the voyage, yet as both 
were to share the losses, as well as the profits thereof, 
they would be deemed partners.^ The same doctrine 

' Mumford v. Nicoll, 20 Johns. 611; Post v. Kiniberly, 9 Johns. 470; 
Saville V. Robertson, 4 T. R. 720, 725 ; Coll. on P. B. 1, c. 1, § 1, p. 16, 17, 
2ded. 

* Holmes v. Unit. Ins. Co. 2 Johns. Cas. 329, 331, 332. 

' Ante, § 34, 42, 44 ; Dry v. Boswell, 1 Camp. 329, 330. But see Mair v. 
Glennie, 4 M. & S. 240 ; [Stocker v. Brockelbank, 3 Macn. & G. 250, 5 Eng. 
Law & Eq. 67] ; Cheap r. Cramond, 4 B. & Aid. 663, 668-670. — In this 
last case (which was one of sharing commissions), Lord Chief Justice Abbott, 
in delivering the opinion of the court, said: "And such an agreement is 
perfectly distinct from the cases, put in the argument before us, of remune- 
ration made to a traveller, or other clerk or agent, by a portion of the sums 
received by or for his master or principal, in lieu of a fixed salary, which is 
only a mode of payment adopted to increase or secure exertion. It is dis- 
tinct also from the case of a factor receiving for his commission a percentage 
on the amount of the price of the goods sold by him, instead of a certain 
sum proportioned to the quantity of the goods sold, as was the case of 
Dixon V. Cooper, 3 Wils. 40, wherein it was held, that the factor was a 
competent witness to prove the sale. It differs also from the case of a per- 
son receiving from a trader an agreed sum, in respect of goods sold by his 
recommendation, as one shilling per chaldron on coals, or the like, for there 
there is no mutuality ; and such a case resembles a payment made to an agent 



CHAP. IV.] AS TO THIRD PERSONS. 99 

would apply, if the parties were to share the profits or 
the net profits ; for in each of these cases there must be 
a deduction first made of all the charges and losses.^ So, 
if two persons sliould enter into an agreement, that the 
one should buy goods on account of the other, and 
should proceed abroad with them, and there sell them, 
and they were to be equally interested in the profit and 
loss of the adventure ; this would constitute a partner- 
ship between them.^ So, if a person should agree with 
a broker, that the latter should purchase goods for the 
former, and should receive for his trouble a certain pro- 
portion of the profits arising from the sale of the goods, 
and should bear a certain proportion of the losses ; such 
an agreement, although it would not vest any property 
in the broker in the goods so purchased, or in the pro- 
ceeds thereof, would yet, by reason of his participation 
in the profits and losses, render him liable, as a partner, 
to thu'd persons.^ 

§ 57. Upon the like ground, where A., having neither 
money nor credit, offered to B., that if he would order 

for procuring orders, and has no distinct reference in the terms of the agree- 
ment to any particular coals purchased by the coal merchant for resale, 
upon which a third person may become a creditor of the coal merchant, 
and probably could not in any instance be shown to apply in its execution 
to any such particular purchase." But see Reynolds v. Toppan, 1.') Mass. 
370, cited ante, § 44, note. 

» Cheap V. Cramond, 4 B. & Aid. 663, 668-670 ; Ex parte Rowlandson, 1 
Rose, 89, 91, 92; Ex parte Hodgkinson, 19 Ves. 291,294; Grace v. Smith, 
2 W. Bl. 998, 1000 ; Tench r. Roberts, 6 Madd. 145, note ; BaQey v. Clark, 
6 Pick. 372; Dob v. Halsey, 16 Johns. 34; ante, § 34; post, § 57, 58; 
Bond V. Pittard, 3 M. & W. 357, 360, 361. 

* Ex parte Rowlandson, 1 Rose, 89-91. — In this last case Lord Eldon 
said : "It was impossible to say, as to third persons, they wore not partners, 
the ground being settled, that if a man, as a reward for his labor, chooses 
to stipulate for an interest in the profits of a business, instead of a certain 
sum proportioned to those profits, he is as to thii'd persons a partner, and 
no arrangement between the parties themselves could prevent it." 

* Smith V. Watson, 2 B. & C. 401 ; Meyer v. Sharpe, 5 Taunt. 74; Ex 
paiie Langdale, 18 Yes. 300; S. c. 2 Rose, 444. 



100 PARTNERSHIP. [CHAP. IV. 

with him certain goods from C. to be shipped upon a 
foreign adventure, and sold by A. abroad, if any profits 
should arise from them, B. should have half the profits 
for his trouble ; and the goods were accordingly ordered 
and charged by C. to their joint account ; it was held 
that B. was jointly liable with A., as a partner to C. 
And the court there took the distinction, that quoad 
third persons it was a partnership, for B. was to share 
half the profits ; but as between themselves, it was only 
an agreement for so much, as a compensation for B.'s 
trouble, and lending A. his credit.^ So, where A. agreed 
with B. to convey by horse and cart the mail between 
particular places, at a certain price per annum, and to 
pay his proportion of the expense of the cart, &c. ; and 
the money received by the carriage of parcels was to be 
divided between the parties, and the damage occasioned 
by the loss of parcels was to be borne in equal propor- 
tions ; it was held, that they were partners inter sese, as 
well as to third persons. And upon that occasion Lord 
Chief Justice Tindal observed : " I have always under- 
stood the definition of partnership to be a mutual par- 
ticipation of profit and loss."^ 

§ 58. Upon the like ground, where one person ad- 
vanced funds for carrying on a particular trade, and 
another furnished his personal services only in carrying 
on the trade, for which he was to receive a proportion 

* Hesketh v. Blanchard, 4 East, 144, 146; s. c. ante, § 40; Meyer v. 
Sharpe, 5 Taunt. 74. See Coll. on P. B. 1, c. 1, § 2, p. 50, 59, 60, 2d ed. — 
Mr. CoUyor thinks, that in Hesketh v. Blanchard, 4 East, 144, the parties 
were partners inter sese, as well as to third persons ; and there is certainly, in 
other authorities, strong ground to support that opinion. {Such is Mr. Lind- 
ley's opinion (Lind. on P. 732), at any rate the remark of Lord Ellen- 
borough that they were partners quoad third persons was only a dictum, 
unnecessary to the decision of the case. } Ante, § 42, and note ; post, § 68. 

* Green v. Beesley, 2 Bing. N. C. p. 108. See also Fromont v. Coup- 
land, 2 Bing. 170; Coll. on P. B. 1, c. 1, § 1, p. 19, 2d ed. 



CHAP. IV.] AS TO THIRD PERSONS. 101 

of the net profits ; it was held, that they were partners 
inter sese^ as well as to third persons.^ And the princi- 
ple was there fully recognized, which had been estab- 
lished in prior cases, that he, who is to take a part of 
the profits, shall by operation of law be made liable to 
losses, as to third persons; because by taking a part of 
the profits, he takes from the creditors a part of that 
fund which is the security for the payment of their 
debts.^ So, where A., B., and C. entered into partner- 
ship in the business of tanning hides, and it was stipu- 
lated that A. should furnish one-half of the stock, to 
keep the tannery in operation, and should market 
and receive one-half the leather, and that B. and C. 
should furnish the other half of the stock, and receive 
and market for the other half of the leather, and that in 
making purchases each should use his own credit sepa- 
rately ; it was held, that they were partners as to third 
persons, as well as between themselves, as to stock sold 
to one of the partners ; for the stipulation, as to the di- 
vision of the manufactured article specifically among the 
partners, was equivalent to a participation of profit and 
loss.^ So, where three persons ran a line of coaches 
from one place to another, the route being divided 
among them into three sections, the occupant of each 
section furnishing his own carriages and horses, hiring 
drivers, and paying the expenses of his own section, and 
the money received from the passengers, as fare, deduct- 
ing the tolls of the turnpike gates, was divided among 
them in proportion to the number of miles of the 
route run by each ; it was held, that they were part- 

' Dob V. Halsey, 16 Johns. 34, 40 ; Everett v. Coe, 5 Denio, 180 ; 3 Kent, 
24, 25; Coll. on P. B. 1, c. 1, § 2, 2d ed. ; ante, § 34. 

"" Ibid. ; Grace w. Smith, 2 W. Bl. 998, 1000 ; Waugh v. Carver, 2 H. Bl. 
235, 245 ; Hesketh v. Blanchard, 4 East, 144 ; ante, § 27, 30, 32. 

' Everitt v- Chapman, 6 Conn. 347. 



102 PARTNERSHIP. [cHAP. IV. 

ners as to third persons, as well for torts, as upon 
contracts.^ 

' Champion v. Bostwick, 18 Wend. 175. [Explained in Pattison v. 
Blanchard, 1 Sel. 186.] — Mr. Chancellor Walworth on this occasion said: 
"It is not necessary to constitute a partnership, that there should be any 
property constituting the capital stock, which shall be jointly owned by the 
partners. But the capital may consist in the mere use of property, owned 
by the individual partners separately. It is sufficient to constitute a part- 
nership, if the parties agree to have a joint interest in, and to share the profits 
and losses arising from, the use of property or skill, either separately or 
combined. Here the capital, which each (.-ontributed or agreed to contribute 
to the joint concern, was the horses, carnages, harnesses, drivers, &c., 
which were necessary to run his part of the route, and to be fed, repaired, 
and paid at his own expense. The only debts or expenses, for which they 
were to be jointly liable as between themselves, were the tolls upon the 
whole line ; and the joint profits, which they were to divide, if any remained 
after paying the tolls, was the whole passage money received upon the entire 
line. Although it may be fairly inferred, that each party supposed, that the 
expenses of running his part of the line, exclusive of the tolls, would be 
equal to the distance run by him, it by no means follows, that any of them . 
supposed, that the actual passage money or pi-ofits of the different parts of 
the line, would be in the same proportion ; as it is a well-known fact, that 
the number of passengers, who travel in public conveyances, increase as 
you approach large market towns, or other places of general resort. The 
only object of the agreement to divide the passage money earned upon the 
whole line, among the different proprietors, must have been to give to those, 
who ran that part of the line, where there was the least travel, a portion of 
the passage money on other parts of the route, as a fair equivalent for their 
equal contribution of labor and expense for the joint benefit of all. And 
as all the owners of the line were thus interested in every part of the route, 
and were liable to the passengers, if they were unreasonably detained on 
the way, I am inclined to think, that, if the driver of either had refused to 
carry on the passengers over his jiart of the line without any sufficient ex- 
cuse, either of the other parties, who happened to be present, might have 
employed another driver at the common expense to proceed with the team to 
the end of that route, although as betAvcen themselves the owner of that 
part of the line would be bound to pay such extra expense. And the same 
right would have existed, if the driver, by reason of intoxication or other- 
wise, was incapable of discharging his duty with safety to the passengers. 
Although the title to the coach and horses for the time being might not be 
so far vested in the partners, as to authorize any of them to take them out 
of the general owner himself under similar circumstances, the passengers 
might imquf'stionably be sent on by either of the others at his expense ; or 
at the expense of all the owners of the line, who were interested in having 
it done, if he was unable to pay the expense." See also Waland v. 



CHAP. IV.] AS TO THIRD PERSONS. 103 

§ 58 a. On the other hand, where there was an agree- 
ment by a raih'oad company with certain persons, who 
were engaged in transporting merchandise from New 
York to various places in the West, by way of Hudson 
River and canals, that these carriers should deliver up 
their freight to the company at particular places, and 
the company should transport the goods from thence to 
their destination, and that the carriers should pay the 
company therefor a certain portion of the freight, ac- 
cording to certain distances ; it was held, that this agree- 
ment did not make the company partners with the car- 
riers in the transportation of the goods, either inter sese, 
or as to third persons.^ The ground of this decision 
seems to have been, that there was no community of 
interests, or division of the profits of a joint concern, 
between the parties. The railroad company had no 
interest in the profits or losses of the transportation 
company, on that part of the route which the latter 
were to accomplish ; nor the transportation comjiany, 
in the profit or loss in the railroad portion of the trans- 
portation. Each company was to receive a fixed pro- 
portion of the freight, whether the other would lose or 
gain on its own portion of the route, so that there was 
no community of. profit or loss. Many other cases 
might be cited to the same eff"ect ; but those, which 
have been referred to, are sufficient to illustrate the doc- 
trine already suggested under this head. 

§ 59. In the next place, as to the class of cases, 
where, strictly speaking, there is no capital stock, but 
labor, skill, and industry are to be contributed by each 

Elkins, 1 Stark. 272, and Barton v. Hanson, 2 Taunt. 49 ; Wetmore v. 
Baker, 9 Johns. 307. See Fromont v. Coupland, 2 Bing. 170; Green 
V. Beesley, 2 Bing. N. C. 108. [See the last two cases coiumented upon, 
in Pattison v. Blanchard, 1 Seld. 186.] 

» Mohawk & Hudson Railroad Co. v. Niles, 3 Hill, (N. Y.) 1G2 ; {Mer- 
rick V. Gordon, 20 N. Y. 93.} 



104 PARTNERSHIP. [cHAP. IT. 

party in the trade or business, as principals, and the 
profit and loss are to be shared in certain proportions 
between them.^ In this class of cases the like rule ap- 
plies ; and the parties are treated as partners, not only 
as to third persons, but also inter sese, upon the plain 
ground, that it is a trade or business carried on upon 
joint account, and that there is a complete communion 
of interest, both in the profit and loss thereof between 
them. It has, therefore, every distinctive mark of part- 
nership. One or two cases will abundantly serve to 
present this doctrine in a clear and satisfactory light.^ 
Thus, if A. and B. should agree to employ their joint 
labor and services and skill in business, as insurance 
brokers, and to divide the profits and losses between 
them, they would to all intents and purposes be held 
partners in that business. So, if A. and B. should 
agree to carry on the business of solicitors upon joint 
account, and to divide the profits and losses thereof in 
certain proportions between them, this would make 
them partners, not only as to third persons, but inter 
sese.^ Nor would the result be varied, if the parties 
agreed to share the profits between them, omitting any 
express provision as to losses ; for in such cases they 
could by mere operation and intendment of law share 
the losses, upon the ground, that the losses must first be 
deducted before the profits can be ascertained ; and also 
upon the more general ground which is so often recog- 
nized in the authorities, that every man who has a share 
of the profits of a trade or business, ought also to bear 
his share of the loss."^ Indeed, all the authorities at the 

' {See §54, note.} 

^ See the reasoning of Lord Chief Justice Eyre in Waugh v. Carver, 
2 H. Bl. 235. 

' See Hopkinson v. Smith, 1 Bing. 13 ; Tench v. Roberts, 6 Madd. 145 ; 
[Smith V. Hill, 8 English, 173.] 

* Grace v. Smith, 2 W. Bl. 998, 1009 ; Ex parte GeUar, 1 Rose, 297 ; 



CHAP. IV.] AS TO THIRD PERSONS. 105 

ccmmon law take the rule to be, that sharmg the losses 
and the profits constitutes such a communion and mu- 
tuality of interest therein, as creates a clear partnership, 
as to third persons ; and, in the absence of all contrary 
or inconsistent stipulations, as between themselves also.^ 
Hence all the adventurers in a fishing voyage, who are 
to share in the profits and losses of the adventure ac- 
cording to certain proportions, and to contribute towards 
the outfit, are deemed partners in the adventure to all 
intents and purposes.^ So, where a merchant in Lon- 
don was by agreement to recommend consignments to 
a merchant abroad, and the commissions on all sales of 
goods, recommended by the one to the other, were to 
be equally divided between them, without allowing any 
deduction for expenses ; it was held, that they were not 
only partners in that business, as to third persons, but 
also as between themselves.^ 

§ 60. In the next place, as to the class of cases, 
where the parties are to share the profits between 
them, if any, as principals ; but the losses are to be 
borne exclusively by one party.'* It is here that the 

Waugh V. Carver, 2 H. BI. 235 ; Cheap v. Cramond, 4 B. & Aid. 663 ; Bond 
V. Pittard, 3 M. & W. 357, 360, 361. See Finckle v. Stacey, Sel. Cas. 9 ; Gow 
on P. c. 1, p. 14, 15, 3d ed. ; Coll. on P. B. 1, c. 1, § 2, p. 54, 2d ed. ; ante, 
§ 19-24. 

^ Geddes v. Wallace, 2 Bligb, 270 ; Peacock v. Peacock, 2 Camp. 45 ; Gow 
on P. 12, 13, 3ded. 

* See Coppard v. Page, Forrest, 1 ; Perrott v. Bryant, 2 You. & C. Ex. 
61, 68; ante, §42. 

» Cheap V. Cramond, 4 B. & Aid. 663, 669, 670 ; Waldeu v. Sherburne, 
15 Johns. 409, 421,422. 

* { See § 30, note. In only two of the leading cases referred to under 
this class, viz., Waugh v. Carver, 2 H. Bl. 235, and Cheap v. Cramond, 4 B. 
& Aid. 663, was it distinctly said that the alleged partners were not so inter 
sese, although they were so as to third persons. Waugh v. Carver must be 
considered as overruled by BuUen v. Sharp, Law Rep. 1 C. P. 86, and other 
recent cases, see § 49, note ; and Cheap v. Cramond is distinctly placed on 
Waugh V. Carver, see § 61, note.} Wats, on P. c. 1, p. 17-27, 2d ed. ; 
ante, § 57. 



106 PARTNERSHIP. [cHAP. IV. 

pressure of the general doctrine, that a participation in 
the profits, as profits, creates a partnership between 
them, is most severely felt, and is most difficult to main- 
tain upon general reasoning. In all this class of cases 
it is the intention of the parties, that no partnership 
should exist between themselves ; and the common law, 
in this respect, gives full force and eff'ect to that inten- 
tion. But in regard to third persons, the common law 
holds, that the mere right to participate in the profits 
creates a partnership between the parties, notwithstand- 
ing there is no participation in the losses, ultra the 
profits, and it is not their intention to be partners.^ The 
doctrine here seems to be founded in part upon the con- 
sideration, that even in such a case there is incidentally, 
and to a limited extent, a participation in the losses, as 
well as in the profits ; for before it can be ascertained, 
that there are any profits, the losses must first be de- 
ducted, and the residue only shared as profits.^ But 
the main reason is, that, which has been already advert- 
ed to, as the first foundation of the doctrine, to wit, that 
every man, who has a share of the profits of the trade or 
business, ought also to bear his share of the loss ; for if any 
one takes part of the profit, he takes a part of the fund, 
on which the creditor of the trade relies for his payment.^ 

» [See§ 49, note.} 

2 Ante, § 19-25, 55-57 ; Cheap v. Cramond, 4 B. & Aid. 663 ; Gilpin v. 
Enderbey, 5 B. & Aid. 954 ; Ex parte Langdale, 2 Rose, 444 ; s. c. 18 Ves. 
300, 301 ; Bond v. Pittard, 3 M. & W. 357. 

« Ante, § 27, 28, 32, 36, notes ; Grace v. Smith, 2W.B1. 998, 1000. —Lord 
Eldon, in Ex parte Langdale, 18 Ves. 300, s. c. 2 Rose, 444, said : " The 
true criterion is, -whether they (the parties) are to participate in the profit. 
That has been the question ever since Grace v. Smith." Lord Chief Jus- 
tice Eyre, in Waugh v. Carver, 2 H. Bl. 235, 247, approved the doctrine, so 
promulgated in Grace v. Smith, as standing upon the fair ground of reason. 
Whether it does so, may certainly, if the question were new, admit of a good 
deal of argument. See ante, § 48-51, and note 3. The point, however, 
now stands dryly upon the maxim, Ita Lex scripta est. See Green v. Bees- 
ley, 2 Bing. N. C. 108 ; ante, § 57. 



CHAP. lY.] AS TO THIRD PERSONS. 107 

i 

Without inquiring into the true force of this mode of 
reasoning, a task, which would be a matter of superero- 
gation, since, so far as the authorities go, it seems ab- 
sohitely established, it may be useful to illustrate it by 
reference to some of the leading cases, in which it has 
been discussed and recognized. 

§ 61. Thus, for example, if one person should en- 
gage with another in any trade or business, under an 
arrangement to divide the profits between them ; but 
if there should not be any profits, but a loss, then that 
the loss should be borne by one only ; that would make 
them partners, as to third persons, at all events.^ On 
the like ground, if two solicitors should carry on busi- 
ness on joint account, and one should be entitled to 
receive a fixed sum, and also a share of the profits, and 
not be liable for any losses, they would be partners 
intei' sese, as well as to third persons.^ So, where two 
merchants agreed to enter into partnership for a certain 
term of years, and each was to furnish the same amount 
of capital, and one was to receive a certain annual sum 
out of the profits, if any, and if none, out of the capital, 
and at the expiration of the term he w^as to receive his 
full original capital by instalments ; it was held, that 
they were partners intet^ sese, and also as to third per- 
sons,^ So, where two ship agents, at different ports, 
entered into an agreement with each other to share in 
certain proportions the profits of their respective com- 
missions, and discount on tradesmen's bills, employed 
by them in repauing ships confided to their care, but 
neither was to be answerable for the acts or losses of 

^ Ex parte Langdale, 18 Ves. 300, 301 ; Geddes v. Wallace, 2 Bligh, 270 ; 
Jordan v. Wilkins, 2 Wash. C. C. 482 ; Gow on P. c. 1, p. 16, 3d ed. ; Gilpin 
V. Enderbey, 5 B. & Aid. 954 ; Bond v. Pittard, 3 M. & W. 357. 

^ See Bond v. Pittard, 3 M. & W. 357, 360 ; Tench v. Roberts, 6 Madd. 
145, note. 

' Gilpin. r. Enderbey, 5 B. & Aid. 954. 



108 PARTNERSHIP. [CHAP. IV. 

the other, but each was to bear his own ; it was held, 
that they were partners as to third persons, although 
not as between themselves.^ So, where a commission 

1 Waugh V. Carver, 2 H. Bl. 235 ; Cheap v. Cramond, 4 B. & Aid. 663, 
668 ; [Emanuel v. Draiighn, 1-4 Ala. 303.] — In Waugh v. Carver, Lord Chief 
Justice Eyre said : " Whether these persons were to interfere more or less 
with their advice and directions, and many small parts of the agreement, I 
lay entirely out of the case ; because it is plain upon the construction of 
the agreement, if it be construed only between the Carvers and Giesler, 
that thej' were not, nor ever meant to be, partners. They meant each house 
to carry on trade without risk of each other, and to be at their own loss. 
Though there was a certain degi'ee of control at one house, it was without 
an idea that either was to be involved in the consequences of the failure of 
the other, and without understanding themselves responsible for any circum- 
stances that might happen to the loss of either. That was the agreement 
between themselves. But the question is, whether they have not, by parts 
of their agreement, constituted themselves partners in respect to other 
persons ? The case therefore is reduced to the single point, whether the 
Carvers did not entitle themselves, and did not mean to take a moiety of the 
profits of Giesler's house, generally and indefinitely as they should arise, 
at certain times agreed upon for the settlement of their accounts. That 
they have so done is clear upon the face of the agreement ; and upon the 
authority of Grace v. Smith, he who takes a moiety of all the profits in- 
definitely, shall, by operation of law, be made liable to losses, if losses arise, 
upon the principle that, by taking a part of the profits, he takes from the 
creditors a part of that fund which is the proper security to them for the 
payment of their debts. That was the foundation of the decision in Grace 
V. Smith, and I think it stands upon the fair ground of reason. I cannot 
agree, that this Avas a mere agency, in the sense contended for on the part 
of the defendants, for there was a risk of profit and loss : a ship agent employs 
tradesmen to furnish necessaries for the ship, he contracts with them, and is 
liable to them, he also makes out their bills in such a way as to determine 
the charge of commission to the ship-owners. With respect to the commis- 
sion indeed, he may be considered as a mere agent, but as to the agency 
itself, he is as much a trader as any other man, and there is as much risk of 
profit and loss to the person with whom he contracts, in the transactions with 
him, as with any other trader. It is true that he will gain nothing but his 
discount ; but that is a profit in the trade, and there may be losses to him as 
well as to the owners. If therefore the principle be true, that he who takes 
the general profits of a partnership must of necessity be made liable to 
the losses, in order that he may stand in a just situation with regard to the 
creditors of the house, then this is a case clear of all difficulty. For though, 
with respect to each other, these persons were not to be considered as part- 
ners, yet they have made themselves such with regard to their transactions 
with the rest of the world." In this case, it seems that the Court considered 



CHAP. IV.] AS TO THIRD PERSONS. 109 

merchant in London agreed with another commission 
merchant in Rio Janeiro, equally to divide between 
them the commissions on the sale of all goods recom- 
mended by the one house to the other ; it was held, 
that as to third persons, they were partners in this busi- 
ness.^ 

•'commissions to mean profits; and that the net commissions, and not the 
gross commissions, were divisible." Coll. on P. B. 1, c. 1, § 1, p. 30. 

^ Cheap V. Cramond, 4 B. & Aid. 663. — In this case, it is not clear, 
whether the Court treated the case as one where the gross comnn'ssions, or 
the net commissions were to be divided, although the commissions were 
treated as if the word had been profits, and therefore undistinguishable 
from profits. The language of Lord Chief Justice Abbott, in delivering 
the opinion of the Court, was as follows : " And in support of this propo- 
sition, the case of Waugh v. Cai'ver was cited and relied on. And we are 
all of opinion, that the present case cannot be distinguished in principle 
from that, and that our decision must be governed by it. It is true, that in 
that case a definite part of the commission was, by agreement of the parties, 
to be deducted as compensation for the charges and expenses before a 
division took place ; and also that each party was to share in some specified 
measure Avith the other, in other parts of the profits of their respective 
business, such as warehouse rent, and discount upon tradesmen's bills. And 
it was contended, in this case, on the part of the plaintiffs, that the bank- 
rupts and Ruxton were to be considered as dividing the gross proceeds 
only, and not the net proceeds or profits of each other's agency or factorage ; 
and that a division of gross proceeds does not constitute a partnership. 
We think, however, that the previous deduction of a definite part of the 
commission before the division in the case cited, is an unimportant fact. It 
cannot have the effect in all cases of leaving the remainder as clear profit, 
because the expense and charge cannot be in all cases uniformly the same, 
but must vary with the particular circumstances of each transaction ; so that 
in effect a part only of the gross commission, or proceeds of the agency, 
and not the whole, was to be divided in that case ; and taking the definite 
deducted part at a fifth, or any other aliquot part, the absent house, instead 
of receiving one-half, as in the case at bar, would, by the agreement, receive 
two-fifths, or some other definite part of the whole gross sum, and not an 
indefinite part thereof, depending upon the actual and clear profit of the 
transaction. And although, in the case of Waugh v. Carver, the agreement 
was not confined to a division of the commission, but extended also to the 
moneys received in certain other parts of the transactions of the two houses, 
yet the principle of the decision is not affected by that circumstance, the 
principle being, that where two houses agree that each shall share with 
the other the money received in a certain part of the business, they are, as to 
such part, partners with regard to those who deal with them therein, though 



110 PARTNERSHIP. [cHAP. IV. 

§ 62. We may conclude this head with the remark, 
that the Roman law did not (as we have seen) ordi- 

they may not be partners inter sese. By the effect of such an agreement, 
each house receives from the other a part of that fund on which the creditors 
of the other rely for payment of their demands, according to the language 
of Lord Chief Justice De Grey, in the case of Grace v. Smith. And such 
an agreement is perfectly distinct from the cases put in the argument before 
us of remuneration made to a traveller, or other clerk or agent, by a por- 
tion of the sums received by or for his master or principal in lieu of a fixed 
salary, which is only a mode of payment adopted to increase or secure 
exertion. It is distinct also from the case of a factor receiving for his 
commission a percentage on the amount of the price of the goods sold by 
him, instead of a certain sum proportioned to the quantity of the goods sold, 
as was the case of Dixon v. Cooper, wherein it was held, that the factor 
was a competent witness to prove the sale. It differs also from the case of 
a person receiving from a trader an agreed sum, in respect of goods sold 
by his x'ecommendation, as one shilling per chaldron on coals, or the like, 
for there is no mutuality ; and such a case resembles a payment made to an 
agent for procuring orders, and has no distinct reference in the terms of the 
agreement to any particular coals purchased by the coal merchant for re- 
sale, upon which a third jjerson may become a creditor of the coal merchant, 
and probably could not in any instance be shown to apply in its execution 
to any such particular purchase. But it is to be observed, that, even on a 
case of this nature, the inclination of Lord Mansfield's opinion, in Young 
V. Axtoll, cited 2 H. Bl. 242, was, that such an agreement might constitute 
a partnership. Of the case of Muirhead v. Salter, referred to in the argu- 
ment, we have neither the facts nor the ground of decision brought before 
us with sufficient accuracy, to enable us to consider it as an authority on 
the present question. It may have been, that the division of the commission 
between the two insurance brokers was a solitary instance ; that the assured 
had recognized the second broker, as being the person employed by him- 
self; or that the court did not think fit, under all the circumstances of the 
particular case, to disturb the verdict of a jury of merchants, as to the effect 
of a division of the commission in that particular species of agency, the 
divided commission being, as I understand, payable for effecting the policy, 
and not for receiving the money from the underwriters, in the event of the 
loss, and payable whether any loss had occurred or not. So that we cannot 
consider that case as having contravened or weakened the authority of the 
decision in Waugh v. Carver. Upon the authority of this latter case, and 
for the reasons already given, Ave think the direction of the learned judge 
at the trial, and the verdict of the jury, are right, and that the rule for a 
new trial ought to be discharged." There is certainly some obscurity in 
that part of the opinion, which refers to the question as to the gross or the 
net commissions. If the learned judge meant to say, that a division of 
the gross commissions would make them partners, the case certainly is in 



CHAP. IV.] AS TO THIRD PERSONS. Ill 

narily contemplate cases to be cases of partnership ex- 
cept where the parties intended to create a partnership, 
and the losses, as Avell as the profits, were to be shared 
in some proportions by each of them. The usual inter- 
pretation was, that if the agreement provided either for 
a distribution of the profits alone, or of the losses alone, 
in certain proportions, the other, which was omitted, 
would be presumed to be intended to be shared in the 
same proportion. lUud expedifum est, si in una causa 
pars fuerit expressa (veluii in solo lucro, vel in solo 
damno) in altera vero o^nissa ; in eo quoque, quodprce- 
termisswn est, eandem partem servari} And unless 
some provision was found in the agreement itself, touch- 
ing the matter, the Roman law presumed, as a natural 
result from the contract, that the partners were to share 
in both, and to share equally. Nam sicuti lucrum, ita 
damnum quoque commune esse oportet ; quod non culpa 
socii contingit.^ Quoniam societas, cum contrahitur, 
tam lucri, quam damni communio initur.^ Still, how- 
ever (as we have seen), the Roman law, if the parties 
clearly intended a partnership, did not prevent them 
from agreeing, in consideration of peculiar services or 
credit in aiding the partnership, that the partners should 
share the profits between them, if any, and that the one 
rendering such services, or credit, might be exempted 

conflict Avith other authorities. But if he meant, that the division was to be 
of the net connnissions, deducting all charges, then it Avould be in harmony 
with those authorities. See ante, § 34, 44, 5o-60. Sec Pearson t'. Skelton, 
1 M. & W. 504. The same case is much more fully reported in 1 Tyrw. & 
G. 848, where the distinction between an interest in the gross profits, and 
that in the net profits, is clearly stated. His language on that occasion is 
quoted, post, § 220, note. Mr. Collyer understands Cheap v. Cramond, 
4 B. & Aid. 663, to have decided that there is no difference between a 
division of the gross and a division of the net commissions. 

1 Inst. 3, -IQ, 3; Domat, 1, 8, 1, art. 5; ante, § 27, 50. 

* D. 17, 2, 52, 4; Poth. Pand. 17, 2, n. 39; Domat, 2, 1, 1, art. 1. 

» D. 17, 2, 67, Intr. ; Domat, 1, 8, 1, art. 1, 3, 4. 



112 PARTNERSHIP. [CHAP. lY. 

from all losses beyond the profits.^ But it does not ap- 
pear, that the Roman law ever established a partnership 
in favor of third persons, against the intention of the 
parties, from the mere participation of profits, and a for- 
tiori^ where there was an express provision against one 
party being liable for any losses.^ 

§ 63. The principles established in these three classes 
of cases ^ are commonly applied to dormant and secret 
partnerships, where the ostensible partners only are 
known or act, and yet other persons, who are to share 
the profits, are held responsible as partners to third 
persons, although they may not be so chargeable inter 
sese} Thus, for example, if A. and B. should agree 
to carry on any trade or business for their joint and mu- 
tual account, to divide the profits and losses between 
them, and A. alone was to be known in the trade and 
business, and to be solely responsible for the debts and 
contracts thereof, and B. was to be a secret dormant 
partner, B. would nevertheless be deemed a partner as to 
third persons, and responsible to them for all the debts 
and contracts growing out of such trade or business.^ 
The same rule would apply to a case, where it was even 
expressly agreed between the parties, that there should 
be no partnership between them ; but they were merely 
to share the profits and losses, or the profits only, and 
one was to bear all the losses.^ 

» D. 17, 2, 29, 1 ; Domat, 1, 8, 1, art. 9 ; ante, § 37, 50. 
" Ante, § 50. 3 ^^^6, § 55, 59, 60. 

* 3 Kent, 32, Winship v. Bank of U. S. 5 Pet. 529 ; Etheridge v. Binney, 
9 Pick. 272. 

* Hoare v. Dawes, 1 Doug. 371 ; Winship v. Bank of U. S. 5 Pet. 529; 
S. c. sub nom. U. S. Bank v. Binney, 5 Mason, 176 ; Coope v. Eyre, 1 H. Bl. 
37 ; Geddes v. Wallace, 2 Bligh, 270 ; {Beckham v. Drake, 9 M. & W. 79 ; 
8. C. 11 M. & W. 315 ; Lind. on P. 273} ; [Baring v. Crafts, 9 Met. 380; 
Brooke v. Washington, 8 Gratt. 248.] 

6 Gow on P. c. 1, p. 12-18, 3d ed.; Coll. on P. B. 1, c. 1, § 1, p. 11-27, 
2d ed.; Id. § 2, p. 53-67; Id. B. 3, c. 3, § 3, p. 368, 370, 371; Wats. 



CHAP. IV.] AS TO THIRD PERSONS. 113 

§ 64. In the next place, as to the class of cases, where 
the parties are not in reality partners, but are held out 
to the world as such in transactions affecting third per- 
sons. In such cases, they will be clearly held partners, 
as to such persons.^ Tms doctrine turns upon no pecu- 
liar principles of municipal jurisprudence ; but is founded 
in the enlarged principles of natural law and justice, ex 
cBcjuo et bono. For, wherever one of two innocent per- 
sons must suffer from a false confidence or trust reposed 
in a third, he who has been the cause of that false con- 
fidence, or trust, and is to be benefited by it, ought to 
suffer, rather than the other ; and this must apply a 
fortiori, where the credit is given to a party solely upon 
the faith of the fraudulent allegation of a fact, which is 
known to such party at the time to be untrue. The 
reason of the doctrine is fully expounded by a late emi- 
nent judge in the following terms. " The definition of 
a partnership cited from Pufendorf is good, as between 
the parties themselves, but not with respect to the world 
at large. If the question were between A. and B., 
whether they were partners, or not; it would be very 
well to inquire, whether they had contributed, and in 
what proportions, stock, or labor, and on what agree- 
ments they were to divide the profits of that contribu- 
tion. But in all these cases a very different question- 
arises, in which the definition is of little service. The 
question is generally, not between the parties, as to what 

on P. c. l,p. 17-27, 2d ed. ; Hesketh v. Blancliard, 4 East, 144; [Smith 
V. Smith, 7 Fost. 244 ; Hill v. Voorhies, 22 Penn. St. 68 ; Brooke v. Wash- 
ington, 8 Gratt. 248 ; Grilfith v. Buffiim, 22 Vt. 181.] 

' 3 Kent, 32, 83 ; Post v. Kimberly, 9 Johns. 4 70, 489 ; Ex parte Watson, 
19 Ves. 459, 469; Fox v. Clifton, 6 Bing. 7 76 ; Coll. on P. B. 1, c. 1, § 2, p. 
60-64, 2d ed. ; Parker w. Barker, 1 Brod. & B. 9 ; Goode v. Harrison, 5 B. 
& Aid. 147; Bond v. Pittard, 3 M. & W. 357; 2 Bell, Comm. B. 7, c. 2, p. 
G23, 624, 5th ed. See Bonfield v. Smith, 12 M. & W. 405, the eonverse case, 
where the firm name was A. & Co., and the defendant held himself out as 
the sole partner then in the firm. 



114 PARTNERSHIP. [cHAP. IV. 

shares they shall divide, but respecting creditors, claim- 
ing a satisfaction out of the funds of a particular house, 
who shall be deemed liable in regard to these funds. 
Now, a case may be stated, in which it is the clear sense 
of the parties to the contract, that they shall not 
be partners ; that A. is to contribute neither labor nor 
money, and, to go still further, not to receive any profits. 
But if he will lend his name as a partner, he becomes, as 
against all the rest of the world, a partner, not upon the 
ground of the real transaction between them, but upon 
principles of general policy, to prevent the frauds, to 
which creditors would be liable, if they were to suppose, 
that they lent their money upon the apparent credit of 
three or four persons, when in fact they lent it only to 
two of them, to whom, without the others, they would 
have lent nothing.^ Upon so clear and natural a doctrine, 
it seems unnecessary to cite at large the authorities in its 
support. They are uniform and positive to the purpose.^ 
§ 65. This last class of cases may arise from the 
express acknowledgments of the parties, or by impli- 
cation or presumption from circumstances. Thus, if a 
person should expressly hold himself out as a partner, 
and thereby should induce the public at large, or par- 
ticular persons, to give credit to the partnership, he 
would be liable as a partner for the debts so contracted, 
although he should in reality not be a partner.^ On 

• Lord Chief Justice Eyre in Waugh v. Carver, 2 H. Bl. 235, 246. 

2 Coll. on P. B. 1, c. 1, § 5, p. 53-64; Gow on P. c. 1, p. 10, 3d ed. ; 
Wats, on P. p. 83, 34, 2d ed. ; 3 Kent, 31-33 ; Hoare v. Dawes, 1 Doug. 371 ; 
Young V. Axtell, cited 2 H. Bl. 242 ; Ex parte Langdale, 2 Rose, 444 ; s. c. 
18 Ves. 300, 301 ; M'lver v. Humble, 16 East, 169 ; Bond r. Pittard, 3 M. 
& W. 357, 359; {Martyn v. Gray, 14 C. B. N. s. 824; Dutton ». Wood- 
man, 9 Cush. 255; Potter v. Greene, 9 Gray, 309,} 

3 Wats, on P. c. 1, p. 6, 2d ed. ; Id. p. 33 ; Gow on P. c. 1, p. 10-13, 3d 
ed.; Id. p. 23, 24; Coll. on P. B. 1, c. 1, § 2, p. 53-67, 2d ed. ; Guidon v. 
Robson, 2 Camp. 302; Young v. Axtell, cited 2 H. Bl. 242. {To charge 
a defendant with liability as a partner on the ground of representation of 



CHAP. lY.] AS TO THIRD PERSONS. 115 

the other hand, if a known partner should silently 
withdraw from the partnership, without giving any 
notice thereof, he would still remain liable to persons, 
who should continue to deal with it upon the faith and 
confidence, that he still remained a partner ; for his 
silence, under such circumstances, would be equivalent 
to an affirmation of a continuing partnership/ But 
this subject will naturally occur in other connections 
in a subsequent part of these Commentaries, and needs 
not here be further dwelt upon.^ 

§ 66. In the next place as to the class of cases 
where one of the parties is to receive an annuity out 
of the profits, or as a part thereof. And here it may 
be generally stated, that a person, who lends money to 
a firm, and is to receive therefor a fixed interest 
(whether usurious, or otherwise, is not material), or an 
annuity, certain as to amount and duration, will not 
thereby become, as to third persons, a partner in the 
firm ; for, in such a case, there is no mutuality of profit 
with the firm, and no general participation in the 

himself as a partner, it must be proved either that he has ' represented 
himself as a partner to the plaintiff, or has made such a public repre- 
sentation of himself in that character as to lead the jury to conclude 
that the plaintilT, knowing of that representation, and believing the defend- 
ant to be a partner, gave him credit under that belief. Ford v. Whitmarsh, 
Hurlst. & Walm. 53. This rule, in spite of the remark in Young v. Axtell, 
cited 2 H. Bl. 242, seems now well settled. Dickinson v. Valpy, 10 B. & C. 
128, 140. Wood V. Duke of Argyll, 6 M. & G. 928, 932 ; Lake v. Duke of 
Argyll, 6 Q. B. 477; Shott v. Strealfield, 1 M. & Rob. 8; Baird r. Planque, 
1 Fost. & Finl. 344; Fitch v. Harrington, 13 Gray, 468; Wood r. Pennell, 
51 Me. 52 ; Irvin v. Conklin, 36 Barb. 64 ; Bowie v. Maddox, 29 Ga. 285 ; 
Lind. on P. 41-52; Metcalf on Contr. 113; 1 Sm. Lead. Gas. (6th Am. ed.) 
1190; Smith's Merc. Law, (5th ed.) 23, note (r.)} 

' Coll. on P. B. 3, c. 3, § 3, p. 368-376, 2d ed. ; Godfrey v. Turnbull, 1 
Esp. 371 ; AVhitman v. Leonard, 3 Pick. 177; Griswold v. AVaddington, 15 
Johns. 57 ; Parkin v. Carruthers, 3 Esp. 248; Stables v. Eley, 1 Car. & P. 
614 ; Graham v. Hope, 1 Peake, 154. 

* {See § 158-163.} 



116 PART>'ERSHIP. [chap. IV. 

casual and indefinite profits, which, as we have seen, 
constitutes one of the ingredients of partnership.^ 
Cases of this kind often occur upon the retirement of 
a partner, leaving money or funds in the hands of the 
firm, and upon the decease of a partner, who bequeathes 
an annuity to his widow out of the profits ; and in 
neither case will the retiring partner, or the widow, be 
held a partner as to third persons, as he or she cer- 
tainly is not, as to the partners themselves.^ It is 
true, that it may be said, that the retiring partner or 
widow has, in a certain sense, an interest in the profits. 
But the same suggestion may be made as to creditors 
of the firm. If any one advances or lends money to a 
trader, it is only lent on his general personal security. 
It is no specific lien upon the profits in the trade ; and 
yet the lender is generally interested in those profits. 
He relies on them for repayment. And there is no 
difference, whether money be lent de novo, or be left 
behind in the trade by a retiring partner ; or, whether 
the terms of the loan be kind, or be harsh.^ 

§ 67. The true criterion, by which we are to distin- 
guish cases of this kind from cases in which there is a 
partnership as to thhd persons, is to ascertain, whether 
the retiring partner, or lender, or annuitant, is to 
receive a share of the profits, as profits, or whether the 
profits are relied on only as a fund of payment ; or, in 
other words, whether the profit, or premium, or annuity, 
is certain and defined, or is casual, indefinite, and de- 
pending on the accidents of trade. In the former case, 
it is a loan ; in the latter, a partnership. The hazard 
of profit or loss is not equal and reciprocal, if the retir- 

' Coll. on P. B. 1, c. 1, § 1, p. 26. 2d ed. 

= Coll. on P. B. 1, c. 1, § 1, p. 26, 27, 2d ed. Grace v. Smith, 2 W. Bl. 
9 98, 1000; Waugh v. Carver, 2 H. Bl. 235, 245. 
=> Grace v. Smith, 2 W. Bl. 998, 1000. 



CHAP. IV.] AS TO THIRD PERSONS. 117 

ing partner, or lender, or annuitant, can receive a 
limited sum only for the profits of the loan or other 
fund ; and therefore the law will not deem him or her 
a partner, since there is an utter want of mutuality of 
right and interest in the profit.^ 

§ 68. There may be, and indeed sometimes is great 
nicety in the application of the doctrine ; but, never- 
theless, the distinction itself is ordinarily clear and 
satisfactory. Thus, if a person is to receive an annuity 
in lieu of profits, he will not be held to be a partner as 
to third persons ; because such words negative the 
presumption, that the annuity is to be paid out of the 
profits ; since it is not to vary in its amount with the 
profits, nor to depend, as to its duration, on the term 
or continuance of the partnership.- But if he is to 
receive a certain percentage on the profits, or on the 
amount of the business done, he will clearly be, as to 
third persons, a partner, since the amount to be 
received would rise and fall with the amount of the 
profits or business.^ So (it has been said), if a retiring 

» Grace v. Smith, 2 W. Bl. 998, 1000; Waugh i-. Carver, 2 H. Bl. 235, 
247. {In McDonald v. Millaudon, 5 La. (Miller), 403 ; Sheridan v. Medara, 
2 Stockt. 469 ; Pierson v. Steinmeyer, 4 Rich. 309 ; and Wood v. Vallette, 
7 Ohio St. 172, persons who had lent money for a share in the profits were 
held liable as partners. In the first two cases the contracts, unless they 
■were contracts for partnership, were usurious ; see note infra. In the last 
case, the one who advanced the money also furnished services, and the con- 
tract is said by the court to be not a contract of loan, but of actual partner- 
ship. In Pierson r. Steinmeyer, p. 319, the court recognized the distinction 
between participation in the profits as profits, and the receiving of a sum 
proportionable to the profits in cases of agency, but they refused to apply 
the distinction in the case of a loan. O'Xeall, J., dissented. 

On the other hand, in Gibson- r. Stone, 43 Barb. 285, and Williams i: 
Soutter, 7 Iowa, 435, a loan for a share of profits was held not to create 
liability as a partner. See § 49, note ; § 70, note ; Wall v. Balcom, 9 
Gray, 92.} 

* Coll. on P. B. 1, c. 1, § 1, p. 27, 28, 2d ed. 

» Young V. Axtell, cited 2 H. Bl. 242; Waugh v. Carver, 2 H. Bl. 235, 
246, 247 ; [Buckner v. Lee, 8 Ga. 285, 288.] 



118 PARTNERSHIP. [CHAF. IV. 

partner is entitled to receive a certain interest on the 
funds, which he leaves in the partnership, and also a 
fixed annuity for a certain number of years, if the 
partner shall so long live, in lieu of the profits of the 
trade, with a right to inspect the books of the partner- 
ship, he will be deemed a partner ; for, taking the 
whole transaction together, it is apparent, that he is to 
be paid out of the profits.^ 

§ 69. It is upon a similar ground, that, where a 
person is to receive an annuity of a fixed sum out of 
the profits of a trade or business, he is held to be a 
partner as to third persons ; for in such a case the 

1 Bloxham v. Pell, cited 2 W. Bl. 999 ; Coll. on P. B. 1, c. 1, § 1, p. 28, 
2d ed. ; Id. § 2, p. 54. — This case seems to stand upon the utmost verge of 
the law, even if it be at all maintainable. It differs from Grace v. Smith, 2 
W. Bl. 998, principally in the circumstance, that the annuity was determina- 
ble upon the contingency of the death of the partner, and there was a right 
to inspect the books. But as the interest was fixed, and the annuity for a 
determinate term, although liable to be defeated by the happening of the 
contingency of the death of the party, it does not seem easy to see, how 
either the interest or the annuity can be properly treated as a payment to be 
made exclusively out of the profits. The right to inspect the books may 
seem more strongly to indicate a partnership ; but ought it to be decisive ? 
See Gow on P. c. 1, p. 21, 22, 3d ed. ; Gary on P. p. 3, 14, 171. Certainly 
an annuity of a fixed sum, determinable on the death of the annuitant, or of 
the partner, cannot, per se, be treated as creating a partnership as to third 
persons, when payable in lieu of the profits of the trade ; for there is no 
mutuality in the profits, and no sharing of profit and loss ; as it is not made 
payable out of the profits exclusively. See Ex parte Chuck, 8 Bing. 469 ; 
Young V. Axtell, cited 2 H. Bl. 242; Holyland v. De Mendez, 3 Mer. 184; 
Watson on P. c. 1, p. 11, 12, 2d ed. {In Grace v. Smith, 2 W. Bl. 998, the 
judgment in which " has always been regarded as the great authority for the 
proposition, that a person who shares profits shall be liable to third parties 
as if he were in fact a partner," the decision was that an annuitant was not, 
under the circumstances, liable as a partner. Mr. Lindley regards the cases 
of Gilpin V. Enderbey, 5 B. & Aid. 954, and Fereday v. Hordei-n, Jac. 144 as 
decisions on the law of usury rather than on the law of partnership, and the 
case of Bloxham v. Pell, 2 W. Bl. 999, as resting on the reason given by 
Lord Mansfield that " it shall not lie in the defendant Pell's mouth to say it is 
usury and not a partnership," and on the maxim Quum quod ago non valet ut 
agam, valeat quantum valere potest. Lind. on P. 18, 35. See Ex parte 
Briggs, 3 Deac. & Ch. 3G7 ; ante, § 49, note.} 



CHAP. IV.] AS TO THIRD PERSONS. 119 

annuity will be payable out of the net profits, and will 
rise and fall accordiiig to the profits, if there be not 
enough profits to pay the annuity ; and there will also 
be a lien on the profits therefor.^ In short, in all cases 
of this kind, the real question to be solved is, whether 
the party is in effect to participate in the rise or fall of 
the profits, and has an interest in the profits, as such ; 
or, whether he only looks to profits as a fund for pay- 
ment of the annuity ; but not exclusively to that fund. 
In the former case he is a partner ; in the latter he is 
not. Questions of this sort also sometimes arise in 
cases where a simulated partnership is resorted to, 
in order to disguise a loan upon usurious interest; 
and then the court will look astutely to the real 
nature of the transaction. It may be clearly a case 
of usury between the parties, which will create no 
legal partnership as between themselves, although 
they may as clearly be liable as partners to third 
persons.^ 

§ 70. We may conclude this part of our subject with 
the remark, that persons may not only be partners as 
to third persons, but also inter sese, where they are not 
interested personally, but are concerned in an official 
capacity only in the partnership, for the use and 
benefit of others. Thus, where a trustee for third 
persons is concerned in a partnership, but derives no 
profit personally therefrom, or an executor or adminis- 
trator is, in pursuance of partnership articles, admitted 
into the partnership after the death of a deceased 
partner, he will be deemed to all intents and purposes, 
as to the other partners, as well as to third persons, a 

> Bond i: Pittard, 3 M. & W. 357, 361 ; In re Colbeck, Buck, 48 ; Ex parte 
Chuck, 8 Bing. 469; Ex parte Hamper, 17 Ves. 403, 412; ante, § 66, 67. 

- Gilpin r. Enderbey, 5 B. & Aid. 954 ; Morse i\ Wilson, 4 T. R. 353 ; 
Coll. on P. B. l,c. 1, § 1, p. 38-41, 2d ed. See also Poth. de Soc. n. 22-27 ; 
{Sheridan v. Medara, 2 Stockt. 469.} 



120 PARTNERSHIP. [CHAF. IV. 

partner.^ But if a person is not in the firm, and has 
no control or authority or interest, either in the capital 
stock or in the profits thereof,^ and his cestui qite trust 
is the party in interest (whether he be infant or an 
adult), the mere reservation to such person of a right 
to an account of the profits, and that the partnership 
shall be governed by his advice, will not (it should 
seem) constitute him a partner in any respect whatso- 
ever. Thus, where it appeared, that a father, on the 
formation of a partnership, invested a sum of money in 
the partnership firm on behalf of his son, who was a 
minor ; and it was stipulated, that the other partners 
should account with the father, as the trustee of his son, 
for one-third profit of his son's capital, or any loss, that 
might accrue, and should be governed and directed by 
his advice in all matters relative to the business ; it was 
determined, that this did not constitute the father a 
partner, the jury having found, that the money was not 
invested by him for his own benefit, and that he had 
not reserved to himself the power of drawing out the 
principal or profits, as trustee for his son.^ 

' Gow on P. c. 1, § ], p. 16, 3d efl. ; Wightman v. Townroe, 1 M. & S. 
412; Ex parte Garland, 10 Ves. 110; Barker v. Parker, 1 T. R. 287, 295; 
Coll. on P. B. 3, c. 3, § 4, p. 427, 428, 2d ed. ; Owen v. Body, 5 Ad. & E. 28. 
{But see Gibson v. Stevens, 7 N. H. 352. If a debtor assigns his property to 
trustees for the benefit of creditors, with power in the trustees to carry on the 
business, and divide the net profits among the creditors in proportion to their 
debts, the creditors becoming parties to the deed are not liable as partners for 
debts contracted by the trustees in carrying on the business. Cox v. Hickman, 
8 H. L. C. 268, s. c. sub nom. Wheatcroft iJ. Hickman, 9 C. B. n. s. 47, revers- 
ing Hickman v. Cox, in the Exchequer Chamber, 3 C. B. N. s. 523,>which 
affirmed the judgment of the Court of Common Pleas in the same case, 18 C. B. 
617. See Re Stanton Iron Co. 21 Beav. 164 ; Owen v. Body, 5 Ad. & E. 28 ; 
M'Alpine V. Mangnall, 3 C. B. 496 ; Janes v. Whitbread, 11 C. B. 406 ; Sul- 
len V. Sharp, Law Rep. 1 C. P. 86 ; ante, § 49, note ; Conkling v. Washington 
University, 2 Md, Ch. 497 ; Drake v. Ramey, 3 Rich. 37 ; Brundred v. Muzzy, 
1 Dutch, 268.} 

2 [See Price v. Groom, 2 Exch. 542.] 

^ Barklie v. Scott, 1 Huds. & Br. 83, cited Gow on P. Suppl. London, 
1841,c. l,§l,p. 1. 



CHAP. IV.] AS TO THIRD PERSONS. 121 

{Note. Sub-partnership. — If several persons are partners, and one of 
them agrees to share profits with a stranger, this does not make the stranger 
a partner in the principal firm. Ex parte Barrow, 2 Rose, 252 ; Bray v. 
Fromont, 6 Madd. 5 ; Lind. on P. 52 ; Coll. on P. (3d Am. ed.) § 194 ; 3 
Ross, Lead. Cas. 697. See Drake v. Ramey, 3 Rich. 37. 

Whether a sub-partner is liable to third persons for the debts of the prin- 
cipal firm is not clearly settled. Mr. Collyer (Coll. on P. 3d Am. ed. § 194) 
and Mr. Lindley (Lind. on P. 53) are of opinion that a sub-partner Is not 
liable, and it is so held in Reynolds v. Hicks, 19 Ind. 113. In Fitch v. 
Harrington, 13 Gray, 468, A. and B. were members of a firm, and an action 
was brought against A., B., and C. for a partnership debt ; it was alleged that 
C. shared profits with B., and was liable as a partner. The jury was in- 
structed that " if there was a sub-partnership between B. and C, by which C. 
was to share in the profits of the firm, to which profits B. was entitled, this 
alone would not make C. liable for the debts of the firm." The jury returned 
a verdict in favor of C, and the plaintiff excepted. The exceptions were 
sustained on the ground that this instruction, " given, as it was, without any 
explanation, may have misled the jury." The court say : " An agreement 
between one copartner and a third person, that he shall i^articipate in the 
profits of the firm, as profits, renders him liable, as a partner, to the creditors 
of the firm, although, as between himself and the members of the firm, he is 
not their copartner ; but if such third person, by his agreement with one 
member of the firm, is to receive compensation for his labor, services, &c., in 
proportion to the profits of the business of the firm, without having any 
specific lien on the profits, to the exclusion of other creditors, he is not liable 
for the debts of the firm." But can a joartner give a stranger a specific lien on 
the profits of the partnership to the exclusion of other creditors ? In Sir Charles 
Raymond's Case,' as cited by Lord Eldon in Ex parte Barrow, 2 Rose, 252, 255, 
it was held that a sub-partner " had no demand against it [the partnership], 
had no account in it, and that he must be satisfied with a share of the profits 
arising and given " to the sub-partner with whom he had entered into tho 
sub-partnership. And see § 49, note.} 



122 PARTNERSHIP. [CHAP. V. 



CHAPTER V, 

PARTNERSHIP DIFFERENT SORTS OF. 

{§71. Preliminary. 

72. Universal partnerships. 

73. In the Roman law; 

74. General partnerships. 

75. Special partnerships. 

76. Private partnerships and public companies. 

77. Unincorporated companies and corporations. 

78. Classification of partnerships in the French law. 

79. In the Scottish law. 

80. Ostensible, nominal, and dormant partners. 

81. Objects of partnership. 

82. Partnerships concerning land. 

83. PecuHar character of such partnerships. 

84. Duration of partnership. 

85. Roman law. 

86. Mode of formation of partnerships. 
8 7. Foreign law. } 

§ 71. Having thus ascertained the true nature of the 
contract of partnership ; the persons who are in law 
capable of being partners, or not ; and what will con- 
stitute a partnership inter sese, and what merely as to 
third persons ; we may now proceed to other consider- 
ations touching the subject, which seem necessary to be 
adverted to, as preliminaries to the more full discussion 
of the rights, duties, interests, powers, and responsibili- 
ties of partners, as well iiitei" sese, as in respect to thu'd 
persons. 

§ 72. Partnerships then at the common law may, in 
respect to their character and extent, be divided into 
three classes ; universal partnerships ; general partner- 
ships ; and limited or special partnerships. By univer- 
sal partnerships we are to understand those, where the 



CHAP. Y.J DIFFERENT SORTS OF. 123 

parties agree to bring into the firm all their property, 
real, personal, and mixed, and to employ all their skill, 
labor, services, and diligence in trade or business, for 
their common and mutual benefit, so that there is an 
entire communion of interest between them. Such con- 
tracts are within the scope of the common law ; but 
they are of very rare existence.^ 

§ 73. The Roman law fully recognized the same classi- 
fication. Societates confraJmnfur, sive imiversorum bo- 
norum, sive negotiationis aliciijus, sive vectigalis, sive 
etiam rei unius.^ And in neither case was it necessary 
that the parties should contribute in equal proportions. 
Societas autem co'iri i^otest^ et valet etiam inter eos, qui 
non sunt cequis facultatlhus, cum plerumque 2^ai(perior 
opera suppleai^ quantum ei per comparationem i^citri- 
monii deest.^ In that law universal partnerships were 
distinguished into two sorts ; first, those, which were of 
all the property of the parties, present and future ( Uni- 
versorum honorum^) ; and, secondly, those which extend 
only to all the gains, earnings, and profits of all the 
busmess done by them. ( Universorum^ quae ex qucestu 

^ [Lyman v. Lymau, 2 Paine, 11 ; Rice r. Barnard, 20 Yt. 479. — In this 
case the partnership was said to be, " not strictly a partnership, but rather a 
universal hotchpot of all the property and liabilities, present and prospective, 
of both the persons concerned."] In U. S. Bank v. Binney, 5 Mason, 176, 183, 
the court said : " In respect to the general law regulating partnerships, there 
does not seem any real dispute or difficulty. Partnerships are usually divided 
into two sorts, general and limited. The former is, where the parties are 
partners in all their commercial business ; the latter, where it is limited to 
some one or more branches, and does not include all the business of the part- 
ners. There is, probably, no such thing as a universal partnership, if, by the 
terms, we are to understand, that every thing done, bought, or sold, is to be 
deemed on partnership account. Most men own some real or personal estate, 
which they manage exclusively for themselves." 

^^ D. 17, 2, 5; Both. Pand. 17, 2, n. 11 ; Inst. 3, 26. 

3 D. 17, 2, 5; Poth. Pand. 17, 2, n. 12. 

" Poth. de Soc. n. 28, 29, 43 ; D. 17, 2, 5-12; Poth. Pand. 17, 2, n. 13-18 ; 
Domat, 1, 8, 3, art. 1, 4. 



124 PARTNERSHIP. [CHAP. V. 

veniiint}) The former sort was never deemed to be in- 
tended, unless it was explicitly stipulated ; the latter 
was ordinarily presumed from the mere formation of a 
partnership.^ In societate omnium honorum omnes 
res, qucB coeuntium sunt, continuo commiinicantur.^ 
Cowl societatem et shnpUciter licet. Et si non fuerit 
distinctum, videtur coita esse universorum, quce ex quces- 
tu veniunt ; hoc est, si quod lucrum ex einj^tione, vendi- 
tione, loccdione, conducfione descendit^ Qucesius enim 
inteUigitur, qui ex opera cujusque descendit.^ Sed et si 
adjiciatur, ut et qucesius et lucri socii sint, verum est, 
non ad aliud lucrum, qicam quod ex qucestu venii, hanc 
quoque adjectionem pertinere.^ 

§ 7-i. General partnerships are properly such, where 
the parties carry on all their trade and business, what- 
ever it may be, for the joint benefit and profit of all the 
parties concerned, whether the capital stock be limited 
or not, or the contributions thereto be equal or unequal.^ 
But where the parties are engaged in one branch of 
trade or business only, the same appellation is ordinarily 
applied to it. Thus, if two merchants are engaged in 
mercantile commerce and business on joint account, 
and also in manufacturing and other business solely on 
joint account, it is properly a general partnership. But, 
if the same merchants carry on no other business than 
that of commerce on joint account, they would be usu- 

1 Poth. de Soc. n. 43 ; Domat, 1, 8, 3, art. 2 ; 1 Voet, ad Pand. 17, 2, n. 4, 
p. 749 ; Vinn. ad Inst. 3, 26, Intr. 

2 Poth. de Soc. n. 29, 43; Domat, 1, 8, 3, art. 2, 3; Poth. Pand. 17, 2, 
n. 20, 21. 

D. 17, 2, 1 ; Poth. Pand. 17, 2, n. 13. 

* D. 17, 2, 7; Poth. Pand. 17, 2, n. 20; Poth. de Soc. n. 29, 43. 

* D. 17, 2, 8; Poth. Pand. 17, 2, n. 20. 

« D. 17, 2, 13 ; Poth. Pand. 17, 2, n. 20 ; Domat, 1, 8, 3, art. 2, 3 ; Poth. 
de Soc. n. 43-45. 

' Willett V. Chambers, Cowp. 814, 816; 2 Bell, Comm. B. 7, c. 2, p. 621, 
5th ed. 



CHAP, y.] DIFFERENT SORTS OF. 125 

ally spoken of as engaged in a general partnership. 
The former case approaches very nearly to that of a 
general partnership in the Roman law, universorum^ 
quce ex qi(cestu venhmt} The latter would be distin- 
guished by the Roman law, as a particular partnership, 
negotiafionis almijus. The like distinctions prevail in 
the foreign law.^ 

§ To. Special partnerships, in the sense of the com- 
mon law, are those which are formed for a special or 
particular branch of business, as contradistinguished 
from the general business or employment of the parties, 
or of one of thera.^ They are more commonly called 
limited partnerships, when they extend to a single trans- 
action or adventure only ; such as the purchase and sale 
on joint account of a particular parcel of goods, or the 
undertaking of a voyage or adventure to foreign parts 
upon joint account.^ But the appellation may be ap- 
plied indifferently, and without discrimination to both 
classes of cases. They therefore fall within the denomi- 
nation of the Roman law, Societas sive negotiationis 
alicKJus, sive vectigalis, sive eticmi rei unius.^ 

§ 76. At the common law partnerships are also some- 



' Ante, § 73, Poth. de Soc. n. 43. 

2 Ante, § 73 ; Poth. de Soc. n. 54, 55 ; Domat, 1, 8, 3, art. 1 ; Wats, on P. 
c. 1, p. 1, 2d ed. ; 2 Bell, Coram. B. 7, c. 2, p. 621, 5tli ed. ; 1 Yoet, ad Pand. 
17, 2, n. 5, p. 750 ; Yinn. ad Inst. 3, 26, Intr.; 3 Kent, 30, note (a) ; Civil 
Code of France, n. 1836-1842 ; Civil Code of Louisiana, art 2795-2805. 

=* Willett V. Chambers, Cowp. 814, 816 ; 2 Bell, Coram. B. 7, c. 2, p. 621, 
5th ed.; \_In re Warren, Daveis, 320, 323.] 

* {Partnerships in commandite as established by the laws of the several 
States are often called limited partnerships. See § 78. } 

5 Ante, § 73 ; Poth. de Soc. n. 54 ; 1 Voet, ad Pand. 17, 2, n. 5, p. 750. 
[But an association of pereons, who agree in writing to pay a particular sum 
for the erection of a house of worship, or other public building, whicii wlien 
complete is to be owned by the subscribers in proportion to the amount paid 
by each, is not even a special partnership. Woodward v. Cowing, 41 Mo. 9.] 
{See§ 144.} 



126 PARTNERSHIP. [CHAP. V. 

times divided into other kinds. (1.) Private partner- 
ships, 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 pub- 
lic, as well as private interests and benefits.^ The latter 
are also subdivided, (1.) into unincorporated companies, 
or associations ; and (2.) into incorporated companies, 
fraternities (or guilds, as they were anciently called), 
and corporations existing under a charter of the crown 
or government, and having special powers and rights 
conferred thereby." In both cases, however, the part- 
nership, although commonly 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 functionaries. 
Thus, for example, a college, a bank, a turnpike com- 
pany, a bridge company, a manufacturing company, a 
company for mining, or for foreign trade or commerce, 
whether incorporated 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. 

' Wats, on p. c. 1, p. 3, 4, 2d ed. ; Coll. on P. B. 5, c. 1-3, p. 721-793, 2d 
ed. ; Gow on P. c. 1, p. 2-4, 3d ed. 

2 Wats, on P. c. 1, p. 3, 4, 2d ed. ; Comyn's Dig. Trade, B. D. 

' Trustees of Dartmouth College v. Woodward, 4 Wheat. 518; Terrett 
V. Taylor, 9 Cranch, 43, 52. 



CHAP. Y.] DIFFERENT SORTS OF. 127 

§ 77. Unincorporated companies and associations dif- 
fer in no material respect, as to their general powers, 
rights, duties, interests, and responsibilities, from mere 
private partnerships, nnless otherwise expressly provid- 
ed for by statute, except that the business thereof is 
usually carried on by directors, or trustees, or other 
officers, acting for the proprietors or shareholders ; and 
they usually extend to some enterprise, in which the 
public have an ultimate concern.^ But incorporated 
companies, or corporations, are governed strictly, as to 
their powers, rights, duties, interests, and responsibili- 
ties, by the terms of their respective charters ; and the 
shareholders, or stockholders, are not personally or in- 
dividually liable in their private capacities, unless 
expressly so declared by their charters, for the acts, or 
doings, or contracts of the officers, or members of the 
company, or corporation ; ^ whereas in unincorporated 
companies and associations the shareholders and stock- 
holders are personally responsible 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.^ 

§ 78. In the French law, partnerships are distin- 
guished into three sorts. (1.) Partnerships under a 
collective name, that is, where the trade or business of 
the partnership is carried on under a particular social 
name or firm, containing the names of some or of all 

» Wats, on P. c. 1, p. 3, 4, 2d ed. ; Coll. on P. B. 5, c. l,§4,p. 764-7 71, 
2d ed. ; Id. c. 1, § 2, p. 734 ; 2 Bell, Comm. B. 7, c. 2, p. 627, 628, 5th ed. 

" Wats, on P. c. 1, p. 4, 2d ed. 

3 Wats, on P. c. 1, p. 3, 4, 2d ed. ; Coll. on P. B. 5, c. 1, § 1-4 : Id. c. 2 : 
Id. c. 3, p. 721-783, 2d ed. — Mr. Collyer, in the chapters above cited, has 
given a very full view of joint-stock companies, both at common law, and by 
statute, as well as of mining companies. See also 2 Bell, Comm. B. 7, c. 2, 
p. 627-630, 5th ed. 



128 PARTNERSHIP. [cHAP, V. 

of the partners.^ (2.) Partnerships in commandite^ or 
in commendam, that is, limited partnerships, where the 
contract is between one or more persons, who are gen- 
eral partners, and jointly and severally responsible, and 
one or more other persons, who merely furnish a par- 
ticular fund or capital stock, and thence are called cotii- 
7)iandataire, or commandataires^ or partners in com- 
mandite ; the business being carried on under the social 
name, or firm of the general partners only, composed of 
the names of the general or complementary partners, 
the partners in commcindlte being liable to losses only to 
the extent of the funds or capital furnished by them.^ 
(3.) Anonymous partnerships are, where all the partners 
are engaged in the common trade or business, but there 
is no social name or firm, but a name designating the 
objects of the association, and the trade or business is 
managed by directors.^ They correspond with our ordi- 
nary joint-stock companies, and other unincorporated 
associations. Similar distinctions are adopted in many 
other foreign countries, and in the Laws of Louisiana.* 
Special partnerships i7i commandite have also been re- 
cently introduced by statute into the jurisprudence of 
several States in the Union.^ But the regulations ap- 
plicable to such partnerships vary in different countries 
and States, and are strictly local, and therefore seem 
unnecessary to be brought further under examination in 
the present Commentaries. 

§ 79. In the Scottish law, partnerships are sometimes 

' Code of Commerce, art. 20, 21 ; Wats, on P. c. 1, p. 2, 2d ed.; Poth. 
de Soc. n. 57. 

2 Code of Commerce, art. 23, 24 ; Wats, on P. c. 1, p. 2, 2d ed. ; Poth. de 
Soc. n. 60, 102. 

3 Code of Commerce, art. 29, 30; Wats, on P. c. 1, p. 2, 2d ed. 

* Code of Louisiana, art. 2796, 2810, 2883. 

* 3 Kent, 34, 35 ; {Parsons on P. 526.} 



CHAP, v.] DIFFERENT SORTS OF. 129 

divided into ordinary partnerships, acting under a social 
name or firm ; and joint adventures, where no firm is 
used ; and public companies. But in truth the two 
former are generally governed by the same rules. And 
therefore it may be properly said, that, in the Scottish 
law, partnerships are divisible into three classes; (1.) 
Ordinary partnerships ; (2.) Joint-stock companies ; 
(3.) Public companies.^ In the former, the firm consti- 
tutes a distinct person in contemplation of law, capable 
independently of maintaining with third persons, as 
well as with the individual partners, the relation of 
debtor and creditor ; and the partners, although jointly 
and severally liable for all the debts and contracts of 
the firm, are so, not as primary or principal debtors or 
contractors, but rather as guarantors or sureties of the 
firm.^ Such a partnership may be either general or 
special. By general partnership the Scottish law does 
not intend the societas universorinn honoriun of the 
Roman law, but a partnership in the whole trade or 
manufacture carried on by the parties.^ By special 
partnership, in the Scottish law, is intended a partner- 
ship limited to a particular branch of business, or ex- 
cluding a particular branch, which would otherwise be 
included in a general partnership.^ The second class, 
joint-stock companies, difi"ers in several respects from 
the former class. (1.) By the credit raised with the 
public being placed entirely on the joint-stock of the 
company, as indicated by its descriptive name. (2.) By 
a diff"erence in the management and operation of the 
association, as conducted, not by the shareholders per- 
sonally, but by directors or other ofiicers appointed by 

1 2 Bell, Comm. B. 7, p. 612, 621, 649, 656, 5th ed. 

2 2 Bell, Comm. B. 7, p. 619, 620, 5th ed. 

3 2 Bell, Comm. B. 7, p. 621, 5th ed. 
* 2 Bell, Comm. B. 7, p. 621, 5th ed. 

9 



130 PARTNERSHIP. [cHAP. V. 

the association, and made publicly known. (3.) By the 
shares being made transferable. In joint-stock compa- 
nies, the liability of the shareholders to creditors is, by 
the common law of Scotland, limited to the amount of 
their respective shares, and they are not, as in ordinary 
partnership, jointly and severally responsible for all the 
debts of the firm.^ The third class, public companies, 
embraces such as are created by royal or parliamentary 
authority ; and therefore they have conferred upon them 
such powers, privileges, and exemptions only, as by the 
charter and by law properly belong to them.^ 

§ 80. In this connection it seems proper also to 
advert to the various denominations given to partners, 
and which in our subsequent inquiries should be kept 
steadily in view, to prevent any mistakes and embar- 
rassments in the application of cases and principles. 
Partners, then, are ordinarily divided as follows: (1.) 
Ostensible partners, or those, whose names are made 
known and appear to the world as partners, and who 
in reality are such.^ (2.) Nominal partners, or those 
who appear, or are held out to the world as partners ; 
but who have no real interest in the firm or business.^ 
(3.) Dormant partners, or those whose names are not 
known, or do not appear as partners, but who never- 
theless are silent partners, and partake of the profits, 
and thereby become partners, either absolutely to all 
intents and purposes, or at all events, in respect to 
third persons.^ Dormant partners, in strictness of lan- 
guage, mean those who are merely passive in the firm, 

• 2 Bell, Comm. B. 7, p. 627, 628, 5th ed. 

2 2 Bell, Comm. B. 7, p. 656, 5th ed. 

3 Coll. on P. B. 1, c. 1, § 1, p. 3, 2d ed. ; 1 Mont, on P. c. 2, § 1, 2 ; Gow 
on P. c. 1, p. 12, 3d ed.; 3 Kent, 31. " Ibid. 

5 Ibid ; {North v. Bloss, 30 N. Y. 374 ; Mitchell v. Dall, 2 Harr. & G. 159, 
172; Waite v. Dodge, 34 Vt. 181 ; Deford v. Reynolds, 36 Penn. St. 325.} 



CHAP, v.] DIFFERENT SORTS OF. 131 

whether known or unknown, in contradistinction to 
those who are active, and conduct the business of the 
firm, as principals.^ Unknown partners are properly 
secret partners ; but in common parlance, they are us- 
ually designated by the appellation of dormant partners.^ 

' [And it has been thought that although some of the partners are active 
managing partners, and have given public notice of their interest in the 
firm, yet if the business is conducted under the individual name of one of 
the firm, the others are dormant partners; so far at least, that it is not 
necessary to join them in a bill to enforce a debt due the firm, contracted by 
one ignorant of their interest in the concern ; Bank of St. Marys v. St. John, 
25 Ala. 566.] 

2 Coll. on P. B.l, c. 1, § 1, p. 3, 2d ed.; 1 Mont, on P. c. 2, § 1, 2; Gow 
on P. c. 1, p. 12, 3d ed. ; 3 Kent, 31 ; Hoare r. Dawes, 1 Doug. 371 ; U. S. 
Bank v. Binney, 5 Mason, 176, 185. — In this last case the Court said: "It 
has been said, that this is the case of a secret partnership ; that it was the 
intention of the Binneys, that their connection with it should be kept secret, 
and that the management of the business in the name of 'John Winship' 
shows this intention. In point of fact, there is no covenant or declaration in 
the articles of copartnership, by which the partners have bound themselves 
to keep it secret; or that the names of the Binneys should never be disclosed 
to any persons dealing with Winship in the partnership concerns. In point 
of fact, too, if the evidence is believed, Winshiji, immediately after its forma- 
tion, and during its continuance, constantly avowed it, and made it known, 
and obtained credit in the business of the firm thereby. He stated the 
Binneys to be partners ; and this statement was generally known and 
believed by the public, and especially by persons dealing with Winship 
in respect to the business of the firm. If the jury believe this evidence, 
then in point of fact, whatever was the original intention of the parties, this 
was not a secret partnership in the common meaning of the terms. I under- 
stand the common meaning ef secret partnership to be, a partnership where the 
existence of certain persons as partners is not avowed or made known to the 
pubHc by any of the partners. Where all the partners are publicly made 
known, whether it be by one, or all the partners, it is no longer a secret partner- 
ship ; for this is generally used in contradistinction to notorious and open part- 
nership. And it makes no difierence in this particular, whether the business of 
the firm be carried on in the name of one person only, or of him and com- 
pany. Even if some of the partners intend to be such secretly, and their 
names are disclosed against their wishes and intentions ; still, when generally 
known and avowed by any other of the partners, the partnei-ship is no longer 
a secret partnership. If, therefore, in the present case, Winship, against the 
wishes and intention of the Binneys, did in the course of the business of the 
firm make known that they were partners, and who all the partners were, so 
that they became public and notorious, I should say, it was no longer a 



132 PARTNERSHIP. [CHAP. V. 

Similar designations also prevail in the Scottish 



1 



aw/ 

§ 81. In respect to the objects of partnerships, it 

may be generally stated, that they are not confined to 
mere commercial business or trade ; but may extend to 
manufactures, and to all other lawful occupations and 
employments, and to professional and other business ; ^ 
as, for example, they may embrace the business of at- 
torneys, solicitors, conveyancers, surgeons, apothecaries, 
physicians, mechanics, artisans, engineers, owners of 
stage-coaches, farmers, drovers, brokers, bankers, factors, 
consignees, and even of artists and sculptors and paint- 
ers. They may extend to all the business of the par- 
ties ; or to a single branch thereof, or to a single adven- 
ture, or even to a single thing.^ And so (as we have 
seen) stood the doctrine in the Roman law. Societates 
contraliuntur sive universorum bonorum, sive negotia- 
tionis aliciijus, sive vectigalis, sive etiam rei iiniiis} 
But there cannot lawfully be a partnership in a mere 
personal ofiice, especially when it is of a public nature, 
and involves a distinct personal confidence in the skill 
and integrity of the particular party. ^ 

§ 82. There may also be a partnership in some cases 
touching interests in lands, or in a single tract of land, 

secret partnership in the common sense of the terms ; if secret in any sense, 
it must be, under such circumstances, in a peculiar sense. Sometimes dor- 
mant and secret partners are used as synonymous. But I take it, that dor- 
mant is generally used in contradistinction to active, and secret to open 
or notorious. However, nothing important turns in this case upon the accu- 
racy of definitions, since it must be decided upon the principles of law appli- 
cable to such a partnership as this in fact was, and is proved to be, whatever 
may be its denomination." 

1 2 Bell, Comm. B. 7, c. 2, p. 622, 623, 5th ed. 

- 3 Kent, 28 ; Coll. on P. B. 1, c. 1, § 1, p. 29-32, 2d ed.; Gow on P. c. 1, 
p. 5, 3d ed. ; [Livingston v. Cox, 6 Penn. St. 360, 364.] 

3 Ante, § 73. ■> D. 17, 2, 5; Poth. Pand. 17, 2, n. 11-26. 

* Coll. on P. B. 1, c. 1, § 1, p. 31, 32, 2d ed. 



CHAP, v.] DIFFERENT SORTS OF. 133 

which will be governed by the ordinary rules, applica- 
ble to partnership in trade or commerce.^ Thus, for 
example, there may be a partnership in the working of 
a mine ; for Courts of Equity constantly treat the Mork- 
ing of a mine as a species of trade ; and apply the same 
remedial justice to such cases as they do to ordinary 
partnerships.^ So, real estate, held for general partner- 
ship purposes, has attributed to it the common qualities 
of partnership property, in whosesoever name the title 
may stand in law.^ In short (as has been well ob- 
served), in the working of mines (such as a colliery), 
it seems difficult to establish, that there is an interest 
in the land, distinct from the partnership in trade ; a 
mere interest in land, in which a partition could take 
place. For, when persons, having purchased such an 
interest, manufacture 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 in trade.'* 

' '[See Fall River Whaling Co. v. Borden, 10 Cush. 458, 474 ; Jones i'. 
Neale, 2 P. & H. 339]; {Darby i-. Darby, 3 Drew. 495; Kramer v. Arthurs, 

7 Penn. St. 165; Heirs of Ludlow v. Cooper's Devisees, 4 Ohio St. 1; 
Clagett i: Kilbourne, 1 Black, 346.} 

" Coll. on P. B. 5, c. 3, p. 783, 784, 2d ed. ; Williams v. Attenborough, 
Turn. & R. 70, 73 ; Story r. Lord Windsor, 2 Atk. 630 ; Wren r. Kirton, 

8 Ves. 502; Crawshay v. Maule, 1 Swans. 495; Fereday v. Wightwiok, 
Taml. 250; [Sage v. Sherman, 2 Comst. 417]; Jefferys v. Smith, 1 Jac. & 
W. 298; 1 Story, Eq. Jur. § 674. 

3 Gow on P. c. 1, p. 32-35, 3d ed. ; Id. c. 5, § 2, p. 232; Id. § 4, p. 340 ; 
Coll. on P. B. 2, c. 1, § 1, p. 82-102, 2d ed.; 3 Kent, 37-39; Randall v. 
Randall, 7 Sim. 271 ; Cookson v. Cookson, 8 Sim. 529; Sigourney v. Munn, 
7 Conn. 11 ;. Hoxie v. Carr, 1 Sumn. 173, 182, 186; [Dale t'. Hamilton, 5 
Hare, 369 ; Lancaster Bank v. Myley, 13 Penn. St. 544.] 

•• Per Lord Eldon, in Crawshay v. Maule, 1 Swans. 518, 523, 526, 527.— 
Mr. Collyer has a valuable chapter on the subject of partnerships in mines, 
which contains a summary of the general doctrines of Courts of Ecpiity 
touching them. See Coll. on P. B. 5, c. 3, p. 783-792, 2d ed. 



134 PARTNERSHIP. [CHAP. V. 

§ 83. But although there is no positive incompetency 
at th-e common law of creating a partnership in the buy- 
ing and selling of lands on joint account, and for the 
joint benefit of the parties, by way of commercial spec- 
ulation and commercial adventure ; yet such a contract 
must, from the nature of the case, and the positive 
rules of law and the Statute of Frauds, be reduced to 
writing ; and then the stipulations of the parties will 
constitute the sole rule to ascertain their intent, and to 
enforce their respective rights.^ The general rules of 
law, applicable to ordinary commercial partnerships, are 
not applied to them ; ^ nor are the ordinary remedies 
thereof enforced either at law, or in equity, inter sese, 
or as to third persons.^ Thus, for example, the ordinary 
doctrine of the liability of dormant partners does not 
extend to partnerships formed for speculations in the 
purchase and sale of lands. "* The present Commenta- 

' Smith V. Burnham, 3 Sumn. 435, 458-471 ; [In re Warren, Daveis, 320, 
323. In England, the Vice-Chancellor, in an elaborate judgment, reviewing 
the authorities, has sustained an agreement for such a partnership, without any 
writing within the Statute of Frauds. Dale v. Hamilton, 5 Hare, 369. See 
also Smith v. Tarlton, 2 Barb. Ch. 336 ; Fall River Whaling Co. v. Borden, 
10 Cush. 458, 474] ; { Dale v. Hamilton was affirmed by Lord Cottenham, c. 2, 
Phil. 266. See also Forster v. Hale, 3 Ves. 696 ; S. C. 5 Ves. 308, Cowell v. 
Watt, 2 Hall & Tw. 224. But in Caddick v. Skidmore, 2 De G. & J. 52, 
Lord Cranworth, C, says that an agreement between A. and B. to become 
partners in a colliery for the purpose of demising it in royalties to be divided 
between them would be within the operation of the Statute of Frauds. See 
Lind. on P. 82-84. See also Hale v. Henrie, 2 Watts, 143; HaniFt'. How- 
ard, 3 Jones, Eq. 440; Jones v. McMichael, 12 Rich. 176. In this last 
case a partnership agreement was held void, both "because it was not to be 
performed within a year and because it related to interests in land. See § 93, 
note (V. 1, A.)} 

2 [Patterson v. Brewster, 4 Edw. Ch, 352.] 

' [In Olcott V. AVing, 4 McLean, 15, it was held that the same principles 
governed partnerships for buying and selling land as ordinary partnerships, 
and that a Court of Equity would decree a sale of the lands after dissolution, 
and a division of profit or loss, according to the terms of the partnership.] 

* Pitts V. Waugh, 4 Mass. 424 ; Smith v. Burnham, 3 Sumn. 435, 470, 471. 
[But see Brooke v. Washington, 8 Gratt. 248, contra.'] 



CHAP, v.] DIFFERENT SORTS OF. 135 

lies are designed to treat principally of partnerships in 
the ordinary business of trade, navigation, commerce, 
manufactures, and arts ; and other cases will be inci- 
dentally discussed by way of illustration only, or to 
distinguish them from the general rules belonging to 
common partnerships. 

§ 84. And here it may be proper to say a few words, 
as to the extent and duration of partnerships in point 
of time, and also as to the different modes, in which 
they may be formed. As to the first point, as partner- 
ships are formed by the voluntary consent of the par- 
ties, they may be for life, or for a specific period of time, 
or conditional, or indefinite in their duration, or for a 
single adventure or dealing ; and therefore dependent 
upon the mutual will or pleasure of the parties.^ The 
period may be fixed by express stipulation, or it may 
be implied from circumstances.^ If no particular period 
is fixed by the parties for the duration of a partnership, 
it is deemed to exist during their mutual pleasure only, 
and of course is dissoluble by either of them, at any 
time when he chooses to withdraw therefrom.^ When 
a particular term is fixed, it is presumed to endure until 
that period has elapsed ; when no term is fixed, it is 
presumed to endure for the life of the parties, unless 
previously dissolved by some act or notice of one of the 
parties, or by operation of law. But in no case will the 
law presume, that the partnership is intended to con- 
tinue beyond the life of the parties ; and therefore if 

1 Wats, on p. c. 7, p. 379, 2d ed. ; Coll. on P. B. 1, c. 2, § 1, p. 68, 2d ed. ; 
Gow on P. c. 5, p. 219-22G, 3d ed. ; Poth. de Soc. n. 64; 3 Kent, 52-54; 
2 Bell, Comm. B. 7, c. 2, p. 630-633, 5th ed. 

" Coll. on P. B. 1, c. 2, § 1, p. 68, 2d ed. ; Crawshay v. Maule, 1 Swans. 
495, 521, 525 ; Alcock v. Taylor, Taml. 506. 

3 Ibid.; Featherstonhaugh v. Fenwick, 17 Ves. 298, 307, 308; Ex parte 
Nokes, cited in Wats, on P. c. 7, p. 380, 2d ed. ; Peacock c. Peacock, 1 6 Ves. 
49 ; 2 Bell, Comm. B. 7. c. 2, p. 630-634, 5th ed. 



136 PARTNERSHIP. [cHAP. V. 

such is the object, it must be provided for by some ex- 
press stipuhition.^ The causes, which will constitute a 
dissolution, or a cause of dissolution, will naturally come 
under review in our subsequent pages. 

§ 85. The Koman law fully recognized the like prin- 
ciples. Tamdiu societas durat, quamdiu consensus 
partium integer perseverat.^ So, in the Institutes it is 
said: Manet cmtem societas eo usque, donee in eodem 
consensu 2)e7'severaverint. At, cum aliquis renunciaverit 
societati, solvitur societas.^ And again in the Digest: 
Societas co'iri potest vel in perpetumn, id est, dmn vi- 
vunt, vel ad tempus, vel ex tempore, vel sub conditioned 
The Roman law went further than ours; and positively 
prohibited the duration of any partnership beyond the 
life of the parties ; and therefore a provision, that the 
heir of one should share in the partnership, was held 
wholly void. JSfidla societatis in cdernum coitio est.^ 
Nemo potest societatem hcEredi suo sic parere, ut ipse 
hceres socius sit.^ Idem [Pa^nnianus) resjjondit, socie- 
tatem non posse ultra mortem porrigi? The French 
law, and in general the law of the other nations of con- 
tinental Europe, adopt similar principles.^ 

§ 86. In the next place, as to the different modes in 
which partnerships may be formed. At the common 
law, no particular forms or solemnities are required to 
constitute a partnership between the parties. It is suf- 

1 Crawsbay v. Maule, 1 Swans. 495, 521 ; s. c. 1 Wils. Ch. 181. { See § 196.} 

- Cod. 4, 37, 5; Domat, 1, 8, 5, art. 1, 2; Id. 1, 8, 3, art. 8, 9. 

^ Inst. 8, 26, 4. 

■* D. 17, 2, 1 ; Poth. Pand. 17, 2, n. 10 ; Poth. de Soc. n. 64, 65 ; Domat, 
1, 8, 5, art. 1, 2; Id. 1, 8, 13, art. 8, 9. 

s D. 17, 2, 70; Poth. Pand. 17, 2, n. 10; 1 Swans. 509, note (a); Vinn. 
ad Inst. 3, 26, § 4, n. 1, p. 698. 

« D. 17, 2, 35; Poth. Pand. 17, 2, n. 56 ; Domat, 1, 1, 2, art. 2-5. 

'' D. 17, 2, 52, 9 ; Poth. Pand. 17, 2, n. 56, 57. 

8 Civ. Code of France, art. 1865-1871; Poth. de Soc. n. 64, 65; Id. u. 
146-154. 



CHAP, v.] DIFFERENT SORTS OF. 137 

ficient, that it is formed by the voluntary consent of 
the parties, whether that be express or implied ; 
whether it be by written articles, or by unsolemn writ- 
ings ; or whether it be by tacit approbation, or by parol 
contract, or even by mere acts.^ It is indeed usual to 
have some writings pass between the parties, when a 
partnership is formed for a specific term, or even during 
the pleasure of the parties, if the business is expected 
to be of a permanent nature, or of long duration. But 
this is a matter resting in the mere discretion and choice 
of the parties, and is by no means made indispensable 
by the law. And this also seems to have been the rule 
of the Roman law. Sociefatem co'tre et re, et verbis, 
et ^;er nuntium, i^osse nos, duhium non est^ Voet 
has expressed the same doctrine in broader language. 
Societas dividitur primo in expressam, quce ex expressa 
conventione fit, et tacitam, quce re contrahi dicitur, dum 
rebus ijjsis et factis, shnul emendo, vendendo, hccra et 
damna dimdendo, socii ineundoi societatis voluntatem 
declarant.^ 

§ 87. The old French law required, that all general 
partnerships and partnerships in commandite should be 
reduced to writing and registered, unless when the 
concern was under one hundred livres in value.'* And 

' {The creation of a partnership by an agent without authority, if ratified 
by the person so made a partner, establishes that relation, and will cut off 
the intervening rights of third persons, if the doctrine is applied for the pro- 
tection of a superior equity ; and the partnership assets must be first ajjplied 
to the payment of the partnership debts. Williams v. Butler, 35 111. 544. 
See also Buckingham v. Hanna, 20 Ind. 110} ; Coll. on P. B. 1, c. 1, § 1, p. 2, 
3, 2d ed.; Wats, on P. c. 1, p. 4, 5, 2d ed. ; GowonP. c. 1, p. 4, 5,3d ed.; 
2 Bell, Comm. B. 7, c. 2, p. 621-623, 5th ed. [And it is sufficient evidence to 
prove a person to be in partnership, that he and others had agreed to form 
a company, and that business had been carried on, on the basis of such agree- 
ment. Owen V. Van Uster, 10 C. B. 318 ; 1 Eng. L. & Eq. 39G.] 

" D. 17, 2, 4 ; Potb. Pand. 14, 2, n. 6 ; Domat, 1, 8, 3, art. 6. 

^ 1 Voet, ad Pand. 17, 2, § 2, p. 748 ; ante, § 50. 

■» Poth. de Soc. n. 79-81. 



138 PARTNERSHIP. [CHAP. V. 

r 

this continues in substance to be the rule under the 
modern Code of France.^ Similar regulations are to 
be found in the laws of some other nations ; but the 
Roman law seems more generally to have been fol- 
lowed.- 

* Code of Commerce, art. 39-44. 

2 3 Kent. 24, note (a) ; 2 Bell, Comm. B. 7, c. 2, p. 621-623, 5th ed. ; 
1 Voet, ad Band. 1 7, 2, § 2, p. 748 : 1 Tapia, Elem. de Jur. Merc. Lib. 2, c. 
2, § 1, p. 83, 84 ; Van Leeuwen's Comm. B. 4, c. 23, § 1, 3. 



CHAP. VI.] PARTNERSHIP PROPERTY. 139 



CHAPTER VI. 

RIGHTS AND INTERESTS OF PARTNERS IN PARTNERSHIP 

PROPERTY. 

{ § 88. Preliminary. 

89. Joint tenancy, tenancy in common. 

90. Partnership neither of the two. 

91. Partners are joint owners of partnership property. 

92. 93. Real estate of a partnershijj. 

94. Power of pai'tners over partnership property. 

95. Roman law. 

96. Scottish law. 

97. Lien on the partnership property. 

98. What constitutes partnership property. 

99. Good-will of the partnership. 
100. Right to use the firm name.} 

§ 88. Having disposed of these preliminary matters, 
we shall next proceed to the consideration of the rights 
and interests, powers and authorities, duties and obh- 
gations, liabilities and exemptions, of partners between 
themselves, as well as in relation to third persons. In 
treating of these points, so far as respects the partners 
themselves, we shall keep mainly in ^dew cases where 
a real partnership exists according to the intention of 
the parties, and there is a community of interest in the 
property, as well as in the profits of the trade or busi- 
ness, without any special stipulations, which may vary 
the application of the general principles of law. Of 
course, where any such stipulations exist, which are 
lawful in their nature or character, they properly con- 
stitute exceptions to those principles, and ^j?'o tanto 
may create new and peculiar relations and obligations.^ 

1 Ante, § lG-29. 



140 PARTNERSHIP. [cHAP. VI. 

§ 89. And first in relation to the rights and inter- 
ests of the partners inter sese, in the partnership capital, 
stock, funds, and effects. Partners differ from mere 
part-owners of goods and chattels in several respects. 
The latter are either joint owners, or tenants in com- 
mon, each having a distinct, or at least an independent, 
although an undivided interest in the property ; and 
neither can transfer or dispose of the whole property, 
or act for the others in relation thereto ; but merely for 
his own share, and to the extent of his own several 
right and interest.^ In cases of joint-tenancy of goods 
or chattels, indeed, the joint-tenants are said to be seised 
or possessed ^9er my et 2^er tout, by the half or moiety 
and by all ; that is, they each of them have the entire 
possession, as w^ell of every parcel, as of the whole ; ^ 
or, as Bracton has expressed it : Quilihet totiim tenet, et 
nihil tenet; scilicet, totum in communi, et nihil se'pa- 
ratim ])er se? Hence it is said, that in joint-tenancy 
there is a fourfold unity, unity of interest, unity of title, 
unity of time, and unity of possession ; "^ and the right to 
the whole belongs to the survivor.^ But still each joint- 
tenant has an independent, and, in a certain sense, a 
distinct right and interest in the property during his 
lifetime, which cannot be disposed of by the other 
joint-tenant, but which he may severally himself dispose 
of, and thus sever the joint-tenancy ; and he may now 
by statute, although not at common law, have an action 
of account against the other for his share of the profits 

* Com. Dig. E&lale, K. 1-10 ; Litt. § 321 ; Co. Litt. 200, a; [Woodward i\ 
Cowing, 41 Me. 9, 12.] 

2 2 Bl. Comm. 182, 399 ; Litt. § 288 ; Co. Litt. 1 86, a ; Bac. Abr. Joint-ten- 
ancy and Tenancy in Common (C). 

^ Bracton, Lib. 5, tr. 5, c. 26, p. 430 ; Co. Litt. 186, a. 

* 2 Bl. Comm. 180, 399. 

" 2 131. Comm. 183, 184 ; Com. Dig. Estate, K. 3, 4 ; Litt. § 281, 282 ; Co. 
Litt. 181, 182, a. 



CHAP. YI.] PARTNERSHIP PROPERTY. 141 

deriYed from the common property.^ On the other 
hand, tenants in common hold undivided portions of 
the property by several titles, or in several rights, 
although by one title ; but they have their possession 
in common and undivided ; so that there may be an 
entire disunion of interest, of title, and of time among 
them.^ Hence it is said, that tenants in common 
properly take by distinct moieties, and have no 
entirety of interest; and therefore there is no sur- 
vivorship between them ; but the share of the deceased 
tenant in common goes to his personal or real repre- 
sentative.^ 

§ 90. From the resemblances thus existing between 
cases of joint-tenancy and tenancy in common and part- 
nerships, it has been sometimes said, that partners are 

' 2 Bl. Coram. 183 ; Com. Dig. Accompt, B. — There is no small subtlety 
in tlie language of our Law Books on this subject. Thus, Blackstone uses 
language to the effect, that the interest of two joint-tenants is not only equal 
or similar, but it is one and the same ; that survivorship is the natural and 
necessary consequence of the union and entirety of their interests ; that one 
has not a distinct moiety from the other ; and that if by any subsequent act, 
as by alienation or forfeiture of either, the interest becomes separate and 
distinct, the joint-tenancy instantly ceases. 2 Bl. Coram. 183, 184. And 
yet it is palpable, that one joint-tenant may transfer or alien his own right 
severally, and thereby sever the joint-tenancy. And therefore it has been 
well observed by Lord Coke, after quoting the language of Bracton (already 
cited), that joint-tenants hold per my et per tout: "And albeit they are so 
seised, yet to divers purposes each of them hath but a right to a moiety, as to 
enfeoff, give or demise, or to forfeit." Co. Litt. 186, a. And afterwards he 
adds : " And where all the joint-tenants join in a feoffment, every one of 
them in judgment of law doth but give his part. If an alien and a subject 
purchase land jointly, the king upon office found shall have a moiety ; and 
Littleton afterwards in this chapter (§ 291) saith, that one joint-tenant hath 
one moiety in law, and the other the other moiety." Co. Litt. 186, a. Now, 
what is this but admitting, that joint-tenants have in reality distinct and 
independent interests, capable of a distinct alienation ; and that each has but 
a moiety, concurrent and undivided, with tiie other in the property, with 
a right of survivorship in case no severance takes place ? 

2 Com. Dig. Estate, K. 8 ; 2 Bl. Coram. 192 ; Litt. § 292 ; Co. Litt. 188, b. 

' Com. Dig, Estate, K. 8 ; 2 Bl. Comui. 194, 309; Abbott on Ship. c. 3, 
p. 68, Am. ed. 1829. 



142 PARTNERSHIP. [cHAP. YI. 

either tenants in common of the partnership effects, or 
joint-tenants without the benefit of survivorship.^ But 
this language is by no means accurate ; and perhaps 
no case could better exemplify the truth of the maxim, 
jSfidhnn simile est idem. Partnership differs from joint- 
tenancy in two important particulars. In the first 
place, joint-tenants cannot dispose of the interest of 
each other in the joint property, although they hold 
jjer my et per tout ; but each has the sole power of dis- 
posing of his own interest therein ; ^ whereas, in cases 
of partnership, each partner is not only a joint owner 
with the others of the partnership property, but he 
also has full power to dispose of the entire right of all 
the partners therein, for the purposes of the partner- 
ship, and in the name of the firm. In the next place, 
there is no survivorship in cases of partnership, as there 
is in joint-tenancy. This has been the doctrine of the 
common law for more than three centuries, and indeed 
is probably coeval with the business of joint trade and 
commerce in England. Thus, Lord Coke, in speaking 
of joint-tenancy in chattels and debts, contracts and 
duties, where the right of survivorship ordinarily exists, 
adds : " An exception is to be made of two joint mer- 
chants ; for the wares, merchandises, debts, or duties, 
that they have as joint merchants, or partners, shall 
not survive, but shall go to the executors of him, that 
deceaseth ; and this is ^:)e?' legem mercatoriam^ which 
(as hath been said) is a part of the laws of this realm 
for the advancement and continuance of commerce and 
trade, which is ^;ro hono j^uhlico ; for the rule is, that 
Jus accrescendi inter mercatores 2)ro heneficio co7nmercii 

» Wats, on P. c. 2, p. 65, 2d ed. ; Gow on P. c. 2, § 1, p. 32, 3d ed. ; 
West V. Skip, 1 Ves. Sr. 239, 242; 3 Kent, 36, 37, 

'^ Co. Litt. 186, a; Litt. § 291 ; ante, § 89, note b; West v. Skip, 1 Ves. 
Sr. 239, 242. 



CHAP. VI.] PARTNERSHIP PROPERTY. ^ 143 

locum non habet." ^ It might be added, that otherwise 
partnerships would never have been formed for purposes 
of trade, since the death of either partner might bring 
want or ruin upon his family, and the whole business 
would be full of perils and hazards, which might occa- 
sion losses far beyond any hope of reasonable gains 
and profits. Within the benefit of the rule, all persons 
engaged in any trade, foreign or domestic, were origin- 
ally deemed merchants ; ^ and now it is applied to all 
employments and business between two or more per- 
sons on joint account and benefit, whether they fall 
under the denomination of merchants, or not.^ So 
strong is this doctrine, that even where persons are 
clearly joint-tenants of any property, and it is after- 
wards by them deliberately embarked in trade and 
business on joint account, as partners, such property 
will cease to be held by them in joint-tenancy, and will, 
in case of the decease of either, be no longer subject to 
the jus accrescendi ; for the joint-tenancy is thereby 
severed, and a partnership established in the property 
in lieu thereof'* Partnership differs quite as much 
from a tenancy in common ; for in a tenancy in com- 
mon each party has a separate and distinct, although 
an undivided interest, and possesses (as it is technically 
expressed) the whole of an undivided moiety of the 
property, and not an undivided moiety of the whole 
property ; ^ whereas in partnership the partners are 

' Co. Litt. 182, a; Com. Dig. Merchant, D. ; 2 Brownl. 99 ; Coll. on P. 
B. 2, c. 1, § 1, p. 80, 81, 2d ed.; Jackson v. Jackson, 7 Ves. 535; s. C. 9 
Ves. 591. 

* 2 Brownl. 99 ; Com. Dig. Merchant, A. 

^ Jackson v. Jackson, 9 Ves. 591, 596, 597; Jefferys r. Small, 1 Vern. 
217 ; Coll, on P. B. 2, c. 1, § 1, p. 76, 7 7, 80-82, 2d ed. ; 2 Bl. Comm. 404. 

* Jackson v. Jackson. 7 Ves. 535; S. C. 9 Ves. 591 ; Hall r. Digbv, 4 
Bro. P. C. 224 ; s. c. 4*Bro. P. C. by Tomlins, 577 ; CoU. on P. B. 2, c. 1, § 
1, p. 80, 81, 2d ed. 

* 2 Bl. Comm. 182, 191-19 3. 



144 ^ PARTNERSHIP. [cHAP. VI. 

joint owners of the whole property. A tenant in com- 
mon can dispose only of his own share in the property ; 
whereas (as we have seen), each partner may, in the 
partnership name, dispose of the entirety of the prop- 
erty for partnership purposes. 

§ 91. The true nature, character, and extent of the 
rights and interests of partners in the partnership 
capital, stock, funds, and effects, is, therefore, to be 
ascertained by the doctrines of law applicable to that 
relation, and not by the mere analogies furnished by 
joint-tenancy, or by tenancy in common. It may, 
therefore, be said, that in cases of real partnerships, 
unless otherwise provided for by their contract, part- 
ners are joint owners and possessors of all the capital, 
stock, funds, and effects belonging to the partnership, 
as well those which" are acquired during the partner- 
ship, as those which belong to it at the time of its first 
formation and establishment.^ So, that, whether its 
stock, funds, or effects be the product of their labors or 
manufactures, or be received or acquired by sale, barter, 
or otherwise, in the course of their trade or business, 
there is an entire community of right and interest 
therein between them ; each has a concurrent title in 
the whole, or, as Bracton says : Tenet toimn in commu- 
nis et nihil separatim j^er se.^ 

§ 92. Nor is there in reality, as between the partners 
themselves, any difference, whether the partnership 
property, held for the purposes of the trade or busi- 
ness consists of personal or movable propert}% or of 
real or immovable property, or of both, so far as their 
ultimate rights and interests therein are concerned.^ 

> 3 Kent, 36, 37 ; Coll. on P. B. 2, c. 1, § 2, p. 76, 77, 2d ed, ; Wats, on 
P. c. 2, p. 66, 2d ed. 

2 Ante, § 89 ; Bract c. 26, p. 430 ; Coll. on P. B. 2, c. 1, § 2, p. 78, 2d ed. 

3 Wats, on P. c. 2, p. 72-77 ; Gow on P. c. 2, § 1, p. 32-36, 3d ed. ; Sage 
V. Sherman, 2 Comst. 417. — There are some differences, however, arising 



CHAP. VI.] PARTNERSHIP PROPERTY. 145 

It is true, that at law, real or immovable propertv is 
deemed to belong to the persons, in whose name the 
title by conveyance stands. If it is in the name of a 
stranger, or of one partner only, he is deemed the sole 
owner at law ; ^ if it is in the names of all the partners, 
or of several strangers, they are deemed joint-tenants, 
or tenants in common,^ according to the true in- 
terpretation of the terms of the conveyance.^ But, 
however the title may stand at law, or in whose- 

from the very nature and character of the particular property. Each partner, as 
we shall presently see (and indeed, as has been already intimated), may sell or 
dispose of the entirety of any personal property of the partnei-ship in the 
name of the firm. But if real estate has been conveyed to both partners for 
the partnership account, they ordinarily become tenants in common thereof 
at law, and each can convey by deed only his own share or moiety, and not 
that of the other. So, that while one partner may in the name of the firm 
sell the whole of any goods or articles belonging to the partnership, both 
must join in order to convey the entirety of the real estate thereof. Coles 
V. Coles, 15 Johns. 159, 161 ; Wats, on P. c. 2, p. 72, 73, 2d ed. ; 2 Bell, 
Comm. B. 7, c. 1, p. 613-615, 5th ed. ; Coll. on P. B. 2, c. 1, § 1, p. 82-101, 
2ded. 

' [Cox v. McBurney, 2 Sand. 561. — In equity he might be considered 
as holding in trust for the partnership, if the property is paid for from 
partnership funds. McGuire i-. Ramsey, 4 Eng. (Ark.) 518 ; Peck v. Fisher, 
7 Cush. 386 ; Jarvis v. Brooks, 7 Fost. 37. The legal title, however, is un- 
disturbed, except so far as to protect the equitable rights of the respective 
partners. Lang v. Waring, 25 Ala. 625. And see Black v. Black, 15 Ga. 
445; Galbraith v. Gedge, 16 B. Mon. 631.] 

" [See Lancaster Bank v. Myley, 13 Penn. St. 544; Jones v. Neale, 2 P. 
& H. 339. In Massachusetts it is settled that real estate conveyed to and 
held by partners as tenants in common, although purchased with partnership 
funds, and for partnership use, is to be considered at law as the several 
property of the individual partners, and liable to be levied on for their 
separate debts ; but if so taken, it will be considered in equity as held by the 
creditor in trust, to be applied, so far as may be necessary, to the payment of 
partnership debts. Peck v. Fisher, 7 Cush. 386 ; see Burnside r. Merrick. 4 
Met. 537 ; Dyer c. Clark. 5 Met. 562; Howard v. Priest, 5 Met. 582.] 

^ Anderson v. Tompkins, 1 Brock. 456, 465. See Blake v. Nutter, 19 
Me. 16. [And parol evidence has been held inadmissible to show that real 
estate conveyed to two as tenants in common was purchased and paid for by 
them as partners, and was partnership property. Ridgway's Appeal, 15 Penn. 
St. 17 7.] 

10 



146 PARTNERSHIP. [CHAP. VI. 

soever name or names it may be, the real estate 
belonging to the partnership will in equity be treat- 
ed as belonging to the partnership, like its personal 
funds, and disposable and distributable accordingly ; 
and the parties, in whose names it stands, as owners 
of the legal title, will be held to be trustees of the part- 
nership, and accountable accordingly to the partners, 
according to their several shares and rights and inter- 
ests in the partnership, as cestuis que trust, or beneficia- 
ries of the same.^ Hence in equity, in case of the death 
of one partner, there is no survivorship in the real estate 
of the partnership ; but his share will go to his proper 
representatives.''' 

§ 93. Indeed, so far as the partners and their cred- 
itors are concerned, real estate belonging to the part- 
nership is in equity treated as mere personalty, and 
governed by the general doctrines of the latter.^ x\nd 
so it will be deemed in equity, to all other intents and 
purposes, if the partners themselves have, by their 
agreement or otherwise, purposely impressed upon it 

* 1 Story Eq. Jur. § 674; Coll. on P. B. 2, c. 1, § 1, p. 82, 83, 2d ed. ; 
Hoxie V. Carr, 1 Sumn. 173; Gaines t'. Catron, 1 Humph. 514; [Smith r. 
Danvers, 5 Sand. 669 ; Boyce v. Coster, 4 Strobh. Eq. 25 : Fall River Whal- 
ing Co. V. Borden, 10 Cush. 458; Andrews v. Brown, 21 Ala. 437; Ludlow 
V. Cooper, 4 Ohio St. 1 ; Roberts v. McCarty, 9 Ind. 16 ; Buchan v. Sumner, 
2 Barb. Ch. 165; Delmonico v. Guillaume, 2 Sand. Ch. 366; Rice r. Bar- 
nard, 20 Vt. 479 ; Moreau r. SafFarans, 3 Sneed, 595.] 

2 Lake v. Craddock, 3 P. Wm. 158 ; s. C. 1 Eq. Cas. Abr. 290 ; Morris v. 
Barrett, 3 You. & J. 384 ; Jackson v. Jackson, 9 Ves. 591 ; Coll. on P. B. 2 
c. 1, § 1, p. 82-102, 2d ed. ; Wats, on P. c. 2, p. 72-77, 2d ed. ; 1 Story Eq. 
Jur. § 674; 3 Kent, 37, 38. 

3 Thornton v. Dixon, 3 Bro. Ch. 199, and Mr. Belt's note (1); Balmain 
V. Shore, 9 Yes. 500, 507-509 ; [Matlock v. Matlock, 5 Ind. 403] ; Ripley v. 
Waterworth, 7 Ves. 425; [Rice v. Barnard, 20 Vt. 479]; Cookson v. Cook- 
son, 8 Sim. 529; Fereday i-. Wightwick, 1 Russ. & M. 45; Houghton v. 
Houghton, 11 Sim. 491 ; [Buchan v. Sumner, 2 Barb. Ch. 165, 200] ; 1 Story 
Eq. Jur. § 674. [And a lease thereof by one partner in his own name will 
enure for the benefit of the firm. Moderwell v. MuUison, 21 Penn. St. 257.] 



CHAP. VI.] PARTNERSHIP PROPERTY. 147 

the character of personalty.^ But a question has been 
made whether, in the absence of any such agreement, 
or other act, affectmg its general character, real estate, 
held as a part of the partnership funds, or stock, ought 
to devolve upon, or descend, as real estate, to the heir 
or devisee, or ought to belong as personalty to the exe- 
cutor or administrator, upon the death of the partner. 
Upon this point there has been a diversity of judicial 
opinion, as well as of judicial decision ; some judges 
holding, that in such a case it retained its original char- 
acter of real estate, and passed to the heirs or devisees 
accordingly; and others holding, that it was to be 
treated throughout, as partnership property, and there- 
fore as personalty, and belonged to the executor or ad- 
ministrator. The doctrine under these circumstances 
must be considered as open to many distressing doubts.^ 

^ [But it seems the property should be purchased for partnership uses 
as well as with partnership funds, in order to constitute it personalty. Gal- 
braith v. Gedge, 16 B. Mon. 631 : Coder v. Ruling, 27 Penn. St. 84. And 
see 10 Cush. 458. But see Ludlow v. CoojDer, 4 Ohio St. 1, 9.] 

^ Lord Thurlow held the former opinion in Thornton v. Dixon, 3 Bro. 
Ch. 199. and Belf s note (1) ; and Sir AVilliam Grant, in Bell r. Phyn, 
7 Yes. 4o3, and Balmain v. Shore, 9 Ves. oUO, adopted the same opinion. 
On the other hand. Lord Eldon, in Selkrig v. Davies, 2 Dow, 230, 242, 
held the opposite opinion, that all property, involved in a partnership 
concern, ought to be considered as personal ; and again affirmed it in 
Townsend v. Devaynes, reported in 1 Mont, on P. Appx. 97 ; 3 Bro. Ch. 
199, Belt's note (1 ) . Sir John Leach, in Fereday v. Wightwick, 1 Buss. & M. 
45, and Phillips v. Phillips, 1 Myl. & K. 649, and Broom v. Broom, 3 Myl. 
& K. 443, was of the same opinion as Lord Eldon. Mr. Baron Alderson, 
in ^Morris v. Kearsley, 2 You. & C. Ex. 139, acted on the same opinion. More 
recently, Yice-Chancellor Shadwell has upheld the doctrine of Sir Wm. 
Grant. Cookson v. Cookson, 8 Sim. 529. Mr. Collyer, in his valu.ible 
Treatise on Partnership, has discussed at large the whole learning applicable 
to this point. See Coll. on P. B. 2, c. 1, § 1, p. 82-102. Mr. Bell has 
summed up the Scottish law on these points as follows : " The property of 
the company is comuion ; held p?o indiviso by all the partners, as a stock, 
and in trust ; responsible for the debts of the concern ; and subject, after 
the debts are paid, to division among the partners according to their agree- 
ment. This is a great point in the doctrine of partnership, and important 



1-iS PARTNERSHIP. [cHAP. YI. 

§ 94. In virtue of this community of rights and in- 
terests in the partnership stock, funds, and effects, each 

consequences are deducible from it. The common stock includes all lands, 
houses, ships, leases, commodities, money; whatever is contributed by the 
partners to the company use. It comprehends also -whatever is created by 
the joint exertions of the company, or acquired in the course of the employ- 
ment of their capital, skill, and industry. All this, by the operation of law, 
and the nature and effect of the contract, becomes common property ; is held 
by all the partners jointly for the uses of the partnership ; and is directly 
answerable as a stock for the payment of its debts. 1. Vesting of the 
Stock. — The stock or common fund is held by the i>a.rtneTS pro indiviso. 
And, 1. This^^ro indiviso right implies, as between the parties themselves, 
a right of retention in each partner over the stock, for any advances, which 
he may have made to the company, or for any debt due by the company, 
for which he may be made responsible. 2. It also implies, in relation to the 
public at large, creditors of the company, a trust in the several partners, as 
joint trustees for payment, in the first place, of the company debts. And 
on this point rests, (1), the preference, which the creditors of the company 
have over the company funds ; none of the partners, nor any one in their 
right, as individual creditors or otherwise, being entitled to more than the 
reversion after the purposes of the trust are fulfilled: and, (2), the peculi- 
arity, that hereditable subjects belonging to and held by a company, are 
considered not as hereditable in succession, but as movable ; consisting of 
the jus crediti only. 3. In this respect, the contract of partnership has the 
effect of a direct conveyance of property to the company, of whatever is 
engaged to be given, or by clear evidence is contributed to the use of the 
company by any of the partners, to whom it belongs. The contract does 
not indeed supersede the necessity of the completion of the transference by 
tradition or otherwise ; but it operates as a conveyance (fittdii.s transferendi 
dominii), which, when followed by tradition, possession, intunation, and the 
other methods of completing a transference by law, vests the property in 
the partners, jointly for the purposes already expressed. ' Society,' says 
Lord Stair, ' is not so much a permutative as a commutative contract, whereby 
the contractors communicate to each other some stock, work, or profit. 
The effect of society is, that thereby something, which before was proper, 
becometh, or is continued to be, common to the copartners.' He adds : 
' Yet this communication is not effectual to transfer the property in part, or 
to comnmnicate it without delivery or possession, by which property by 
positive law is transferred.' This distinction is of some consequence. Where 
the question is between the parties and their representatives, as to what 
shall be considered as the estate of the company, but without involving any 
competition with third parties, Avhatever falls under the fair construction of 
the contract will, as a personal right, belong to the company and its creditors. 
But where there arises a competition depending on the question of real 
right, it will be determined according to that criterion of real right, which 



CHAP. VI.] PARTNERSHIP PROPERTY. 149 

partner possesses full power and authority to sell, 
pledge, or otherwise to dispose of the entirety of any 

the law has appointed in cases of transference. But in determining what 
shall amount to an engagement to contribute, and consequent conveyance 
of a particular subject, it is not always the use of the subject that will settle 
the point. In one case, certain subjects, of which the use was given to the 
company, were held to be fairly intended as part of the stock, from the way 
in which they were mentioned in the inventories. In another nearly similar 
case, the same inference was avoided, the partnership not being of a perma- 
nent character, but a momentary joint adventure merely. In respect to 
movables, all commodities comprehended within the partnership, and in 
possession of the partner, to whom they previously belonged, are held, as 
by traditio brevis manns, to be vested in the company ; for the partners 
having power to hold for the company as prcspositi, their possession will be 
presumed to be for the common behoof. But money due by a third party 
to an individual partner, or commodities in the hands of third parties, con- 
tributed by the owner as part of his stock, will not be transferred without 
delivery or intimation. The creditors of the owner, using attachment by 
diligence before intimation of the partnership, would attain a preference 
over the company. Ships must be transferred according to the directions 
of the statute. 4. As to land and other property, which, by the forms of 
territorial conveyance, require to be transferred by deed, the partnership 
will acquire by the contract nothing more than the jus ad rem. If, for 
example, a cotton-mill is, by the agreement, contibuted as his share of stock, 
on the part of the owner, this will not feudally transfer to the company the 
property of the mill, so as to entitle them to exclude the adjudication of 
the separate creditors of the projjrietor trusting to the record. But it will, 
like a general disposition, confer on the company a jus ad rem, by virtue of 
which they may, in a declarator and adjudication in implement, have that 
property declared and adjudged to the partners jointly, or to a trustee, as 
part of the stock of the concern. 5. Such personal property as may have 
been acquired in the name of the society, becomes eo ipso the property of 
the partnership, although purchased by an individual partner with his own 
money. He is prcepositus of the company, and entitled to advance money 
and acquire projierty directly for the common behoof. 6. Such personal 
property as a partner acquires, even in his own name, provided it be bene- 
ficial acquisition and in the company's line of trade, is, according to the 
spirit of the contract of partnership, to be held as acquired for the com- 
pany ; and the company will be entitled to claim it. But it would rather 
seem, that in such a case the property would pass to the partner in real 
right, with a jus ad rem to the company and its creditors. 7. A partner, 
who binds himself to pay a sum or fungible into the stock, is debtor to 
the company ; and the loss of the money or fungible, beibre being put into 
stock, is his private loss. If he has engaged to put in a specific subject 
into stock, and it perish, the loss is to the company, unless the partners shall 



150 PARTNERSHIP. [CHAP. VI. 

particular goods, wares, merchandise, or other personal 
effects belonging to the partnership, and not merely of 

be in mora.''' 2 Bell, Comm. B. 7, c. 1, p. 613-615, 5th ed. Mr. Chancel- 
lor Kent, in his learned Commentaries (Vol. 3, 37-40), has discussed the 
subject at large ; and after referring to the American authorities, which are 
as much in conflict with each other as the English, he e.xpresses his own 
opinion to be, that the weight of authority is, that equity will consider the 
person, in whom the real estate is vested, as trustee for the whole concern, 
and the property will be entitled to be distributed as personal estate. 3 Kent, 
37-39 ; and the authorities cited in the notes, Id. See Gow on P. c. 2, p. 
32-35, 3d ed. ; Wats, on P. c. 2, p. 81-89, 2d ed. ; Gow on P. Suppl. 1841, 
to 3d ed. c. 2, § 1, 8-13. 

{Real Estate of a Partnership. — I. The interest of a partnership 
in real estate can only be equitable. The legal title must be either in all 
the partners as individuals, or in one or more of them, or in a stranger. 
Coles V. Coles, 15 Johns. 159; 1 Am. Lead. Cas. 494, 4th ed. The 
holders of the legal title may be either joint-tenants or tenants in common, 
according to the terms of the conveyance to them. JefFereys v. Small, 1 Vern. 
217; Elliott ?;. Brown, 3 Swans. 489. The equitable interest of a partner in 
real estate cannot of course be availed of in ejectment. Collins v. Warren, 
29 Mo. 236 ; Lowe v. Alexander, 15 Cal. 296. In Moreau v. SafFarans, 
3 Sneed, 595, it was held, that a conveyance to J. S. & Company vested the 
legal title in J. S. On the partition of partnership real estate, see Greene v. 
Graham, 5 Ohio, 264; Patterson v. Blake, 12 Ind. 436. See also Ensign 
V. Briggs, 6 Gray, 329; Whitman v. Boston & Maine R. R. Co., 3 All. 
133. 

II. The equitable interest of a partner in partnership real estate is the 
right to have the use of it, the right to have it employed, if necessary, for 
the payment of partnership debts, and of any balance due him from his copart- 
ners, and after such payments, a share in it proportional to his interest in 
the partnership. 1 Am. Lead. Cas. 494, 4th ed. ; 1 Lead. Cas. in Eq. 
229, 230 [152-154], 240, 3d Am. ed. and cases there cited. Thus, though 
the partners are at law joint-tenants, there will be no jus accrescendi allowed 
in equity. Lake v. Craddock, 3 P. Wm. 158. If one of the partners has 
a one-third interest and the other a two-thirds intei'est in the partnership, 
they will have that same proportionate interest at equity in partnership 
lands, though the lands were conveyed to them in equal shares as tenants in 
common. Putnam v. Dobbins, 38 111. 394. So one holding the legal title 
to partnership real estate, cannot be compelled in equity to convey a moiety 
of the estate to his copartner, when the balance of accounts is against the 
latter. Williams u. Love, 2 Head, 81. 

III. 1. As in all cases of real estate held on trust, one who purchases 
real estate ffrom the partner having the legal title, with notice that it is 
partnership property, will take the land subject to the equities of the part- 
ners and partnership creditors ; but a purchaser who has no such notice will 



CHAP. VI.] PARTNERSHIP PROPERTY. 151 

his own share thereof, for purposes within the scope of 
the partnership.^ In respect to his own sluirc thereof, 

take the land discharged of such equities. 1 Am. Lead. Cas. 497 4th ed. ; 
1 Lead. Cas. in Eq. 240, 3d Am. ed. ; Hoxie v. Carr, 1 Sumn. 173 ; Til- 
linghast v. Champliu, 4 R. I. 173; Frink v. Branch, 16 Conn. 260; Buchan 
V. Sumner, 2 Barb. Ch. 165 ; M'Dermot v. Laurence, 7 S. «& R. 438 ; Mat- 
lack V. James, 2 Beasl. 126 ; Forde v. Herron, 4 Munf. 316 ; Divine v. 
Mitchum, 4 B. Mon. 488 ; Buck v. Winn, 11 B. Mon. 320 ; Reeves v. Ayers, 
38 111. 418. But see Treadwell v. Williams, 9 Bosw. 649. 

2. So, also, as in other trdsts, partnership equities will be enforced 
against the heirs, devisees, or widow of the partner who held the legal title. 
Burnside v. Merrick, 4 Met. 537 ; Dyer v. Clark, 5 Met. 562 ; Howard v. 
Priest, 5 Met. 582; Sumner v. Hampson, 8 Ohio, 328. In Smith v. Jack- 
son, 2 Edw. Ch. 28, the claim for dower, of the widow of a deceased partner 
who held the legal title to partnership real estate, was held paramount to 
the equities of the other partners ; but this decision stands alone, and finds 
no support in the other cases. But though the claim of the widow for 
dower must yield to the trust for the partnership, yet if the land is purchased 
by one without notice of the partnership, and is therefore held discharged 
of the trust, the right of the vendor's widow to dower revives, and will be 
enforced against the purchaser. Markham v. Merrett, 7 How. Miss. 437. 
But when partnership land is conveyed for a partnership debt, the party to 
whom it is conveyed will hold it free from any claim of dower by the widow 
of one of the partners. Duhring v. Duhring, 20 Mo. 174. 

3. Partnership real estate will be held bound to the partnership creditors 
in preference to the creditors of the separate partners. 1 Am. Lead. 
Cas. 497, 498, 4th ed. ; 1 Lead. Cas. in Eq. 240, 3d Am. ed. ; Crooker 
V. Crooker, 46 Me. 250 ; Jones v. Neale, 2 P. & H. 339. At law the sepa- 
rate creditor will not be postponed to a partnership creditor. Blake v. 
Nutter, 19 Me. 16. See Goodwin v. Richardson, 11 Mass. 469. But a 
separate creditor who has levied at law will hold the land in trust for the 
partnership. Peck v. Fisher, 7 Cush. 386. 

In Hale v. Henrie, 2 Watts, 143, and Ridgway's Appeal, 15 Penn. St. 
177, it was held, that if the land be recorded as owned by A. and B., and 



1 Wats, on P. c. 2, p. 91-93, 2d ed. ; Gow on P. c. 2, § 2, p. 51-54, 3d 
ed. ; Coll. on P. B. 3, c. 1, § 1, p. 263-268, 2d ed. ; Id. B. 2, c. 1, § 2, p. 
113; Fox V. Hanbury, Cowp. 445; 3 Kent, 44; [Woodward v. Cowing, 41 
Me. 9.] Of course we are to except from this doctrine all cases, where, 
although the property originally belonged to the partnership, it has become 
the property of an individual partner by the consent of the firm ; for in such 
cases, the property is to all intents and purposes to be treated as the private 
property of that partner, and is disposable by him alone accordingly in the 
same manner, as if it never had belonged to the partnersliip. Coll. on P. 
B. 2, c. 1, § 2, p. 113, 114, 2ded. 



152 PARTNERSHIP. [cHAP. VI. 

he may be properly deemed to do all acts of this sort, 
as owner ; in respect to the shares of his copartners, he 

there is no notice on record that A, and B. are partners, a separate creditor 
of A. can hold A.'s undivided moiety of the land against the creditors of 
the partnership. Contra, Fall River Whaling Co. v. Borden, 10 Cush. 458. 
Hale V. Henrie and Ridgway's Appeal are questioned, and it would seem 
with reason, in 1 Lead. Cas. in Eq. 241, 3d Am. ed., as contravening the 
general rule that creditors can take only the equities of their debtors. 

IV. 1. A partner cannot, of course, give a good legal title to that part 
of the partnership real estate in which he has only an equitable interest. 
Dillon V. Brown, 11 Gray, 179; Davis v. Christian, 15 Gratt. 11. And a 
purchaser of such interest takes it subject to all equities, though unknown 
to him. Kramer v. Arthurs, 7 Penn. St. 165. 

A surviving partner, however, has authority over the real estate of the 
firm, and can sell it for partnership debts ; and, if he has only the equitable 
interest, equity will compel the heir of the deceased partner to convey the 
legal title. Andrews' Heirs v. Brown's Administrators, 21 Ala. 437 ; Del- 
monico v. Guillaume, 2 Sand. Ch. 366 ; Pierce's Adm'r v. Trigg's Heirs, 
10 Leigh, 406 ; Galbraith v. Gedge, 16 B. Mon. 631. Though the purchaser 
is not obliged to see to the application of the purchase-money, yet if he is 
cognizant that the action of the surviving partner is fraudulent, he will not 
be protected in his purchase. Tillinghast v. Champlin, 4 R. I. 173 ; Hol- 
land V. Fuller, 13 Ind. 195 ; Lang v. Waring, 25 Ala. 625. In Dujjuy v. 
Leavenworth, 17 Cal. 262, where one partner had absconded, the other 
partner was Jield authorized to sell the partnership real estate, and a bona 
fide purchaser from him could compel a conveyance from one who had pur- 
chased with notice from the absconding partner. See Moran v. Palmer, 
13 Mich. 367. 

2. Whether a conveyance by one partner of the real estate of the 
partnership for a firm debt without the assent of the other partners is valid 
is a question which arises in two classes of cases which do not seem suffi- 
ciently distinguished in the books. 

First. When the partner has the legal title to a part only of the real 
estate, as when he is tenant in common with his copartners. In this case he 
can convey only so much as he has title to, for the legal title can be conveyed 
only by deed, and one partner cannot bind the others by deed. § 117-122 ; 
Dillon V. Brown, 11 Gray, 179; Haynes v. Seachrest, 13 Iowa, 455. The 
assent of the other partners may be proved to have been given before the 
conveyance, or they may be proved to have ratified it afterward. Juggee- 
wundas Keeka Shah v. Ramdas Brijbooken Das, 2 Moo. Ind. App. 487 ; 
Lowery v. Drew, 18 Tex. 786 (which was the case of a bond for a deed) ; 
Wilson V. Hunter, 14 Wis. 683. 

Secondly. When the partner has the legal title to the whole estate. 
There is no technical obstacle to such a partner conveying the title to a 
partnership creditor, and the only objection is that indicated in § 94 of the 



CHAP. VI.] PARTNERSHIP PROPERTY. 153 

may be properly deemed to do such acts, as their agent, 
and as the accredited representative of the firm. The 

text of a fundamental difference in the power of partners over real and 
personal estate. In spite of the statement in the text, which has been fol- 
lowed by the text-books generally, it may be doubted whether this distinc- 
tion exists. The authority cited in the text is Coles v. Coles, 15 Johns. 
159, but in that case the partners were at law tenants in common. The 
other cases commonly cited in support of this doctrine are Anderson v. 
Tompkins, 1 Brock. 456 ; Tapley v. Butterfield, 1 Met. 515 ; Dyer v. 
Clark, 5 Met. 562 ; Tillinghast v.' Champlin, 4 R. 1. 173 ; but none of these, 
when examined, will be found to decide the point. In Sharp v. Milligan, 22 
Beav. 606, there is a semhle that if a partnership is formed for no fixed 
period, a partner cannot bind the firm by a lease for twenty-one years, but 
the remark is not based on any thing in the peculiar nature of real estate. 
Lawrence v. Taylor, 5 Hill, (N. Y.) 107. On the other hand, there is a 
dictum in Jones v. Neale, 2 P. & H. 339, that a conveyance by a partner 
having the legal title to a partnership creditor passes the property to the 
land as against other pai-tnership creditors. Mr. Lindley (Lind. on P. 
229) says, " The writer is not aware of any decision in which an equitable 
mortgage made by one partner by a deposit of deeds relating to partnership 
real estate, has been upheld, or the contrary ; he can therefore only venture 
to submit, that such a mortgage ought to be held valid in all cases in which 
it is made by a partner having an implied power to borrow on the credit of 
the firm. See Ex parte Lloyd, 1 Mont. & Ayr. 494." On the whole, it is 
submitted that the rule as laid down in the text is co-extensive only with 
the rule that one partner cannot bind another by deed, and that an attempt 
to push it beyond such latter rule to a case in which a partner having the 
legal title to partnership property sells or pledges it for a partnership debt 
has no support either in the decided cases or on principle. In Moderwell 
V. Mullison, 21 Penn. St. 257, 259, Woodward, J., says : " Partners are the 
agents of each other in partnership transactions ; and when real estate is 
brought into the partnership business, it is treated in equity as personal 
estate ; and a lease of it by one partner is as much a partnership transaction, 
as a sale of partnership goods by him would be." 

V. The chief question which has arisen with regard to partnership real 
estate is to determine wlien land becomes partnership property. 

1. Real estate 2)tircJtased ivith partner shiiJ funds. 

A. Real estate purchased by the partnership funds for partnership pur- 
poses is partnership property, and this whether the legal title is taken in the 
name of one or of all of the partners. Lind. on P. 555 ; 1 Am. Lead. 
Cas. 495, 4th ed. ; 1 Lead. Cas. in Eq. 231, 232 [155, 156], 3d Am. ed. ; 
Phillips V. Phillips, 1 i\Iyl. & K. 649 ; Fereday v. Wightwick, 1 Russ. & 
M. 45 ; Townsend v. Devaynes, 1 Mont, on P. App. 97 ; Broom r. Broom, 
3 Myl. & K. 443 ; Morris v. Kearsley, 2 You. & C. Ex. 139 ; Bligh v. Brent, 



154 PARTNERSHIP. [CHAP. VI. 

law, however, treats each partner, without any nicety 
of discrimination of this sort, as possessing a dominion 

Id. 268; Houghton v. Houghton, 11 Sim. 491 ; Hoxie v. Carr, 1 Sumn. 173, 
181 ; Burnside v. Merrick, 4 Met. 537 ; Dyer v. Clark, 5 Met. 562 ; How- 
ard V. Priest, 5 Met. 582 ; Crooker v. Crooker, 46 Me. 250 ; Buffum v. Buf- 
fum, 49 Me. 108 ; Jarvis v. Brooks, 7 Fost. 37 ; Willis v. Freeman, 35 Vt. 
44; Delmonico v. Guillaume, 2 Sand. Ch. 366; Buchan v. Sumner, 2 Barb. 
Ch. 165 ; Smith v. Tarlton, 2 Barb. Ch. 336 ; Matlack v. James, 2 Beasl. 
126 ; Baldwin v. Johnson, Saxt. Ch. 441 ; Abbott's Appeal, 50 Penn. St. 
234; Robertson v. Baker, 11 Fla. 192; Greene v. Greene, 1 Ohio, 535; 
Matlock V. Matlock, 5 Ind. 403. See Fall River Whaling Co. v. Borden, 
lOCush. 458; Carlisle's Adm'rs v. Mulhern, 19 Mo. 56. In Duhring v. 
Duhring, 20 Mo. 174, where the case states that the land was bought with 
partnershijj funds, " to be held as an investment," until the firm closed busi- 
ness, the land was held to be partnership property; but it is plain from the 
report that the firm occupied part of the premises, and that the main use of 
the land was for partnership purjioses, and the land was finally sold for a 
partnership debt. 

So if land is bought with partnership funds with the intention of using 
it for partnership purposes, though in fact it is never so used, it is partner- 
ship property. Erwin's Appeal, 39 Penn. St. 535. A partnership consisted 
of four members, two of whom were dormant, the ostensible partners 
bought lands to be used in the partnership business in their own name. A 
small part only of the price was paid ; but what little was paid came out of 
the partnership funds. The partners, (including the dormant members) 
were held liable for the remainder of the purdhase-money. Brooke v. 
Washington, 8 Gratt. 248. On the other hand, in N. Penn. Coal Co.'s Ap- 
peal, 45 Penn. St. 181, land was bought by one partner in his own name, 
and he gave a bond and mortgage for part of the price, the remainder of 
the price was paid out of the partnership funds, and the land was used in 
the business of the firm ; yet, on the ground that the vendor had given 
credit to the individual partner, the firm was held not liable for the unpaid 
purchase-money. See also Pitts v. Waugh, 4 Mass. 424. See Forsyth v. 
Clark, 3 Wend. 637 ; Dewey v. Dewey, 35 Vt. 555 ; Lacy v. Hall, 37 Penn. 
St. 360; Boyers v. Elliott, 7 Hump. 204; infra 2. B. 

B. Real estate purchased with partnership funds, but not for partnership 
purposes, is presumed to belong to the partners in proportion to their in- 
terest in the partnership. (In New York, however, it is otherwise, implied 
trusts having been abolished by statute. Cox v. McBurney, 2 Sand. 561.) 
But this presumption may be rebutted ; and it may be shown that the real 
estate belongs to the partner in whose name the legal title was taken. 
Smith V. Smith, 5 Ves. 193. See Hunt v. Benson, 2 Humph. 459. 

Though real estate purchased with partnership funds, but not for part- 
nership purposes, belongs to the partners, in the absence of evidence to 



CHAP. VI.] PARTNERSHIP PROPERTY. 155 

over the entirety of the property, and not merely over 
his own share, and, therefore, as clothed with all the or- 

the contrary, yet it seems to be tlie better opinion that the land lielongs to 
the partners separately, and not to the partnership. Wooldridge v. Wil- 
kins, 3 How. Miss. 360. 

There are dicta to the same effect in Bell v. Phyn, 7 Ves. 453; Randall 
V. Randall, 7 Sim. 271 ; Sigourney v. Munn, 7 Conn. 11 ; Coder v. Haling, 
27 Penn. St. 84, Lind. on P. 552 ; Am. 1 Lead. Cas. 495, 4th ed. ; 1 
Lead. Cas. in Eq. 235, 236, [159-162], 241, 3d Am. ed. On the other 
hand, in Galbraith v. Gedge, 16 B. Mon, 631, land purchased with partner- 
ship funds, though there was no evidence that it was bought for sale, and 
though apparently it was not used for partnership purposes, was considered 
as partnership property ; and in Buck v. Winn, 11 B. Mon. 320, it is said 
that land bought with partnership funds, not for the firm use, but as a specu- 
lation, or a safe investment, is partnership property. In Sumner v. Hamp- 
son, 8 Ohio, 328, and Andrews' Heirs v. Brown's Adm'r, 21 Ala. 437, 
it does not appear whether the land was used for partnership purposes or 
not. 

In Fall River ^Vhaling Co. v. Borden, 10 Cush. 458, 467, 470, lands were 
purchased by partners, and the deed taken to them as tenants in common. 
" The cost of the purchase went into the partnership accounts. The estates 
were entered into the company books as company property. As portions 
were sold for profit, from time to time, the proceeds were merged in the 
general funds of the copartnership. These lands were avowedly purchased 
for speculation." It was held, that the lands were partnership property. 
The court say : "In order to affect lands with partnership equities, it is not 
necessary that such land should be the incident merely of a commercial 
partnership ; but it may be in part, at least, the distinct substratum of a co- 
partnership." See Hoxie v. Carr, 1 Sumn. 173 ; Dilworth v. Mayfield, 36 
Miss. 40. 

When land is bought by a commercial partnei-ship from partnership funds 
for the purpose of selling to pay firm debts, it is partnership property. Ileii's 
of Pugh V. Currie, 5 Ala. 446. And when land is taken for a partnership debt, 
it becomes partnership property, though it be not used in partnership business. 
Buchan v. Sumner, 2 Barb. Ch. 165 ; Collumb v. Read, 24 N. Y. 505 ; Put- 
nam V. Dobbins, 38 111. 394. See Moran v. Palmer, 13 Mich. 367. Contra, 
Goodwin v. Richardson, 11 Mass. 469. But this last case seems partly- 
based on a State statute, and was a decision at law. See the comments of 
Story, J., in Hoxie v. Carr, 1 Suran. 173, 185. 

2. Heal estate not purchased icith part nershijJ funds. 

A. A partnership may be formed by an oral agreement ; and though 
the Statute of Frauds requires that an agreement concerning land should be 
in writing, yet if the existence of a partnership be once proved, whether by 
writing or by parol, and the fact that land has been purchased by partner- 



156 PARTNERSHIP. [CHAP. VI. 

dinary attributes of ownership.^ This doctrine, indeed, 
seems indispensable to the security and convenience of 

ship funds be also proved, whether by writing or parol, then a trust for the 
partnership attaches to such land, because it comes within the general class 
of implied trusts, which it has long been settled (whether wisely or not it 
would be now vain to inquire) are excepted out of the statute. 

But in those cases in which the purchase is not made from partnership 
funds, and there is therefore no resulting trust, it becomes important to 
consider the effect of the Statute of Frauds. 

If a partnership is formed under written articles which provide for the 
purchase of land, it may be shown by parol evidence that land standing in 
the name of one of the pai'tners was bought for partnership purposes, and 
was partnership property. Frederick v. Cooper, 3 Iowa, 171. And in 
Fall River Whaling Co. v. Borden, 10 Cush. 458, it is said that if a part- 
nership be proved to exist by any memorandum in writing, or by books 
or other written transactions, a partnership trust will attach to land 
treated as partnership property ; but in this case it would seem that the 
land was purchased with partnership funds, and therefore came within the 
general class of resulting trusts. Though a partnership for the purchase 
and sale of lands must be evidenced originally by writing, yet the fact of 
the substitution of two partners in the place of two of the original partners 
may be proved by parol. Rowland v. Boozer, 10 Ala. 690. In Bird v. 
Morrison, 12 Wis. 138, the question is very fully discussed, and the court 
conclude that whatever may be the law where the alleged partners are 
tenants in common of the land, or where the land is an incident to the part- 
nership, yet that a partnership, to consist in dealings in real estate, cannot 
be proved by oi-al evidence so as to affect lands purchased by one of the 
alleged partners in his own name, even though the alleged partners are, in 
fact, partners in a commercial partnership under written articles. In Fowler 
V. BaiUey, 14 Wis. 125, it does not appear whether the partnership was 



' 3 Kent, 44. — Mr. Chancellor Kent here says : " With respect to the 
power of each partner over the partnership property, it is settled that each one, 
in ordinary cases, and in the absence of fraud on the part of the purchaser, 
has the complete jus disponendi of the whole jDartnership interests, and is 
considered to be the authorized agent of the firm. He can sell the effects, or 
compound or discharge the partnerehip debts. This power results fi-om the 
nature of the business, and is indispensable to the safety of the public, and the 
successful operations of the partnership. A like power in each partner exists 
in respect to purchases on joint account ; and it is no matter ynih what frau- 
dulent views the goods were purchased, or to what purposes they are applied 
by the purchasing partner, if the seller be clear of the imputation of collusion. 
A sale to one partner, in a case within the scope and course of the partner- 
ship business, is, in judgment of law, a sale to the partnershiji." 



CHAP. VI.] PARTNERSHIP PROPERTY. 157 

the public, as well as to the facility of transacting com- 
mercial business. But in respect to real estate a difFcr- 

formed by written articles ; the question of the application of the Statute of 
Frauds was not raised. 

The cases of Forster v. Hale, 3 Ves. 696 ; s. c. 5 Ves. 308, and Dale v. 
Hamilton, 5 Hare, 369 ; s. c. 2 Ph. 266, are commonly cited as authorities to 
prove that lands may be affected with a trust in favor of a partnership, 
though the partnership was formed by parol, and the land was not purchased 
with partnership funds. But in Forster v. Hale, the case was decided both 
by the Master of the Rolls and on appeal, on the ground that there was a 
written declaration of trust. Lord Chancellor Loughborough says (5 Ves. 
314) : " The case appears proved in the strictest manner by the written evi- 
dence ; " it would seem, also, that the court was of opinion that the purchase 
was made out of the partnership funds. Dale v. Hamilton, it is true, was 
decided by Vice-Chancellor Wigram (5 Hare, 369), without regard to the 
fact that there was a written memorandum ; but Lord Chancellor Cotten- 
ham, on appeal, made a decree in favor of the plaintiff, distinctly on the sole 
ground of the existence of a written memorandum (2 Ph. 266) ; and the 
Vice-Chancellor's judgment in Dale v. Hamilton, 5 Hare, 369, must be con- 
sidered as weakened, if not overruled, by the case of Caddick v. Skidmore, 
2 De G. & J. 52. The marginal note in this case is as follows : " An agree- 
ment between A., a lessee of a mine, and B. to become partners in the 
mine, paying the reserved rent, subletting the mine at a royalty, and dividing 
the proceeds. Held, to be within the Statute of Frauds, and not sufficiently 
proved by a receipt signed by A. and given to B. for a sum as B.'s share of 
the head-rent of the mine, the sum being exactly half of that rent." 

In Henderson v. Hudson, 1 Munf. 510, an agreement to form a partner- 
ship, for the purpose of purchasing land, was held within the statute, and it 
was so held by Judge Story, in a very well-considered case. Smith v. Burn- 
ham, 3 Sumn. 435, Pitts v. Waugh, 4 Mass. 424 ; In re Warren, Davies, 
320; Deloney v. Hutcheson, 2 Rand, 183. See Bird v. Morrison, 12 Wis. 
138 ; Fall River Whaling River Co. v. Borden, 10 Cush. 458. In this last 
case the court say: "The cost of the purchase went into the partnership 
account," which would seem to mean that the purchase was made with part- 
nership funds. 

The only American cases in which lands have been allowed to be affected 
with a partnership trust, when neither was the existence of the partnership 
evidenced by writing, nor the lands purchased with partnership funds, seem 
to be Dilworth v. Mayfield, 36 Miss. 40, and Hanff v. Howard, 3 Jones, 
Eq. 440 ; and in the former of these cases no (piestion as to the Statute of 
Frauds was raised. In Black v. Black, 15 Ga. 445, it was held, that an 
agreement between a partnership and a stranger, that the latter should have 
an interest in the profits arising from the sale of the partnership lands was 
within the Statute of Frauds. If A. and B., who are in partnership as 
attorneys, agree by parol to engage in the business of buying lauds, though 



158 PARTNERSHIP. [cHAP. VI. 

ent rule prevails, founded upon the nature of the prop- 
erty and the provisions of the common law applicable 

such agreement may be void as between themselves, yet the holders of a 
note signed by them both, and given in the course of such business, are 
entitled to proceed against the partnership assets in preference to the sep- 
arate creditors. In re Warren, Davies, 320. 

B. Real estate not purchased with partnership funds will of course 
become converted into partnership j^roperty by express agreement. When 
there is no express agreement, Mr. Lindley (Lind. on P. 555) sums up the 
rule as follows : "It seems that land acquired, whether gratuitously or not, 
for the purpose of carrying on a jjartnership business, and used for that 
purpose, is to be considered as property of the partnership ; but that land 
which is not so acquired, but which, belonging to s&veral persons jointly or 
in common, is employed by them for their common profit, does not become 
partnership property unless there is some evidence to show that it has been 
treated by them as ancillary to their partnership business, and as part of the 
common stock of the firm." Crawshayu. Maule, 1 Swans. 495, 522 ; Roberts 
V. Eberhardt, Kay. 148 ; Morris v. Barrett, 3 You. & J. 384 ; Brown v. Oak- 
shot, 24 Beav. 254; Phillips v. Phillips, 1 Myl. & K. 649 ; s. c. Bisset on P. 
50 ; Jackson v. Jackson, 7 Ves. 535, s. c. 9 Ves. 591 ; Fereday i\ Wightwick, 
Taml. 250; Essex v. Essex, 20 Beav. 442. See also, Caddick v. Skidmore, 
2 De G. & J. 52 ; Burdon v. Barkus, 2 Giff. 412. The American cases 
hold generally that real estate not purchased with partnership funds does 
not become partnership property, though used for partnership purposes 
unless there is some agreement that it shall be so considered, 1 Am. Lead. 
Cas. 496, 4th ed. Wheatley's Heirs v. Calhoun, 12 Leigh, 264 ; Frink v. 
Branch, 16 Conn. 260; See Divine v. Mitchum, 4 B. Mon. 488; Owens v. 
Collins, 23 Ala. 837. In Boyers v. Elliott, 7 Humph. 204, and Fall River 
Whaling Co. v. Borden, 10 Cush. 458, the land seems to have been pur- 
chased with partnei'ship funds. See Pitts v. Waugh, 4 Mass. 424. In 
Forsyth v. Clark, 3 Wend. 637, it was held, that land did not become part- 
nership property, though jiartnershij) funds were employed by a ^sartner in 
its purchase, if it was not agreed at the time of the purchase, that it should 
be made with j^artnei'ship funds ; but in Dewey v. Dewey, 35 Vt. 555, where 
land was purchased by one partner for partnership use, and was so used ibr 
twenty-six years, the fact that the partner purchasing took the title in his own 
name, and gave his individual note for the amount, without the knowledge 
of the other partner, the note being j^aid out of partnershiji i'unds, did not 
prevent a resulting trust arising for the other partner in a moiety of the 
land ; and in Lacy v. Hall, 37 Penn. St. 360, where one of two partners, 
acting as the financial member of the firm, purchased land to promote the 
partnership business, though the purchase was made in his own name, and 
with his own money, and where the firm afterwards expended money and 
made valuable improvements on the land, the purchase was held that of 
the firm, and enured to its benefit. 



CHAP. VI. J PARTNERSHIP PROPERTY. 159 

thereto. Each partner is required, both at law and in 
equity, to join in every conveyance of real estate, in 

VI. Real estate which has once been partnership proj)erty niav by 
agreement he changed into separate property. Rowley v. Adams, 7 Beav. 
548, 1 Lead. Cas. in Eq. 237, [162], 3d Am. ed. 

VII. The remaining question on the subject is whether the property of 
a partner in partnership land is real or personal estate. If it is the former, 
it is liable to dower, and goes, on the partner's decease, to his heir ; if the 
latter, it is free from dower, and goes to his personal representatives. The 
question is complicated in the cases with that previously discussed, viz. 
whether the real estate has become pai*tnership property ; if it has not, there 
can be no question that it is liable to all the incidents, and has all the qual- 
ities of real estate. The cases in England are conflicting; but the result is 
well summed by Mr. Lindley in the following passage. (Lind. on P. 565.) 

" If a share of a partner is nothing more than his proportion of the part- 
nership assets after they have been turned into money and applied in liqui- 
dation of the partnership debts, it necessarily follows that in equity, a share 
in a partnership, whether its property consists of land or not, must, as 
between the real and personal representatives of a deceased partner, be 
deemed to be personal and not real estate. And although the decisions 
upon this point are conflicting, the authorities which are in favor of the 
above conclusion certainly preponderate over the others. Tliornton v. 
Dixon, 3 Bro. Ch. 199 ; Bell r. Phyn, 7 Ves. 453 ; Randall v. Randall, 
7 Sim. 271 ; Cookson v. Cookson, 8 Sim. 529, are all cases in which part- 
nership realty was treated as realty. On the other hand, Ripley v. Water- 
worth, 7 Ves. 425 ; Townsend v. Devaynes, 1 Mont, on P. note 2a. Appx. 
p. 97 ; Phillips v. Phillips, 1 Myl. & K. 649 ; Broom v. Broom, 3 Myl. & K. 
443 ; Morris v. Kearsley, 2 You. & C. Ex. 139 ; Houghton v. Houghton, 
11 Sim. 491 ; Essex v. Essex, 20 Beav. 442, and Darby v. Darby,. 3 Drew, 
495; Holroyd v. Holroyd, 7 Weekly Rep. 426, all support the statement 
in the text. 

"In Thornton v. Dixon, 3 Bro. Ch. 199, the court recognized the rule, 
that partnersliip property must be considered as personal estate ; but held, 
that the lands which Avere there in question could not be so considered, as 
they had been conveyed to all the partners in connnon, and there was no 
agreement for a sale. 

" In Bell V. Phyn, 7 Ves. 453, partners in trade purchased, with the funds 
of the firm, a share in a plantation, and kept the accounts relating to the 
estate in the partnership books ; and it was held, upon the authority of the 
last case, that, assuming the land to have become partnershij) 2>roi)erty, it 
ought not to be regarded as personal estate. 

" In Randall v. Randall, 7 Sim. 271, the partners were farmers, maltsters, 
and biscuit makers. They bouglit land for the farming business, and it was 
held, that, as it was not acquired for the purpose of any partnersliip in trade, 
the land could not be treated as personalty. 



160 PARTNERSHIP. [CHAP. VI. 

order to pass the entirety thereof to the grantee ; and 
if one partner only executes it, whether it be in his 

" In Cookson v. Cookson, 8 Sim. 529, a father, who was seised in fee of 
land on which he carried on business as a bottle manufacturer, took his son 
into partnership, and conveyed a share in the land to him. The land was 
declared by the articles of partnership to be partnership property. But on 
the death of the flither, it was held, that his share in the land was to be 
treated as real estate, no sale being required for the payment of the part- 
nership debts, or for any other purpose. 

" These are the cases which militate against the rule under discussion. 
The following are those which support it : — 

" In Ripley v. Waterworth, 7 Ves. 425, partnership land was conveyed to 
trustees upon trust, upon a dissolution of the partnership, to sell and pay 
the partnership debts, and divide the residue of the money arising from the 
sale amongst the partners ; and it was held, upon the death of one of them, 
that his share in the land was personal estate, although the land was not in 
fact sold, and the deceased's share in it was purchased by the surviving part- 
ners, under a clause enabling them so to do, and contained in the convey- 
ance to the trustees. 

"In Townsend v. Devaynes, 1 Mont, on P. note 2a. Appx. p. 97; see 
too, 11 Sim. 498, note ; two persons in partnership as paper makers, pur- 
chased paper-mills for the use of the firm, and paid for them out of its funds. 
It was agreed that, on the death of either, the survivor should have the op- 
tion of purchasing his share. One of the partners died, and his share was 
purchased by the survivor. It was held, that the whole of the purchase 
money formed part of the personal estate of the deceased, although most 
of the money was paid in respect of the interest of the deceased in the 
mills. 

" In Phillips V. Phillips, 1 Myl. & K. 649, two persons in partnership 
as brewers purchased public houses for the purposes of their trade, 
and had them conveyed to both in fee. On the death of one of them, 
it was held, that his share in the houses was to be treated as personal 
estate. 

" Broom v. Broom, 3 Myl. & K. 443, is a decision to the same effect as the 
last, and decided on its authority. 

" In Morris v. Kearsley, 2 You. & C Ex. 139. A partnership of brewers 
was possessed of real estate conveyed partly to the partners as tenants in 
common, and partly to one or more of the partners, in trust for the firm ; 
and it was decided that the several lands, hereditaments, and premises 
belonging to the partnership, ought to be considered as personal estate. 
The report does not state how, when, or for what purpose, the property 
was originally acquired. 

" In Houghton v. Houghton, 11 Sim. 491, two brothers, A. and B., were 
partners as soap boilers. They purchased land for the purposes of their 
trade, took a conveyance to themselves as tenants in common, and mort- 



CHAP. VI.] PARTNERSHIP PROPERTY. 161 

osvn name, or in that of the firm, the deed will not 
ordinarily convey any more than his own . share or in- 
terest therein.^ 

gaged the land for the purchase money. They then built on the land, in- 
sured the buildings, and paid the expenses and the intei-est of the mortgage 
debt out of the partnership funds. A. died intestate, and B. took another 
brother, C, into partnership. B. and C. paid off the mortgage, and took a 
reconveyance to themselves as joint tenants in fee, and expended money in 
building and insurance, defraying the expense, as Avell as providing the mort- 
gage money, out of the funds of the partnership. On B.'s death it was held 
that the land and buildings had clearly become partnership property, and 
that it ought, therefore, to be treated as personal estate. 

" In Darby r. Darby, 3 Drew, 495, two brothers embarked in joint specu- 
lations in land. Their scheme was to buy land, convert it into building sites, 
and then sell it at a protit. This was done on several occasions, the land 
being generally conveyed to one of them only. On the death of that one, 
it was held that his interest in all the land bought by both, and still unsold, 
was personal and not real estate. 

" In Essex v. Essex, 20 Beav. 442, two brothers were, under the will of 
their lather, seized of freehold lands. They agreed to become partners as 
curriers and tanners for fourteen years, and to carry on their business on 
those lands. It Avas stipulated that if either died during the copartnership 
term, the other should take his share in the freeholds, and that the entirety 
thereof, including the plant and tan-pits, should be valued at £5,000. The 
fourteen yeai's expired, but the partnership was continued as before. On 
the death of one of th^partners, it was held that his share in the freeholds 
was to be regarded as personal estate. 

" There are also various dicta of Lord Eldon in favor of the broad principle 
that partnership property is to be regarded as personal and not as real estate. 
See the judgment of V. C. Kindersley, in Darby ». Darby, 3 Drew, 498, &c. 

" Upon the whole, therefore, it is submitted : — 1. That, notwithstanding 
Thornton v. Dixon, Bell v. Phyn, and Randall v. Randall, the true rule is, 
as stated by the vice-chancellor, Kindersley, in Darby v. Darby, 3 Drew, 
506, ' that whenever a partnership purchase real estate for the partnership 
purposes, and with the partnership funds, it is, as between the real and per- 
sonal representatives of the partners, personal estate.' See, in addition to 
the cases referred to above, Holroyd v. Holroyd, 7 Weekly Rep. 426. 

" 2. That, notwithstanding Cookson y.Cookson, no satisfactory distinction, 
Avith reference to the question of conversion, can be drawn between land 
purchased with partnership moneys, and land acquired in any other way. 
See per Lord Eldon, in Jackson v. Jackson, 9 Ves. 593 : ' It is very diflicult 
to make a distinction between a joint tenancy by will, by a gratuitous deed. 



^ Coles V. Coles, 15 Johns. 15!i, IGl ; [Jackson v. Stanford, 19 Geo. 14]; 
ante, § 93, note. 



11 



162 PARTNERSHIP. [CHAP. VI. 

§ 95. The Roman law does not seem, ordinarily, to 
have conferred upon partners the same extensive 

or a purchase, the law of merchants, if it applies to one, must apply to 
all ; ' and that the question of conversion, like the question of survivorship, 
turns only on whether the land is or is not to be deemed property of the 
firm in the true sense of that expression. 

" If, indeed, the property is not partnership property in the true sense of 
the phrase {i. e. the property of the firm, or, in other words, of all the part- 
ners, as such), the rule has no application. Therefore, in a case where two 
out of three partners were owners of land occupied by the firm, and for 
which the fii'm paid a rent, and the land was in fact kept distinct from the 
joint property of the three pai-tners, it was properly held, on the death of 
one of the two partners to whom the rent was paid, that his interest in 
the land was not to be considered as personal, but as real estate. Rowley 
V. Adams, 7 Beav. 548; Balmain v. Shore, 9 Ves. 500; see, too, Phillips v. 
Phillips, ante. So, if land belongs to all the partners as tenants in 
common, but not as partners, and that land is used by them for partnership 
pui'poses, but is nevertheless intended to remain vested in them as tenants 
in common, and not to form part of the assets of the firm, the share of each 
partner will be real and not personal estate. In the case now supposed, 
co-owners of land are partners : but the co-ownership continues unaffected by 
the partnership. But it is not possible on this ground to uphold Thornton 
V. Dixon, Bell v. Phyn, Randall v. Randall, and Cookson v. Cookson. In 
each of these four cases the land had become part of the assets of the firm, 
or it had not ; if it had, these four cases are in direct conflict with those 
which have just been alluded to ; whilst, if it had not, they are in no less 
direct conflict with other cases which are authorities on the question what is 
and what is not property of the firm. The doctrine of conversion which has 
just been considered, merely amounts to this, that on the death of a partner, 
his share in the partnership is, as between his real and personal representa- 
tives, to be treated in equity as money and not as land. The crown cannot 
avail itself of the doctrine, and require probate duty to be paid, upon the 
assumption that the share of the deceased actually consisted of money. 
Custance v. Bradshaw, 4 Hare, 315. And if the shares of the partners in 
partnership realty are of sufficient value, they are not precluded by the 
doctrine in question from voting in respect of those shares at elections for 
members of Parliament. Baxter v. Brown, 7 Man. & Gr. 198. See, too, 
Rogers v. Harvey, 5 C. B. N. s. 3." But see 23 Law Mag. 98. 

The subject has been often alluded to in the American courts, and the 
books are full of dicta on the matter ; but there seem to be but few cases in 
which the point has arisen directly for decision between the widow or heirs 
on one side, and the personal representatives on the other. In several of 
the cases where the widow's claim for dower has been allowed, the case 
seems to have turned not on the point that partnership land was to be re- 
garded as real estate as between the widow and next of kin, but on the 



CHAP. VI.] PARTNERSHIP PROPERTY. 1G3 

powers and mutual rights over the disposition of the 
partnership property, as is given by the common law, 

point that the real estate in question never became partnership property. 
Wooldridge v. Wilkins, 3 How. Miss. 360 ; Markham v. Merrett, 7 How. 
Miss. 437. See Dilworth v. Mayfield, 36 Miss. 40. 

In the following cases it has been held, that, as between the widow and 
heirs of a deceased partner on one side, and the personal representatives on 
the other, partnership real estate goes, in the absence of agreement for an 
absolute conversion into personalty, to the former. Wilcox v. Wilcox, 13 
All. 252 ; Buckley v. Buckley, 11 Barb. 43 ; Goodburn v. Stevens, 5 Gill, 1 ; 
s. c. 1 Md. Ch. 420; Hale v. Plummer, 6 Ind. 121; Summey v. Patton, 
1 Winst. Eq. 52; Dilworth v. Mayfield, 36 Miss. 40; Piper v. Smith, 1 
Head, 93. In this latter case, however, the Court say that the weight of 
authority is the other way, " and it should be so held, if the question were 
an open one " in tljat State, but they declare themselves concluded by the 
earlier cases of McAlister v. Montgomery, 3 Haywood, 94 ; Yeatman v. 
Woods, 6 Yerg. 20. 

In Wilcox V. Wilcox, 13 All. 252, Wells, J., says: "We are unable to 
see how the equities, which spring from the relation of copartnership, and 
are raised for the protection of the rights of the several copartners, intei' 
sese, and of their joint creditors, can, by any principle of law or equity, be 
invoked by one class of the representatives of a deceased copartner against 
another class of representatives of the same copartner, each claiming the 
same interest and right. The legal estate passes to the heirs, with the 
incident of dower to the widow. Equity interferes for equitable purposes 
only. This right of each copartner to hold the real estate of the firm as 
security through him for the partnership debts, and to him for his advances 
and for the amount of his interest in the final results of the joint business, 
is often called an equitable lien. Now, when the joint debts are all paid, 
all balances between the several copartners fully adjusted, and there remains 
undivided real estate in which they are tenants in common, the legal title of 
each corresponding to his interest or share in the partnership, lor what can 
one partner have any lien upon the share of the other in such real estate ? 
For what pui'poses, and upon what grounds, can he ajipeal to a court of 
equity to decree its sale? Certainly in Massachusetts, where equitable 
jurisdiction is given only ' where the parties have not a plain, adequate, and 
complete remedy at the common law,' such an appeal must fail ; a fortion, 
Avould the executor or administrator fail of any right to come into ecjuity for 
such a purpose." 

It is generally admitted, that, if there is an agreement that the land shall 
be considered as personal property, such agreement will be enforced be- 
tween the real and personal representatives. See Goodburn v. Stevens, 
ubi supra; Hale v. Plummer, ubi supra; Galbraith v. Gedge, 16 B. Mon. 
631. And it is held, that an agreement to buy and sell lands and share in 
the profits of the sale is such an agreement as will convert the lands abso- 



164 PARTNERSHIP. [CHAP. VI. 

unless, indeed, a particular partner was specially clothed 
with the authority of all the partners, as the general 
agent of the partnership in the administration of its 
affairs. Hence, one partner could not ordinarily, in 
virtue of that relation alone, contract debts, which 
would be binding on all the partners, or alienate more 
than his share of the partnership property. Accord- 
ingly it is laid down in the Digest : Nemo ex sociis plus 
parte sua potest alienare, etsi totorum honorum socii 
sint} And again : In re communi neminem dominorum 

lutely into personalty as between heir and administrator. Heirs of Ludlow u. 
Cooper's Devisees, 4 Ohio St. 1. See NicoU v. Ogden, 29 111. 323; Coster 
V. Clarke, 3 Edw. Ch. 428 ; Wylie v. Wylie, 4 Grant, Cfi. (u. c.) 278. But 
see Dilworth v. Mayfield, 36 Miss. 40. 

The case of Dyer v. Clark, 5 Met. 562, is commonly cited as an authority 
against the doctrine of absolute conversion ; but the question as to right 
of heir and administrator in the partnership real estate does not seem to 
have been presented to the court. There are numerous dicta sustaining the 
same view as in Buchan v. Sumner, 2 Barb. Ch. 165 ; Galbraith v. Gedge, 
16 B. Mon. 631 ; Lang v. Waring, 25 Ala. 625 ; but in none of these cases 
does the precise point seem to have arisen for decision. 

On the other hand, in Pierce v. Trigg, 10 Leigh, 406, 427, is a dictum to 
the contrary, and the opinion of Chancellor Kent (3 Kent, 39, note h), and 
of Judge Story (1 Story, Eq. Jur. § 674), were in favor of the absolute 
conversion. See also Hoxie v. Carr, 1 Sumn. 173 ; Piper v. Smith, uhi 
supra. 

On the whole, the law does not seem to have advanced much beyond its 
condition when the author declared it open to many distressing doubts. If 
the doctrine that partnership real estate should pass to the widow and heirs 
of the partner, is finally adopted, many curious questions may arise, as 
Whether this doctrine applies to a partner who had no legal, but only an 
equitable interest in the land ? Whetlier, if partnership land is sold for the 
payment of debts, any surplus goes to the heir or to the executor, and if it goes 
to the heir, whether it goes as i-eal or personal property .^ Whether equity 
will compel the partnership creditor to exhaust the personal assets before 
proceeding against the real estate ? There do not seem to be any decisions 
touching these points, except those under the general doctrines of equitable 
conversion and marshalling of assets. The avoidance of tliese and other 
similar difhcult questions seems to be a practical reason for adopting the 
doctrine of absolute conversion.} 

» D. 17, 2, G8 ; Poth. Pand. 17, 2, n. 26, 27 ; Poth. de Soc. n. 89 ; Domat, 
1, 8, art. 16. 



CHAP. VI.] PARTNERSHIP PROPERTY. 165 

jure facere quicquam^ invito altero^ posse : uncle man- 
ifeshim est j^^ohlhendi jus esse} Those, who were 
specially appointed to administer the affairs of the part- 
nership, were called inagistri societatis — ita maglstri 
ai^pellantur." Similar principles prevail in our day in 
the foreign law of many countries, whose jurisprudence 
is founded on the Roman law ; and especially in that 
of France.^ However, by the modern code of France, 
the partners are deemed to have given reciprocally to 
each other the power of administering one for the 
other, in default of any special stipulations as to the 
mode of administration.'* This, of course, leaves the 
rights of the partners to be governed by the general law 
of France, where such stipulations exist, although they 
may be unknown to third persons, and, of course, it 
may expose the latter to some hazards of loss or incon- 
venience, if they trust to their confidence in a single 
partner, not notoriously authorized to administer for the 
partnership. 

§ 96. The Scottish law has avoided this difficulty, 
and followed the general doctrine of the common law. 
By the Scottish law, it is implied from the very nature 
of partnership, that each partner is clothed with the 
complete power of administering the property and 
affairs of the partnership, as 2^^((^p>ositus negotlls socie- 
tatis, to the eff"ect not only of holding possession of the 
property for the company, and of acquiring property for 
them in the course of their trade and business, but also 
to the eifect of entering into contracts on behalf of the 
company, and binding the company by all acts in the 

1 D. 10, 3, 28; Poth. Pand. 17, 2, n. 27. 

2 D. 2, U, 14; Id. 50, 16, 57; Domat, 1, 8, 4, art. 16; 2 Bell, Comm. 
B. 7, p. 615, 5tli ed. 

3 Poth. de Soc. n. 66-72. 

* Code Civil, art. 1856, 1860. 



166 ■ PARTNERSHIP. [cHAP. VI. 

ordinary administration of such trade and business.^ 
And it will make no difference in this respect, that 
there are private stipulations between the partners 
themselves prohibiting or restraining this right or 
authority ; for, as a general institorial power, it will 
still be deemed to exist in favor of third persons, who 
are ignorant of any such prohibitions or restrictions.^ 

§ 97. Besides this community of interest in the 
capital stock, funds, and effects of the partnership, 
each partner has certain rights, liens, and privileges 
thereon. In the first place, no one partner has any 
right to share in the partnership property, except 
what remains thereof after the full discharge and pay- 
ment of all debts and liabilities of the partnership ; 
and, therefore, each partner has a right to have the 
same applied to the due discharge and payment of all 
such debts and liabilities, before any one of the part- 
ners, or his personal representatives, or his individual 
creditors, can claim any right or title thereto.^ In 
short, as between the partners themselves, the debts 
and liabilities of the firm to creditors and third per- 
sons are a fund appropriated, in the first instance, to 
the discharge and payment of such debts and liabil- 
ities, and there is, JDroperly speaking, as between them, 
a lien thereon, or at least an equity, which may be 
worked out through the partners in favor of the credi- 
tors, although it may not directly attach in the creditors 
by virtue of their original claims, in all cases."* Each 

> 2 Bell, Coram. B. 7, p. 615, 5th ed. 

2 2 Bell, Comm. B. 7, p. 615, 5th ed. 

=* Coll. on r. B. 2, c. 1, § 1, p. 77, 2d ed.; West v. Skip, 1 Ves. Sr. 239, 
242; Ex parte Ruffin, 6 Ves. 119. 

* Ex parte Ruffin, 6 Ves. 119, 126. — In this case Lord Eldon said: 
" It is the case of two partners, who owed several joint debts, and had joint 
effects. Under these circumstances their creditors, who had a demand ujion 
them in respect of those debts, had clearly no lien whatsoever upon the 



CHAP. VI.] PARTNERSHIP PROPERTY. . 167 

partner also has a specific lien on the present and future 
property of the partnership, not only for the debts and 

partnersliip effects. They had power of suing, and by process creating 
a demand, that would directly attach upon the partnership effects. But 
they had no lien upon or interest in them in point of law or equity. If any 
creditor had brought an action, the action would be joint; his execution 
might be either joint or several. He might have taken in execution both 
joint and separate effects. It is also true, that the separate creditors of 
each, by bringing actions, might acquire a certain interest even in the part- 
nership effects ; taking them in execution in the way, in which separate 
creditors can affect such property. But there was no lien in either. The 
partnership might dissolve in various ways ; first, by death ; secondly, by 
the act of the parties ; that act extending to nothing more than mere disso- 
lution ; without any special agreement as to the disposition of the property, 
the satisfaction of the debts, much less any agreement for an assignment from 
either of the partners to the others. The partnership might also be dissolved 
by the bankruptcy of one or of both, and by effluxion of time. If it is dis- 
solved by death, referring to the law of merchants, and the well-known 
doctrine of this Court, the death being the act of God, the legal title in some 
respects, in all the equitable title, would remain, notwithstanding the survi- 
vorship ; and the executor would have a right to insist, that the property 
should be applied to the partnership debts. I do not know that the partner- 
ship creditors would have that right ; supposing both remained solvent. So 
upon the bankruptcy of one of them there would be an equity to say, the 
assignees stand in the place of the bankrupt ; and can take no more than he 
could ; and consequently nothing until the partnership debts are paid. So, 
upon a mere dissolution, without a special agreement, or a dissolution by 
effluxion of time ; to wind up the accounts the debts must be paid, and the 
surplus be distributed in proportion to the different interests. In all these 
ways the equity is not that of the joint creditors, but that of the partners 
with regard to each other, that operates to the payment of the partnership 
debts. The joint creditors must of necessity be paid, in order to the 
administration of justice to the partners themselves. When the bankruptcy 
of both takes place, it puts an end to the partnership certainly ; but still it 
is very possible, and it oftens happens in fact, that the partners may have 
different interests in the surplus ; and out of that a necessity arises, that the 
partnership debts must be paid : otherwise the surplus cannot be distributed 
according to equity; and no distinction has been made with reference to 
their interests, whether in different proportions, or equally. Many cases 
have occurred upon the distribution between the separate and joint estates ; 
and the principle in all of them, from the great case of ]\Ir. Fordyce, has 
been, that if the Court should say, tliat what has ever been joint or separate 
property shall always remain so, the consequence would be, that no part- 
nership could ever arrange their affairs. Therefore a honajidc transmuta- 
tion of the property is understood to be the act of men acting fairly, wind- 



168 PARTNERSHIP. [cHAP. VI. 

liabilities due to third persons, but also for his own 
amount or share of the capital stock, and funds, and for 
all moneys, advanced by him for the use of the firm, 
and also for all debts due to the firm'for moneys ab- 
stracted by any other partner from such stock and 
funds beyond his share.\/ It follows from this principle, 
that if an}^ partner takes the whole or a part of his 
share out of the partnership stock, the stock so taken, 
if identified, is applicable to the payment of what 
shall, upon an account taken, be found due from him 
to the partnership, before any of it can be applied to 
the payment of his debts, due to his own separate cred- 
itors ; for such partner has an interest in the stock only 
to the amount of the ultimate balance due to him, as 
his share of the stock.^ The same rule will apply to 
any other property, into which the partnership prop- 
erty may have been converted, so far and so long as its 
original character and identity can be distinctly traced.^ 
Hence it may be stated, as a general corollary from the 
foregoing considerations, that no separate creditor of any 
partner can acquire any right, title, or interest, in the part- 
nership stock, funds, or effects, by process or otherwise, 
merely in his character as such creditor, except for so 
much as belongs to that partner, as his share or balance, 
after all prior claims thereon are deducted and satisfied.^ 

ing up the concern, and binds the creditors ; and therefore the Court always 
lets the arrangements be, as they stand, not at the time of the commission, 
but of the act of bankruptcy." s. p. Ex pa?-fe Williams, 11 Ves. 3, 5; 
[Kirby v. Schoonmaker, 3 Barb. Ch. 46.] 

1 Coll. on P. B. 2, c. 1, § 1, p. 77, 2d ed. ; West v. Skip, 1 Ves. Sr. 

239, 242 ; Ex parte Paiffin, 6 Ves. 119. 

^ Coll. on P. B. 2, c. 1, § 1, p. 78, 79, 2d ed. ; West v. Skip, 1 Ves. Sr. 239, 

240, 242 ; Skipp v. Harwood, 2 Swans. 586 ; Croft v. Pyke, 3 P. Wms. 180 ; 
Wats, on P. c. 2, p. 66, 2d ed. 

3 Coll. on P. B. 2, c. 1, § 1, p. 78, 79, 2d ed. ; Ridgely v. Carey, 4 Har. 
& McII. 167. 

* {See § 261-264, and c. xv.} 



CHAP. VI.] PARTNERSHIP PROPERTY. 169 

§ 98. What properly constitutes partnership prop- 
erty may be, in some particular cases, an inquiry of no 
inconsiderable embarrassment and difficulty, although, 
when all the facts are established, the principles of law 
applicable to it are generally clearly defined. So far as 
personal property is concerned, not only the capital, 
stock, funds, and other effects originally put into the 
partnership, but all the property subsequently acquired 
by the firm, by sale, barter, or otherwise, and all the 
debts and other claims arising in the course of the trade 
and business thereof, are deemed part of the partner- 
ship capital, stock, funds, and effects/ So, all real es- 
tate, purchased for the partnership, and paid for out of 
the funds thereof, in whosesoever name it stands,^ is 
treated in the same manner.^ Leases of land, also, oris:- 
inally granted to or for the partnership, or subsequently 
renewed during the partnership, for the purposes there- 
of, fall under the like predicament.^ In short, whatever 
property, whether real, or personal, or mixed, is pur- 
chased for the use and purposes of the partnership, and 
is chargeable to the same, is in the contemplation of 
courts of equity, even if not of courts of law, treated 
as a part of the effects thereof.^ 

§ 99. There is a peculiar species of interest, which 
arises in cases of partnership, and is often treated as in 
some sort a part of the partnership property. It is 
what is commonly called the good-will of the trade or 

' Coll. on P. B. 2, c. 1, § 1, p. 76-78, 2d ed. {But the capital stock may 
remain the property of one partner. See § 27. } 

^ [But see Otis v. Sill, 8 Barb. 102, 122, as to such a rule at law, if the 
title is in only one partner.] 

3 Coll. on P. B. 2, c. 1, § 1, p. 82, 83, 2d ed. ; Jackson v. Jackson, 
7 Ves. 535; 9 Ves. 591. {See § 93.} 

" Coll. on P. B. 2, c. 1, § 1, p. 83, 84, 101, 2d ed. ; Elliot v. Brown, 
3 Swans. 489, note ; Alder v. Fouracre, 3 Swans. 489 ; Featherstonliaiigii v. 
Fenwick, 17 Ves. 298 ; Gow on P. c. 2, § 1, p. 32-34,3d ed. ; Coles v. Coles, 
15 Johns. 159, 161. 

* Story, Eq. Jur. § 674. 



170 PARTNERSHIP. [CHAP. VI. 

business. This good-will may be properly enough de- 
scribed to be the advantage or benefit, which is acquired 
by an establishment, beyond the mere value of the cap- 
ital, stock, funds, or property employed therein, in con- 
sequence of the general public patronage and encour- 
agement, which it receives from constant or habitual 
customers, on account of its local position, or common 
celebrity, or reputation for skill or affluence, or punctu- 
ality, or from other accidental circumstances or necessi- 
ties, or even from ancient partialities or prejudices. 
Thus, an inn, a nursery of trees and shrubs, a favorite 
fashionable stand, or a newspaper establishment, may, 
and often does enjoy a reputation, and command a price 
beyond the intrinsic value of the property invested 
therein, from the custom, which it has obtained and 
secured for a long time ; and this is commonly called 
the good-will of the establishment.^ Lord Eldon upon 
one occasion said, that a good-will of this sort was noth- 
ing more than the probability, that the old customers 
will resort to the old place.^ It is certainly not a visi- 
ble, tangible interest, or a commodity, upon which a 
definite or fixed allowance can be made;^ nor, perhaps, 
would a contract, touching the conveyance thereof, be 
decreed to be specifically performed in equity."* It is 

' See Cruttwell v. Lye, 17 Ves. 335; Coslake v. Till, 1 Riiss. 376; 
Dougherty v. Van Nostrand, 1 Hoflf. 68-70. See also an able review of the 
doctrine in 16 Am. Jur. 87-92 ; {Churton v. Douglas, H. R. V. Johns. 174 ; 
Austen v. Boys, 2 De G. & J. 626. } 

2 Cruttweil V. Lye, 17 Ves. 335, 346. 

3 Coll. on P. B. 2, c. 1, § 1, p. 102, 103, 2d ed. {The value of the 
good-will assigned exclusively to one partner on a dissolution, is what it would 
have produced if sold in the most advantageous manner, and at the proper 
time. Mellersh v. Keen, 28 Beav. 453. On the value of good-will in a part- 
nership of limited duration see Austen v. Boys, 24 Beav. 598 ; s. c. on ap- 
peal, 2 De G. & J. 626.} 

* Baxter v. Conolly, 1 Jac. & W. 576 ; Coslake v. Till, 1 Russ. 376, 378 ; 
Shackle v. Baker, 14 Ves. 468. {Cooper v. Hood, 26 Beav. 293; Robert- 
son V. Quiddington, 28 Beav. 529.} 



CHAP. VI.] PARTNERSHIP PROPERTY. 171 

not, therefore, strictly speaking, a part of the partner- 
ship effects, of which, upon a dissohition thereof, a di- 
vision can be compelled, unless, indeed, in cases, where 
a sale of the whole premises and stock will be ordered ; 
and then the good- will will accompany such sale, and 
may create a speculative value in the mind of a pur- 
chaser, of which each partner will be entitled to his 
share of the benefit.^ But the term " good-will " is 
sometimes applied to another case, where a retiring 
partner contracts not to carry on the same trade or 
business at all, or not within a given distance. This is 
an interest, which may be valued between the parties, 
and may therefore be assigned with the premises and 
the rest of the effects to the remaining partner, as an 
accompaniment of the ordinary good-will of the estab- 
lishment.^ Good-will, in the former sense, is therefore 

> Coll. on P. B. 2, c. 1, § 1, p. 102, 103, 2d ed. ; Id. c. 3, § 4, p. 214-218 ; 
Crawshay v. Collins, 15 Ves. 218, 227; Crutwell ?J.»Lye, 1 Rose, 123; 
Featherstonhaugh v. Fenwick, 17 Ves. 298, 809, 310 ; Dougherty v. Van 
Nostrand, 1 HofF. 68-70 ; Gow on P. c. 5, § 4, p. 349, 350, 3d ed. — Lord 
Rosslyn, in Hammond v. Douglas, 5 Ves. 539, held, that the good-will of a 
trade, carried on without articles, survives, and is not to be considered as 
partnership stock, to Avhich the representatives of a deceased partner have 
any right. But Lord Eldon, in Crawshay v. Collins, 15 Ves. 227, expressed 
doubts of the propriety of that determination, considering it difficult to 
draw any solid distinction between the lease of the partnership premises, 
and the good-will, which consists in the habit of the trade being conducted 
on those premises. Gow on P. c. 5, § 4, p. 349, 3d ed. ; Coll. on P. B. 2, 
c. 1, § 1, p. 102, 103, 2d ed. {On a sale of partnership property and busi- 
ness, the good-will will be included. Williams v. Wilson, 4 Sand. Ch. 379 ; 
Holden's Adm'rs v. M'Makin, 1 Pars. Eq. Cas. 270 ; Marten v. Van Schaick, 
4 Paige, 479. In this last case a receiver was appointed to carry on a news- 
paper for the purpose of preserving the good-will, but to sell without delay. 
The right to use the name of a periodical must be sold for the benefit of a 
partnership on its dissolution. Bradbury v. Dickens, 27 Beav. 53. See 
]\Iellersh v. Keen, 28 Beav. 453 ; Turner v. Major, 3 Giff. 442. The estate 
of a deceased partner participates in the good-will.. Smith v. Everett, 27 
Beav. 446, Wade v. Jenkins, 2 Giff. 509. See Wedderburn r. Wedderburn, 
22 Beav. 84, 104 ; Davies v. Hodgson, 25 Beav. 177, and the following note. } 

= Coll. on P. B. 2, c. 1, § 1, p. 102, 103, 2d ed. ; Id. c.'3, § 4, p. 214- 
218, and note ; Bryson v. Whitehead, 1 Sim. & St. 74 ; Harrison v. Gard- 



172 PARTNEI^SHIP. [chap. YI. 

an advantage arising from the mere fact of sole owner- 
ship of the premises, stock, or establishment, without 

ner, 2 Madd. 198 ; Cruttwell v. Lye, 17 Ves. 335 ; Gow on P. c. 5, § 4, p. 
349, 3d ed. — Lord Eldon, In Kennedy v. Lee, 3 Mer. 441, 4:32, speaking 
on this subject, used the following language: " AYhere two persons are 
jointly interested in trade, and one by purchase becomes sole owner of the 
partnership property, the very circumstance of sole ownership gives him an 
advantage beyond the actual value of the property, and which may be 
pointed out as a distinct benefit, essentially connected with the sole owner- 
ship. In the case of the trade of a nursery-man, for instance, the mere 
knowledge of the fact, that he is sole owner of the property, and in the 
sole and exclusive management of the concern, gives him an advantage 
which the other partner, supposing him to carry on the same trade, with 
other property, not the partnership property, would not possess. In that 
sense, therefore, the good-will of a trade follows from, and is connected 
with, the fact of sole ownership. There is another way, in which the good- 
will of a trade may be rendered still more valuable ; as by certain stipula- 
tions entered into between the parties at the time of the one relinquishing 
his share in the business ; as by inserting a condition, that the withdrawing 
partner shall not carry on the same trade any longer, or that he shall not 
carry it on within a certain distance of the place, whei-e the partnership 
trade was carried on, and where the continuing partner is to carry it on 
upon his own sole and separate account. Xow it is evident, that in neither 
sense was the good-will of this trade at all considered, as among the sub- 
jects of the valuation to be made by either party. It was not so considered 
by the plaintiff, when he wrote his letter of the 21st of October. The 
words ' concern ' and ' inheritance ' are used inartificially, and cannot be 
construed as having any reference but to the actual subjects of valuation. 
And when the plaintiff offers to take the business himself, he could not have 
forgotten, that the defendant's own estate of Butterwick, lay contiguous to 
the partnersliip property, and therefore his introducing no stipulation, with 
reference to the fact of its contiguity, is a clear intimation, that when he 
wrote this letter, he had no intention, in offering to take the paitnership 
property, to purchase with it the good-will, in the sense of restricting the 
defendant from carrying on the trade in its vicinity. In that sense, at least, 
therefore, the good-will of the trade was not the subject of contract, or 
treaty even, between the parties." {If a partnershijD is dissolved, each part- 
ner, in the absence of agreement, can carry on business in the name of the 
old firm. Banks v. Gibson, 34Beav. 566. See Dent v. Turpin, 2 John. & 
Hem. 139. The surviving partner can carry on the same trade. Davies v. 
Hodgson, 25 Beav. 177. Hence, though the estate of a deceased partner par- 
ticipates in the good-will (see previous note), yet as the surviving partner, 
afler the sah; of the partnership business, can at once set up a similar business 
in the same place, the good-will will often sell for but little. Lind. on P. 710 ; 
Smith V. Everett, 27 Beav. 446 ; Davies v. Hodgson, 25 Beav. 177 ; Cook v. 



CHAP, yi.] PARTNERSHIP PROPERTY. 173 

reference to other persons, as rivals ; and in tlie latter 
sense, as an advantage arising from the fact of exclud- 
ing the retiring partner from the same trade or busi- 
ness, as a rival. ^ It seems that good-will can constitute 
a part of the partnership effects or interests only in 
cases of mere commercial business or trade ; and not 
in cases of professional business, which is almost neces- 
sarily connected with personal skill and confidence in 
the particular partner.^ 

§ 100. Under this head a curious question has arisen; 
and that is, whether the right to use the firm name is 
a part of the good-will belonging to the partnership, 

Collingridge, Jac. 607. The form of the decree in Cook v. Colliiiuridge is 
given at 27 Beav. 456. In Churton v. Douglas, H. R. V. Johns. 17-t, Wood, 
V. C, says that, on a sale, by the retiring partner to the other partner of the 
good-will, the retiring partner may set up a precisely similar business next door, 
provided he sets it up distinctly as a separate business. In Hall v. Barrows, 
10 Jur. N. s. 55; s. c. 33 L. J. n. s. Ch. 204, Lord AVestbury, C, held 
that under a stipulation in articles that the surviving partner should have 
the option of taking all the partnership stock on paying to the rej)resenta- 
tive of the deceased partner the value of his share, the good-will must be 
included in the valuation, but on the footing that the surviving partner was 
at liberty to set up and carry on the same business as that of the partner- 
ship. See Johnson v. Helleley, 34 Beav. 63 ; s. c. on appeal, 2 De G. J. & 
S. 446. In Hall v. Hall, 20 Beav. 139, a retiring partner was not allowed 
to share in the value of the good-will, though the stipulations of the articles 
were nmch like those in Hall v. Barrows : the decision seems hardly to be re- 
conciled with that case. It thus appears that the good-will of a partnership 
is of little value after dissolution, lor lack of power in the courts to restrain the 
former or surviving partners from carrying on a similar business. In Wil- 
liams V. Wilson, 4 Sand. Ch. 379, the court assumed this power, and on a 
sale of partnership jjroperty and the good-will of the business, ordered that 
either of the former partners might lie a purchaser ; but that, except they 
purchased, they should be restrained from conducting the same business, 
directly or indirectly, in the same city. See § 100, 210-212, Turner v. 
Major, 3 Giff. 442. } 

> Coll. onP. B.2,c. 1,§1, p. 102, 103, 2d ed.; Gow on P. c. 5, § 4, p. 349, 
350, 3d ed. 

=^ Fan- V. Pearce, 3 Madd. 74, 76; Coll. on P. B. 2, c. 1, § 1. p. 103, 
104, 2d ed. ; Gow on P. c. 5, § 4, p. 349, 350, 3d ed. ; {Austen v. Boys, 2 
DeG. &. J. 626.} 



174 PARTNERSHIP. [CHAP. VI. 

or whether in case of the dissokition thereof by the 
death of the partner, it belongs to the survivors. That 
the right to use the name of a known and celebrated 
firm, especially in the case of manufactures, is often a 
very valuable possession, is unquestionable ; and, there- 
fore, courts of equity will often interpose to protect the 
right against the abuse of third persons, in using it for 
their own advantage.^ But it has been thought, that 
this right, however valuable, does not fall within the 
true character and nature of good-will ; but that it 
belongs to the surviving partner,^ 

^ Eden on Injunct. c. li, p. 314, 315 ; Motley v. Downman, 3 MyL & C. 
1, 14, 15 ; Millington v. Fox, 3 Myl. & C. 338 ; 2 Story, Eq. Jur. § 951 ; 
Knott V. Morgan, 2 Keen, 213, 219 ; Webster v. W^ebster, 3 Swans. 490, n. ; 
Gow on P. c. 2, § 4, p. 109, 3d ed. {The name of a fii-m may be a trade- 
mark. HoUoway i\ Holloway, 13 Beav. 209 ; Lawson v. Bank of London, 
18 C. B. 84 ; ^Velcli v. Knott, 4 K. & J. 747 ; Burgess v. Burgess, 3 De G., 
Macn. & G. 896 ; Hall v. Barrows, 9 Jur. x. s. 483 ; s. c. 32 L. J. n. s. Cli. 
548; on appeal, 10 Jur. n. s. 55, s. c. 33 L. J. x. s. Ch. 204; Bradbury 
U.Dickens, 27 Beav. 53.} 

* Lewis V. Langdon, 7 Sim. 421. — La this case Vice-Chancellor Shad- 
well said: "The question in this case depends on the right, in the surviv- 
ing partner, to carry on the business under the name of the partnership. Lord 
Eldon, certainly, has expressed a doubt, in the case of Crawshay v. Collins, 
15 Ves. 227, upon what has been understood to be the proposition laid down 
by Lord Rosslyu, in the case of Hammond v. Douglas, 5 Ves. 539. It is 
true, that the question might have been, to a cei'tain degree, whether, hav- 
ing regard to what had taken place, the money should be considered to be- 
long to one party, rather than to another ; and it is also observable, that 
Lord Eldon might have been throwing out his observations with reference to 
a supposed connection between the place where the business was carried on, 
and the good-will. But it occurs to me, that if the good-will is to be con- 
sidered as a salable article, which belongs to the partnership, then this con- 
sequence must follow ; namely, that the surviving partner must be under an 
obligation to carry on the trade for some time after his partner's death, in or- 
der that the thing, which is said to be salable, may be preserved until it can 
be sold. If a partnership were carried on between A. and B. under the 
name of Smith & Co., and the surviving partner chose to discontinue the busi- 
ness, and to write to the customers, and say, that his partner was dead, and 
that the business was at an end, the effect would be, that that, which is said 
to be salable, would cease to exist. Now, what power is there in a court of 
equity, to compel a jiartner to carry on a trade after the death of his co- 



CHAP. VI.] PARTNERSHIP PROPERTY. 175 

pa.'tner, merely that, at a fhture time, the good-will, as it is called, may be 
sold ? It is plain, that, unless tliei'e is such a power in this court, it must 
be in the discretion of the surviving partner to determine, what shall be done 
with the good-will ; and, if that is the case, it must be his property. I can- 
not but think, when two partners carry on a business in pax'tnership together 
under a given name, that, during the partnership, it is the joint right of 
them both to carry on the business under that name, and that, upon the 
death of one of them, the right which they before had jointly, becomes the 
separate right of the survivor." See also Webster v. Webster, 3 Swans. 
490, n. {If a partnership is dissolved, each partner, in the absence of 
agreement, can carry on business in the name of the old firm. Banks v. 
Gibson, 34 Beav. 566. See Dent v: Turpin, 2 John. & Hem. 139. 
The firm name survives to a surviving partner, and cannot, therefore, 
be sold as part of the partnership assets. Robertson v. Quiddington, 
28 Beav. 529. See Smith i\ Everett, 27 Beav. 446. J. D., a member of 
a firm styled J. D. & Co., assigned his interest in the business and 
the good-will thereof to his late partners, who continued to carry on the 
business under a new name with the addition " late J. D. & Co." J. D. took a 
partner and set up in the same neighborhood in a similar business under the 
name of J. D. & Co. He was restrained by injunction. Churton v. Douglas, 
H. R. V. Johns. 174. Mr. Lindley, (Lind. on P. 710,) says: "In the event 
of dissolution by death, it has been said that the good-will survives. But 
this is not correct, if ^it is meant that the value of the good-will, as such, be- 
longs to the survivor. It undoubtedly may happen that the survivor may ob- 
tain the benefit of the good-will, without paying for it ; for he is at liberty, 
(unless restrained by agreement) to carry on business on his own account, 
and, it is said, in the name of the late fii-m. See Webster v. Webster, 3 
Swans. 490, and Hammond v. Douglas, 5 Ves. 539. But see contra, Smith 
V. Everett, 27 Beav. 446. The executor of the deceased partner has 
no right to do this. Lewis v. Langdon, 7 Sim. 421. Under these circum- 
stances, if, on the death of a partner, the good-will is put up for sale, it will 
produce nothing if it is known that the surviving partner will exercise his 
rights. He will, therefore, acquire all the benefit of the good-will ; but he 
does not acquu-e it by survivorship, as something belonging to him exclu- 
sively, and with which the executors of the deceased partner have no concern ; 
for if he did, he might sell the good-will for his own benefit, and this he can- 
not do. See Smith v. Everett, 27 Beav. 446 ; Wedderburn v. Wcdderburn, 
22 Beav. 84, 104. (Hammond v. Douglas, 5 Ves. 539 is not consistent with 
the statement in the text, but this case has been much doubted, and is against 
all principle.) When, therefore, it is said that, on t)je death of one partner, 
the good-will of the firm survives to the other, what is meant is, that the sur- 
vivor is entitled to all the advantages incidental to his former connection 
with the firm, and that he is under no obligation, in order to render those 
advantages salable, to retire from business himself." See § 99.} 



176 PARTNERSHIP. [cHAP. VII. 



CHAPTER VII. 

POWERS AND AUTHORITIES OF PARTNERS. 

{§ 101. Power over the partnership property. General assignments. 

102. Partners have all powers incident to the trade. 
102 a. Power to give negotiable paper. 

103, 104. Necessity of general powers in partners. 

105. Misconduct of partner does not affect liability to third parties. 

106. Nor does the constitution of the partnership. 

107. Representations and admissions of a partner. 

108. Liability for frauds by a partner. 

109. Power of partners in the Roman and Fi'ench law. 

110. Limitations on a partner's jjower. 

111. 112. Powers confined to the scope of the ordinary business of the 

partnership. 

113. Determination of this scope. 

114. A partner cannot submit to arbitration. 

115. Though he may compromise or release a debt. 

116. Roman law. 

117. One partner cannot bind the others by deed. 

118. Roman law. 

119. Illustrative cases. 

120. Limitation of the rule. 

121. Whether authority to seal must be given under seal. 

122. 'American doctrine. 

122 a. A partner cannot bind a firm before its establishment. 

123. Power of a majority. 

124. Roman law. 

125. Majority cannot change the partnership articles.} 

§ 101. As to the powers and authorities of the part- 
ners during the existence of the partnership (for their 
powers and authc^-ities upon the dissohition thereof will 
be considered hereafter, in another place), they have 
been in part already suggested. In the first place, when- 
ever there are written articles, or particular stipulations 
between the partners, these will regulate their respect- 
ive powers and authorities inter sese, although not, if 



CHAP. VII,] POAVERS AND AUTHORITIES. 177 

unknown, in their dealings with third persons.^ But, 
indeijendently of any such articles or stipulations ex- 
pressed, each partner is PrceposHus negotiis societatls, 
and each partner, virtute officii, possesses an equal and 
general power and authority in behalf of the firm, to 
transfer, pledge, exchange, or apply or otherwise dis- 
pose of the partnership property and effects, for any and 
all purposes within the scope and objects of the partner- 
ship, and in the course of its trade and business.^ Or, 
as was said by a learned judge upon a recent occasion, 
" One partner by virtue of that relation (of partner- 
ship) is constituted a general agent for another as to 
all matters within the scope of the partnership deal- 
ings, and has communicated to him, by virtue of that 
relation, all authorities necessary for carrying on the 
partnership, and all such as are usually exercised by 
partners in that business, in w^hich they are engaged. 
Any restriction which, by agreement amongst the part- 
ners, is attempted to be imposed upon the authority 
which one possesses as a general agent for the other, is 
operative only between the partners themselves, and 
does not limit the authority as to third persons, who 
acquire rights by its exercise, unless they know that 
such restrictions have been made." ^ The power ex- 
tends also to assignments of property of the firm, as a 
security for antecedent debts, as well as for debts there- 
after to be contracted on account of the firm."* Nor 
will it make any difference, whether the assignment be 

• 3 Kent, 40-42 ; U. S. Bank r. Binney, 5 Mason, 176 ; s. c. 5 Pet. 529 ; 
Coll. on P. B. 3, c. 1, p. 259, 260, 2d ed. 

* 3 Kent, 40-46 ; Story on Ag. § 37, 39, 124 ; Coll. on P. B. 2, c. 2, § 1, p. 
129, 2d ed. ; Gow on P. c. 2, § 2, p. 36, 51-53, 3d ed. ; 2 Bell, Coram. B. 7, 
c. 1, p. 615, 616, 5th ed. 

3 Hawken v. Bourne, 8 M. & W. 703, 710. 

■• Harrison v. Sterry, 5 Cranch, 289 ; Anderson v. Tompkins, 1 Brock. 456 ; 
Tapley v. Butterfield, 1 Met. 515, 

12 



178 PARTNERSHIP. [CHAP. Til. 

for the benefit of one creditor, or of several, or of all 
of the joint creditors.^ But it may well admit of some 
doubt, whether this power extends to a general assign- 
ment of all the funds and effects of the partnership by 
one partner, for the benefit of creditors ; for such an 
assignment would seem to amount of itself to a sus- 
pension or dissolution of the partnership itself.^ The 

' Ibid. 

2 Pearpoint v. Graham, 4 Wash. C. C. 232 ; [Dana v. Lull, 17 Vt. 390; 
Cullura V. Bloodgood, 15 Ala. 34; Deming v. Colt, 3 Sand. .284; Hayes 
V. Heyer, 3 Sand. 284; Wilson v. Soper, 13 B. Mon. 411; Fisher v. 
Murray, 1 E. D. Smith, 341; Mabbett v. White, 2 Kern. 442; Kemp v. 
Carnley, 3 Duer, 1; Kirby v. Ingersoll, 1 Dougl. (Mich.), 477, Harrington, 
Ch. 1 72. If, however, one partner has abandoned all control of the business, 
an assignment by the other is valid, if an equal distribution is thereby 
secured. Kemp v. Carnley, 3 Duer, 1] ; Deckert v. Filbert, 3 W. & S. 454. — 
In this case, it was held, that after a dissolution of partnership, one partner 
could not make a voluntary assignment of the effects of the partnership for 
the benefit of creditors . against the express dissent of his copartner. In 
Anderson v. Tompkins, 1 Brock. 456, Mr. Chief Justice Marshall affirmed 
the authority of one partner to assign all the partnership effects for the pay- 
ment of the creditors thereof On that occasion, he said: " It will be readily 
conceded, that a fraudulent sale, whether made by deed or otherwise, would 
pass nothing to a vendee concerned in the fraud. But, with this exception, I 
feel much difficulty in setting any other limits to the power of a partner, 
in disi^osing of the effects of the company, purchased for sale. He may sell 
a yard, a piece, a bale, or any number of bales. He may sell the whole of 
any article, or of any number of articles. This power certainly would not be 
exercised in the presence of a partner, without consulting him ; and if it were 
so exercised, slight circumstances would be sufficient to render the transac- 
tion suspicious, and, perhaps, to fix on it the imputation of fraud. In this 
respect, every case must depend on its own circumstances. But with respect 
to the power, in a case perfectly fair, I can perceive no ground on which it 
is to be questioned. But this power, it is said, is limited to the course of 
trade. What is understood by the course of trade ? Is it that which is act- 
ually done every day, or is it that which may be done whenever the occa- 
sion for doing it presents itself? There are small traders, who scarcely ever, 
in practice, sell a piece of cloth uncut, or a cask of spirits. But may not a 
partner in such a store sell a piece of cloth, or a cask of spirits ? His power 
extends to the sale of the article, and the course of trade does not limit him 
as to (|uantity. So with respect to larger concerns. By the course of trade 
is understood dealing in an article in which the company is accustomed to 
deal ; and dealing in that article for the company. Tompkins and Murray 



CHAP. VII.] POWERS AND AUTHORITIES. 179 

doctrine, however, is strictly confined to personal prop- 
erty, and does not extend to real estate held by the 

sold goods. A sale of goods was in the course of their trade, and within the 
power of either partner. A fair sale, then, of all or of a part of the goods 
was within the power vested in a partner. This reasoning applies with 
increased force, when we consider the situation of these partners. The one 
was on a voyage to Europe, the other in possession of all the partnership 
effects for sale. The absent partner could have no agency in the sale of 
them. He could not be consulted. He could not give an opinion. In leav- 
ing the country, he must have intended to confide all his business to the 
partner, who remained, for the purpose of transacting it. Had this then been 
a sale for money, or on credit, no person, I think, could have doubted its ob- 
ligation. I can perceive no distinction in law, in reason, or in justice, between 
such a sale and the transaction which has taken place. A merchant may 
rightfully sell to his creditor, as well as for money. He may give goods in 
payment of a debt. If he may thus pay a small creditor, he may thus pay a 
large one. The quantum of debt, or of goods sold, cannot alter the right. 
Neither does it, as I conceive, affect the jjower, that these goods were con- 
veyed to trustees to be sold by them. The mode of sale must, I think, 
depend on circumstances. Should goods be delivered to trustees for sale, 
without necessity, the transaction would be examined with scrutinizing eyes, 
and might, under some circumstances, be impeached. But if the necessity 
be appai-ent, if the act is justified by its motives, if the mode of sale be such 
as the circumstances require, I cannot say, that the partner has exceeded 
his power. This is denominated a destruction of the partnership subject, and 
a dissolution of the partnership. But how is it a destruction of the subject ? 
Can this appellation be bestowed on the application of the joint property to 
the payment of the debts of the company '? How is it a dissolution of the 
partnership '? A partnership is an association to carry on business jointly. 
This association may be formed for the future before any goods are acquired. 
It may continue after the whole of a particular purchase has been sold. But 
either partner had a right to dissolve this partnership. The act, however, of 
applying the means of carrying on their business to the payment of their 
debts, might suspend the operations of the company, but did not dissolve the 
contract, under which their operations were to be conducted." In Egberts v. 
•Wood, 3 Paige, 517, 523, 524, Mr. Chancellor Walworth said: "It appears 
to be the better opinion, that one of the partners, at any time during the 
existence of the partnership, may assign the partnership effects, in the name 
of the firm, for the payment of the debts of the company, although by such 
assignment a preference is given to one set of creditors over another. In 
the case of Dickinson v. Eegare and others, cited by the complainant's 
counsel from the Equity Reports of South Carolina, 1 Desaus. 537, the Court 
of Chancery of that State decided against the validity of an assignment of all 
the partnership eflects, made by one of the partners, without the knowledge 
or consent of the other, to pay the debt of a particular creditor. Chancellor 



180 PARTNERSHIP. [CHAP. VII. 

partnership ; for in such a case the partner, who exe- 
cutes the deed of conveyance, can transfer no more title 

Matthews, who delivered the ojjinion of the court in that case, admits, that it 
was a question of the first impression, no case analogous to it having come 
under the view of the court. That assignment, however, was made under 
very peculiar circumstances. The company during the revolutionary war 
were doing business in this country. And while one of the partners was on 
a voyage to France, he was taken by a British ship of war, and carried as a 
prisoner to England, where he was prevailed upon by a creditor residing 
there, to give him a general assignment of all the partnership funds, which 
funds were then in this country, to secure the payment of his particular debt 
against the firm. Although the decision was put upon the general ground, 
that one partner had not the right to assign the partnership funds in this 
manner, without the consent of his copartner, there is no doubt that the par- 
ticular circumstances, under which that assignment took place, had a very 
considerable influence in bringing the mind of the Chancellor to that result. 
The assignment in that case being made by a citizen of one of the United 
States, during the existence of the war, to an alien enemy and in an enemy's 
country, was probably void by the laws of war, so far at least as to prevent 
its being carried into effect by any of the courts of this country. And cer- 
tainly it could not be considered as made according to any mercantile usage. 
That decision, however, has been recently overruled by the Court of Appeals 
in the same State, in the case of Robinson v. Crowder, 4 McCord, 519; 
where it was held, that an assignment by one partner of all the effects of the 
firm in payment of the partnership debts was valid, as against his copartners. 
In Pearpoint v. Graham, 4 Wash. C. C. 232, in the Circuit Court of the United 
States for the district of Pennsylvania, Judge Washington doubted the right 
of one of the partners, without the consent of the others, to assign the whole 
of the partnership effects in such a manner as to terminate the partnership. 
But he declined expressing any decided opinion upon this question, which he 
consitlered unnecessary to the decision of the cause then befoi'e him ; as, in 
that case, the copartner had subsequently assented to the assignment. In 
Mills V. Barber, 4 Day, 428, the Supreme Court of Errors in Connecticut 
decided, that one partner, without the knowledge of the other, might make a 
valid assignment of partnership funds, to secure the payment of a debt due 
from the firm. See Forkner v. Stuart, 6 Graft. 197. And in Harrison v. 
Sterry, 5 Cranch, 289, the Supreme Court of the United States decided, that 
one of the partners might assign the partnership effects to a trustee, for the 
security or payment of the creditors of the firm, without the concurrence of 
his copartners. I do not intend, in this case, to express any opinion in favor 
of the validity of such an assignment of the partnership effects to a trustee 
by one partner, against the known wishes of his copartner, and in fraud of 
his i-ight to participate in the distribution of the partnership funds among the 
creditors, or in the decision of the question, which of those creditors should 
have a preference in payment, out of the effects of an insolvent concern. 



CHAP. VII.] POWERS AND AUTHORITIES. 181 

than he possesses ; and he cannot transfer the property 
belonging to the firm, whether it was conveyed directly 

As a Court of Equity, upon a proper application, would protect the rights of 
the several partners in this respect, before an assignment had actually been 
made, and if they could not agree among themselves, would appoint a receiver 
of the effects of the partnership, and would apply them in payment of all 
the debts due from the firm ratably, it might perhaps apply the same rule to 
the case of an assignment to a trustee for the payment of the favorite credi- 
tors of one of the partners only, where the equitable rights of the parties had 
not in fact been changed by any proceedings under the assignment." — But 
in the subsequent case of Havens v. Hussey, 5 Paige, 30, 31, the Chancellor 
greatly quahfied that ojiinion. On that occasion he said: "In the case of 
Egberts v. Wood, 3 Paige, 517, I had occasion to refer to most of the cases 
relative to assignments of partnershij? effects made by one of the copartners. 
And I then arrived at the conclusion, that, from the nature of the contract 
of copartnership, one of the partnership might make a valid assignment of 
the partnership effects, or so much thereof as was necessary for that purjDOse, 
in the name of the firm, directly to one or more of the creditors in payment 
of his or their debts ; although the effect of such assignment was to give a 
preference to one set of creditors over another. But as it was not necessary 
for the decision of that case, I did not express any opinion, as to the validity 
of an assignment of the partnership effects by one partner, against the known 
wishes of his copartner, to a trustee, for the benefit of the favorite creditors 
of the assignor; in fraud of the rights of his copartner to participate in the 
distribution of the partnership effects among the creditors, or in the decision 
of the question as to which of the creditors, if any, should have a preference 
in payment out of the effects of an insolvent concern. The present case 
presents that point distinctly for the decision of the court. And upon the most 
deliberate examination of the question, I am satisfied, that the decision of the 
Vice- Chancellor is correct ; that such an assignment is both illegal and inequit- 
able, and cannot be sustained. The principle, upon which an assignment by 
one partner in payment of a partnership debt rests, is, that there is an implied 
authority for that purpose from his copartner, from the very nature of the 
contract of partnership ; the payment of the company debts being always a 
part of the necessary business of the firm. And while either party acts fairly 
within the limits of such implied authority, his contracts are valid, and bind- 
ing upon his copartner. One member of the firm, therefore, without any 
express authority from the other, may discharge a ])artnership debt, either 
by the payment of money, or by the transfer to the creditor of any other of 
the copartnership effects ; although there may not be sufficient left to pay an 
equal amount to the other creditors of the firm. But it is no part of the 
ordinary business of a copartnership, to appoint a trustee of all the part- 
nership effects, for the purpose of selling and distributing the proceeds 
among the creditors in unequal proportions. And no such authority as 
that can be implied. On the contrary, such an exercise of power by one 



182 PARTNERSHIP. [CHAP. VII. 

to the firm, or held in trust ; for it belongs to the part- 
ners as tenants in common, and neither of the partners 
can convey more than his undivided interest.^ 

of tlie firm, without the consent of the other, is in most cases a virtual 
dissolution of the copartnership ; as it renders it impossible for the firm to 
continue its business. The case of Harrison v. Sterry, 5 Cranch, 289, which, 
perhaps, has gone as far as any other on this subject, was not sustained as 
an assignment of all the partnership effects to a trustee for the payment of 
preferred creditors. It professed to be the transfer of a certain specific 
portion of the partnership property, for the purpose of saving the credit of 
the firm, and to raise funds to carry on the partnership business. And upon 
the ground that it was not in fact what it professed to be, but was merely 
intended to give a preference to particular creditors, the court held the 
assignment void, as a fraud upon the bankrupt laws. It was only upon 
the supposition, that the assignment was in fact what it professed to be, that 
Chief Justice Marshall held it to be within the power usually exercised by a 
managing partner." In Hitchcock v. St. John, 1 Iloff. 511, Mr. Vice- 
Chaucellor Hoffman decided against the authority of one partner to make 
any general assignment, allowing preferences, and said : " The power to 
make a sale of the partnership effects resides in each partner while the 
relation exists. The power to bind the firm upon a purchase equally exists in 
each, although the goods never came into joint stock. All these instances 
of authority, as well as that to make negotiable paper, flow from the principle, 
that each is the agent of the whole. But for what is he such agent ? For 
the purposes of carrying on the business of the firm, and because the 
authority to do the act is implied from the nature of the business. Best, J., 
In Barton v. Williams, 5 B. & Aid. 395, 405. Now a transfer of all the effects 
of a firm for payment of its debts, is a virtual dissolution of the partner- 
ship. It supersedes all the business of the firm, as such. It takes from 
the control of each all the property with which such business is conducted. 
The purposes of the business then clearly do not require that such a power 
should be implied. What other reason is there for holding, that by the 
contract of partnership it is to be inferred ? I do not think that the principle 
insisted upon by the counsel for the defendant is the true one, namely, that 
such a transfer is only invalid, when it operates as a fraud upon the other 
partner; when, for example, it is made against his wishes, and to give 
preferences, which he is unwilling to give. It strikes me that the principle, 
upon which the invalidity is established, lies deeper. I consider that neither 
during the existence, nor after the dissolution of a partnership, can such 
a transfer be made, because of want of power in any one partner to make 
it. A direct payment of money, or a transfer of property to an acknowl- 
edged creditor, is an admitted and a necessary power, during the existence 
of the partnership. We probably are compelled by authoi'ities to go so far 



Anderson v. Tompkins, 1 Brock. 456, 463. {See § 94.} 



CHAP. YII.] POWERS AND AUTHORITIES. 183 

§ 102. Each partner may, in like manner, enter into 
any contracts or engagements on behalf of the firm in 
the ordinary trade and business thereof; as for example, 
by buying, or selling, or pledging goods, ^ or by paying, 
or receiving, or borrowing moneys, or by drawing, or 
negotiating, or indorsing, or accepting bills of exchange, 
and promissory notes, and checks, and other negotiable 
securities, or by procuring insurance for the firm, or by 
doing any other acts, which are incident or appropriate 

as to say, that it is a necessary surviving power after a dissolution, in what- 
ever way that is effected. All that is requisite to test the transfer is the 
amount of debt, and the extent of the fund assigned. But upon an assign- 
ment of the property of a firm to a trustee, a complication of duties and 
responsibilities is involved. An agent is appointed to control and dispose 
of the whole. The capacity, integrity, and industry of another are brought 
to the management ; and the fitness of the party selected is judged of solely 
by one member of the firm. From what part or principle of the partnership 
relation can such an authority emanate ? It is impossible to uphold a rule, 
which would rob every member of a firm of a voice and share in this last, 
and probably most important act of a foiling house. It is no contradiction of 
this doctrine, that, where the assignment is made after insolvencv, and divides 
the funds with perfect equality among all the creditors, it will be supported. 
It is clear, that either partner might file a bill, obtain an injunction and 
receiver, and insure an equal distribution of all the funds. An assignment 
fairly securing the same equality is an object of favor in this court. In the 
absence of any indication on the part of the copartner of a contrary inten- 
tion, it may well be inferred, that he consents to do justice. A serious 
question might indeed arise in a case in which, after such an assignment 
by one partner, the other should make a transfer of a specific piece of 
property, in payment of a just debt of the firm." There is no small difficulty 
in supporting the doctrine, even with these qualifications, that one partner 
may make a general assignment of all the partnership property. {Graser v. 
Stellwagen, 25 N. Y. 315 ; Welles v. March, 30 N. Y. 344; Robinson v. 
Gregory, 29 Barb. 560 ; McClelland v. Remsen, 36 Barb. 622 ; Palmer v. 
Myers, 43 Barb. 509 ; Pettee v. Orser, 6 Bosw. 123 ; Kimball v. Hamilton 
Fire Ins. Co. 8 Bosw. 495; Hennessy v. Western Bank, 6 W. & S. 300; 
Sloan V. Moore, 37 Penn. St. 217 ; M'Cullough v. Sommerville, 8 Leigh, 
415 ; Hughes v. Ellison, 5 Mo. 463 : Drake v. Rogers, 6 Mo. 317 ; Forbes 
V. Scannell, 13 Cal. 242 ; Barcroft v. Snodgrass, 1 Coldwell, 430 ; 1 Am. 
Lead. Cas. 444, 4th ed.} 

1 {One partner may execute a valid mortgage of a vessel owned by the 
firm. Ex parte Howden, 2 Mont. D. & De G. 574 ; Patch v. Wheatland, 8 
All. 102.} 



184 PARTNERSHIP. [CHAP. YII. 

to such trade or business, according to the common 
course and usages thereof.^ So each partner may con- 

' 3 Kent, 40-42 ; Story on Ag. § 37, 124 ; Coll. on P. B. 3, c. 1, § 4, p. 
282, 2d ed. ; Id. B. 2, c. 2, § 1, p. 128, 129 ; Id. B. 3, c. 1, p. 259 ; Id. § 1, 
p. 263, 268-293 ; Gow on P. c. 2, § 2, p. 36-69, 3d ed. ; Id. c. 4, § 1, p. 
146, 147; Wats, on P. c. 4, p. 167, 2d ed. ; Id. p. 195. — The cases on 
this subject are exceedingly numerous. Many of them will be found col- 
lected in the elementary wi-iters in the pages above cited. See also Swan 
V. Steele, 7 East, 210 ; Hope v. Oust, cited by Lawrence, J., in 1 East, 53 ; 
Sandilands v. Marsh, 2 B. & Aid. 673; U. S. Bank v. Binney, 5 Mason, 
176 ; s. c. 5 Pet. 529 ; South Carolina Bank v. Case, 8 B. & C. 427 ; Liv- 
ingston V. Roosevelt, 4 Johns. 251 ; Fisher v. Tayler, 2 Hare, 218, 229. 
In Winship v. Bank of U. S. 5 Pet. 529, 561, Mr. Chief Justice Marshall, 
in delivering the opinion of the court, said: " Partnerships for commercial 
purposes, for trading with the world, for buying and selling from and to a 
great number of individuals, are necessarily governed by many general 
principles, which are known to the public, which subserve the purpose of 
justice, and which society is concerned in sustaining. One of these is, 
that a man, who shares in the profit, although his name may not be in the 
firm, is responsible for all its debts. Another, more applicable to the subject 
under consideration, is, that a partner, certainly the acting partner, has 
power to transact the whole business of the firm, whatever that may be, and 
consequently to bind his partners in such transactions, as entirely as himself. 
This is a general power, essential to the well conducting of business ; which 
is implied in the existence of a partnership. When, then, a partnership is 
formed for a particular purpose, it is understood to be in itself a grant of 
power to the acting members of the company to transact its business in the 
usual way. If that business be to buy and sell, then the individual buys 
and sells for the company, and every person, with whom he trades in the 
way of its business, has a right to consider him as the company, whoever 
may compose it. It is usual to buy and sell on credit ; and if it be so, the 
partner, who purchases on credit in the name of the firm, must bind the firm. 
This is a general authority held out to the world, to which the world has a 
right to trust. The articles of copartnership are perhaps never published. 
They are rarely if ever seen, except by the partners themselves. The 
stipulations they may contain are to regulate the conduct and rights of the 
parties, as between themselves. The trading world, with whom the company 
is in jierpetual intercourse, cannot individually examine these articles, but 
must trust to the general powers contained in all partnerships. The acting 
partners are identified with the company, and have power to conduct its 
usual business, in the usual way. This power is conferred by entering 
into the partnership, and is perhaps never to be found in the articles. If it 
is to be restrained, fair dealing requires that the restriction should be made 
known. These stipulations may bind the partners ; but ought not to affect 
those to whom they are unknown, and who trust to the general and well 



CHAP. VII.] POWERS AND AUTHORITIES. 185 

sign goods to an agent or factor for sale on account of 
the firm, and give instructions and orders relating to 
the sale.^ All such contracts and engagements, acts and 
things, he has authority to make and do in the name of 
the firm, and, indeed, in order to bind the firm, they 
must ordinarily be made and done in the name of the 
firm; otherwise they will bind the individual partner 
only, who executes them, as his own private acts, con- 
tracts, or other things.^ And this is entirely in coinci- 

establisbed commercial law." See also Hooper v. Lusby, 4 Camp. G6 ; Le 
Roy V. Johnson, 2 Pet. 186, 198 ; Ex parte Agace, 2 Cox, 312 ; 2 Bell, 
Coram. B. 7, p. 615-618, 5th ed. ; {1 Am. Lead. Cas. 407, 4th ed.} 

' 3 Kent, 40-45. 

'^ {See § 134-151, 202} ; Kirk v. Blurton, 9 M. & W. 284 ; Faith v. Rich- 
mond, 11 Ad. & E. 339 ; Story on Ag. § 37, 39, 41, 147, 155, 161 ; Coll. on 
P. B. 3, c. 1, § 4, p. 277, 278, 282, 2d ed. ; Id. B. 8, c. 2, § 2, p. 315-323, 
2d ed. ; Pothier on Oblig. n. 83, and note by Evans ; 3 Kent, 41-44. —Mr. 
Chancellor Kent, in his learned Commentaries, in the passage above cited, 
has summed up the doctrine in the following terms: "In all contracts 
concerning negotiable paper, the act of one partner binds all ; and even 
though he signs his individual name, provided it appears on the face of 
the paper to be on partnership account, and to be intended to have a 
joint operation. But if a note or bill be drawn by one partner, in his 
own name only, and without appearing to be on partnership account, or 
if one partner borrow money on his own security, the partnership is not 
bound by the signature, even though it was made for a partnership pur- 
pose, or the money applied to a partnership use. The borrowing partner 
is the creditor of the firm, and not the original lender. If, however, the 
bill be drawn by one partner in his own name, upon the firm or partnership 
account, the act of drawing has been held to amount, in judgment of law, 
to an acceptance of the bill by the drawer in behalf of the firm, and to 
bind the firm as an accepted bill. And though the partnership be not bound 
at law in such a case, it is held, that equity will enforce payment from it, if 
the bill was actually drawn on partnership account. Even if the paper was 
made in a case, which was not in its nature 'a partnership transaction, yet 
it will bind the firm, if it was done in the name of the firm, and there be 
evidence that it was done under its express or implied sanction. But if part- 
nership security be taken from one partner, without the previous knowledge 
and consent of the others, for a debt, which the creditor knew at the time 
was the private debt of the particular partner, it would be a fraudulent 
transaction, and clearly void in respect to the partnership. So, if I'rom the 
subject-matter of the contract, or the course of dealing of the partnership, 
the creditor was chargeable, with constructive knowledge of that fact, the 



186 PARTNERSHIP. [CHAP. VII. 

dence with the rule of the Roman law, as to jomt em- 
ployers of ships, against w^hom the exercitorial action 

partnership was not liable. There is no distinction in principle upon this 
point, between general and special partnerships ; and the question, in all 
cases, is a question of notice, express or constructive. All partnerships are 
more or less limited. There is none, that embraces, at the same time, every 
branch of business ; and when a person deals with one of the partners in a 
matter not within the scope of the partnership, the intendment of law will 
be, unless there be circumstances, or proof in the case, to destroy the pre- 
sumption, that he deals with him on his private account, notwithstanding the 
partnership name be assumed. The conclusion is otherwise, if the subject- 
matter of the contract was consistent with the partnership business ; and the 
defendants in that case would be bound to show that the contract was out of 
the regular course of the partnership dealings. When the business of a 
partnership is defined, known, or declared, and the company do not appear 
to the world in any other light than the one exhibited, one of the partners 
cannot make a valid partnership engagement, except on partnership account. 
There must be at least some evidence of previous authority beyond the mere 
circumstance of partnership, to make such a contract binding. If the pub- 
lic have the usual means of knowledge given them, and no acts have been 
done or suffered by the partnership, to mislead them, every man is presumed 
to know the extent of the partnership, with whose members he deals ; and 
when a person takes a partnership engagement without the consent or au- 
thority of the firm, for a matter that has no reference to the business of the 
firm, and is not within the scope of its authority, or its regular course of 
dealing, he is, in judgment of law, guilty of a fi-aud. It is a well-established 
doctrine, that one partner cannot rightfully apply the partnership funds to 
discharge his own pre-existing debts, without the express or implied assent of 
the other partners. This is the case, even if the creditor had no knowledge 
at the time, of the fact of the fund being partnership property. The author- 
ity of each partner to dispose of the partnership funds, strictly and rightfully, 
extends only to the partnership business, though in the case of hona fide pur- 
chasers, without notice, for a valuable consideration, the partnership may, in 
certain cases, be bound by the act of ope partner. But, if the negotiable 
paper of a firm be given by one partner on his private account, and that 
paper, issued within the general scope of the authority of the firm, passes 
into the hands of a bona fide holder, Avho has no notice, either actually or 
constructively, of the consideration of the instrument ; or if one partner 
should purchase, on his private account, an article, in which the firm dealt, 
or which had an immediate connection with the business of the firm, a differ- 
ent rule applies, and one, which requires the knowledge of its being a pri- 
vate, and not a partnership transaction, to be brought home to the claimant. 
These are general principles, which are considered to be well established in 
the English and American jurisprudence." In some cases, however, it is a 
matter of great nicety to decide, whether the partner alone is bound, or the 



CHAP. YII.] POWERS AND AUTHORITIES. 187 

lay. Si 2^lures navjem exerceant, cum quoUhet eoruin in 
solidum agi potest. JVe in plures adversarios destrin- 
gatur, qui cum uno contraxerit} Jure societatis per 
socium cere alieno socius non ohligatur, nisi in commu- 
nem arcam pecimice versce sunt} This is also the rule 
of the French law,^ and of the Scottish law.^ Pothier 

partnership. Thus if a bill is drawn upon a firm, and is accepted by one of 
the firm in his own name, it will be treated as an acceptance of the firm. 
Wells V. Masterman, 2 Esp. 731; Mason v. Rumsey. 1 Camp. 384; Beach 
V. State Bank, 2 Ind. 488; Coll. on P. B. 3, c. 1, § 2, p. 274, 275, 2d ed. 
{But see Heenan v. Nash, 8 Minn. 407.} So, where a note was drawn, " I 
promise," and was signed " for A. B. & C. — A." it was held to bind the 
partnership. Hall v. Smith, 1 B. & C. 407 ; Coll. on P. B. 3, c. 1, § 2, p. 277, 
278, 2d ed. ; Lord Galway v. Matthew, 1 Camp. 403. See also Story on Ag. 
§ 154, 275, 276 ; Doty v. Bates, 11 Johns. 544 ; Gow on P. c. 2, § 2, p. 40- 
42, 3ded. ; Id. p. 49, 50. Wats, on P. c. 4, p. 214, 2ded. ; U. S.Bankr.Bin- 
ney, 5 Mason, 176 ; s. c. 5 Pet. 629 ; Faith v. Richmond, 3 Per. & Dav. 187. 

1 D. 14, 1, 25; Id. 14, 1, 2; Poth. Pand. 14, 1, n. 10; Domat, 1, 16, 
3, art. 6, 7; D. 14, 1, 4, § 1, 2; Domat, 1, 8, 4, art. 16; Story on Ag. 
§ 124, note. 

2 D. 17, 2, 82; Domat, 1, 8, 3, art. 10. 
^ Poth. on Oblig. n. 83. 

^ 2 Bell, Comm. B. 7, c. 1, p. 615, 5th ed. ; Ersk. Inst. B. 3, tit. 3, § 20. 
— Mr. Erskine says : " It hath been much disputed, how far an obligation, 
signed by one of the partners, affects the company or copartnery by the Ro- 
man law ; as to which, a variety of distinctions hath been imagined by Doc- 
tors, to reconcile the different expressions of the Roman jurisconsults. 
According to our present practice, the partners in private companies gener- 
ally assume to themselves a firm or name, proper to their own company, by 
which they may be distinguished in their transactions ; and in all deeds 
subscribed by this name of distinction, every partner is, by the nature of co- 
partnery, understood to be intrusted with a power from the company of bind- 
ing them. Any one pai'tner, therefore, who signs a bill, or other obligation, by 
the company's firm, obliges all the other partners : but where he subscribes a 
deed by his own proper subscription, the creditor, who followed his faith 
alone in the transaction, hath no action against the company, unless he shall 
prove, that the money lent or advanced by him was thrown into the common 
stock." Lord Stair savs : " The same question is incident here, that before 
hath been touched concerning mandates, when one or more of the parties 
act in the matter of the society, whether thereby the whole society be obliged 
by the obligations of these ? Whether obligations, made to these, constitute 
the society creditor ? Or whether real rights, acquired by these, are ipso 
facto common to the society, or if there be but an obligation upon the actors 
to communicate the property always remaining in the actors, till they effect- 
uallv communicate ? The resolution of this beinjj the same with that in 



188 PARTNERSHIP. [CHAP. VII. 

says : Whatever may be the authority of a partner, in 
order tliat a debt contracted by him should bind his 
partners, it is necessary that it should be contracted in 
the name of the firm.^ 

§ 102 a. In the remarks which have been already 
made, in respect to the power of each partner to bind 
the firm by bills of exchange, promissory notes, checks, 
and other negotiable instruments, we are to understand 
that this doctrine is not applicable to all kinds of part- 
nership, but is generally limited to partnerships in trade 
and commerce, for in such cases it is the usual course of 
mercantile transactions, and grows out of the general 
customs and laws of merchants, which is a part of the 
common law, and is recognized as such.^ But the same 
reason does not apply, or at least may not apply to oth- 
er partnerships, unless indeed it is the common custom 
or usage of such business to bind the firm by negotiable 
instruments, or it is necessary for the due transaction 
thereof.^ Hence, attorneys who are in partnership have 

mandates, we refer you thither, and say only this m general, that when these 
parties only act in the name of the society, and by its express warrant, or by 
what they have been accustomed to do, in so far they are not only partners, 
but mandators, and it hath the same effect, as if the society had acted itself. 
But when they act not so, there doth only arise an obligement upon the 
partners-actors to communicate ; in the mean time the property remaineth 
in the actors ; and if transmitted to others before this communication, the 
society will be thereby excluded, but the actors will remain obliged for rep- 
aration of the damage and interest of the society. And this will hold, 
though things be bought or acquired by the common money of the society ; 
but all the natural interest, birth, fruits, and profit of the society, is of it- 
self and instantly, common to the society." Stair's Inst. B. 1, tit. 16, § 6, 
p. 159. 

> Both, de Soc. n. 100, 101. [But see Xewton v. Boodle, 3 C.B. 795; 
post, § 202.] 

2 Hedley v. Bainbridge, 3 Q. B. 316, 321 ; {Tappan v. Bailey, 4 Met. 
529.} 

=» {Dickinson v. Valpy, 10 B. & C. 128; Brown v. Byers, 16 M. & W. 
252 ; Greenslade v. Dower, 7 B. & C. 635 ; Nicholson v. Ricketts, 2 E. & E. 
497 ; Crosthwait v. Ross, 1 Humph. 23 ; Gray v. Ward, 18 111. 32 ; Lind. on 
P. 214. See Kimbro v. Bullitt, 22 How. 256.} 



CHAP. VII.] POWERS AND AUTHORITIES. 189 

110 implied authority to become parties to negotiable 
instruments, and to bind the firm thereby.^ The author- 
ity to do such acts must in such cases be either express- 
ly given, or be recognized as proper and necessary, or 
in the usual course of the particular business of that 
firm.- 

§ 103. This doctrine of the common law, as to the 
general right and authority of each partner to bind the 
firm, and act for the firm in all partnership transactions, 
equally applies to all cases of partnership in trade, 
whether the partners be all known, or some be secret 
or dormant partners.^ It doubtless has its foundation in 

' [So an attorney has no implied power, as such, to bind his partner 
by receiving money to lay out on security for the depositor, and to hold 
the money in his hands until an opportunity offers for laying it out. Har- 
man v. Johnson, 2 E. & B. 61, 18 Eng. L. & Eq. 400;] {Breckinridge v. 
Shrieve, -i Dana, 375. See Atkinson v. Mackreth, Law Rep. 2 Eq. 570 ; 
Alliance Bank i'. Tucker, 15 Weekly Eep. 992. See § 126. An attorney 
has no implied authority to bind his copartners by a post-dated check, drawn 
in the firm name. Forster v. Mackreth, Law Rep. 2 Ex. 163.} 

2 Hedley v. Bainbridge, 3 Q. B. 316, 321. 

^ Dormant partners ai'e bound by the written unsealed contracts of the 
ostensible partners, as much as by their parol contracts ; but not, for tech- 
nical reasons, by their sealed contracts. {See § 117-122.} Beckham v. 
Drake, 9 M. & W. 79, s. c. 11 M. & W. 315, overruling Beckham v. Knight, 
4 Bing. N. C. 243 ; s. c. 1 Man, & G. 738. See Swan v. Steele, 7 East, 210 ; 
Sandilands r. Marsh, 2 B. & Aid. 6 73; U. S. Bank v. Binney, 5 Mason, 
176; s. c. 5 Pet. 529; Coll. on P. B. 3, c. 1, p. 259, 2d ed. The whole 
doctrine is well summed up by Mr. Chief Justice Marshall, in the case of 
Binney v. U. S. Bank, 5 Pet. 529, 561, where he states the reasons of the 
general rule, and the application of it to dormant partnershiji. Immediately 
after the passage already cited (ante, § 102, note), he added as follows: " The 
counsel tor the plaintifi' in error supposes, that though tliese principles may 
be apphcable to an open avowed partnership, they are inapplicable to one 
that is secret. Can this distinction be maintained ? If it could, there would 
be a difference between the responsibility of a dormant partner, and one 
whose name was to the articles. But their responsibility, in all partnership 
transactions, is admitted to be the same. Those who trade with a firm on the 
credit of individuals, whom they believe to be members of it, take upon 
themselves the hazard that their belief is well founded. If they are mistaken, 
they must submit to the consequences of their mistake ; if their belief be 
verified by the fact, their claims on the partners, who were not ostensible, are 



190 PARTNERSHIP. [cHAP. VII. 

common convenience and public policy in regard to 
all commercial operations, if indeed in a general view 
it might not be deemed almost a matter of moral neces- 
sity in the enlarged intercourse and trade of modern 
nations. If it were not admitted, then, it would be ne- 
cessary, that every partner should expressly agree to or 
confirm every transaction affecting the partnership be- 
fore it could acquire any absolute obligation, or be con- 
clusive upon the partnership. The absence, or illness, 
or remote residence, of a single partner might greatly 
delay and retard, if it would not prostrate the best con- 
certed enterprise or bargain ; and before any negotiation 
could be completed, it would be indispensable, that the 
other contracting party should first by inquiry ascertain 
who all the parties were in any particular firm, and 

as valid as on those whose names are in the firm. This distinction seems to 
be founded on the idea, that, if partners are not openly named, the resort to 
them must be connected with some knowledge of the secret stipulations be- 
tween the partners, which may be inserted in the articles. But this certainly 
is not correct. The responsibility of unavowed partners depends on the 
general principles of commercial law, not on the particular stipulation of the 
articles. It has been supposed, that the principles laid down in the third in- 
struction, respecting these secret restrictions, are inconsistent with the opinion 
declared in the first ; that in this case, where the articles were before the 
court, the qnestion, whether this was in its origin a secret or an avowed part- 
nership, had become unimportant. If this inconsistency really existed, it 
would not affect the law of the case; unless the judge had laid down principles, 
in the one or the other instruction, which might aifect the party injuriously. 
But it does not exist. ♦ The two instructions were given on different views of 
the subject, and apply to different objects. The first respected the parties to 
the firm, and their liability, whether they were or were not known, as mem- 
bers of it ; the last applies to secret restrictions on the partners, which 
change the power held out to the world, by the law of partnership. The 
meaning of the terms ' secret partnership,' or the question, whether this did 
or did not come within the definition of a secret partnership, might be unim- 
portant ; and yet the question, whether a private agreement between the 
partners, limiting their responsibility, was known to a person trusting the 
firm, might be very important." See also Watson on P. c. 5, p. 168-174, 2d 
ed. Furze v. Sharwood, 2 Q. B. 388, 417; [and it exists so long as the 
relation continues, notwithstanding the objection of the other partners. 
AVIlkins v. Pearce, 5 Denio, 541 ; Sage v. Sherman, 2 Comst. 417.] 



CHAP. VII.] POWERS AND AUTHORITIES. 191 

whether they had all deUberately assented thereto. The 
arrangements of commerce, which are now accomplished 
in a single hour or day, might thus require whole weeks, 
or even months, before they could be matured or estab- 
lished.^ To avoid this difficulty, the common law has 
adopted a very satisfactory, and at the same time a very 
facile rule. It decides, that in the absence of any known, 
controlling stipulation between the parties, each partner 
shall be deemed invested by the consent of all of them 
with an equal and complete power of administration of the 
whole partnership property, funds, and affairs. It gives 
to all and each of the partners, what the Roman law 
allows to be delegated to one by a special authority, the 
entire administration of all the partnership business, and 
thereby, as such admistrator, he may act for the whole, 
and in the name of the whole. Si ijlures exerceanU 
unmn autem de numero suo raagistrwni fecerint^ hujus 
nomine in soUdum j^otenmt conveniri.^ 

§ 104. It has, therefore, been well remarked by a 
learned writer, that, " Although the general rule of law 
is, that no one is liable upon any contract, except such 
as are privy to it ; yet this is not contravened by the 
liability of partners, as they may be imagined virtually 
present at, and sanctioning the proceedings, they singly 
enter into in the course of trade ; or, as each is vested 
with a power, enabling them to act at once as principals, 
and as the authorized agent of their copartners. It is 
for the advantage of partners themselves, that they are 
thus held liable, as the credit of their firm in the mer- 
cantile world is hereby greatly enhanced, and a vast fa- 
cility is given to all their dealings ; insomuch, that they 
may reside in distant parts of the country, or in different 

1 Wats, on p. c. 4, p. 16G, 1G7, 2d cd. ; Gow on P. c. 2, § 2, p. 36, 37. 3d 
ed. ; Coll. on P. B. 2, c. 2, § 1, p. 128, 129: 

2 D. 14, 1, 4, 1 ; Civil Code of France, art. 1836, 1857. 



192 PARTNERSHIP. [cHAP. VII. 

quarters of the globe. A due regard to the interests of 
strangers is at the same time observed ; for, where a 
merchant deals with one of several partners, he goes 
upon the credit of the whole partnership, and therefore 
ought to have his remedy against all the individuals who 
compose it."^ 

§ 105. Whenever, therefore, credit is given to a firm, 
within the scope of the business of that firm, whether 
the partnership be of a general or of a limited nature, it 
will bind all the partners, notwithstanding any secret 
reservations between them, which are unknown to those 
who give the credit. And no subsequent misappUcation 
of the fund by the partner procuring it, to which the 
creditor is not a party, or privy, will exonerate them 
from liability. Thus, for example, if one partner should 
borrow money on the credit of the firm, which he should 
subsequently misapply to his own private purposes with- 
out any knowledge or connivance on the part of the 
lender, the firm would be bound therefor.^ 

§ 106. Nor will it make any diff'erence in cases of 
this sort, as to third persons, whether the partnership 
is carried on for the benefit of the partners themselves 
alone, or for the benefit of others, who are the cestids 
que trusty or beneficiaries. In each case the trustees 
and the cestuis que finest, or beneficiaries, will be equally 
bound by the acts of a single partner, and equally liable 
therefor to third persons.^ The same rule applies, 
whether the partnership is carried on in a firm or com- 

1 Wats, on p. c. 4, p. 167, 168. See also Gow on P. c. 2, § 2, p. 36, 37, 
3d ed. 

* U. S. Bank v. Binney, 5 Mason, 176, 187, 188; Etheridge v. Binney, 9 
Pick. 272, 274, 275; Winship v. Bank of U. S. 5 Pet. 529; [Buckner v. 
Lee, 8 Ga. 285, 291.] 

^ Coll. on P. B. 3, c. 1, p. 260; Thicknesse v. Bromilow, 2 Cromp. & J. 
425; Clavering v. Westley, 3 P. Wms. 402; Furze v. Sharwood, 2 Q. B. 
388, 417, 418. {But see § 70.} 



CHAP. VII.] POWERS AND AUTHORITIES. 193 

pany name, or in the name of one partner only. If in 
the name of the partner only, it will, however, be ne- 
cessary to show, that the transaction was in the business, 
or upon the credit of the partnership, and not of that 
partner alone. ^ 

§ 107. The like rule applies to other acts, done by any 
partner, touching the partnership business, and to any 
acknowledgments, representations, declarations, admis- 
sions, or undertakings of any partner relating thereto. 
Thus the representation of any fact, or a misrepresen- 
tation of any fact, made in any partnership transaction, 
by one partner, will bind the firm.^ So, the acknowl- 
edgment of one partner, during the continuance of the 
partnership, of a debt, as due by the partnership, will 
amount to a promise, binding on the firm. So, the ad- 
mission of any fact, by one partner, material as evidence 
in a suit, will, under the like circumstances, be deemed 
the admission of all the partners.^ So, a part payment 
of a debt of the firm, by one partner, will not only 
extinguish 2^'f'o tanto the partnership debt, but will, 
under the like circumstances, operate as an admission 
of the existence of the residue of the debt, binding on 

' Coll. on P. B. 3, c. 1, § 2, p. 270-277, 2d ed. ; Baker r. Charlton, 1 
Peake, 80; 1 Mont, on P. p. 37, note (c) ; 2 Bell, Comm. B. 7, p. 615-618, 
5th ed. ; Swan v. Steele, 7 East, 210; {Davison v. Robertson, 3 Dow. 218.} 
U. S. Bank i-. Blnney, 5 Mason, 176 ; s. c. 5 Pet. 529 ; [Buckner v. Lee, 8 
Ga. 285]; Etheridge v. Binney, 9 Pick. 272; Ex parte Bolitho, Buck, 100; 
South Carolina Bank v. Case, 8 B. & C. 427; Manuf. & Mech. Bank v. 
Winship, 5 Pick. 11 ; Mifflin v. Smith, 17 S. & R. 165; Furze v. Sharwood, 
2 Q. B. 388, 417, 418. This last case involved the same point as was 
decided in U. S. Bank v. Binney, 5 Mason, 176, and it was decided the same 
way. {See §139.} 

- Gow on P. c. 2, § 2, p. 55, 3d ed. ; Id. 129, 130; Rapp v. Latham, 2 B. 
& Aid. 795 ; Coll. on P. B. 3, c. 1, § 4, p. 290 ; Id. § 5, p. 296-298, 2d ed. ; 
Lucas V. De la Cour, 1 M. & S. 249 ; [Blair v. Bromley, 5 Hare, 542.] 

3 [Pope V. Risley, 23 Mo. 185]; {Wickham v. Wickham, 2 K. & J. 478 ; 

Folk t'. Wilson, 21 Md. 538; Gordon v. Bankard, 37 111. 14 7. See Wells v. 

Turner, 16 Md. 133.} 

13 



194 PARTNERSHIP. [cHAP. VII. 

the partnership.^ So, the acts of joint proprietors of 
stage coaches, in relation to their partnership concerns, 
will be deemed the acts of all of them, and binding on 
ali.^ So, notice to or by one of a firm is deemed notice 
to or by all of them. ^ 

§ 108. The principle extends further, so as to bind 
the firm for the frauds committed by one partner in the 
course of the transactions and business of the partner- 
ship, even when the other partners had not the slight- 
est connection with, or knowledge of, or participation 
in the fraud ; "* for (as has been justly observed), by form- 
ing the connection of partnership, the partners declare 
themselves to the world satisfied with the good faith 
and integrity of each other, and impliedly undertake to 
be responsible for what they shall respectively do withm 
the scope of the partnership concerns. •" Hence, if in 
the business of the partnership, money is received, partly 
by one of the firm and partly by another, to be laid out 

1 Coll. on P. B. 3, c. 1, § 4, p. 282-286, 290, 2d ed. ; Lacy v. M'Neile, 4 Dowl. 
& R. 7; Pittam v. Foster, 1 B. & C. 248; Burleigh v. Stott, 8 B. & C. 36.— 
The authorities are all agreed on this })oint, during the existence of the 
partnership. But whether such an acknowledgment or admission, or promise, 
or payment by one partner, after the dissolution of the firm, will bind the 
others, is a matter upon which there are conflicting authorities ; and the point 
will be hereafter discussed in another connection. See Bell v. Mori-ison, 1 
Pet. 351, 373; 3 Kent, 49, 50; Whitcomb r. Whiting, 2 Doug. 652; Brisban 
V. Boyd, 4 Paige, 1 7. { On the law under the jjresent Statutes of Limitations 
in England, see Lind. on P. 370-379.} 

2 Coll. on P. B. 3, c. 1, § 4, p. 287, 288, 2d ed.; Helsby v. Hears, 5 B. 
& C. 504. 

=» Coll. on P. B. 3, c. 1, § 4, p. 290-292, 2d ed. ; Bignold v. Waterhouse, 
1 M. & S. 255 ; [Haywood i'. Harmon, 17 111. 477 ; Bouldin v. Page, 24 Mo. 
594] ; { Spaulding v. Ludlow Woollen Mill, 36 Vt. 150 ; State v. Linaweaver, 
3 Head, 51 ; Lind. on P. 230-232. See Baldwin v. Leonard, 39 Yt. 260; 
Herbert v. Odlin, 40 N. H. 267.} 

« [Pierce v. Wood, 3 Post. 519; Locke v. Stearns, 1 Met. 560]; {See 
§ 131, 166.} 

5 Gow on P. c. 2, § 2. p. 55, Id. c. 4, § 1, p. 146-148, 3d ed. ; Coll. on P. 
B. 3, c. 1, § 5, p. 293-304, 2d ed. ; Wats, on P. c. 4, p. 1 75, 2d ed. 



CHAP. Yll.] POWERS AND AUTHORITIES. 195 

Upon a mortgage, and a mortgage is forged by one part- 
ner, without the knowledge of the other, the innocent 
partner will be liable for the whole money. ^ So, if repre- 
sentations of certain facts, as existing, are fraudulently 
made by one partner, unknown to the others, in the 
partnership business, and the facts never existed, but 
the whole statement is a mere fiction, the firm will be 
bound to the same extent, as if it were true, and the 
facts existed.^ This whole doctrine proceeds upon the 
intelligible ground, that, where one of two innocent 
persons must suffer by the act of a third person, he 
shall suffer, who has been the cause or occasion of the 
confidence and credit reposed in such third person. 

§ 109. The French law has adopted a rule essential- 
ly the same as that of the common law. The admin- 
istration of the affairs of the partnership may be 
delegated or intrusted to one or more of the partners.^ 
But in the absence of any stipulation to this effect, the 
partners are deemed to have given reciprocally to each 

1 {§ 166, 168}; Willett v. Chambers, Cowp. 814; Stone v. Marsh, Ry. & 
Moo. 364; 6 B. & C. 551 ; Hume v. Bolland, Ry. & Moo. 371 ; Keating v. 
Marsh. 2 CI. & Fin. 250 ; Manuf. & Mech. Bank v. Gore, 15 Mass. 75 ; Board- 
man V. Gore, 15 Mass. 331 ; [Blair v. Bromley, 5 Hare, §42, s. c. 2 Phil. 354. 
But see Sims v. Brutton, 5 Exch. 802, 1 Eng. L. & Eq. 446]; {Devaynes v. 
Noble, 1 Mer. 572, 611; Brydges v. Branfill, 12 Sim. 369. Ex parte Bid- 
dulph, 3 De G. & Sm. 587; Sadler v. Lee, 6 Beav. 324; De Ribeyre v. 
Barclay, 23 Beav. 107; Eager v. Barnes, 31 Beav. 579; Atkinson v. Mack- 
reth, Law Rep. 2 Eq. 570 ; Sawyer v. Goodwin, 15 Weekly Rep. 1008 ; s. c. 
36 L. J. Ch. 578, St. Aubyn v. Smart, Law Rep. 5 Eq. 183, But see § 168, 
note; also Harman v. Johnson, 2 E. & B. 61.} 

- Rapp V. Latham, 2 B. & Aid. 795 ; Hume v. Bolland, Ry. & Moo. 371 ; 
[Beach v. State Bank, 2 Ind. 488 ; Doremus v. McCormick, 7 Gill, 49 ; Sweet 
V. Bradley, 24 Barb. 549 ; Hawkins v. Appleby, 2 Sand. 421] ; { Griswold v. 
Haven, 25 N. Y. 595 ; French v. Rowe, 15 Iowa, 563.} [And in Eipiity the 
limitation in bar of the claim in such Ccises does not begin to run until the time 
of the discovery of the fraud. Blair v. Bromley, 5 Hare, 542, s. c. 2 Phil. 
354. See Sims v. Brutton, 5 Exch. 802, 1 Eng. L. & Eq. 446.] 

* Code Civil, art. 1856, 1857; Poth. de Soc. n. 66, 67, 89, 90, 96, 98; 
Poth. on Oblig. n. 83; Code of Louisiana (of 1825), art. 1841. 



196 PARTNERSHIP. [cHAP. VII. 

other the power of administering the one for the other ; 
and what each one does is vaHd even for the share of 
his partners, without his having obtained their consent.^ 

» Code Civil, art. 1859; Poth. de Soc. n. 90-100; Poth. on Oblig. n. 83, 
89. — Pothier (on Oblig. n. 83) has expounded tlie reason of this doctrine 
exactly as it would be stated at the common law. " We are also deemed to 
contract by the ministry of our partners, when they contract, or are regarded 
as contracting for the affairs of the partnership. For, by entering into the 
partnei-ship with them, and permitting them to transact the business of it, we 
are deemed to have adopted and approved beforehand of all the contracts, 
which they may make for the affairs of the partnership, as if we had con- 
tracted jointly with them, and we have acceded beforehand to all the conse- 
quent obligations. A partner is deemed to contract for the affairs of the 
partnership, whenever he adds to his signature the words, and Company, 
although afterwards the contract does not turn to the benefit of the pai'tner- 
ship. For instance, if he borrows a sum of money, for which he gives a note 
with the words, and Company^ added to his signature, although he has em- 
ployed the money in his private affairs, or lost it at play, he is still deemed to 
have contracted for the affairs of the partnership, and consequently obliges 
his partners as having borrowed the money jointly with him, and as having 
contracted by his ministry. For his partners must take the consequence of 
having entered into their engagement with such a person ; but those, who 
contract with him, ought not to be deceived and suffer by his want of fidelity. 
The signature, and Company, does not, however, oblige my partners, if it 
appears by the very nature of the contract, that it does not concern the 
affairs of the partnership ; as if I put that signature to the lease belonging to 
myself and not to the company. AVhen the partner does not sign and 
Company, he is deemed to have only contracted for his own private affairs, 
and does not bind his partners, unless the creditor shows by other proof, that 
he contracted in the name of the partnership, and that the contract actually 
related to the partnership affairs." See also Story on Ag. § 124, note (1), 
and Poth. on Oblig. n. 44 7, 448; Poth. de Soc. n. 96. Mr. Bell in his 
learned Commentaries (2 Bell, Comm. B. 7, p. 611, 5th ed.) has made some 
very appropriate remarks on the state of the Roman law. " Partnership is 
thus a contract involving important relations to the public, as well as to the 
contracting partners. In the infancy of trade it is little regarded or under- 
stood ; and no proofs perhaps are more decisive of the low state of 
mercantile intercourse in Rome, than the very imperfect state of the 
Roman jurisprudence with respect to partnership. In the simple view of 
partnership as a mere society, in all that relates to the shares of parties 
accidentally associated as joint proprietors, or the rules of contribution 
and division in the management of a common stock or concern, there is 
no defect in the Roman law. But the subject is never contemplated in 
that more delicate and important light, which presents for decision the 
interests and dealings of the company with third parties, and the powers 



CHAP. VII.] POWERS AND AUTHORITIES. 197 

In these respects the French law differs (as has been 
already suggested) from the Roman law ; for the latter 
did not ordinarily clothe one partner (any more than 
any other agent) with the power of generally adminis- 
tering the affairs of the partnership, unless it was 
especially delegated and confided to him. Under other 
circumstances, each one could act only for his own 
share, and so bind himself.^ Nemo ex sociis plus parte 
sua p)otest aUenare, efsi totofntm honorum socii sint.^ 
Item magistri societatum p)actum et p)Todesse et ohesse 
constat.^ Si socius p)^^opriam. pecuniam mutuam dedit, 
omnimodo creditam, [jpemniam^ faeiL licet ceteri dissen- 
serint. Quod si coinmunem [^pecuniani] numeravit, non 

of partners to pledge the stock and credit of the society with the indi- 
vidual responsibility of the partners. In modern times, the effects of this 
contract, in its relations to third parties, are by far the most important. 
The question in this view is, not what share or profit, or what proportion 
of loss, upon a common stock, each partner is to gain or to suffer; but 
what are the rights of those, who deal with the company, in claiming 
preferably on its common stock, and what responsibility is undertaken by the 
several j^ai'^ners for contracts bona fide entered into by third parties ? In 
this inquiry, be the reciprocal rights and liabilities of the partners what they 
may in respect to each other, they each, in their relation to the public, hold 
an authority, which no force of private stipulation can alter or restrain ; and 
by means of which, in the face of the most express injunctions or prohibitions 
of their contract, the several partners, or even those jjerhaps, who may long 
have left the partnership, may, by the act of any one of the number, be made 
responsible to third jjarties to the whole extent of their private fortune. It 
is in this view chieliy, that definitions of partnership (which, like all others, 
are proverbially dangerous, seldom useful) are to be received with peculiar 
caution, if borrowed or derived from the writings of the civilians; who neg- 
lect almost entirely the implied power and unlimited mandate of the partners 
to bind the rest. Even in the writings of some modern lawyers, this limited 
character appears in their definitions of partnership, while their doctrine ex- 
tends to consequences which are not presented prominently in the descrip- 
tion." See post, last note of this section. 

' Poth. Pand. 17, 2, n. 26-29; Domat, 1, 8, 4, art. 16; D. 17, 2, 68; 
Story on Ag. § 124, note (1) ; Id. § 425-427 ; ante, § 102. 

'- D. 17, 2, 68; Poth. Pand. 17, 2, n. 26, 27. 

* D. 2, 14, 14; Poth. Pand. 2, 14, n. 46; Domat, 1, 8, 4, art. 16; Poth. 
de Soc. n. 89. 



198 PARTNERSHIP. [CHAP. VII. 

alias creditam efficit^nisi ceteri quoque consentiant ; quia 
Slice j^a^tis tantutn alienatlonem hahuit} This delega- 
tion of the administration of the partnership, or assent 
to any contract made by one partner, need not, under 
the Roman law, be express ; but might be implied from 
circumstances. But it has been a matter of no small 
discussion among the civilians, what circumstances were 
sufficient for such a purpose.^ 

^ D. 12, 1, 16; Poth. Pand. 12, 1, n. 12; Domat, 1,8, 4, art. 16. 

^ Story on Ag. § 124, n. (1); Poth. de Soc. n. 96. — In these respects 
the Roman law seems to have followed out its own doctrines respecting 
the rights, duties, and obligations of principals and agents. The follow- 
ing statement of the general provisions of that law on this subject may 
not be unacceptable. By the Roman law, as it originally stood, the prin- 
cipal could not ordinarily sue or be sued on the contract made through the 
instrumentality of his agent ; but the latter was generally treated as the 
proper and sole contracting party. This was subsequently altered by the 
edicts of the Praetor, so far as it respected the rights of third persons to 
institute suits against the principal, in cases falling within the reach of the 
exercitorial and institorial actions. But the exercitorial action did not lie 
in favor of the owner or employer {exerciloi') against the other contracting 
party. He was not, however, without a remedy ; for, if there was a con- 
tract of hire with the master, the owner or employer might recover the 
hire in a direct action ex locato ; if it was a gratuitous contract, he might 
maintain an action ex mandato. So the Digest has declared. Sed ex con- 
trarioy exercenti naveni adversus eos, qui cum magistro contraxerunt, actio 
non pollicetur, quia non eodem auxilio indigebat ; sed. aut ex locato cum 
magistro, si mercede operam ei exhibet ; aut si gratuitam, mandati agere 
potest. The institorial action was, also, in its terms apparently limited to 
suits against the principal, ^quum Prcelori visum est, sicut commoda sen- 
timus ex actu institorum, ita etiam ohligari nos ex contractibus ipsorum et 
conveniri. But no like action lay against the other contracting party by the 
principal. However, he was not without remedy ; since, by a cession of the 
right of action from the institor, he might, in some cases, maintain a suit 
founded thereon against the other party. Sed non idem facit circa eum, 
qui institorem prceposuit, ut experiri possit: sed, si quidem servum proprium 
institorem habuit, potest esse securus, acquisitis sibi action ibus ; si autem 
vel alienum servum, vel etiam Jwminem iiherum, actione dejicietur. Ipsum 
tamen institorem, vel dominum ejus convenire poterit, vel mandati, vel 
negotiorum gestorum. It is added : Marcellus autem ait, debere dari 
actionem ei, qui institorem prceposuit, in eos, qui cum eo contraxerint. And 
Gains held, that the principal might maintain the suit, if he could not other- 
wise vindicate his right ; Eo nomine, quo institor contraxit, si modo aliter rem 



CHAP. YII.] POWERS AND AUTHORITIES. 199 

§ 110. The limitations at the common hiw, upon this 
authority of each partner to bind the partnership, may 

siiam servare non potest. In special cases, also, where the contract, made 
through an agent, was declared to be directly obligatory between the princi- 
pal and the other contracting party (as, for example, in case of a sale), the 
principal might maintain a direct action thereon. Thus, the Digest puts it : 
Si prociwato?- vendiderit, et caverit emptori ; quceritur, an domino, vel adversus 
dominum actio dari debe.at ? Et Papinianus (Lib. 3, Responsorum)/jM^o/, cu7n 
domino ex empto agi posse utili actione, ad exemplum institorim actionis si mode 
rem vendendam mandavit ; ergu et per contrariuyn, dicendum est^ utilem ex empto 
actionem domino competere. But, except in these and a few other cases, the 
general rule seems to have prevailed in the Roman law, that reciprocal 
actions lay in cases of agency only between the direct and immediate 
parties thereto. The modern nations of continental Europe seem, with 
great wisdom, to have adopted the general doctrine of allowing reciprocal 
actions between the principal and the other contracting parties, where it 
is not excluded by the nature, or express terms of the contract. The 
rights of principals against third persons, arising from the acts and con- 
tracts of their agents, may be further illustrated by the consideration of 
payments made to or by the latter. And, first, in relation to payments 
made to agents. Such payments are good, and obligatory upon the prin- 
cipal in all cases, where the agent is authorized to receive payment, either 
by express authority, or by that resulting from the usage of trade, or from 
the particular dealings between the parties. In such cases, the maxim of 
the Roman law is justly apj^lied ; Quod jussu alterius solvifw, pro eo est, 
quasi ipsi solutitm esset. But, the principal may intercept such payment, 
by giving notice to the debtor not to pay to the agent, before the money 
is paid ; and, in such a case, if the agent has no superior right, from a lien 
or otherwise, any subsequent payment, made to the agent, will be invalid, 
and the principal may recover the money from the debtor. Story on Ag. 
§ 425-429; Id. § 163, 261, 271. See, also, on this subject, Poth. on Oblig. n. 
54-84, and especially n. 82, 83, 447, 448. Pothier (n. 82) says: " AVe con- 
tract through the ministiy of another, not only when a person merely lends 
us his ministry by contracting in our name and not in his own, as when we 
contract by the ministry of a tutor, curator, agent, &c., in their quality as 
such. We are also deemed to contract by the ministry of another, though 
he contracts himself in his own name, when he contracts in relation to the 
affairs which we have committed to his management ; for we are supposed to 
have adojited and approved, beforehand, of all the contracts, which lie may 
make respecting the affairs committed to him, as if we had contracted our- 
selves, and are held to have acceded to all the obligations resulting therefrom. 
Upon this principle is founded the actio exercitoria, which those, who have 
contracted with the master of a ship for matters relative to the conduct 
of such ship, have against the proprietor, who has ai)pointed the master. 
Upon the same principle is founded the actio institoria, which tliose, who 



200 PARTNERSHIP. [cHAP. VII. 

be readily deduced from what has been ah'eady stated. 
The authority can be exercised only in cases falling 
within the ordinary business and transactions of the 
firm, where the other party has no knowledge or 
notice, that the partner is acting in violation of his 
duties and obligations to the firm, or for purposes 
disapproved of by the firm, or in fraud of the rights 
thereof.^ 

§ 111. In the first place, the authority, to be valid, 
must be exercised in cases within the scope of the 
ordinary business and transactions of the firm.^ Thus, 
for example, in cases of factorage, it is a common, al- 
though not an invariable usage, to guaranty the solven- 
cy of the purchasers on sales made by the factor, and 
to receive therefor a commission del credere ; and this 
would be deemed an authority within the scope of a 
partnership, formed for factorage purposes, although it 
could not be shown, that the partners had stipulated 
for that power in their articles of partnership, or even 
if they had excluded it by such articles, if it was un- 
known to the principal, for w^hom they were dealing.^ 

have contracted with the manager of a commercial concern, or a manu- 
factory, have against the employer {le commettant) ; and the actio utilis 
insliloria, which relates to contracts made with a manager, of any other 
kind. Observe, there is a difference between these managers, and tutors, 
curators, syndics, &c. When these managers contract, they contract 
themselves, and enter into a personal obligation. Their employers are only 
regarded as accessory to their contracts, and to the obligations resulting 
from them ; whereas the others do not contract themselves, but only afford 
their ministry in contracting, and therefore do not oblige themselves, but 
only those who contract by their ministry." See ante, first note of this 
section. 

> Coll. on P. B. 3, c. 1, p. 259-282, 2d ed.; Story on Ag. § 125; Ex 
parte Agace, 2 Co.x, 312; Wats, on P. c. 4, p. 180, 2d ed.; Farrar v. Hutch- 
inson, 9 Ad. & E. 641. 

2 Wats, on P. c. 4, p. 180, 194, 2d ed. ; Sandilands v. Marsh, 2 B. & Aid. 
673, 679. {See § 126, 127,} 

3 See Sandilands v. Marsh, 2 B. & Aid. G73 ; Coll. on P. B. 3, c. 1, § 3, 
p. 27'J-281 ; Hope v. Cust, 1 East, 53 ; Ex parte Nolte, 2 Glyn & J. 295. 



CHAP. VII.] POWERS AND AUTHORITIES. 201 

So, it is the common course of business for persons 
engaged in the purchase and sale of horses, to give a 
warranty on sales made by them ; and therefore a war- 
ranty, made in the course of such business by one 
partner, would bind the partnership, notwithstanding 
the articles prohibited such warranty, if the purchaser 
were unacquainted therewith.^ On the other hand, 
where it is not the common course of the business, in 
which a partnership is engaged, to give letters of 
guaranty or of credit, if one partner should give such 
a letter of guaranty or credit, it would not be binding 
on the firm, although given in the name thereof.^ 

§ 112. For the like reason, if one partner should in 
the name of the firm make purchases of goods, not 
connected with the known business of the firm, such 
purchases would not bind the partnership. Thus, for 
example, if a partnership is engaged in the mere busi- 
ness of selling dry goods by wholesale or retail, uncon- 
nected with navigation, a purchase of a ship by one 
partner, in the name of the firm, would not be binding 
on the other partners, unless they should assent thereto. 
So, if persons are engaged in the mere business of tal- 
low chandlers, as partners, a purchase of a cargo of 
flour, or of pepper, or of coff"ee, or of other things by 
one partner, wholly beside the business of the firm, 
would not bind the other partners. But if the articles 
were such as might be applied or called for in the 

1 Coll. on p. B. 3, c. 1, § 260; Sandilands v. Marsh, 2 B. & Aid. 673, 
679, per Abbott, C.J. 

« Coll. on P. B. 3, c. 1, § 3, p. 279, 280 ; Hope v. Cust, 1 East, 53 ; Dun- 
can V. Lowndes, 3 Camp. 478: [Hasleliam v. Young, 5 Q. B. 833. And 
although sucli guaranty might be convenient and reasonable for accomplish- 
ing the objects of the partnership, it would not be binding upon the other 
partners without their recognition or adoption, unless it was reasonably 
necessary for the business of the partnership. Brettel v. Williams, i Exch. 
623. Overruling whatever is contrary in Ex parte Gardora, 15 Ves. 286.] 
{See§ 127.} 



202 PARTNERSHIP. [cHAP. VII. 

ordinary course of their business, the purchase of such 
articles would bind the firm, even though they were 
unnecessary at the time, or were bought contrary to 
the private stipulations between the partners, or were 
not designed to be used in the partnership at all, if the 
vendor were not acquainted with the facts. 

§ 113. The real difficulty in many cases of this sort 
is to ascertain what contracts, engagements, and acts 
are properly to be deemed within the scope of the par- 
ticular partnership, trade or business ; for these are not 
exactly the same in all sorts of trade or business.^ On 
the contrary, in many cases, rights, powers, and author- 
ities over the partnership property and partnership 
concerns exist either by usage, or by general under- 
standing, or by natural implication, which are wholly 
unknown in others. To answer the inquiry, then, sat- 
isfactorily, it is not enough to show, that in other trades 
or other business, certain rights, powers, and authorities 
are incident thereto, and may be lawfully exercised by 
each of the partners ; but we must see, that they ap- 
propriately belong to, or are, by usage or otherwise, 
implied or incidental to the particular trade or business 
in which the partnership is engaged.- 

§ 114. Having enumerated some of the general 
powers and authorities, which ordinarily belong to 
partnerships, and the general limitations thereof (a 



' {1 Am. Lead. Cas. 407, 442, 4th ed. Some of the later cases in 
■which questions as to the scope of a partnership business have arisen are 
London, &c., Society v. Hagerstown, &c.. Bank, 3G Penn. St. 498 ; Thompson 
V. Franlcs, 37 Penn. St. 327 ; Livingston v. Pittsburgh R. R. Co. 2 Grant's 
Cas. 219 ; Maltby v. N. W. Va. R. R. Co. 16 Md. 422 ; Cadwallader v. 
Kroesen, 22 Md. 200; Freeman v. Carpenter, 17 Wis. 126.} 

^ Dickinson v. Valpy, 10 B. & C. 128. {Mr. Lindley is of opinion that 
such powers nuist be necessary in order that the firm may be bound. Lind. 
on P. 193-195 ; and see Brettel v. Williams, 4 Exch. 623 ; Hawtayne v. 
Bourne, 7 M. & W. 595 ; Ex jmrte Chippendale, 4 De G. M. & G. 19. } 



CHAP. VII.] POWERS AND AUTHORITIES. 203 

subject which will more fully occur hereafter in other 
connections), it may be proper here to state, in further 
illustration of the foregoing remarks, what powers and 
authorities are not ordinarily deemed to be within the 
scope of partnerships, and which therefore require some 
special delegation or solemn instrument to confer them. 
And, in the first place, it may be laid down as a gen- 
erally recognized principle, that one partner has no 
power or authority to submit or refer to arbitration 
any matters whatsoever, concerning or arising out of 
the partnership business.^ The reason assigned is, that 
it is not within the scope of the ordinary business or of 
the powers or authorities necessary or proper to carry 
on the business of the partnership.^ Another reason is, 
that the award may call upon the partners to do acts, 
which they might not otherwise be compellable to per- 
form.^ But the soundest reason seems to be, that, as it 

' Com. Dig. Arbitrament, D. 2 ; 2 Bell, Comm. B. 7, p. 618, 5th ed. ; 
Stead V. Salt, 3 Bing. 101 ; Hambidge v. De la Crouee, 3 C. B. 742 ; Ad- 
ams V. Bankart, 1 Cr. M. & R. 681 ; {Hatton v. Royle, 3 H. & N. 500} ; 
Kartbaus v. Ferrer, 1 Pet. 222, 228; Strangford v. breen, 2 Mod. 228; 
[Buchoz r. Grandjean, 1 Mich. 367 ; Harrington v. Higham, 13 Barb. 660; 
Abbott V. Dexter, 6 Cush. 108 ; Armstrong v. Robinson, 5 Gill & J. 412] ; 
Buchanan v. Curry, 19 Johns. 137 ; [Wood v. Shepherd, 2 P. & H. 442] ; 
{1 Am. Lead. Cas. 452, 4th ed. See, also. Wesson v. Newton, 10 Cush. 
114 ; Horton v. Wilde, 8 Gray, 425 ; McQuewans v. Hamlin, 35 Penn. St. 
517} ; 3 Kent, 49; Ersk. Inst. B. 3, tit. 3, § 23. —In Pennsylvania and 
Kentucky a different doctrine is established ; that one partner may by an 
unsealed instrument refer any partnership matter to ai'bitratioii, which will 
bind the partnership. Taylor v. Coryell, 12 S. & R. 243 ; Southard v. Steele, 
3 Monr. 435. {So in Illinois, Hallack u. March, 25 111. 48.} See Cotton u. 
Evans, 1 Dev. & Bat. Eq. 284; per Lord Abinger in Cleworth v. Pickford, 
7 M. & W. 314, 321. 

2 Ibid. 

3 Gow on P. c. 2, § 2, p. 66 ; Adams v. Bankart, 1 Cr. M. & R. 681. [It 
has been decided, that one partner has no implied authority to consent to 
an order for judgment in an action against himself and his copartner. Ham- 
bidge V. De la Crouee, 3 C. B. 742 ; Binney v. Le Gal, 19 Barb. 592 ; 
& Morgan v. Richardson, 16 Mo. 409. {See Rathbone v. Drakeford, 4 Moo. 
P. 57 ; Brutton v. Burton, 1 Chitty, 707, 1 Am. Lead. Cas. 452, 4tii ed. Among 



204 PARTNERSHIP. [CHAP. VII. 

takes away the subject-matter from the ordmary cog- 
nizance of the estabHshed courts of justice, which have 
the best means to investigate the merits of the case by 
proper legal proofs and testimony, and the means of 
arbitrators to accomplish the same purposes are very 
narrow, and often wholly inadequate, it ought not to 
be presumed, that the partners mean to waive their 
ordinary legal rights and remedies, unless there be 
some special delegation of authority to that eifect, 
either formal or informal.^ 



the later American cases on this point are Shedd v. Bank of Brattleboro', 
32 Yt. 709 ; Christy v. Sherman, 10 Iowa, 535 ; Xorth v. Mudge, 13 Iowa, 
496. But see Edwards v. Pitzer, 12 Iowa, 607 ; EHiott v. Holbrook, 33 
Ala. 659.} And service of a writ on one partner, after dissolution, will not 
authorize judgment against the other. Faver v. Briggs, 18 Ala. 478. An 
acknowledgment of service of a writ written by one partner in presence of 
the other, and with his consent, binds the firm. Freeman v. Carhart, 17 
Ga. 348. {See Lind. on P. 227.} An appearance in a suit entered by 
an attorney, employed by one of the partners, will be binding and con- 
clusive upon the other partners. Bennett v. Stickney, 17 Vt. 531. But 
such appearance by an attorney employed by one partner, has been constraed 
to be only an appearance for the partners, as partners, and for the purpose 
of defending the action against the firm, and not as an appearance for the 
partners, individually and severally, and such an appearance will not bind 
one partner individually, who is without the jurisdiction, was not served 
with process, and did not authorize the appearance, so as to render the 
judgment evei-yichere conclusive against him. Phelps v. Brewer, 9 Cush. 
390.] 

' See Adams v. Bankart, 1 Cr. M. & R. 681 ; Bruen i-. Marquand, 17 
Johns. 58 ; 3 Kent, 44 ; [Boyington v. Boyington, 10 Vt. 107.] — Mr. Gow, 
in the Supplement to his Treatise on Partnership, London, 1841, c. 2, § 2, 
p. 17, says : " In the case of Boyd v. Emmerson, 2 Ad. & E. 184, one ques- 
tion was, whether a partner could bind his copartners by a parol submission 
to arbitration. But the case being disposed of on other points, it became 
unnecessary to decide that question. However, Sir F. Pollock, who had to 
maintain the affirmative, in the course of his argument observed, that the 
point might be considered as res Integra, and admitted that ' one partner 
cannot bind another in a matter of arbitration, where the submission is by 
deed ; because, in general, he cannot bind his partner by any deed.' Harrison 
V. Jackson, 7 T. R. 207. But it does not follow that one of several persons, 
who are general partners, cannot in any way bind the rest by a submission 
to arbitration, upon a specific matter of partnership right. One partner 



CHAP. YII.] POWERS AND AUTHORITIES. 205 

§ 115. It may not perhaps seem very easy to see, 
since one partner alone may release, or even compound, 
or compromise a partnership debt,^ in what essential 
respect the latter power differs from that which re- 
spects a submission to arbitration. A release by one 
partner certainly binds all the partners, as indeed a 
receipt for the debt would ; because, as a debtor may 
lawfully pay his debt to one of them,^ he ought also 
to be able to obtain a discharge upon due pay- 
may bring, or settle an action on behalf of the rest. Furnival v. Weston, 
7 J. B. Moore, 356 ; Harwood v. Edwards, Gow on P. 65, note (g), 3d ed. 
Why may he not enter into an agi'eement to refer the subject-matter ? And 
if so, why may not one agree, on behalf of the rest, to be governed by an 
opinion, in which both they and the opposite party may confide? In Strang- 
ford V. Green, 2 Mod. 228, the submission appears to have been by arbitra- 
tion bond, and therefore the partner could not be bound. In Stead v. Salt, 
3 Bing. 101, the parties were not partners generally, but only in the dealings, 
to which the award related ; the matter was twice referred. In the first 
instance, four partners signed the agreement of i-eferenee ; the arbitration 
went off, and the new agreement was signed by three only. In the absence 
of any explanation, it was reasonable to suppose, that, if both agreements 
were signed by the authoi-ity of all the partners, the second would have been 
executed by the same number as the first. The passage cited in that case, 
from Com. Dig. Arbitrament, J). 2, from which it was implied that a partner 
cannot bind his copartner, probably refers to submissions by deed. There 
is no ground in reason for sajing, that, in the case of a general partnership 
in a banking firm, one partner cannot submit, on behalf of all, to such a 
mode of settling a dispute upon a partnership concern as was adopted here. 
Suppose the question had been a practical one, as to something to be done 
in the course of business, might not a partner have agreed to take the judg- 
ment of an experienced person, as a custom-house oflicer, a dock-master, 
or an eminent merchant? And if so, why not the opinion of counsel in the 
present case ? To hold, that the opinion could not be so taken, would throw 
great impediments in the way of a very common, useful, and economical 
mode of settling such disputes." See post, § 122, note. 

^ See Gow on P. c. 2, § 2, p. 61, 3d ed., and Ellison v. Dezell, there cited ; 
Metcalfe v. Rycroft, 6 M. & S. 75 ; Coll. on P. B. 3, c. 2, § 1, p. 311, 312, 2d 
ed. ; [Hambidge v. De la Crouee, 3 C. B. 742] ; {Wallace v. Kelsall, 7 M. 
& W. 264 ; Lind. on P. 221, 222. See Nottidge v. Prichard, 2 CI. & Fin. 
379. Payment to one partner is a defence to an action at law by the firm, 
though the other partner has given notice to the debtor not to pay to such 
partner. Koyes v. 2^ew Haven, New London, »& Stonington R. R. Co. 30 
Conn. 1. } 



206 PARTNERSHIP. [cHAP. VII. 

ment.^ There is another technical reason, applicable to 
such a case ; which is, that the release certainly operates 
as against the partner himself; and if so, since no suit 
could be brought for the debt without uniting him as 
plaintiff, the release of one plaintiff would necessarily 
bar the action as to the others.^ The compromise of 
a debt, by taking less than its nominal amount, seems 
to be an incident to the collection of the debt, and may 
fairly, therefore, be deemed within the discretion con- 
fided to each partner ; and indeed in practice it is so 
ordinarily treated. These cases, therefore, seem clearly 
distinguishable from that of a submission to arbitra- 
tion, since they steer wide of the objections, which 
have been already mentioned, as applicable to the 
latter. 

§ 116, The Roman law coincides in many respects 
with ours on this subject. It admits a release or dis- 
charge by one joint creditor to the debtor, or a release 



1 Stead V. Salt, 3 Bing. 101 ; Coll. on P. B. 3, c. 2, § l,p. 313, 314; Id. 
B. 3, c. 4, § 2, p. 452, 453 ; Id. B. 3, c. 5, § 5, p. 485, 2d ed. ; Pierson v. 
Hooker, 3 Johns. 68 ; Wats, on P. c. 4, p. 225, 2d ed. ; Story on Ag. § 49. 

■ See Adams w.^Bankart, 1 Cr. M. & R. 681 ; Wats, on P. c. 4. p. 222, 2d 
ed. ; Coll. on P. B. 3, c. 2, § 1, p. 311, 312, 2d ed. ; Hawkshawr. Parkins, 
2 Swans. 539 ; Halsey v. Whitney, 4 Mason, 206 ; Pierson v. Hooper, 3 
Johns. 68 ; Bulkley v. Dayton, 14 Johns. 387 ; Bruen v. Marquand, 17 
Johns. 58 ; Ruddock's Case, 6 Co. 25 a ; Salmon t'. Davis, 4 Binn. 375 ; 
Napier u. McLeod, 9 Wend. 120. {Arton v. Booth, 4 Moore, 192; Furni- 
val V. Weston, 7 Moore, 356 ; Phillips v. Clagett, 11 M. & W. 84. If the re- 
lease has been obtained by fraudulent collusion with one of the partners, it 
will not be a defence to an action. See § 132 ; Barker v. Richardson, 1 Y. & 
J. 362 ; Aspinall v. London & X. W. R. R. Co., 11 Hare, 325 ; 1 Am. Lead. 
Gas. 453,4th ed.} But although one partner may release a debt of the 
partnership in his own name alone ; yet, if he enters into a covenant in his 
own name with a debtor of the partnership, not to sue him therefor, that 
is no release of the debt ; and will not prevent a suit from being maintained 
by a partner, in the names of all the partners for the debt. The remedy 
for tlie debtor in such a case is by a suit against that partner for breach of 
his covenant. Walmsley v. Cooper, 3 Per. & Dav. 149 ; s. c. 11 Ad. & E. 
216; post, §323, 324. 



CHAP. YII.] POWERS AND AUTHORITIES. 207 

01" discharge to one joint debtor by the creditor, to be 
an extinguishment of the entire contract. Cum duo 
eandem pecunimn aut promiser'mt^ aut stijmlati sunt, 
ipso jure et singuli in soUdimi dehentur, et singidi de- 
hent. Ideoqiie jietltione cicceptilatione unius tota solmtur 
ohligatio} And yet by the Roman law it is not compe- 
tent for one of two creditors, or for one of two partners, 
to compromise a suit, or to submit a controversy touch- 
ing their joint demands to arbitration, without the con- 
sent of both ; for in such a case each can act only as 
the agent of the other ; and a general authority is not 
deemed to include such a right. Mandato generali non 
contineri etiam trcmsactlonem decidendi causa interpo- 
sitam.^ The same doctrine is fully recognized in the 
law of France,^ and probably in that of many other 
nations of continental Europe. 

§ 117. In the next place it is a general rule of the 
common law, that one partner, from that mere relation, 
cannot bind the others by a deed or instrument under 
seal, either for a debt or any other obligation, even 
when contracted in the course of their commercial 
dealings and business, and within the scope thereof; 
unless indeed the authority be expressly given under 
the seals of the other partners, and include the very 
act done under seal.'' The reason of this rule seems to 

• D.45, 2, 2. 

'^ D. 3, 3, 60; Domat, 1, 15, 3, art. 11. 
3 Poth. de Soc. n. 68. 

* Wats, on P. c. 4, p. 218-222, 2ded. ; Coll. on P. B. 3, c. 2, § 1, p. 308- 
312, 2d ed. ; Gow on P. c. 2, § 2, p. 57-60, 3d ed. ; 3 Kent, 47-49 ; Story 
on Ag. § 49-51 ; Dickerson v. ^Vheeler, 1 Humph. 51 ; Napier v. Catron, 2 
Humph. 534; McXaughten v. Patridge, 11 Ohio, 223; [McDonald v. Eg- 
gleston, 26 Vt. 154; Snyder «. May, 19 Ponn. St. 235; Henry v. Gates, 26 
Mo. 315 ; Remington v. Cummings, 5 Wis. 138] ; {Bowker i\ Burdekin, 11 
M. & W. 128 ; Met. on Contr. 124 ; 1 Am. Lead. Cas. 449, 4th ed. But see 
Dudgeon v. O'Connell, 12 Jr. E<j. 566. See also Cummings v. Parish, 39 
Miss. 412.} 



208 PARTNERSHIP. [cHAP. VII. 

be purely technical ; and has its origin in the general 
doctrine of agency at the common law ; where it is 
held, that an agent or attorney cannot execute a deed 
or sealed instrument, in the name of his principal, so 
as to bind him thereby, as the proper party thereto, 
unless the authority is conferred upon him by an in- 
strument of equal dignity and solemnity, that is by one 
under seal.^ And yet the common law does not seem 
in all cases to follow out its own principle ; for it is not 
required to execute any instrument or writing, not un- 
der seal, that the authority to an agent, or attorney, or 
partner, should be in writing. It may be by parol, or 
even be implied from circumstances.^ Ordinarily, also, 
the dissolution of a contract is required by the common 
law to be by an instrument of the same dignity and 
solemnity, as that by which it is created.^ Eodem modo^ 
quo oritur^ eodem modo dissolvitur^ 

§ 118. The Roman law seems to have acted upon 
one uniform principle, if not in the formation of con- 
tracts, at least in the dissolution of contracts ; that is to 
say, that they might and ought to be dissolved in the 
same mode in which they were created. Nihil tarn 
naturale est, cfiiam, eo genere quidque dissolvere, quo 
coUigatum est. Ideo verhorimi ohligatio verbis tollitur ; 
nudi consensus ohligatio contrario consensu dissolvitur.^ 

1 Story on Ag. § 49 ; Co. LItt. 48, b. ; Harg. note 2 ; Harrison v. Jack- 
son, 7 T. R. 207 ; Paley on Ag. by Lloyd, 157, 158 ; 2 Kent, 613 ; 3 Kent, 47, 
48; Green v. Beals, 2 Caines, 254; Clement v. Brush, 3 Johns. Cas. 180; 
Skinner I). Dayton, 19 Jolms. 513; Berkeley v. Hardy, 5 B. & C. 355; 
Gow on P. c. 2, § 2, p. 58-60, 3d ed. ; U. S. v. Astley, 3 Wash. C. C. 508 ; 
\_Ex parte Bosanquet, 1 De Gex, 432.] 

2 Story on Ag. §50, 51 ; Coles v. Trecothlck, 9 Ves. 234, 250; 2 Kent, 
613, 614. 

^ Story on Ag. § 49. 

•* Bac. Abridg. Release, A. ; Neal v. Sheaffield, Cro. Jac. 254. {See 
§268.} 

^ D. 50, 17, 35; Both. Oblig. n. 571-580. 



CHAP. VII.] POWERS AND AUTHORITIES. 209 

Again : Prout quidque contractum est, ita et solvi debet; 
ut cum re contraxerimus, re solvi debet} And again: 
Et cimi verbis aliquid contraxiinus, vel re, vel verbis, 
obligatio solvi debeat ; verbis, veluti cum acceptum 
promissori fit ; re, veluti cur)% solvit, quod promisit. 
^que, cum emptio, vel venditio, vel locatio contracta 
est; quoniam consensu nicdo contrahi p>otest, etiam 
dissensu contrario dissolvi potest.^ But a distinction 
was taken in the Roman law between mere consensual 
contracts, and other civil obligations, which resulted 
from real contracts or stipulations under that law. The 
former might be discharged by a simple agreement ; but 
to discharge the latter, 2)leno jure, it was necessary for 
the act to be done by the formality of an acceptilation.^ 

' D. 46, 3, 80; Poth. Pand. 58, 17, n. 1388. 

2 D. 46, 3, 80. 

^ Inst. 3, 30, § 1, 2. — Pothier has expounded this doctrine in his Treat- 
ise on Obligations, n. 571, and says : " According to the principles of the 
Roman law, there was a difference between civil obligations resulting from 
consensual contracts, which were contracted by the mere consent of the 
pai'ties, and other civil obligations, which resulted from real contracts, or 
from stipulations. With respect to those contracted by the consent of the 
parties, the release might be made by a simple agreement, by which the 
creditor agreed with the debtor to hold him acquitted, and such agreement 
extinguished the obligation pleiio jure. With respect to other civil obliga- 
tions for the release to extinguish the obligation pleno jure, it was necessary 
to have recourse to the formality of an acceptilation, either simple, if the 
obligation resulted from a stipulation, or Aquilian, if from a real contract. 
A simple agreement by the creditor to acquit the debtor, did not extinguish 
such obligations 2yleno jure ; but only gave the debtor an exception, or Jin 
de non re^evoir, against the action of the creditor, demanding the payment 
of the debt, contrary to the faith of the agreement. This distinction and 
these subtilties are not admitted in the law of Fi'ance, in which we have no 
such form as an acceptilation ; and all debts, of whatever kind, and in what- 
ever manner contracted, are extinguished, pleno jure, by a simple agreement 
of release between the creditor and debtor, provided the creditor is capable 
of disposing of his property, and the debtor is not a person to whom the 
creditor is prohibited by law from making a donation. Therefore all that is 
said in the title, ff. de Accept, concerning the form of an acceptilation, and 
particularly that acceptilation cannot be made under a condition (L. 4, ff. de 
Accept.), has no ap})lication in the law of France. With us there is notliing 
to prevent the creditor making the release of tlie debt depend upon a con- 

14 



210 PARTNERSHIP. [cHAP. VII. 

§ 119. Upon the ground of the general principle of 
the common law, it has been held, that a bond, signed 
by one partner in the course of the partnership busi- 
ness, without an authority under seal, binds only the 
partner, who signs and seals it, although it is signed 
and sealed in the name of the firm.^ Thus, a bond, 
given in the name of the firm at the custom-house, for 
the payment of the duties on goods imported for and 
belonging to the partnership, will not bind the part- 
nership, but only the partner signing and sealing the 
same.^ A fortiori^ if a deed be made by one partner in 

dition, and the eflfect of such a release is to render the debt conditional, 
the same as if it had been contracted under the opposite condition to that of 
the release." 

^ In Harrison w. Jackson, 7 T. R. 207, 210, Lord Kenyon said: "The 
law of merchants is part of the law of the land ; and in mercantile transac- 
tions, in drawing and accepting bills of exchange, it never was doubted, 
but that one partner might bind the rest. But the power of binding each 
other by deed is now for the first time insisted on, except in the nisi prius 
case cited, the facts of which are not sufficiently disclosed to enable me to 
judge of its propriety. Then it was said, that, if this pai'tnership were con- 
stituted by writing under seal, that gave authority to each to bind the others 
by deed. But I deny that consequence, just as positively as the former ; 
for a general partnership agreement, though under seal, does not authorize 
the partners to execute deeds for each other, unless a particular power be 
given for that purpose. This would be a most alarming doctrine to hold out 
to the mercantile world ; if one partner could bind the others by such a 
deed as the present, it would extend to the case of mortgages, and would 
enable a partner to give to a favorite creditor a real lien on the estates of 
the other partners." See 3 Kent, 47, 48. {But see Orr v. Chase, 1 Mer. 
729. In Fisher v. Pender, 7 Jones, Law, 483, it was held, following the pre- 
vious course of decision in North Carolina, that, when it appeared on the face 
of an instrument that A. signed, sealed, and delivered it, in order to bind the 
firm of which he was a member, and not as his individual deed, they 
were not individually liable. But see contra, 1 Am. Lead. Cas. 451, 4th 
ed. See, also, Jarman v. Ellis, 7 Jones, Law, 77.} 

"- Metcalfe v. Rycroft, 6 M. & S. 75 ; Elliot v. Davis, 2 B. & P. 338 ; 
Hawkshaw v. Parkins, 2 Swans. 539 ; Harrison v. Jackson, 7 T. R. 207 ; 
Skinner v. Dayton, 19 Johns. 513. — To cure this very difficulty. Congress 
have been compelled to pass an act, providing, that such a bond given and 
sealed in the name of the firm, or partners, under his seal (see Hawk- 
shaw V. Parkins, 2 Swans. 539), shall be binding on all of them. Act of 
1st March, 1823, c. 149. § 25. 



CHAP. VII.] POWERS AND AUTHORITIES. 211 

the name of the firm, conveying away the real estate 
of the firm, it will be invalid to convey the title of the 
other partners, since the law requires, that every con- 
veyance of real estate should be by the deed of the 
party himself, who possesses the title ; and another 
person cannot convey it in his name, except by an 
authority under seal.^ 

§ 120. This doctrine seems peculiar to the common 
law ; and, as has been suggested, seems mainly founded 
on technical reasoning. It has, however, been some- 
times maintained, as founded in public policy ; and that 
it would be a dangerous power, and enable one partner 
to give undue preferences to favorite creditors. But 
this power now exists, as to all personal property and 
funds of the partnership ; and, as an original founda- 
tion of the doctrine, seems at once inadequate, and 
unsatisfactory. Indeed, a strong inclination has been 
exhibited in our day to get rid of the doctrine, or to 
qualify and limit it so far, that, practically speaking, it 
would have little operation and influence. One excep- 
tion is, that if the deed is executed by one partner in 
the presence of and with the assent of all the partners, 
it shall be deemed the deed of all.~ But, perhaps, this 
is not so properly an exception, as it is an application 
of an old rule of the common law, which makes a deed, 
executed by an agent in the presence of his principal, 
the deed of the latter, although the authority to do it 
is merely by parol.^ The case of a release by one part- 

1 {See§ 94.} 

* Ball V. Dunsterville, 4 T. R. 313 ; Burn v. Burn, 3 Ves. 573 ; Mackay 
V. Bloodgood, 9 Johns. 285 ; Halsey v. Whitney, 4 Mason, 206 ; Coll. on P. 
B. 3, c. 2, § 1, p. 308-310, 2d ed. See Smith v. Winter, 4 M. & W. 454. 
See Hunter r. Parker, 7 M. & W. 322; {Anthony v. Butler, 13 Pet. 423; 
Potter V. McCoy, 26 Penn. St. 458.} 

^ Lord Lovelace's Case, W. Jones, 268 ; Story on Ag. § 51 ; Gow on P. 
c. 2, § 2, p. 59, od ed. 



212 PARTNERSHIP. [CHAP. VII. 

ner, either in his own name, or in that of the firm, of a 
partnership debt, may also be thought to constitute 
another exception. But, in fact, it turns, as we shall 
presently see, upon another distinct consideration, that 
a release by one joint creditor discharges the action as 
to both ; and such a deed of one partner is clearly 
operative as to himself.^ 

§ 121. But the main struggle has been, not so much 
to contest the doctrine of the common law, that an au- 
thority to execute a sealed instrument does not flow 
from the ordinary relation of partnership, as to con- 
test the doctrine, that it requii-es a prior authority 
under seal, or a subsequent ratification under seal, to 
make the execution valid.^ The old authorities, and 
indeed the whole current of decisions in England, estab- 
lish the rigid doctrine in its fullest extent. They assert, 
that no prior authority, or subsequent ratification, either 
verbal, or by writing, without seal is sufficient to give 
validity to the instrument, as the sealed contract of the 
party.^ This is reducing the rule itself to its true 
technical character, and stripping it of all pretence of 
being founded in public policy. The American courts 
have in this view strongly inclined to repudiate it in all 
cases, where an express, or an implied authority or 
confirmation could be justly established, not under 
seal, whether it be verbal, or in writing, or circum- 
stantial.'' 

1 Gow on P. c. 2, § 2, p. 60, 3d ed. ; Coll. on P. B. 3, c. 2, § 1, p. 308- 
312, 2d ed. ; Cady v. Shepherd, 11 Pick. 400; Gram v. Seton, 1 Hall, 262; 
Skinner 15. Dayton, 19 Johns. 513 ; Story on Ag. § 49 ; ante, §114; Beckham 
V. Drake, 9 M. & W. 79, 91-94. {Beckham v. Drake, 11 M. & W. 315.} 
Beckham r. Knight, 1 Man. & G. 738 ; ante, § 115. 

2 3 Kent, 47, 48. 

3 Gow on P. c. 2, § 2, p. 58-60, 3d ed. ; Steiglitz v. Eggington, Holt N. 
P. 141 ; Hunter v. Parker, 7 M. & W. 322, 342 ; Wallace v. Kelsall, 7 M. & 
W. 264, 272. 

* 3 Kent, 47, 48. 



CHAP. VII.] POWERS AND AUTHORITIES. 213 

§ 122. Some of the American decisions may be sup- 
ported upon the general ground, that the act, if done 
by an unsealed instrument, would have been within the 
scope of the business of the partnership, and the pow- 
ers and authorities belonging to each partner.' In such 
cases there does not seem any solid reason, why the 
act, when done, should be vitiated by being under the 
seal and signature of the firm.^ There seems nothing 
incongruous in such a case in holding, that it is binding 
on the individual partner, as his sealed instrument, and 
on the other partners as their agreement or assignment, 
made by their authorized agent.^ Thus, a purchase of 

' Tapley v Butterfield, 1 Met. 515. 

* [Purviance v. Sutherland, 2 Ohio St. 478 ; Sweetzer v. Mead, 5 Mich. 
107]; {Milton v. Mosher, 7 Met. 244; Dubois' Appeal, 38 Penn. St. 231 i 
Daniel v. Toney, 2 Metcalfe, 523; Human v. CunifFe, 32 Mo. 316; Met. on 
Contr. 125; 1 Am. Lead. Cas. 450.} 

^ See Harrison v. Sterry, 5 Cranch, 289 ; Cady v. Shepherd, 11 Pick. 400. 
— In Anderson v. Tompkins, 1 Brock. 456, 462, Mr. Chief Justice Marshall 
said : " It is said, this transfer of property is by a deed, and that one partner 
has no right to bind another by deed. For this a case is cited, which, I 
believe, has never been questioned in England, or in this country. Harrison 
V. Jackson, 7 T. R. 207. I am not, and never have been satisfied with the 
extent to which this doctrine has been carried. The particular point decided 
in it is certainly to be sustained on technical reasoning, and perhaps ought 
not to be controverted. I do not mean to controvert it. That was an action 
of covenant on a deed ; and if the instrument was not the deed of the de- 
fendants, the action could not be sustained. It was decided not to be the 
deed of the defendants, and I submit to the decision. No action can be sus- 
tained against the partner, who has not executed the instrument, on the deed 
of his copartner. No action can be sustained against the partner, which rests 
on the validity of such a deed, as to the person who has not executed it. 
This principle is settled. But I cannot admit its application In a case where 
the property may be transferred by delivery, under a parol contract, where 
the right of sale is absolute, and the change of property Is consummated 
by delivery. I cannot admit, that a sale, so consummated, is animlled by 
the circumstance, that It Is attested by, or that the trusts under which it Is 
made, are described In a deed. No case goes thus far; and I think such a 
decision could not be sustained on principle." See also Sale v. Dishman's 
Executors, 3 Leigh, 548; Coll. on P. B. 3, c. 2, § 1, p. 313, 2d ed. ; s. P. 
Hunter v. Parker, 7 M. & W. 322. [In Ex parte Bosanquct, De Gex, 432, 
the Chief Judge in Bankruptcy said: " As to the objection, that the security 



214 PARTNERSHIP. [cHAP. VII. 

goods, in the course of the trade and business of the 
partnership, under the seal of the lirm, has been held 
binding on the firm.^ But the more general doctrine, 
and, indeed, that which is principally relied on, is, that 
a prior authority, or a subsequent ratification, not un- 
der seal, but either express or implied, verbal or written, 
is sufficient to establish the deed, as the deed of the 
firm, and binding upon it as such.^ 

being effected by a deed executed by one partner could not bind the firm, it 
might be true that the instrument would not take effect as the deed of the firm; 
but the transaction itself was one within the authoi'ity of the partner, and the 
circumstance of a deed being executed would not invalidate the contract." 
See also Everit v. Strong, 7 Hill, (N. Y.) 585.] 

* Cady V. Shepherd, 11 Pick. 400. 

2 Skinner v. Dayton, 19 Johns. 513; Cady v. Shepherd, 11 Pick. 400; 
Gram v. Seton, 1 Hall, 262; [Herbert v. Hanrick, 16 Ala. 581; Smiths. 
Kerr, 3 Comst. 144; McDonald v. Eggleston, 26 Vt. 154; Drumright v. 
Philpot, 16 Ga. 424; Swan v. Stedman, 4 Met. 548; Ely v. Hair, 16 B. 
Monr. 230.] The whole reasoning on which this doctrine depends, as well as 
the authorities on which it is founded, were most ably and elaborately re- 
viewed in the case of Cady v. Shepherd, 11 Pick. 405, 406, and in Gram v. 
Seton, 1 Hall, 262. In the latter case especially, all the English, as well as 
the American authorities, were examined at great length by Mi*. Chief 
Justice Jones, and his judgment is worthy of a most attentive perusal. On 
that occasion he said : " The principle, that a partner cannot, by virtue of 
the authority he derives from the relation of copartnership, bind his co- 
partner by deed, has been too long settled to be now shaken. It is the 
technical rule of the common law applicable to deeds, which has been in- 
grafted into the commercial system of the law of partnership ; and unless 
the charter-party in question can, under the circumstances of this case, be 
construed to be the deed of Bunker, the defence must prevail. The reasons 
for the restrictions are not very satisfactory ; for all the mischiefs, which the 
expositors of the rule ascribe to the authority of members of a copartnership 
to seal for their copartners, may flow almost as extensively, and nearly with 
equal facility, from the use of the name and signature of the copartnership. 
The dangers of allowing the use of a seal to the members of a copartnership 
are supposed to consist in these two attributes of the seal ; that it imports a 
consideration, and that it is competent to convey absolutely, or to charge and 
encumber real estate. But negotiable paper, by which the partner may bind 
the firm, efjually imports a consideration with a seal ; and upon general prin- 
ciples, the use of the seal of the copartner, equally with the signature of the 
copartnership, would, if permitted, be restricted to copartnership purposes 
and copartnersiiip operations solely ; and the joint deed of the copartners, 



CHAP. VIl] powers AND AUTHORITIES. 215 

§ 122 a. In the next place, although one partner may 
procure advances of money to carry on the business of 

executed by the present for the absent members, be held competent to con- 
vey or to encumber the copartnership property alone, and to have no oper- 
ation upon the private funds or separate estate of the copartners. With 
these restrictions upon the use and operation of the seal, is not the power of 
a partner to bind his copartner, and to charge and encumber his estate, as 
great and as mischievous, without the authority to use the seal of the absent 
partner, as it would be with that authority ? Those powers undeniably 
place the fortune of the members of a general copartnership, to a great de- 
gree, at the disposal of any one of the copartners ; but it is necessary to the 
beneficial management of the joint concern, that extensive powers should be 
vested in the members who compose it ; and when the copartners live re- 
motely from each other, their joint business concerns cannot be advanta- 
geously conducted or carried on, without a latitude of authority in each, which 
is inconsistent with the perfect safety of the other copartners. It cripples 
the operation of a partner, whose distant residence precludes a personal co- 
operation, to deny him the use of the seal of his copartner for instruments 
requiring it, and which the exigencies of their joint concerns render expe- 
dient or beneficial to them. He must be clothed with the power to execute 
deeds for his copartner when necessarily required for the purposes of the 
trade ; and if that authority is not inherent in the copartnership, it must be 
conferred by letter of attorney, and it must be general, or it will be inade- 
quate to the ends of its creation. A copartnership, especially, which is em- 
ployed in foreign trade, and has occasion to employ ships for the transporta- 
tion of merchandise, or to borrow money on respondentia, if its members are 
dispersed, as is often the case, must be seriously embarrassed in its operations 
by the application of the rule, that requires every copartner, who is to be 
bound by the charter-party or the respondentia bond, to seal it personally, 
or by attorney duly constituted for that specific purpose, with his own seal. 
Similar difliculties would arise out of the same rule, when the operations of 
the house required the copartnership to execute other deeds. Can it then 
be, that this stern rule of the common law, which has its appropriate sphere 
of action, and a most salutary operation on those relations of society, where 
men, not otherwise connected, are the owners of undivided property, is to 
be applied in all its force, and to govern, with unbending severity, in the 
concerns of copartners, whose intimate connection and mutual interest re- 
quire such large power and ample confidence in the integrity and prudence 
of each other, to give to their operations efficiency, vigor, and success ? 
The pressure of these considerations has induced a relaxation of the com- 
mon-law rule, to adapt it to the exigencies of commercial copartnerships, 
and other associations of individuals operating with joint funds for the com- 
mon benefit. The rule itself remains ; but the restrictions it imposes are 
qualified by the application of other principles. The general authority of 
a partner, for example, derived from his relation to his copartners, does not 



216 PARTNERSHIP. [cHAP. VII. 

an established partnership, and thereby bind the firm ; 
yet if the partnership is not estabhshed, one partner has 
not an implied authority to bind the firm for advances 
in the incipient state thereof to raise capital therefor.^ 

§ 123. These seem to be the principal exceptions to 
the authority of one partner to bind the partnership by 
his own acts and contracts, done within the scope of 
partnership trade and business, and for the purposes 
thereof. But another question may arise ; and that is, 
whether in cases of partnership the majority is to gov- 
ern in case of a diversity of opinion between the part- 
ners, as to the partnership business and the conduct 
thereof; or, whether one partner can, by his dissent, 
arrest the partnership business, or suspend the ordinary 
powers and authorities of the other partners in relation 

empower him to seal an instrument for them, so as to make it binding upon 
them without their assent, and against their will. This is the fair import of 
the modern cases, and is, I apprehend, the principle courts are disposed to 
apply to the use of a seal in joint contracts for copartnership purposes. An 
absent partner is not bound by a deed executed for him by his copartner, 
without his previous authority or permission, or his subsequent assent and 
adoption. But the previous authority or permission of one partner to an- 
other to seal for him, or his subsequent adoption of the seal as his own, will 
impart efficacy to the instrument as his deed ; and that previous authority or 
subsequent adoption may be by parol. These are the results, which I de- 
duced from the judicial decisions, especially those of our own courts, on the 
subject ; and if I am correct in my deduction, the conclusion must be favor- 
able to the validity of this charter-party, as the deed of both the partners." 
{Bond V. Aitkin, 6 W. & S. 165 ; Johns v. Battin, 30 Penn. St. 84. The 
same rule has been extended to instruments affecting real estate. Haynes v. 
Seachrest, 13 Iowa, 455 ; Wilson v. Hunter, 14 AVis. 683. Lowery v. Drew, 
18 Tex. 786. The previous authority or subsequent ratification must be 
proved. Dillon v. Brown, 11 Gray, 179. Butterfield v. Hemsley, 12 Gray, 
226. Fox r. Norton, 9 ]\lich. 207. In Delaware authority cannot be proved 
by parol. Little v. Hazzard, 5 Harring. 291. Nor perhaps in Tennessee. Tur- 
beville v. Ryan, 1 Humph. 113 ; Napier v. Catron, 2 Humph. 534; but see 
Lambden v. Sharp, 9 Humph. 224. The several partners may use one and 
the same seal. Tasker v. Bartlett, 5 Cush. 359, 364. Lambden v. Sharp. 
uhi sup. Contra, Rex v. Inhab. of Austrey, 6 M. & S. 319.} 
1 Fisher v. Tayler, 2 Hare, 218, 229. {See § 146.} 



CHAP. VII.] POWERS AND AUTHORITIES. 217 

thereto, against the will of the majority. Where there 
is no stipulation in the partnership articles to control or 
vary the result (for if there be any stipulation, that 
ought to govern),^ the general rule would seem to be, 
that each partner has an equal voice, however unequal 
the shares of the respective partners may be, because in 
such a case, each partner has a right to an equal share 
of the profits ; ^ and the majority, acting fairly and hona 
fide, have the right and authority to conduct the part- 
nership business, within the true scope thereof, and dis- 
pose of the partnership property, notwithstanding the 
dissent of the minority.^ Where there are but two 

1 Const V. Harris, Turn. & R. 496, 517, 518, 521 ; 3 Kent, 45 ; {§ 213.} 

" See ante, § 24. 

* Coll. on P. B. 2,c. 2, § 1, p. 129, 130; Id. B. 3, c. 1, § 262, 2d ed. ; 3 
Chitty on Comm. and Manuf. c. 4, p. 236 ; Const v. Harris, Turn & R. 496, 
517, 518, 524, 525 ; Kirk v. Hodgson, 3 Johns. Ch. 400, 405, 406 ; [Johnston 
V. Dutton, 27 Ala. 245] ; {Western Stage Co. v. Walker, 2 Iowa, 504. See 
Noyes v. New Haven, Kew London, & Stonington R. R. Co. 30 Conn. 1 ; Lind. 
on P. 508-518.} It is not easy to say, that this doctrine is so entirely settled, 
as to admit of no controversy. The elementary writers are not all agreed 
about it ; and the dicta of judges do not always admit its correctness. Still 
it appears to me, that the text states the true doctrine, fairly deducible from 
a just survey of all the leading authorities. On one occasion. Lord Eldon 
said : " If I consider them (a lodge of freemasons) as individuals, the ma- 
jority had no right to bind the minority." Lloyd v. Loaring, 6 Ves. 773, 777. 
But that was not a case strictly of partnership; but rather of a club. Mr. Wat- 
son, in his Treatise on Partnership (c. 4, p. 194, 2d ed.), says : "We have seen in 

V. Layfield, 1 Salk. 292, Lord Holt held, that the act of one partner 

should be presumed the act of the others, and should bind them, unless they 
could show a disclaimer. And it would seem, that, even during the subsistence 
of the partnership, and in the established course of trade, one partner may, to 
a certain degree, limit his responsibility. If there be any particular specula- 
tion or bargain proposed, which he disapproves of, by giving distinct notice 
to those with whom his copartners are about to contract, that he will not in 
any manner be concerned in it, they could not have recourse upon him ; as 
proof of this notice would rebut Yns prima facie liability. The partnership in 
that case might either be considered as dissolved, or quoad hoc as suspended. 
Where three persons entered into partnership in the trade of sugar-boiling, 
and agreed, that no sugars should be bought without the consent of the 
majority ; one of them afterwards makes a protest, that he would no longer 
be concerned in partnership with them. The other two persons after make 



218 PARTNERSHIP. [CHAP. VII. 

persons in the firm, and they dissent from each other, 
it would seem a just result, that it amounts to a tempo- 
rary suspension of the right and authority of each to 
carry on or manage the partnership business, or dispose 
of the partnership property, in respect to all persons 
having notice of such disagreement.^ But in every 
case, where the decision of the majority is to govern, it 
would seem reasonable, that the minority, if practicable, 
should have notice thereof and be consulted ; and if the 
majority should choose wantonly to act without infor- 
mation to, or consultation with the minority, it would 
hardly be deemed a ho7ia fide transaction, obligatory 
upon the latter.^ 

a contract for sugars, the seller having notice, that the third had disclaimed 
the partnership, he shall not be charged." The case in 1 Salkeld, 292, will not 
be found to justify the broad conclusion of the author. It was there held, 
that partners would be presumed to have assented to a transaction designed 
for their benefit, unless they had refused to be concerned in it. The case in 
16 Vin. Abr. 244, A. pi. 12, is, indeed, directly in point. But the same case 
is reported under the name of Minnit v. Whinery, 3 Bro. P. C. 523 (5 Bro. 
P. C. by Tomlins, 489), where it appears, that the case turned upon very 
different considerations, and facts estabhshing an exclusive credit to the other 
partners, contracting the debt, and that there had been a dissolution of the 
partnership at the time. See Coll. on P. B. -3, c. 1, p. 261, 2d ed. In the 
case of Vice v. Fleming, 1 Y. & J. 227, 230, Mr. Chief Baron Alexander 
said : " It is clear that the defendant might, by an absolute notice, have dis- 
charged himself from all future liability, whether he ceased or continued to 
be a partner." Mr. Baron Garrow added : " All the partners of a firm are 
liable for the debts of the firm ; but this responsibility may be limited by 
express notice by one, that he will not be liable for the acts of his copartners." 
It does not seem to me, that the facts of that case required so strong a state- 
ment, or that the point was positively in judgment. The case of Willis v. 
Dyson, 1 Stark. 164, is not in point; for there were but two partners, and 
they dissented in opinion, and notice was given by one. In Lord Gal way v. 
Matthew, 1 Camp. 403, s. c. 10 East, 264, a majority of the partners did not 
c o ncurin giving the note. See Booth v. Quin, 7 Price, 193; 3 Kent, 45 ; 
Coll. on P. B. 2, c. 2, § 2, p. 129, 130, 2d ed.; Gow on P. c. 2, § 2, p. 52, 3d 
ed. and note, ibid, of American editor (Mr. Ingraham) ; Id. c. 4, § 1, p. 149. 

' Willis V. Dyson, 1 Stark. 164; {Donaldson v. Williams, 1 Cr. & M. 
345.} 

* Const V. Harris, Turn. & R. 496, 525, 527. — In this case Lord Eldon 
said : " I call that the act of all, which is the act of the majority, provide d 



CHAP. VII.] POWERS AND AUTHORITIES. 219 

§ 124. The Roman law seems to have ado])ted the 
general rule, that no act was binding upon all the part- 
ners, unless so far as it was expressly or impliedly 
agreed to by all ; and consequently the refusal or pro- 
hibition of one rendered the act a nullity, as to him- 
self. In this respect, the partner prohibiting was held 
to have a superior right against the others. In re 
com7nuni 7ieminem dominorum, jure facere quicqicam, 
invito altera^ posse. Unde manifestum est prohihendi 
jus esse ; in re enim j^ciri p)otiore'>n causmn esse prohi- 
hentis constat. Sed etsi in communi prohiberi socius 
a socio, ne quid faciat, potest, ut tamen factum opus tol- 
lat, cogi non jwtest, si, cum p)roMhere poterat, hoc prcB- 
termisit} The French law has adopted the same doc- 
trine, in the absence of all counter stipulations of the 
parties.- But if the administration of the partnership be 
confided to one or more of the partners, the others can- 
not recall that authority, or annul or prohibit its ex- 
ercise during the existence of the partnership, or the 
presumed duration of the authority.^ Such also is the 
rule of the Scottish law ; "* and of the Louisiana Code.^ 

all are consulted, and the majority are acting hona fide, meeting not for the 
purpose of negativing what, when they are met together, they may, after 
due consideration, think proper to negative. For a majority to say, We do 
not care what one partner may say, we being the majority, will do what we 
please, is, I apprehend, what this court will not allow." Again : " In all 
partnerships, whether it is expressed in the deed or not, the partners are 
bound to be true and faithful to each other. They are to act upon the joint 
opinion of all, and the discretion and judgment of any one cannot be ex- 
cluded. What weight is to be given to it is another question. The most 
prominent point on which the court acts, in appointing a receiver of a part- 
nership concern, is, the circumstances of one partner having taken upon 
himself the power to exclude another partner from as full a share in the 
management of the partnership, as he, who assumes that power, himself 
enjoys." 

' D. 10, 3, 28; Poth. Pand. 17, 2, n. 27; Domat, 1, 3, 4, art. 22. 

" Poth. de Soc. n. 87-91. « Poth. de Soc. n. 71, 90. 

* 1 Stair, Inst. tit. 16, § 4, p. 157. * q^^^^^ ^rt. 2838, 2839, 2841. 



220 PARTNERSHIP. [cHAP. VII. 

§ 125. The doctrine of the common law above stated, 
as to the right of the majority to govern in all cases, 
where the stipulations of the articles of the partner- 
ship 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 essential that all should unite ; otherwise it is not 
obligatory upon them.^ This is emphatically true in 
case of joint associations, and joint-stock companies of 
an extensive nature, in the constitution of which certain 
articles are treated as fundamental, and cannot be al- 
tered or varied without the consent of all the members ; 
for the rule, which applies to public bodies, strictly so 
called, that the majority is to govern in all cases, is 
inapplicable to private associations, where the terms 
originally prescribed for the association must and 
ought to remain in full force, until abrogated by the 
consent of all the associates.^ 

' [Thus, if written articles of partnership stipulate that there shall be no 
trade in spirituous liquors, and they be so changed by the majority as to 
allow such trade, this is a material alteration, at least when such trade is con- 
trary to law, and will justify the minority in withdrawing from the firm. 
Abbot V. Johnson, 32 N. H. 9.] 

* Livingston v. Lynch, 4 Johns. Ch. 573, 596. — In this case Mr. Chan- 
cellor Kent said: "Lord Coke, Co. Litt. 181, b. took the distinction between 
public and private associations, and admitted, that, in matters of public con- 
cern, the voice of the majority should govern, because it was for the public 
good, and the power was to be more favorably expounded than when it was 
created for private purposes. In Viner, tit. Authority, B., we have several 
cases marking the same distinction ; and it is now well settled, that in matters 
of mere private confidence, or personal trust or benefit, the majority cannot 
conclude the minority. But where the power is of a public or general nature, 
the voice of the majority will control, on grounds of public convenience; and 
this is also part of the law of coii^orations. Attorney-General v. Davy, 2 
Atk. 212; The King v. Beeston, 3 T. R. 592; Withnell v. Gartham, 6 T. R. 
388 ; Grindley v. Barker, 1 B. & P. 229 ; Green v. Miller, 6 Johns. 39 ; 5 
Co. 63, a. In Lloyd v. Loaring, 6 Ves. 773, there was a suit by three per- 
sons, on behalf of themselves and all the other members of a lodge of free- 



CHAP. VII.] POWERS AND AUTHORITIES. 221 

masons ; and Lord Eldon observed, ' that if he considered them as individuals, 
the majority had no right to bind the minority. One individual has as good 
a riglit to possess the pro2;)erty as any other, unless he can be affected by 
some agreement.' Mr. Abbott, I^aw of Shipping, Part 1, c. 3, § 2, admits 
the extreme inconvenience, under the law of England, of enjoying personal 
chattels vested in several distinct proprietors, without a common consent and 
agreement among them. But the case most applicable to the one before us, 
is that of Davies v. Hawkins, 3 M. & S. 488. A company was formed for 
brewing ale, and by deed they confided the conduct of the business to two 
persons, who were to be trustees of the company. General quarterly meet- 
ings of the company were to be held. It was resolved by the K. B., that one 
person only could not be appointed at a general quarterly meeting, in place 
of the two originally appointed under the deed, unless such alteration was 
made by the consent of all the subscribers. Lord Ellenborough said, that ' a 
change had been made in the constitution of this company, which could not 
be made without the consent of the whole body of the subscribers. It was 
such a substituted alteration in its constitution, as required the assent of 
all.'" {Natusch v. Irving, Gow on P. app. 398, 3d ed. ; Lind. on P. 511- 
514.} 



222 PARTNERSHIP. [CHAP. VIII. 



CHAPTER VIII. 

LIABILITIES AND EXEMPTIONS OF PARTNERS AS TO THIRD 

PERSONS. 

j § 126. Proof of authority to bind the firm sometimes necessary. 

127. In case of a guaranty. 

128. Firm not bound to a party who knows the want of authority. 

129. Foreign law on the subject. 

130. Illustrative cases. 

131. So a fortiori, in cases of fraud. 

132. Firm not bound by the use of its property or credit in favor of a 

partner's private creditor, 

133. This a presumptive rule only. 
133 a, Equity will prevent such use, 

134. Firm not liable when credit Is given to one partner. 

135. Roman law. 

136. Emly v. Lye, 15 East, 7, 

137. French law. 

138. Rule not ajjplicable to a dormant partner. 

139. Firm business carried on In the name of one partner. 

140. Taking a separate security. 

141. Stage-coach proprietors. 

142, 143. Negotiable paper in the name of a partner. 
■ 144. Clubs. 

145. Joint purchases, 

146. Commencement of liability, 
147-151. Illustrative cases. 

152, 153. Liability of incoming partner. 

154. A firm sometimes not bound though the creditor meant to bind it. 

155. Extinguishment of llablHty. 

156. By credit given to a partner, 

157. Appropriation of payments. 

158. Discharge of retiring partner. 

159. Liability of retiring partners for future debts. Dormant partners. 

160. Ostensible partners, 

161. What is sufficient notice of retirement, 

162. Notice of a dissolution other than by retirement, 

163. Fraudulent retirement, 

164. Joint-stock companies, 

165. Scottish law. 



CHAP. VIII.] LIABILITIES AND EXEMPTIONS. 223 

166. Liability of the partnership for torts. 
16 7. Torts several as well as joint. 
168. Release of one partner releases all. 
168 o. Notice of copartners' acts.} 

§ 126. There are certain powers and authorities, 
which from long usage and recognition are so generally 
attached to all sorts of partnerships, that they will be 
deemed to exist by presumption of law Q^resumptione 
juris et dejure), unless there is clear evidence to repel 
the presumption, or some positive contrary stipulation 
be agreed upon between the parties. Thus, for exam- 
ple, each partner may, as we have seen, buy and sell 
goods, belonging to or for the use of the partnership 
or the ordinary business thereof; ^ each partner may 
pledge the partnership property, or borrow money for 
partnership purposes, on the credit of the firm.^ These 
cases are sufficiently clear from what has been already 
suggested in a former section.^ But the same doctrine 
cannot be as universally affirmed, as to the right to 
draw, or indorse, or accept, or negotiate bills of ex- 
change, or to make, or indorse promissory notes, not 
being the securities of third persons, held by the firm, 
as a part of the funds thereof, and therefore disposable 
accordingly. For although, in the ordinary course of 
commercial partnerships, these are known and univer- 

^ Coll. on P. B. 3, c. 1, § 1, p. 263-265, 267, 2d ed. ; Hyat v. Hare, Comb. 
383; Thicknesse v. Bromilow, 2 Cr. & J. 425; ante, § 102; Livingston v. 
Roosevelt, 4 Johns. 251 ; U. S. Bank v. Binney, 5 Mason, 176 ; s. c. 5 Pet. 
529. 

2 Coll. on P. B. 3, c. 1, § l,p. 263, 267; Id. 290, 291, 2d ed. ; Rothwell 
V. Humphreys, 1 Esp. 406 ; Thicknesse v. Bromilow, 2 Cr. & J. 425 ; Bank of 
U. S. V. Binney, 5 Mason, 176; s. C. 5 Pet. 529; Fox v. Hanbury, Cowp. 
445; Raba v. Ryland, Gow, 132; Tupper v. Haythorn, Gow, 135; Reid v. 
Hollinshead, 4 B. & C. 867; Church i\ Sparrow, 5 Wend. 223; Livingston 
V. Roosevelt, 4 Johns. 251, 265 ; 2 Bell, Couim. B. 7, p. 615, 616, 5th ed. ; 
3 Kent, 43-46 ; Gow on P. c. 2, § 2, p. 36-56, 3d ed. ; Wats, on P. c. 4, p. 
195 ; U. S. Bank v. Binney, 5 Mason, 176 ; s. c. 5 Pet. 529. 

* Ante, § 102. 



224 PARTNERSHIP. [CHAP. VIII. 

sally acknowledged operations, which any partner is 
competent to transact, because they arise from the 
usages of trade, and the previous consent of all the 
partners, and from this universality in practice, they 
are now adopted as a general rule of law ; ^ yet it by 
no means follows, that the like rule prevails in all other 
sorts of partnership, or in such as are of a special and 
peculiar nature.^ The foundation of any general and 
known usage may here altogether fail, and the very 
nature, or organization, or objects of the partnership 
may show, that it is neither a proper nor a necessary 
power to be exercised by a partner.^ Thus, if a part- 
nership is organized for mining, or for farming purposes, 
the directors or active agents thereof will not, as inci- 
dent thereto, possess a power to draw or accept bills, or 
to draw or indorse notes for the company. But there 
should be some proof, that an express authority is given 
for this purpose, or that it is implied by the usages of 
the business, or the ordinary exigencies and objects 
thereof.'* 

' Coll. on P. B. 3, c. 1, § 2, p. 268-279, 2d ed. ; Thicknesse v. Bromilow, 
2 Cr. & J. 425 ; U. S. Bank v. Binney, 5 Mason, 1 76, 184 ; s. c. 5 Pet. 529 ; 
Livingston v. Roosevelt, 4 Johns. 251 ; Swan v. Steele, 7 East, 210; Gow on 
P. c. 2, § 2, p. 38-50, 3d ed.; Le Roy v. Johnson, 2 Pet. 186; Harrison v. 
Jackson, 7 T. R. 207. 

2 Dickinson v. Valpy, 10 B. & C. 128; Thicknesse v. Bromilow, 2 Cr. & J. 
425, 430. [But this rule was extended to banking partnerships, in Bank of 
Australasia v. Breillat, 6 Moore, P. C. 152, where the language of the text is 
cited with approbation.] {See § 102 a.} 

' Coll. on P. B. 3, c. 2, § 2, p. 329, 330, 2d ed.; Gow on P. c. 4, § 1, p. 
149, 150, 3d ed. 

* Coll. on P. B. 3, c. 1, § 2, p. 269, 2d ed. ; Dickinson v. Valpy, 10 B. & C. 
128; MuUett v. Huchinson, 7 B. & C. 639; Thicknesse v. Bromilow, 2 Cr. & 
J. 425 ; Greenslade v. Dower, 7 B. & C. 635. [In Ricketts v. Bennett, 4 C. 
B. 686, it was held that one of several co-adventurers in a mine has not, 
as such, any authority to pledge the credit of the general body for money 
borrowed for the concern. And the fact that he had the ffencral manage- 
ment of the mine makes no difference, in the absence of circumstances from 
which an implied authority for that jiurpose can be inferred. See also 



CHAP. Vlir.] LIABILITIES AND EXEMPTIONS. 225 

§ 127. The like observations apply with increased 
force to cases of guaranty.^ If one partner gives a 
letter of credit or guaranty in the name of the part- 
nership, it is not to be treated, as of course binding on 
the partnership ; for it is not a natural or necessary in- 
cident in all sorts of partnerships, for one partner to 
possess the power to bind his copartners by a guaranty.^ 
It must be shown to be justified, either by the usages 
of the particular trade or business, or by the known 
habits of the particular partnership, or by the express 
or implied approbation of all the partners in the given 
case.^ The same rule will apply to cases, where one 

Tredwen v. Bourne, 6 M. & W. 461 ; Hawtayne v. Bourne, 7 M. & W. 595 ; 
Hawken v. Bourne, 8 M. & W. 703.] Pothier has put several cases illustrative 
of au analogous doctrine, in cases of partnerships not commercial. Poth. de 
Soc. 102-104. Mr. Chancellor Kent has well summed up the doctrine in 
his Commentaries, 3 Kent, 46. He says : " It was formerly understood, that 
one partner might bind his copartners by a guaranty, or letter of credit, 
in the name of the firm ; and Lord Eldon, in the case of Ex parte Gardom, 
considered the point too clear for argument. But a different principle seems 
to have been adopted ; and it is now held, both in England and in this coun- 
try, that one partner is not authorized to bind the partnership by a guaranty 
of the debt of a third person, without a special authority for that j^urpose, 
or one to be implied from the previous course of dealing between the parties, 
unless the guaranty be afterwards adopted and acted upon by the firm. The 
guaranty must have reference to the regular course of business transacted 
by the partnership, and then it will be obligatory ujjon the company, and 
this is the principle on which the distinction rests. The same general rule 
applies, when one partner gives the copartnership as a mere and avowed 
surety for another, without the authority or consent of the firm ; for this 
would be pledging the partnership responsibility, in a matter entirely un- 
connected with the partnership business." 

' 2 Bell, Comm. B. 7, p. 618, 5th ed. ; 3 Kent, 46. { See previous note.} 
^ [Sweetser v. French, 2 Cush. 309 ; Andrews v. Planters' Bank, 15 Miss. 
192; Langan v. Hewett, 21 Id. 122; Tutt v. Addams, 24 Mo. 186] ; {1 Am. 
Lead. Cas. 457, 4th ed.} 

* Duncan v. Lowndes, 3 Camp. 478; Sandilands v. Marsh, 2 B. & Aid. 
673 ; Payne v. Ives, 3 Dow. & Ry. 664 ; Ex parte Nolte, 2 Glyn & J. 295, 306 ; 
Coll. on P. B. 3, c. 1, § 3, p. 279-281, 2(1 ed. ; Crawford v. Stirling, 4 Esp. 
207 ; Theobald on Prin, and Surety, 29-31 ; 2 Bell, Comm. B. 7, c. 1, p. 618, 
5th ed. ; 3 Kent, 46, 47; Sutton v. Irwine, 12 S. & R. 13; Hamill r. Purvis, 

15 



226 ' PARTNERSHIP. [cHAP. VIII. 

partner signs or indorses the name of a firm to a note, 
as surety for a third person, in which note the partner- 
ship has no interest, and where it is not in the course 
of their business.^ 

2 Penn. 177; Gow on P. c. 2, § 2, p. 37, 38, 56-58; Id. c. 4, § 1, p. 148, 
149, 3d ed. ; Dob v. Halsey, 16 Johns. 34; [Rollins v. Stevens, 31 Me. 254] ; 
Foot V. Sabin, 19 Johns. 154; N. Y. F. Ins. Co. v. Bennett, 5 Conn. 574 ; 
{Alliance Bank v. Tucker, 15 Weekly Rep. 992.} There is some apparent 
discrepancy in the authorities. But the text contains what seems to me the 
just results belonging to the doctrine ; and it is accordingly adopted by Mr. 
Chancellor Kent in his Commentaries. 3 Kent, 46, 47, In Hope v. Cust, 
cited by Mr. Justice Lawrence in Shirreff v. Wilks, 1 East, 48, 53, Lord 
Mansfield is reported to have said : " There is no doubt but that the act of 
every single partner in a transaction relating to the partnership, binds all 
others. If one gives a letter of credit or guaranty in the name of all the 
partners, it binds all." Lord Mansfield was here addressing himself to the 
case of bankers, when it might perhaps be within the ordinary scope of their 
business. On the other hand, Lord EUenborough, in Duncan v. Lowndes, 

3 Camp. 478, in the case of a commercial partnership, said: "As it is not 
usual for merchants in the common course of business to give collateral 
engagements of this sort, I think you must jirove that Lowndes had authority 
from Bateson to sign the partnership firm to the guaranty in question. It 
is not incidental to the general power of a partner to bind his copartners by 
such an instrument. The case was not, however, a guaranty in the partner- 
ship business, but a guaranty of the acceptances of a third person, not 
belonging to the partnershijj funds. In Sandilands r. Marsh, 2 B. & Aid. 673, 
a guaranty of an annuity by one partner, the partnership not dealing in 
annuities, but the dealing in this annuity being known to the other partner, 
and not disapproved of by him, and he having no knowledge of the guaranty, 
was held to bind the partnership, upon the ground that the transaction as to 
the annuity, being adopted as a part of the business binding on the partner- 
ship, the whole transaction bound the partnership, although the guaranty was 
not known. This must have been sustained upon the notion, that dealers in 
annuities, in the ordinary course of things, were accustomed to guaranty 
them ; for the mere adoption of an act of one partner, where there was a 
concealment of material circumstances, might not bind him, if the business 
were not within the scope of their ordinary business." {The decision in Ex 
parte Gardom, 15 Ves. 286, and Lord Mansfield's dictum, must be considered 
as overruled, and the law in England settled in accordance with the text by 
Hasleham v. Young, 5 Q. B. 833, and Brettel v. Williams, 4 Exch. 623.} 

' Laverty v. Burr, 1 Wend. 529, 531 ; Bank of Rochester v. Bowen, 7 
Wend. 158 ; Wilson r. Williams, 14 Wend. 146 ; Catskill Bank v. Stall, 15 
Wend. 3G4 ; [Rollins v. Stevens, 31 Me. 454] ; {McQuewans v. Hamlin, 
35 Penn. St. 517 ; Selden v. Bank of Commerce, 3 Minn. 166, 1 Am. Lead Cas. 



CHAP. YIII.] LIABILITIES AND EXEMPTIONS. 227 

§ 128. In the next place, every contract in the 
name of the firm, in order to bind the partnership, 
must not only be within the scope of the business of 



455, 4th ed. See Butterfield v. Hemsley, 12 Gray, 226. } The American cases 
are very generally agreed on this point. In Laverty v. Burr, 1 Wend. 529, 
531, Mr. Justice Sutherland, in delivering the opinion of the court, said: 
" Hosmer, the agent of the plaintiffs, took t^ie note in question for a debt 
due from Allen, the maker, to them. He refused to take Allen's note with- 
out seciu'ity. The security given was the indorsement of Burr and Baldwin, 
the defendants, and of Smith and Jenkins, the second indorsers. The 
plaintiffs, therefore, knew, when they took the note, that the indorsement 
of the defendant was made by one of the partners, in the name of the firm, 
as security for Allen, and not for a debt due from the firm. The partner, 
who did not sign the note, is not bound by it under such circumstances, 
unless he was previously consulted, and assented to the transaction ; and 
the burden of proving, that the partner, who did not sign the note, con- 
sented to be bound, is thrown on the creditor. Dob v. Halsey, 16 Johns. 
34, and Foot v. Sabin, 19 Johns. 154. In England, the assent of all the 
partners is presumed, and the burden of avoiding the security is thrown on 
the firm, and they are required to prove, that the note was signed by one 
of the partners on his individual account, without the knowledge and 
against the consent of the others, and that the creditor knew that fact, when 
he took the paper of the firm. Here the 07iits j^robaiuli is thrown on the 
creditor. The law upon this subject is very fully considered and clearly 
established in the cases referred to, and also in Livingston v. Hastie, 2 
Caines, 246, Lansing v. Gaine, 2 Johns. 300, and Livingston v. Roosevelt, 4 
Johns. 251. The only distinction between this case and that of Foot v. 
Sabin, 19 Johns. 154, is this. In that case the note was signed by one 
of the partners in the name of the firm as sureties ; here it was indorsed ; 
and it was urged upon the argument of this cause, that in eveiy general 
partnership, each member necessarily possesses the power of signing or 
indorsing negotiable commercial paper in the customary way of business, 
though the power of pledging the firm as sureties for third persons may not 
exist. The form of the transaction cannot be material, except by way 
of evidence. AVhen paper is signed by one partner in the name of the 
firm, as sureties for a third, it carries on the face of it evidence that it was 
not given for a partnership debt, and proof of that fact becomes unneces- 
sary. But when it is signed or indorsed in the ordinary manner, such proof 
must be given. But when the fact is established, that it was not given for a 
partnership debt, and that the person to whom it was passed knew it, 
no matter what the form of the instrument is, it does not bind the partners, 
who did not sign or assent to it. In this case, the assent of Baldwin is not 
shown, and he is therefore entitled to judgment." [The authority, however, 
may be proved by circumstances. Butler v. Stocking, 4 Seld. 4U8.] 



228 PARTNERSHIP. [cHAP. VIII. 

the partnership, but it must be made with a i^arty who 
has no knowledge, or notice, that the partner is acting 
in violation of his obligations and duties to the firm, or 
for purposes disapproved of by the firm, or in fraud of 
the firm.^ For every such contract, made with such 
knowledge or notice, will be void as to the firm, how- 
ever binding it may be upon the individual partner 
making it.- This is a natural result of the principles 
of justice and equity applied to every other contract, 
as well as to that of partnership contract. It also 
follows from the known limitations of the law of 
agency : for no agent can bind his principal in any 
transaction, in which he knowingly exceeds his author- 
ity, or knowingly colludes with another person, having 
notice, in any violation of the rights of his principal.^ 
§ 129. The same principles are incorporated into the 
foreign law, of the modern nations of Europe, in 
respect to partnership. Thus, Pothier says, that in 
cases of partnership, the signature of the firm by one 
partner will not oblige the partnership, if it appears 
from the very nature of the contract, that it does not 
concern the business of the partnership.'* So, Mr. Bell 
asserts the like principles to belong to the Scottish law. 
When (says he) the party has notice of a stipulated 
restraint on the power of the partners ; or when, by the 
circumstances, or in its own nature, the transaction is 
such as to carry evidence with it of a misapplication of 

> fLind. on P. 260-269; 1 Am. Lead. Cas. 442, 4th ed.} 

- See Stainer v. Tysen, 3 Hill, (N. Y.) 279. 

3 Story on Ag. § 125, 165; 3 Kent, 44-46; Gow on P. c. 2, § 2, p. 42; 
Id. p. 4D-56, 3d ed.; Coll. on P. B. 3, c. 1, p. 261, 2d ed. [Thus, if a per- 
son seeking to enforce a contract for goods sold a firm upon the negotiation of 
one partner, knew that such partner was not authorized by the articles of co- 
partnership to purchase goods for the firm, the other partners are not liable 
therefor. Hastings r. Hopkinson, 28 Vt. 108.] 

■» Poth. on Oblig. n. 83 ; Poth. de Soc. n. 101. 



CHAP. Till.] LIABILITIES AND EXEMPTIONS. 229 

the firm to what is an mdividual concern only, and 
not a matter in which the company is interested, 
the company and the other partners will not be 
bound. ^ 

§ 130. This doctrine may be illustrated in various 
ways ; but the same principle pervades the whole of the 
cases. Thus, if a person should trust a firm, with a full 
knowledge that one partner had withdrawn from it, or 
that the firm was dissolved, or that the other partners 
disavowed or repudiated any such transaction ; in each 
of these cases he would have no remedy against any of 
the partners, except the one with whom he had entered 
into the contract.^ So, also, if the creditor should have 

1 2 Bell, Comm. B. 7, p. 616, 5th ed. 

2 Minnit v. AVhinery, or Whitney, 5 Bro. P. C. by Tomlins, 489 ; s. c. 16 
Vin. Ab. 244 ; s. c. 2 Bro. P. C. 323 ; Le Roy v. Johnson, 2 Pet. 186 ; Gow 
on P. c. 2, § 2, p. 48, 49, 3d ed. ; Coll. on P. B. 3, c. 1, p. 262, 2d ed.; Willis 
V. Dyson, 1 Stark. 164; Alderson v. Pope, 1 Camp. 404, note. {See Lind. on 
P. 46}; Gow on P. c. 2, § 2, p. 55-57, 2ded.; Id. c. 4, § 1, p. 148-150.— 
Mr. Gow (on P. c. 2, p. 48, 49, 3d ed.) has stated the whole doctrine very 
clearly and distinctly. " On the subject " (says he) " of negotiable instru- 
ments, it remains to be observed, that even in transactions, in which all the 
partners are interested, the authority of one partner to make, draw, accept, 
or indorse promissory notes or bills of exchange in the joint name is only im- 
plied, and may, therefore be rebutted by express previous notice, to the party 
taking a joint security from one partner, of his want of authority, or that the 
others will not be liable upon it. Such a power is not indispensably essential 
to the existence of a partnership ; the partners may stipulate between them- 
selves that it shall not be exercised ; and if a third person, apprised of such 
stipulation, will take a joint security, he cannot sue the firm upon it, although 
it were truly represented to him, by the partner giving the security, that the 
money to be advanced on It was required for the purpose of, and was in fact 
applied in liquidating the partnership debts ; much less can he hold the firm 
responsible on a security so obtained, if he take it in defiance of a positive 
notice, previously given by one of the members, that he will not be answera- 
ble for any bill or note signed and negotiated by the others. And the power 
of one partner to bind the firm by a negotiable security, where it Is capable 
of being exercised. Is only co-existent with the duration of the partnership it- 
self; for, immediately on its dissolution, the power ceases." But although a 
partner has withdrawn from a partnership, and it is known to the other party, 
yet if his name is still to continue in the firm for a limited period, that will 



230 PARTNERSHIP. [CHAP. VIII. 

notice of any private arrangement between the partners 
by which the power of one partner to bind the fu-m, or 
his liabiUty on the partnership contracts is quahfied, 
restricted, or defeated ; the creditor would be bound by 
such arrangement, and could not enforce any right in 
contravention thereof.^ The cases have gone yet 

create a liability on his part as a partner for that period, since he thereby holds 
himself out to the world, as responsible for their engagements for that period, not- 
withstanding the dissolution of the partnership. Brown v. Leonard, 2 Chitty, 
120. 

1 Coll. on P. B. 3, c. 1, p. 261 ; Id. p. 329, 2d ed. ; Minnit v. VVhinery, 
583 ; Bignold v. Waterhouse, 1 M. & S. 255 ; Gow on P. c. 2, § 2, p. 54-56, 
2 Bro. P. C. 323 ; s. c. 5 Bro. P. C. by Tomlins, 489 ; Ex parte Harris, 1 Madd. 
3d ed. ; Id. c. 4, § 1, p. 149-151. — In Lord Galway v. Mathew, 10 East, 264> 
Lord EUenborough said : " The general authority of one partner to draw 
bills or promissory notes to charge another is only an implied authority ; and 
that implication was rebutted in this instance by the notice given by Smithson, 
who is now sought to be charged, which reached the plaintiff, warning him 
that Mathew had no such authority. It is not essential to a partnership, that 
one partner should have power to draw bills and notes in the partnership firm 
to charge the others ; they may stipulate between themselves, that it shall not 
be done ; and if a third person, having notice of this, will take such a securi- 
ty from one of the partners, he shall not sue the others upon it, in breach of 
such stipulation, nor in defiance of a notice previously given to him by one of 
them, that he will not be liable for any bill or note signed by the others." Mr. 
Gow, speaking on this subject, says : " So if the person, with whom the single 
partner deals, is at the time conscious of the misconduct of that partner in 
pledging the joint name to a separate transaction, he cannot enforce against 
the firm any claim that may arise to him out of such dealings. Neither can 
he call upon the firm to fulfil a contract which has been made by one partner, 
if he be privy to a private agreement between the partners themselves, the effect 
of which is to throw the responsibility upon the single partner alone. There- 
fore, where four persons are partners in a coach concern, but one by agree- 
ment provides the coaches at a certain rate per mile, he alone is responsible 
for repairs done to the coach by a person cognizant of this arrangement, al- 
though the names of all four appear on the vehicle. So, if it be notorious, 
that the proprietors have separate departments and interests, they must be 
sued separately by the tradesmen, who may supply each with goods." 

I Mr. Lindley (Lind. on P. 266) says : " Granting that a person, knowing 
the limits of a partner's authority as set by his copartners, cannot hold them 
responsible for an act done by him in excess of his authority, it still remains to 
determine the elFect of notice, by non-partners, of stipulations entered into 
between the partnei-s themselves. 

"In Galway v. Mathew, 10 East, 264, Lord EUenborough is reported to 



CHAP. VIII.] LIABILITIES AND EXEMPTIONS. 231 

further ; and it has been held, that where a note has 
been made or indorsed by a partner, in violation of his 

have said, ' It is not essential to a partnership that one partner sliould have 
power to draw bills and notes in the partnership firm to charge the others ; 
they may stipulate hettveen themselves that it shall not he done ; and if a third 
person, having notice of this, tcill take such a security from one of the partners, he 
shall not sue the others upon it in breach of such stipulation.' 

" Again, in Alderson v. Pope, 1 Camp. 404, note, the same judge held ' that 
where there was a stipulation between A., B., and C, who appeared to the 
world as copartners, that C. should not participate in profit and loss, and should 
not be liable as a partner, C. was not liable as such, to those who had notice of 
this stipulation.' These dicta appear to authorize the statement that if part- 
ners stipulate amongst themselves that certain things shall not be done, no 
person who is aware of this stipulation is entitled to hold the firm liable for 
what may be done by one of the members, contrary to such stipulation. But 
it is submitted that this proposition is too wide. A stranger dealing with a 
partner is entitled to hold the firm liable for whatever that partner may do on 
its behalf within certain limits. To deprive the stranger of this right, he ought 
to have distinct notice that the firm will not be answerable for the acts of one 
member, even within these limits. Now notice of an agreement between the 
members that one of them shall not do certain things, is by no means neces- 
sarily equivalent to notice that the firm will not be answerable for them if he 
does. For there is nothing inconsistent in an agreement between the mem- 
bers of a firm that certain things shall not be done by one of them, and a 
readiness on the part of all the members to be responsible to strangers for the 
acts of each other, as if no such agreement had been entered into. It is im- 
material to a stranger what stipulations partners may make amongst them- 
selves, so long as they do not seek to restrict their responsibility as to him : 
and it is only when knowledge of an agreement between partners necessarily in- 
volves knowledge that they decline to be responsible for the acts of each other, 
within the ordinary limits, that a stranger's rights against the firm can be pre- 
judiced by what he may know of the private stipulations between its members. 

"In Galway i'. Matthew, 1 Camp. 403, and 10 East, 264, the 2:)laintiff's 
knowledge of want of authority was derived, not from notice of any agreement 
between the partners, but from an advertisement published by one of them, 
warning all persons that he would no longer be liable for drafts drawn by the 
others on the partnership account. (Distinct notice to the same effect existed 
in Minnit v. Whitney, 16 Vin. Ab. 244, s. C 5 Bro. P. C. 489; Willis v. 
Dyson, 1 Stark. 164.) The passage, therefore. In the judgment, and extracted 
above, was by no means necessary for the decision of the case. With re- 
spect to Alderson v. Pope, 1 Camp. 404, note, if all that was meant was that a 
person knowing that C. did not authorize A. or B. to act on his behalf, could not 
hold C. liable for their acts, the case presents no dllHculty ; but if anything 
more than tlils was meant, the authorltj' of the decision becomes at least 
doubtful, it having been held in another case that a person who holds himself 
out as a partner with others with whom he has no concern, is liable for their 



232 PARTNERSHIP. [cHAP. YIII. 

duty and authority, if the holder, who receives it, has 
been guilty of gross negligence in receiving it, it will 
not be binding in his hands upon the partnership.^ 

§ 131. The same doctrine applies, a fortiori to cases 
of fraud ; for, although in cases of partnership, a fraud 
committed by one partner in the course of the part- 
nership business and transactions, without the knowl- 
edge of the other partners, will bind the firm, and 
create a liability co-extensive therewith ; ^ yet it would 
be absurd to apply this principle to any cases, w^here 
the fraud is known to, or participated in, or connived at 
by, the third person, whose interest it affected ; for that 
would be to allow him to take advantage of his own 
wrong, and would affect the innocent with the grossest 
injustice. Thus, for example, if one partner should 

acts, eveu to persons having notice of the true state of aflfiiirs ; and the de- 
cision was based upon the very ground that a person, who holds himself out as 
a partner with others, expresses his readiness to incur the responsibilities of a 
partner as regards strangers, whatever he may intend shall be the case be- 
tween him and those with whom he associates his name. Brown v. Leonard, 
2 Chitty, 120. Against the general proposition in question it may be further 
urged that if partners agree not to be liable beyond a certain amount, and a 
stranger has notice of that agreement, the notice avails nothing against him. 
Such an agreement, coupled wjth notice of it on the part of a person dealing 
with the firm, is by no means equivalent to a contract between him and it, 
that he shall not hold the members responsible beyond the amount which they 
may have agreed between themselves to contribute respectively. See Green- 
wood's Case, 2 De G. M. & G. 459, 476. The writer is not acquainted with any 
case in which it has been decided that persons who are aware of the terms 
upon which partners have agreed together to carry on business are deemed to 
contract with them upon the basis of the agreement come to amongst them- 
selves. In all cases of this description, the real question to be determined 
seems to be whether there was distinct notice that the firm would not be an- 
swerable to strangers for acts which, without such notice, would clearly impose 
liability upon it ; and in case of any doubt upon this point, the firm ought 
clearly to be liable, the onus being on it to show sufficient reason why liability 
should not attach to it."} 

' Lloyd V. Freshfield, 2 C. & P. 325 ; s. c. 9 Dow. & Ky. 19 ; N. Y. F. 
Ins. Co. U.Bennett, 5 Conn. 5 74; {Chapman v. Devereux, 32 Vt. 616.} 

2 Ante, § 108 ; Coll. on P. B. 3, c. 1, § 5, p. 293-304, 2d ed. ; Gow on P. c. 2, 
§ 2, p. 55, 3d ed. ; Id. c. 4, § 1, p. 146-148. 



CHAP. VIII.] LIABILITIES AND EXEMPTIONS. 233 

make a negotiable security in the name of the partner- 
ship, and dispose of it to a third person, who knew that 
* the proceeds were to be applied in fraud of the firm, or 
for purposes not within the scope of their business, or 
for illegal purposes, it would not be binding on the firm.^ 
A fortiori, if the whole transaction should be a medi- 
tated fraud to accomplish a mere gaming purpose, or 
some other illegal purpose, between the very parties, the 
same rule would apply.- 

§ 132. Similar principles will apply, although not 
always to the same extent, or with the same certainty, 
where one partner misapplies the funds, or securities, or 
other effects of the partnership in discharge or payment 
of his own private debts, claims, or contracts. In such 
cases the creditor, dealing with the partner, and know- 
ing the circumstances, will be deemed to act mala fide, 
and in fraud of the partnership, and the transaction, 
by which the funds, securities, and other effects of the 
partnership have been so obtained, will be treated as 
a nullity.^ The same rule will ordinarily apply to the 
case of a note, or indorsement, or acceptance, given by 
one partner in the name of the firm for his own separate 
debt or contract ; for it is a clear misapplication of the 
partnership credit.'* So, a release of a paitnership debt 

^ {See Connecticut River Banlc v. French, 6 All. 313 ; Warren v. French, 
6 All. 31 7.} 

- Coll. on P. B. 5, c. 1, § 5, p. 293-303, •2d ed. ; Gow on P. c. 2, § 2, p. 55, 56, 
3d ed. ; Id. c. 4, § 1, p. 147-151 ; Sandilands v. Marsh, 2 B. & Aid. 673. 

^ Gow on P. c. 2, § 2, p. 42-48, od ed. ; 3 Kent, 42, 43 ; Ex parte Agace, 
2 Cox, 312 ; Coll. on P. B. 3, c. 2, § 3, p. 331-347, 2d ed. ; Hope v. Cast, 
cited 1 East, 53 ; Arden v. Sharpe, 2 Esp. 524 ; Shirreff v. Wilks, 1 East, 
48; [Kemeys v. Richards, 11 Barb. 312] ; Green v. Deakin, 2 Stark. 347; 
Ex parte Goulding, 2 Glyn & J. 118; Snaith r. Burridge, 4 Taunt. G84 ; 
Rogers V. Batchelor, 12 Pet. 221 ; [7ix jmiie Bushell, 3 Mont. D. & De G. 
615; Burwell v. Springfield, 15 Ala. 273.] 

* Gow on P. c. 2, § 2, p. 44-48, 3d ed. ; Coll. on P. B. 3, c. 2, § 3, p. 
331-347, 2d ed. ; Wats, on P. c. 4, p. 196, 197, 2d ed. ; Wliitaker c. 
Brown, 11 Wend. 75; Gansevoort i?. Williams, 14 Wend. 133; Wilson v. 



234 PARTNERSHIP. [CHAP. VIII. 

by one partner (which ordinarily will extinguish the 
partnership debt), will be held inoperative and void, as 

Williams, 14: Wend. 146 ; Dob v. Halsey, 16 Johns. 34 ; [Lang v. Waring, 
17 Ala. 145] ; {Ex parte Thorpe, 3 Mont. & Ayr. 716, 1 Am. Lead. Cas. 
454, 4th ed. ; Fall River Union Bank v. Sturtevant, 12 Cush. 372 ; Clay 
V. Cottrell, 18 Penn. St. 408 ; Venable v. Levick, 2 Head, 351.} In Arden 
V. Sharpe, 2 Esp. 524, 525, Lord Kenyon said: "The bill is indorsed by 
one partner in the name of the firm. One partner certainly may indorse a 
bill in the partnership name ; and if it goes into the world, and gets into the 
hand of a bona fide holder, who takes it on the credit of the partnership 
name, and is ignorant of the circumstances, though in fact the bill was first 
discounted for that one partner's own use, in such case the partnership 
is liable. But the case is different, where the party, who brings the action, 
was himself the person who took the bill with the indorsement by one part- 
ner only, and was informed that the transaction was to be concealed from 
the other. He cannot sue the partnership. The transaction indicates that 
the money was for that partner's own use, and not raised on the partnership 
account, therefore he shall not be allowed to resort to the security of the 
partnership, to whom in the original transaction he neither looked nor 
trusted." In Livingston v. Roosevelt, 4 Johns. 251, 265, Mr. Justice Van 
Ness said: "The distinction between general and special partnerships 
is probably coeval with their existence. A general rule applicable to both 
is, that in transactions relating to the joint concern, one of several partners 
may bind the rest. He may sign notes, indorse or accept bills for the com- 
mon benefit, &c., without applying to the rest in every particular case. But 
this authority of a single partner has its limitations. Formerly, as appears 
by the case of Pinkney v. Hall, 1 Salk. 126, and s. c. 1 Ld. Raym. 175, it 
was probaljly less extensive than at this day. One partner of the concern 
has no authority to pledge the pai'tnership goods for his own debt ; nor can 
he bind the firm to any engagements, known at the time to be unconnected 
with, and Ibreign to, the partnership. This has not only been so settled by 
this court, but now is, and always has been, the established law in England. 
Not an adjudged case, nor, I believe, a single dictum can be found the 
other way. This will appear from most of the cases, which I shall presently 
have occasion to mention for another purpose. In special partnerships, 
however, this power of the individuals composing them is restricted to still 
narrower limits, and can only be legally exercised within the compass of that 
particular business to which the partnership relates. It is as circumscribed 
as the partnership itself. It is, therefore, analogous to that which is con- 
ferred on an agent, appointed for a special purpose, Avho, if he exceed his 
authority, cannot bind his principal. Fenn v. Harrison, 3 T. R. 757. 
This analogy is complete, in all cases, where third persons have dealings 
with a special partner, with notice that he is such. And, accordingly, it has 
been i-epeatedly ruled, that, whenever such a partner pledges the partnership 
funds, or credit, in a transaction, which is known to be unconnected with, 



CHAP, yill.] LIABILITIES AND EXEMPTIONS. ' 235 

to the firm, if it was taken in discharge of the separate 
debt of the partner releasing it by his creditor knowing 
all the circumstances.^ 

^ 133. But althous:!! this is the general doctrine in 
the absence of all controlling circumstances ; yet the 
presumption of any fraud or misapplication may be 
rebutted by the circumstances of the particular case. 
Thus it may be shown, that the other partners have 
directly or by fair implication authorized or confirmed 
the application of the partnership funds, securities, 
effects, or credits to the very purpose,^ or that the part- 
ner had acquired, with the consent of his partners, an 
exclusive interest therein, or that, from other circum- 
stances, the transaction was actually bona fide, and un- 
exceptionable, although it went to the discharge of the 
private debt by one partner only.^ For, it has been 

and not flxirly and reasonably within, the compass of the partnership, it is, 
as to the other partners, fraudulent and void. They, however, to entitle 
themselves to the protection of this rule of law, must not do, or consent to, 
or suifer any thing to be done, which may hold them out to the world as 
general partners ; and it would always be prudent and proper (though I will 
not say it is indispensably necessary) to give public notice to the community, 
that the partnership is special, and of the particular species of traffic or 
business to which it is confined; Willet v. Chambers, Cowp. 814; De Ber- 
kom V. Smith, 1 Esp. 29 ; Arden v. Sharpe, 5 Esp. 524 ; Shirrefi" v. Wilks, 
1 East, 48. In the ease, Ex ijarte Bonbonus, 8 Ves. o40,. Lord Eldon ex- 
presses himself thus : ' 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 particular 
transaction, yet there was some authority beyond the mere circumstance of 
partnership, to enter into that contract, so as to bind the partnership ; and 
then it depends upon the degree of evidence.' " [See also Ex parte 
Bushell, 3 Mont. D. & De G. 615.] 

^ Gram v. Cadwell, 5 Cowen, 489 ; Evernghim v. Ensworth, 7 Wend. 
326; Farrar v. Hutchinson, 9 Ad. & E. 641;. {1 Am. Lead. Cas. 453, 4th 
ed. ; Williams r. Bramhall, 13 Gray, 462. But see Halls v. Coe, 4 McCord, 
136.} 

2 [Wheeler v. Rice, 8 Gush. 205] ; {Darling t'. March, 22 Me. 184.} 
^ Gow on P. c. 2, § 2, p. 44-48, 3d ed. ; Id. c. 4, § 1, p. 149-151 ; 3 
Kent, 42-44 ; Coll. on l\ B. 3, c. 1, § 4, p. 287-289 ; Id. p. 313-331 ; Id. 



236 • PARTNERSHIP. [cHAP. VIII. 

very justly remarked, that the application by a single 
partner of a joint security, in discharge of his individ- 
ual debt, by no means necessarily establishes, that it is 
a fraud upon the firm ; for it may not only have been 
expressly authorized by the firm, but it may frequently 
result from prudential considerations and arrangements, 
referable to their own business and interests.^ The 

c. 2, § 3, p. 331-338, 2d ed. ; Ex jyarf eAga.ce, 2 Cox, 312 ; Ripley v. Taylor, 
13 East, 175, 178, 182 ; AVintle v. Crowtlier, 1 Cr. & J. 316 ; Bairdu. Coch- 
ran, 4 S. & R. 897 ; {1 Am. Lead. Cas. 454, 4th ed. } 

1 See Gow on P. c. 4, § 1, p. 149, 3d ed. ; Coll. on P. B. 3, c. 2, § 3, p. 
331-347, 2d ed. ; Ex imrte Bonbonus, 8 Ves. 540 ; Frankland v. McGusty, 
1 Knapp, 274; Ridlej' u. Taylor, 13 East, 175, 178, 182; Wats, on P. c. 4, 
p. 202, 2d ed. ; ShirretF v. Wilks, 1 East, 42 ; 2 Bell, Coram. B. 7, p. 616,' 
617, 5th ed. ; {Carter v. Beaman, 6 Jones, Law, 44.} — In Ex paiie Bon- 
bonus, 8 Ves. 540, 543, 544, Lord Eldon said : " This petition is presented 
upon a principle, which it is very difficult to maintain ; that if a partner for 
his own accommodation pledges the partnership, as the money comes to the 
account of the single partner only, the partnership is not bound. I cannot 
accede to that. I agree, if it is manifest to the persons advancing money, 
that it is upon the separate account, and so, that it is against good faith, 
that he should pledge the partnership, then they should show that he had 
authority to bind the partnership. But if it is in the ordinary course of 
commercial transactions, as upon discount, it would be monstrous to hold, 
that a man borrowing money upon a bill of exchange pledging the partner- 
ship, without any knowledge in the bankers that it is a separate transaction, 
merely because that money is all carried into the books of tlie individual, 
therefore the partnership should not be bound. No case has gone that 
length. It was iloubted, whether Hope v. Cast Avas not carried too far, yet 
that does not reach this transaction ; nor Shirreff v. Wilks ; as to which I 
agree with Lord Kenyon, that, as partners, whether they expressly provide 
against it in their articles (as they generally do, though unnecessarily), or 
not, do not act with good faith, when pledging the partnership property for 
the debt of the individual, so it is a fraud in the person taking that pledge 
for his separate debt. The question of fact, whether this was flxir matter 
of discount, or, being an antecedent, separate debt of Rogers, the discount 
was obtained merely for the purpose of paying that debt by the application 
of the partnersliip funds, which question is brought forward by the affidavits, 
though not by the petition, must lead to further examination. If the partners 
are privy, and silent, peruiitting him to go on dealing in this way, without 
giving notice, the cpiestion will be, whether subsequent approbation is not 
for this purpose equivalent to previous consent. Purnell, therefore, must 
explain himself upon this ; for if he admits all these circumstances to have 
been in his knowledge, it will be very difficult to say he is entitled to the 



CHAP. VIII.] LIABILITIES AND EXEMPTIONS. 237 

mere fact, that a note, or security, or fund of the firm 
has been taken in discharge or payment of the separate 
debt of one partner, is not alone decisive of collusion, or 
fraud, or misapplication thereof. Neither is the fact, 

benefit of that principle, Avhich is established for the safety of partners. 
That explanation, if material in 1793, is much more so now; when one of 
the partners is dead ; another gone abroad ; the managing clerk dead. 
Under these circumstances, if the examination as to the propriety of tlie 
proof made in 1793, which I consider a sort of judgment for the debt, can- 
not be gone into but under most unfavorable circumstances to those who 
made it, I cannot throw that difficulty upon those who come forward then ; 
and permit the inattention of the others, who might have come at any time 
since, to be prejudicial to third persons." Again he added : "In Fordyce's 
Case, Lord Thurlow and the Judges had a great deal of conversation ujion 
the law ; and they doubted, ujjon the danger of placing every man, with 
whom the paper of a partnership is pledged, at the mercy of one of the 
partners with reference to the account he may afterwards give of the trans- 
action. There is no doubt, now, the law has taken this course ; that if, 
under the circumstances, the party taking the paper can be considered as 
being advertised in the nature of the transaction, that it was not intended 
to be a partnership proceeding, as if it was for an antecedent debt, 2)rima 
facie, it will not bind them ; but it will, if you can show previous positive 
authority. In many cases of partnership and different private concerns, it 
is frequently necessary, for the salvation of the partnership, that the private 
demand of one partner should be satisfied at the moment ; for the ruin of 
one partner would sjiread to the others, Avho would rather let him liberate 
himself by dealing with the firm. The nature of the subsequent transactions, 
therefore, must be looked to, as well as that at the time. It is impossible 
now to forget, whatever I might have thought of it in 1793, that the person, 
upon whose evidence this joint demand could be cut down, is Purnell, the 
bankrupt ; who could not be a witness at law ; whose duty, also, it Avas to 
protect the partnership against this proof; and who has permitted it to 
stand all this time ; and who, upon all the circumstances appearing in these 
affidavits, if he should deny notice, could not be believed by a jury." See 
also Hood V. Aston, 1 Russ. 412, 415. [So, the use of a partnership name 
by one partner for his own private benefit, may be ratified by the other part- 
ner ; and no independent consideration is necessary to support a subsequent 
promise by the other partner to pay such partnership obligation. Com- 
mercial Bank v. Warren, 15 N. Y. 577.] {But in Taylor v. Hillyer, 3 Blackf. 
433, it was held that such subsequent promise by the other, if oral, was 
within the Statute of Frauds, and did not bind him, qiicere tamen. And a 
note given in the firm name with the consent of all the partners, for the 
debt of one partner, may be renewed in the firm name by that partner, and 
it will not be necessary for the holder of the note to show that the other 
members authorized the renewal. Tilford r. Ramsey, 37 Mo. 563.} 



238 PARTNERSHIP. [cHAP. VIII. 

that the amount thereof has been passed to the separate 
private credit on account of one partner ; nor that a 
note or security of the firm has been in part discounted, 
or applied to pay a separate debt of one partner ; for 
all these circumstances may be consistent Avith entire 
good faith, and without gross negligence on the part of 
the creditor. There must, therefore, be some other 
ingredients in the case, importing some knowledge or 
suspicion of mala Jides, or some reasonable grounds, 
which should put the creditor upon further inquiry.^ 
It may, however, be taken as the general rule, that 
where a note, or security, or fund of the firm has been 
taken in discharge of a separate debt of one partner, 
the burden of proof is on the holder or creditor to show 
circumstances, sufiicient to repel every presumption of 
fraud, or collusion, or misconduct, or negligence, on his 
own part, unless indeed the ckcumstances, already in 
proof on the other side, repel such presumption.^ And 

1 See Coll. on P. B. 3, e. 2, § 3, p. 331-347, 2d ed. ; Ridley v. Taylor, 
13 East, 175 ; Ex parte Bonbonus, 8 Ves. 540-54:5 ; Hood v. Aston, IRuss. 
412, 415. 

* Frankland v. McGusty, 1 Knapp, 274, 301, 305, 306 ; Ex parte Bon- 
bonus, 8 Ves. 540 ; CoU. on P. B. 3, c. 2, § 3, p. 342, 343 ; Lloyd v. Fresh- 
field, 9 Dow. & Ry. 19 ; s. c. 2 C. & P. 325 ; Foot v. Sabin, 19 Johns. 154, 157, 
158; Dob v. Halsey, 16 Johns. 34, 38; Gansevoort v. Williams, 14 "Wend. 
133 ; {1 Am. Lead. Cas. 454, 4th ed. ; Robinson v. Aldridge, 34 !Miss. 352 ; 
King V. Faber, 22 Penn. St. 21. } — Li Frankland v. MeGusty, 1 Knapp, 274, 
301. Sir John Leach (Master of the Rolls), in delivering the opinion of the 
coui-t, said : " I take it to be clear, from all the cases upon the subject, that it 
lies upon a separate creditor, who takes a partnership security for the payment 
of his separate debt, if it be taken simpliciter, and there is nothing more in 
the case, to prove that it was given with the consent of the other pai'tners. 
But there may be other circumstances attending the transaction, which may 
afford the separate creditor a reasonable ground of belief that the security, 
so given in the partnership name, is given with the consent of the other part- 
ners ; and those circumstances occurred in the case which was cited, and 
which seemed to be inconsistent with the other authorities. I refer now to 
the case of Ridley v. Taylor. In that case the bill was dated eighteen days 
before its delivery by tlie partner to his separate creditor, and it was not 
known by the creditor that it was drawn and indorsed by the debtor alone ; 



CHAP. VIII.] LIABILITIES AND EXEMPTIONS. 239 

if the securities or funds of the partnership are received 
in payment of the separate debt of one partner by 

and the bill was to a greater amount than tlie separate debt. The court 
therefore were of opinion, that there was reasonable ground for the separate 
creditor believing it not to have been given to him in fraud of the partner- 
ship, and that the general presumption, that a partnership security, when 
applied in payment of a separate debt, is in fraud of the partnership, was 
repelled by the special circumstances which belonged to that particular 
occasion. Upon a consideration, therefore, of all the authorities, I am of 
opinion, that the law is, that taken simpliciter the separate creditor must 
show the knowledge of the partnership ; but if there are circumstances to 
show a reasonable belief, that it was given with the consent of the part- 
nership, it lies upon the partners to prove the frfeud. I think that will 
reconcile all the cases." And again (Id. p. 305, 306): "The counsel 
seemed to be perfectly satisfied with a reference to one of the members 
of the court to examine what the law was in that case, it having been ad- 
mitted here, that there was no direct evidence, whether these bills had 
been given with the assent of the pai-tners, or whether they had not been 
given with their assent; and the question therefore was, when bills had 
been given by an individual partner in the name of the partnership firm, 
for his individual debt, upon whom the burden of proof lay to show that the 
other partners did not assent to the formation of those bills. Upon the con- 
sideration of that question, and examining all the authorities, it appeared 
to the member of the court, who had the duty of that examination, that, 
simpliciter, bills drawn by one partner for a separate debt in the partnership 
name, could not be recovered upon, as against the partnership firm ; but 
that the person claiming payment of the bills must prove either a direct as- 
sent of the other partners to the formation of the bills, or if not such direct 
assent, that there were some circumstances in the transaction, from which 
the party taking them might reasonably infer, that they were given with the 
consent of the other partners." In Dob v. Halsey, 16 Johns. 34, 38, Mr. 
Chief Justice Spencer, in delivering the opinion of the court, said: "This 
court has decided, in several cases, that where a note is given in the name 
of the firm, by one of the partners, for the private debt of such partner, 
and known to be so by the person taking the note, the other partuers are 
not bound by such note, unless they have been previously consulted, and 
consent to the transaction. Livingston v. Hastie, 2 Caipes, 24G ; Lansing v. 
Gaine, 2 Johns. 300; Livingston v. Roosevelt, 4 Johns. 251. In Ridley v. 
Taylor, 13 East, 175, the Court of King''s Bench held, that if one partner 
draw or indorse a bill in the name of the partnership, it will, prima facie, 
bind the fii-m, although passed by one partner to a separate creditor, in dis- 
charge of his ])rivate debt, unless there be covin between such separate 
debtor and creditor, or, at least, the want of authority, either express or im- 
plied, in the debtor partner, to give the security of the firm for his separate 
debt. The only difference between the decision of this court and that 



2-10 PARTNERSHIP. [chap. YHI. 

his creditor, it will not be necessary for the partners to 
establish the fact, that the creditor knew at the time, 

of the King's Bench, consists in this : We require the separate creditor, 
who has obtained the partnership paper for the private debt of one of the 
partners, to show the assent of the whole firm to be bound ; the rule of 
the Iving's Bench throws the burden of avoiding such security on the firm, 
by requiring them to prove that the act was covinous on the part of the 
partner, for whose private debt the paper of the firm was given, by show- 
ing, that it was done without the knowledge and against the consent of 
the other partners, and that the fact was known to the separate creditor, 
when he took the paper of the firm. I can perceive no substantial differ- 
ence, whether the note of a firm be taken for a private debt of one of the 
partners, by a separate creditor of the partner pledging the security of 
the firm, and taking the property of the firm ujjon a purchase of one of 
the partners, to satisfy his private debt. In both cases, the act is equally 
injurious to the other partners ; it is taking their common property to 
pay a private debt of one of the partners." The same point was decided 
in Foot V. Sabin, 19 Johns. 1.54, 157, 158, where the same learned judge 
said: "The plaintiff proved Holmes"s signature to the note, and, also, 
that Wilson and Foot were partners, and that Wilson signed the name of 
the firm ; and it appeared on the face of the note, that they signed as 
' sureties ' to Holmes. Whether we apply this proof to the general issue 
or to the special plea, the plaintiff has not maintained either issue. It was 
incumbent on him to show, that all the defendants were liable on the note, 
and that Wilson executed the note with the express assent and authority of 
Foot. In this case, it appearing, that the signature of the name of the 
firm, by Wilson, was not for a partnership debt, Wilson could not bind his 
partner, Foot. All the cases were reviewed in Dob v. Halsey, 16 Johns, oi, 
and the principle established is this, that where a note is given in the name 
of a firm, by one of the partners, for the private debt of such partner, and 
known to be so by the person taking the note, the other partner is not 
bound, unless he has been previously consulted, and has consented to the 
transaction ; and the burden of the proof, that the partner, who did not 
sign the note, consented to be bound, is thrown on the creditor. The same 
principle applies with greater foix-e, when one of the partners becomes 
security for another person, and attempts to bind his copartners. The 
creditor is aware, that he is pledging the partnership responsibility in a 
matter in nowise connected with the partnersliip business ; and that is a 
I'raud on such of the partners as do not assent expressly that the firm shall 
be bound. When, therefore, it appeared, from the plaintiff's own showing, 
that the note was signed by Holmes, as principal, and by Wilson, with the 
name of the firm of Wilson and Foot, as sureties for Holmes, nothing was 
shown to bind Foot, and the plaintilF failed to maintain the issue. On the 
motion for a nonsuit, the court iield, that the plaintiff was bound to prove 
the authoritv or consent of Foot, to the making the note, which the court 



CHAP. VIII.] LIABILITIES AND EXEMPTIONS. 241 

that it was a misapplication of the securities or funds ; 

considered he had done. There was no proof of any authority or consent 
of Foot, except the proof of the signature of Wilson of the name of the 
firm. The court, then, certainly drew a very incorrect legal inference from 
the fact proved." Perhaps the whole doctrine cannot be summed up better 
than it is done by Mr. Chancellor Kent in his learned commentaries. " In 
all contracts," says he, " concerning negotiable paper, the act of one part- 
ner binds all ; and even though he signs his individual name, provided it 
appears on the face of the paper, to be on partnership account, and to be 
intended to have a joint operation. But if a note or bill be drawn by one 
partner, in his own name only, and without appearing to be on pai-tnership 
account, or, if one partner borrow money on his OAvn security, the partner- 
ship is not bound by the signature, even though it was made for a partner- 
ship purpose, or the money applied to a partnership use. The borrowing 
partner is the creditor of the firm, and not the original lender. If, how- 
ever, the bill be drawn by one partner in his own name, upon the firm or 
partnership account, the act of drawing has been held to amount, in judg- 
ment of law, to an acceptance of the bill by the drawer in behalf of the 
firm, and to bind the firm as an accepted bill. And though the partnership 
be not bound at law in such a case, it is held, that equity will enforce pay- 
ment from it, if the bill was actually drawn on partnership account. Even 
if the paper was made in a case, which was not in its nature a partnership 
transaction, yet it will bind the firm, if it was done in the name of the firm, 
and there be evidence that it was done under its express or implied sanc- 
tion. But if partnership security be taken from one partner, without the 
previous knowledge and consent of the others, for a debt, which the creditor 
knew at the time was the private debt of the particular partner, it would be 
a fraudulent transaction, and clearly void in respect to the partnership. So, 
if from the subject-matter of the contract, or the course of dealing of the 
partnership, the creditor was chargeable with constructive knowledge of 
that fact, the partnership is not liable. There is no distinction in principle 
upon this point between general and special partnerships ; and the question, 
in all cases, is a question of notice, express or constructive. All partnei'ships 
are more or less limited. There is none that embraces, at the same time, 
every branch of business ; and when a person deals with one of the partners 
in a matter not within the scope of the partnership, the intendment of law 
will be, unless there be circumstances or proof in the case to destroy the 
presumption, that he deals with him on his private account, notwithstanding 
the partnership name he assumed. The conclusion is otherwise, if the sub- 
ject-matter of the contract was consistent with the partnership business ; and 
the defendants in that case would be bound to show, that the contract was 
out of the regular course of the partnership dealings. When the business of 
a partnership is defined, known, or declared, and the company do not ap- 
pear to the world in any other light than the one exhibited, one of the 
partners cannot make a valid partnership engagement, except on partner- 
ship account. There must be at least some evidence of previous authority 

16 



242 PARTNERSHIP. [CHAP. VTII. 

for the very nature of such a transaction ought to put 

beyond the mere circumstance of partnership, to make such a contract bind- 
ing. If the public have the usual means of knowledge given them, and no 
acts have been done or suffered by the partnership to mislead them, every 
man is presumed to know the extent of the partnership, with whose mem- 
bers he deals. And when a person takes a partnership engagement, with- 
out the consent or authority of the firm, for a matter that has no reference 
to the business of the firm, and is not within the scope of its authority, or its 
regular course of dealing, he is, in judgment of law, guilty of a fraud. It is 
a well-established doctrine, that one partner cannot rightfully apply the 
partnership funds to discharge liis own pre-existing debts, without the express 
or implied assent of the other partners. This is the case even if the creditor 
had no knowledge at the time of the fact of the fund being partnership 
property. The authority of each partner to dispose of the partnership funds 
strictly and rightfully extends only to the partnership business, though in the 
case of bona Jicle purchasers, without notice, for a valuable consideration, the 
partnership may, in certain cases, be bound by the act of one partner." 3 
Kent, 41-43. The question upon whom the burden of proof lies to show, 
that the partnership funds or securities have or have not been misapplied, 
by the application thereof to the payment of a separate debt of one part- 
ner, has been elaborately discussed in some other cases in the American 
Reports ; and the conclusion is uniformly maintained, that the burden of 
proof is on the holder, and not on the other partners. In Gansevoort v. 
Williams, 14 Wend. 133, 135, Mr. Justice Xelson, in delivering the opinion 
of the court, examined all the cases at large. The following extract may 
not be unacceptable to the learned reader: "The English cases upon this 
subject are not always consistent with themselves ; and even the same 
court, while they profess to adhere to their general position, namely, that 
the partner denying the authority of his associate must prove affirma- 
tively, that the holder knew the paper was given in a transaction uncon- 
nected with the partnership ; and also, that he did not assent, sometimes 
substantially disregard the latter qualification of the rule in the application 
of it to the facts. The case of Hope v. Cust, before Lord Mansfield, in 1774, 
cited by Lawrence, J., in 1 East, 53, is an instance. There one Fordyce, 
who traded largely in his private capacity, as well as in the business of a 
banker with others, had considerable dealings in his private capacity with 
Hope «& Co., in Holland, and gave to them a general guaranty in the part- 
nership name, for money due in his separate capacity. The plaintiffs failed 
in recovering on the guaranty. Lord Mansfield, in reporting the case to the 
Court of Chancery, it being an issue from that court, said he left it to the 
jury to say, whether, under the circumstances, the taking of the guaranty 
was, in respect to the partners, a fair transaction, or covinous, with suffi- 
cient notice to the plaintiffs of the injustice and breach of trust Fordyce was 
guilty of in giving it. Chitty on Bills, 33. The case seems to have been 
put to the jury, from the history given of it, upon the gross negligence of 
the plaintifl's in not discovering that Fordyce was committing a fraud upon 



CHAP. VIII.] LIABILITIES AND EXEMPTIONS. 243 

him upon further inquiry ; and however bona fide his 

his associates. But it does not appear, that there was any affirmative 
evidence showing that the other partners had not assented, and that this was 
known to the pLiintiffs. In Ex parie Bonbonus, 8 Ves. 540, Lord Chan- 
cellor Eldon says, in Fordyce's case, Lord Thurlow and the judges had 
a great deal of conversation upon the law, and they doubted upon the 
danger of placing every man, with whom the paper of the pai'tnership is 
pledged, at the mercy of one of the partners, with reference to the account 
he may afterwards give of the transaction. But he says, 'there is no doubt 
now the laAv has taken that course ; that if, under the circumstances, the 
party taking the paper can be considei'ed as being advertised in the nature 
of the transaction, that it was not intended to be a partnership proceeding, 
as if it was for an antecedent debt, prima facie it will not bind them.' 
The case of ShirrefF v. Wilks, 1 East, 48, is another instance. There the 
plaintiff, Oct. 1795, sold a quantity of porter to B. & W., partners, which 
was shipped by them to the West Indies. In April, 1796, R. came into the 
firm and continued till November following, when it was dissolved. The 
balance due for the porter, as settled by W., was £78, for which the plain- 
tiffs drew upon the defendants the bill in question, which was accepted by B. 
in the name of the then firm. The court decided R. was not bound, and 
Lord Kenyon says, R. had no concern with the matter, and was no debtor 
of the plaintiffs ; that no assent of his was found, and nothing to show that 
he had any knowledge of the transaction ; that the transaction was fraudu- 
lent upon its face. In Ridley v. Taylor, 13 East, 175, the rule was applied 
by Lord Ellenborough with more strictness. There he required something 
more than the naked fact, that the Bill in the name of the firm was given for 
the private debt of the member who drew it, and that fact known to the 
plaintiffs. The court would not infer want of authority or fraud upon these 
facts ; and they considered the circumstances of the case of ShirrefF v. 
Wilks, as having fairly authorized such a presumption, and that it was 
decided upon that ground. But in Green v. Deakin, 2 Stark. 347, a 
partnership security (a bill) was given by one member for his private debt 
to the plaintiff; and although it appeai'ed expressly, that the plaintiff was 
not informed, that the associate had not concurred, yet Lord Ellenborough 
held, that the nature of the transaction was intrinsically notice, and he non- 
suited him. So, in Wood v. Holbeck, Chitty on Bills, 83, note z, the 
action was on a bill against three acceptors, where it appeared they were 
partners in a tea speculation, and the drawer, a wine merchant, drew it in 
payment of wine delivered to one of them ; the jury Avere directed, if they 
found it was drawn without the knowledge or concurrence of the other two, 
they were not liable, omitting the necessity of bringing home affirmatively 
notice to the holder. It is not material to look any further into these cases ; 
they will be found stated and referred to in Chitty on Bills, p. 29, 33. 
They all clearly prove, that while the English courts hold to the position, 
that the firm is liable on a bill or note made by one out of the partnersiiip 
business, unless the holder knows that it was so made, and that the other 



244 PARTNERSHIP. [CHAP. VIII. 

conduct may be, it is a case of negligence on his part, 

partners did not concur, the frequent practical operation and effect of 
it under their direction does not essentially differ from the rule as settled in 
this court. They undoubtedly put the defence of the copartner upon the 
ground of fraud, committed upon him by his associate and the holder. But 
this is sometimes inferred from the fact, that the bill or note is given for a 
private debt, and that known to the holder ; and at other times further 
proof is required negativing a presumed concurrence of the copartner. In 
this court, the cases are believed to be uniform from that of Livingston 
V. Hastie, 2 Caines, 246, down to the present time, that where a note or other 
security is given in the name of the firm, by one partner for his private debt, 
or in a transaction unconnected with the partnership business, which is the 
same thing, and known to be so by the person taking it, the other partners 
are not bound, unless they have consented. 11 Jolins. 544; 16 Johns. 34; 
19 Johns. 154; 3 Wend. 418; 5 Wend. 223; 6 Wend. 615; 7 Wend. 158, 
309. Prima facie, the execution of the bill or note in the name of the firm 
by one partner binds the whole. The burden, therefore, of proving a 
presumptive want of authority, and of course fraud, for that necessarily 
follows, lies upon the copartners. 11 Johns. 544. We hold, that the 
fact of the paper of the firm being given out of the partnership business 
by one member is presumptive evidence of want of authority to bind the 
other members of the firm, and if the person taking it knows the flict at 
the time, he is chargeable with notice of want of authority, and guilty of 
concurring in an attempted fraud upon the other partners. It may be 
asked, why should the partners be bound at all, when the paper is in fact 
signed without their authority ? This is no doubt against general princi- 
ples, and involves the injustice of subjecting a person to answer for an act 
of another, to which he never expressly or impliedly assented. The an- 
swer is founded upon the law merchant. By entering into the partner- 
ship, each reposes confidence in the other, and constitutes him a general 
agent as to all the partnership concerns ; and the inconvenience to com- 
merce, if it were necessaiy, that the actual consent of each partner should 
be obtained, or that it should be ascertained, that the transaction was for the 
benefit of the firm in the ordinary transaction of their business, suggested 
the rule, that the act of one, when it has the appeai-ance of being on behalf 
of the firm, is considered the act of the rest; and whenever a bill is drawn, 
accepted, or indorsed by one of several partners, on behalf of the firm 
during its continuance, which comes into the hands of a bona jide holder, 
the partners are liable to him, though in truth one partner only nego- 
tiated the bill for his own benefit, without the consent of the copartners. 
Swan V. Steele, 7 East, 210; Chitty on Bills, 30. There appears never to 
have been a doubt in England or in this State, in any of the cases, but that 
all the partners are bound, unless the bona Jides can be impeached. What 
shall amount to an impeachment is oftentimes a debatable question, and in 
England seems to rest very much upon the circumstances of the case. 
There is more uniformity and precision in the application of the rule here. 



CHAP. VIII.] LIABILITIES AND EXEMPTIONS. 245 

which will not entitle him to recover against the part- 
nership.^ 

It is undoubtedly the practice of mercantile firms to indorse the bank paper 
of each other by the hand of any one of the members. Upon a strict appli- 
cation of the rule in this court, and upon some of the cases in England, 
such paper would not bind the firm, if the bank had knowledge of the 
facts. It is not within the purpose and business of a mercantile firm to 
indorse paper for their neighbors. Such business is not within the contem- 
plation of the partnership, and therefore no authority is to be implied or 
attached to any one of the members. It might well alarm the mercantile 
community to lay down the position, that the partnership indorsement of 
accommodation paper, by one of the firm, for any person that might ask 
him, M'ould be binding upon all, whether the holder knew the facts or not. 
Even the authority of one partner to sign bills and notes for the firm when 
interested, is only implied, and may be rebutted by notice. Chitty on Bills, 
33. It would be a strange implication of authority, where the firm had no 
interest. But if it should appear, that a house was in the habit of indorsing 
at the bank or elsewhere for another, such general course of dealing would 
be sufficient evidence of authority from all the members of the firm, and 
such use of it by one would bind all. Duncan v. Lowndes, 3 Camp. 478. 
The authority would not How from the partnership, but from facts and 
considerations independently of it." See, also, on the same point, Wilson v. 
Williams, 14 Wend. 146 ; Rogers v. Batchelor, 12 Pet. 221, 229-232. 

1 Rogers v. Batchelor, 12 Pet. 229-232 ; [Powell v. Messer, 18 Tex. 401] ; 
|Purdy V. Powers, 6 Penn. St. 492 ; 1 Am. Lead. Cas. 453, 456, 4th ed.} — 
This point came directly before the Supreme Court of the United States in the 
case of Rogers v. Batchelor, 12 Pet. 221, 229, and was much discussed. Upon 
that occasion the Court said : " The first instruction raises these questions ; 
whether the funds of a partnership can be rightfully applied by one partner 
to the discharge of his own separate pre-existing debt, without the assent, 
express or implied, of the other partner ; and, whether it makes any differ- 
ence, in such a case, that the separate creditor had.no knowledge at the 
time of the fact of the fund being partnership property. We are of opinion 
in the negative on both questions. The implied authority of each partner to 
dispose of the partnership funds strictly and rightfully extends only to the 
business and transactions of the partnership itself; and any disposition of 
those funds, by any partner, beyond such purposes, is an excess of his 
authority as partner, and a misappropriation of those funds, for which the 
partner is responsible to the partnership ; though in the case of bona fide 
purchasers, without notice, for a valuable consideration, the partnership may 
be bound by such acts. Whatever acts, therefore, are done by any partner, 
in regard to partnership property or contracts, beyond the scope and objects 
of the partnership, must, in general, in order to bind the partnership, be 
derived from some further authority, express or implied, conferred upon 
such partner, beyond that resulting from his character as partner. Such is 



246 PARTNERSHIP. [CHAP. VIII. 

§ 133 a. Upon like principles, if the acting partners 
of a firm, or the governing body of a joint-stock company 

the general principle ; and, in our judgment, it is founded in good sense and 
reason. One man ought not to be permitted to dispose of the property, or 
to bind the rights of another, unless the latter has authorized the act. In 
the case of a partner, paying his own separate debt out of the partnership 
funds, it is manifest, that it is a violation of his duty and of the rights of 
his partners, unless they have assented to it. The act is an illegal con- 
version of the funds ; and the separate creditor can have no better title to 
the funds than the partner himself had. Does it make any difference, that 
the separate creditor had no knowledge, at the time, that there was a mis- 
appropriation of the partnership funds ? We think not. If he had such 
knowledge, undoubtedly he would be guilty of gross fraud ; not only in 
morals, but in law. That was expressly decided in ShirrefFw. Wilks, 1 East, 
48 ; and, indeed, seems too plain upon principle, to admit of any serious 
doubt. But we do not think, that such knowledge is an essential ingredient 
in such a case. The true question is, whether the title to the property has 
passed from the partnership to the separate creditor. If it has not, then 
the partnership may re-assert their claim to it in the hands of such cred- 
itor. The case of Ridley v. Taylor, 13 East, 175, has been supposed to 
inculcate a different and more modified doctrine. But upon a close exam- 
ination, it will be found to have turned upon its own peculiar circum- 
stances. Lord EUenborough in that case admitted, that one partner could 
not pledge the partnership property for his o^vn separate debt ; and if he 
could not do such an act of a limited nature, it is somewhat difficult to 
see, how he could do an act of a higher nature, and sell the property. 
And his judgment seems to have been greatly influenced by the consider- 
ation, that the creditor in tliat case might fairly presume, that the partner 
was the real owner of the partnership security ; and that there was an 
absence of all the evidence (which existed and might have been produced) 
to show, that the other partner did not know, and had not authorized the 
act. If it had appeared from any evidence, that the act was unknown to, 
or unauthorized by the other partners, it is very far from being clear, that 
the case could have been decided in favor of the separate creditor ; for 
his Lordship seems to have put the case upon the ground, that either 
actual covin in the creditor should be shown, or, that there should be 
pregnant evidence, that the act was unauthorized by the other partners. 
The case of Green v. Deakin, 2 Stark. 347, before Lord EUenborough, 
seems to have proceeded upon the ground, that fraud, or knowledge by the 
separate creditor, was not a necessary ingredient. In the recent case. Ex 
parte Goulding, cited in Coll. on P. 283, 284, 1st ed., the Vice-Chan- 
cellor (Sir John Leach) seems to have adopted the broad ground, upon 
which we are disposed to place the doctrine. Upon the appeal, his decision 
was confirmed by Lord Lyndhurst. Upon that occasion his Lordship said : 
* No principle can be more clear, than that, where a partner and a creditor 



CHAP. VIII.] LIABILITIES AND EXEMPTIONS. 247 

should unite with a stranger to produce a fraud against 
the firm or company for whom they act, a court of 

enter into a contract on a separate account, the partner cannot pledge the 
partnership funds, or give the partnership acceptances in discharge of this 
contract, so as to bind the firm.' There was no pretence in that case of any 
fraud on the part of the separate creditor. And Lord Lyndhurst seems to 
have put his judgment upon the ground, that unless the other partner as- 
sented to the transaction he was not bound ; and that it was the duty of the 
creditor to ascertain, whether there was such assent or not. The same ques- 
tion has been discussed in the American courts on various occasions. In 
Dob V. Halsey, 16 Johns. 34, it was held by the court, that one partner 
could not apply partnership property to the payment of his own separate 
debt, without the assent of the other partners. On that occasion, Mr. Chief 
Justice Spencer stated the difference between the decisions in Xew York, 
and those in England, to be merely this : that in New York the court re- 
quired the separate creditor, who had obtained the partnership paper for the 
private debt of one of the partners, to show the assent of the whole firm to 
be bound ; and that in England, the burden of proof was on the other part- 
ners to show their want of knowledge or dissent. The learned judge add- 
ed : ' I can perceive no substantial difference, whether the note of a fii-mbe 
taken for a private debt of one of the partners by a separate creditor of a 
partner, pledging the security of the firm ; and taking the property of the 
firm, upon a purchase of one of the partners to pay his private debt. In 
both cases, the act is equally injurious to the other partners. It is taking 
their common property to pay a private debt of one of the partners.' The 
same doctrine has been, on various occasions, fully recognized in the Supreme 
Court of the same State. And we need do no more than refer to one of 
the latest; the case of Evernghim y. Ensworth, 7 Wend. 326. Indeed, it 
had been fully considered long before, in Livingston v. Roosevelt, 4 Johns. 
251. It is true, that the precise point now before us, does not appear to 
have received any direct adjudication ; for in all the cases above mentioned, 
there was a known application of the funds or securities of the partnership 
to the payment of the separate debt. But we think, that the true principle 
to be extracted from the authorities is, that one partner cannot apply the 
partnership funds or securities to the discharge of his own private debt with- 
out their consent ; and that without their consent their title to the property 
is not devested in favor of such separate creditor, whether he knew it to be 
partnership property or not. In short, his right depends, not upon his knowl- 
edge, that it was partnership property ; but upon the fact, whether the 
other partners had assented to such disposition of it or not.''' 

[But if one partner indorse and negotiate a note in the firm name, but out 
of the legitimate business of the company, a subsequent holder will be entitled 
to recover against the partnership, on proving that he became a holder before 
maturity, for a valuable consideration, and without notice of the fraud. Gil- 
dersleeve v. Mahony, 5 Duer, 383;] {1 Am. Lead. Cas. 455, 4th ed. ; Roth 



248 PARTNERSHIP. [CHAP. VIII. 

equity might interfere and repudiate such acts, and 
ask {1} to be reheved against them.^ 

§ 134. There are other cases, which constitute excep- 
tions to the general liability of partners for acts or con- 
tracts concerning the partnership business, which deserve 
special notice in this connection. One of them is, where 
in the very transaction, although it may be for the benefit 
or use of the partnership, and in the business thereof, 
yet the credit is exclusively given to the partner, trans- 
acting it, upon his sole and separate liability. The 
law is exceedingly clear and well settled upon this 
point. If money is borrowed, or goods bought, or any 

V. Colvin, 32 Vt. 125. A partner drew a check in the name of the firm, pay- 
able to bearer, for the purpose of paying a debt due from the firm to H., 
but instead of so using it, he retained it, and paid the debt due H. by setting 
off against it a debt due from H. to him individually, and paying the balance 
in cash. Subsequently he transferred the check to B. to pay a private debt. 
Held, that B. could maintain an action on the check against the firm. Gale 
V. Miller, 44 Barb. 420. 

Any doubt thrown on the rule as to the burden of proof, by Lord Ellen- 
borough's dictum in Kidley v. Taylor, lo East, 175, must be considered as 
removed by the recent case of Leverson v. Lane, 13 C. B. n. s. 278, in which 
it was held that one who takes from a partner in a firm, for his separate debt, 
a bill accepted in the firm name, must show that the acceptance was with the 
concurrence of the other partners. In this case Mr. Justice Williams said: 
" I do not mean to deny that there is in the judgment of Lord Ellenborough, 
in Ridley v. Taylor, 13 East, 175, a dictum which is to some extent inconsis- 
tent with the law as laid down in this case. But that dictum is clearly at 
variance with all the authorities both before and since that judgment ; " and 
Mr. Justice Byles said: "I adopt the law as laid down in a text-book of 
very great value, — Smith's Mercantile Law, where I think it is correctly laid 
down (p. 44), and evidently well considered, and after reading Lord Ellen- 
borough's judgment in Ridley v. Taylor, 13 East, 175, ' It would seem,' says 
the learned author, ' that the unexplained fact that a partnership security has 
been received from one of the partners in discharge of a separate claim 
against himself, is a badge of fraud, or of such palpable negligence as 
amounts to fraud, which it is incumbent on the party who so took the security to 
remove, by showing either that the partner from whom he received it acted un- 
der the authority of the rest, or at least that he himself had reason to believe 
so.'" See also Hogg r. Skeen, 18 C. B. n. s. 426.} 
1 Vigors V. Pike, 8 CI. & Fin. 562, 648. 



CHAP. Vlir.] LIABILITIES AND EXEMPTIOISS. 249 

other contract is made by one partner upon his own ex- 
clusive credit, he alone is liable therefor ; and the part- 
nership, although the money, property, or other con- 
tract is for their proper use and benefit, or is applied 
thereto, will in no manner be liable therefor.^ For it is 
entirely competent for one partner to borrow money, or 
to buy goods, or to enter into contracts on his own sole 
and exclusive credit with third persons ; and, on the 
other hand, it is equally competent for them to rely on 
that exclusive credit, and either to refuse to contract 
with the firm, or to exonerate the firm from all liability 
upon any contract, which would otherwise bind the firm, 
as being for then- account and benefit. For the maxim 
of the common law here applies with its full force : 
Modus et conventio vincunt legem; and either party 
may at his pleasure waive or relinquish rights, to which 
he would otherwise be entitled. It is but following out 
the rule of natural justice and the exposition of the in- 
tention of the parties recognized in the Pandects. Ante 
omnia enim animadvertendiim est, ne conventio in alia 
re facta, aut cum alia persona, in alia re, aliave persona 
noceati^ 

§ 135. This very case was directly put in the Roman 
law, in relation to joint employers of ships, where one 

' Coll. on P. B. 3, c. 2, § 2, p. 819, 2d ed. ; Id. p. 342, 343 ; Ex parte 
Emly, 1 Rose, 61 ; Ex parte Bonbonus, 8 Ves. 540; Sylvester v. Smith, 9 
Mass. 119, 121; Gow on P. c. 4, p. 154, 155, 3d ed. ; Lloyd v. Freshfield, 
2 C. & P. 325 ; 9 Dow. & Ry. 19 ; Ketchura v. Durkee, 1 HofT. 538 ; Le 
Roy V. Johnson, 2 Pet. 186, 198-200. See Trueman v. Loder, 11 Ad. & E. 
589, 595 ; De Mautort v. Saunders, 1 B. & Ad. ^98 ; Bonfield v. Smith, 12 M. 
& W. 405; [Green v. Tanner, 8 Met. 411. And if the contract is made 
with one alone, and credit is given to him, he is liable on such contract, 
without joinifig his copartnei's. Hagar v. Stone, 20 Vt. 106 ; Stansfeld v. 
Levy, 3 Stark. 8; Murray v. Soraerville, 2 Camp. 99, n. ; Cleveland v. 
Woodward, 15 Vt. 302] ; {Lind. on P. 290-292; 1 Am. Lead. Cas. 448, 
4th ed.} 

^ D. 2, 14, 27, 4 ; Poth. Oblig. n. 85. 



250 PARTNERSHIP. [cHAP. VIII. 

acted as the administrator of the concern, and con- 
tracted in his own name exclusively. Si 2^hires navem 
exercemit, cum quolibet eorum in solidum agi j^otest. 
Ne in plicres adversarios destringatur^ qui cum uno 
contraxerit} The same rule is adopted in the French 
law ; and accordingly Pothier says : When a partner 
has not contracted in the name of the firm, but in his 
own name alone, he alone will be bound, although the 
contract has been applied to the benefit of the partner- 
ship. Thus, if a partner has borrowed money in his 
sole name, for his own account, and then he applies the 
money to partnership purposes, the creditor cannot 
have any action against the firm ; for, according to the 
principles of law, a creditor has his remedy only against 
the party with whom he has contracted, and not against 
those who have been benefited or received profit from 
it.^ And this ao:ain is but the dictate of the Roman law. 
Non adversus te creditores^ qui mutuam sum^psisti 
pecunicun, sed ejus, cui hanc credideras heredes experiri, 
contra ju7^is formam evidenter postulas.^ 

§ 136. One illustration may be taken from a case, 
which has already passed into judgment. In that case, 
one of two partners drew bills of exchange in his own 
name, which he procured to be discounted by a banker, 
through the medium of the same agent who procured 
the discount of other bills drawn in the partnership 
name, with the same banker ; it Avas held by the court, 
that the banker had fio remedy against the firm, either 
upon the bills so drawn in his own name, or for money, 
had and received through the medium of such bills, 
although the proceeds were carried to the partnership 
account. The reason was, that the money was advanced 



1 D. 14, 1, 1, § 25 ; Id. 14, 1, 2 ; ante, § 102. 

* Poth. de Soc. n. 101, 105, 106. => Cod. 4, 2, 15. 



CHAP. VIII.] LIABILITIES AND EXEMPTIONS. 251 

solely on the security of the parties, whose names were 
on the bills, by way of loan to them, and not by way of 
loan to the partnership. And it made no difference in 
the case, that the banker conceived at the time, that all 
the bills were drawn on the partnership account ; since 
he did not credit the firm, but only the names on the 
bills.i 

§ 137. The French law has followed out the like 
doctrine to its legitimate conclusion. Whenever one 
partner in a commercial partnership contracts a debt 
in his own sole name, he alone will be responsible 
therefor ; and the creditor will have no recourse against 
the partnership, even although the debt may have been 
contracted in behalf of, or for the benefit of the part- 
nership.^ And a fortiori in cases of non-commercial 
partnerships, the doctrine is held to apply ; ^ with the 
reservation, however, that the other partners have not 
made him their agent to contract a joint obligation in 
solido, or otherwise.^ 

§ 138. Still, although the general principle is clear, 
it may not always be easy to apply it to the circum- 
stances of particular cases ; for it is often a matter of no 
inconsiderable difficulty and intricacy at the common 
law to ascertain in point of fact, whether there has 
been an exclusive credit given to one partner or not. 
In the case of a dormant and secret partner, the credit 
is manifestly given only to the ostensible partner ; for 
no other party is known. Still, however, it is not 
treated as an exclusive credit ; for the law in all cases 
of this sort founds its decision upon the ground, that 
the creditor has had a choice or election of his debtor, 

' Emly V. Lye, 15 East, 7 ; Siffkin v. Walker, 2 Camp. 308 ; ante, § 102 ; 
post, § 142, 243. See Faith v. Richmond, 11 Ad. & E. 339. 
2 Poth. de Sec. n. 100, 101. => Poth. de Soc. n. 105. 

* Puth. de Soc. n. 104, 105. 



252 PARTNERSHIP. [CHAP. VIII. 

which cannot be, where the partner is dormant and 
unknown.^ The credit therefore is not deemed ex- 
clusive, but binding upon all, for whom the partner 
acts, if done in their business and for their benefit, 
as is the case in cases of agency for an unknown 
principal.^ 

§ 139. Another case may easily be put. Suppose a 
partnership to be carried on in the sole name of one of 
the partners, and he at the same time should transact 
business upon his own separate account ; and he should 
borrow money in his own name. In such a case the 
question may arise, whether the partnership is bound 
for such borrowed money, or the individual partner 
only. And it must be resolved by taking into con- 
sideration the whole circumstances of the case. Thus, 
if the money is in fact borrowed for the partnership 
business, or it is in fact applied to the partnership busi- 
ness, in the absence of all controlling circumstances, the 
partnership will be bound therefor ; since the fair pre- 
sumption is, that it was intended by the partner to 
pledge the partnership credit, and not merely his indi- 
vidual credit, whether the partnership was known or 
unknown to the lender. On the other hand, if the 
money was borrowed for the separate use of the indi- 

» Ante, § 63. 

2 Story on Ag. § 291, '292 ; 2 Kent, 630, 631 ; Paley on Ag. by Lloyd, 
245, 250, 3d ed. ; Thomson v. Davenport, 9 B. & C. 78, 80, 87 ; Poth. on 
Oblig. n. 82, 83, 447 ; Coll. on P. B. 1, c. 1, § 1, p. 11, 12, 14, 2d ed. ; Id. 
B. 3, c. 1, p. 259 ; Hoare v. Dawes, Doug. 371 ; Gow on P. c. 4, § 1, p. 
162, 163, 3d ed. ; Saville v. Robertson, 4 T. R. 720 ; Robinson v. Wilkin- 
son, 3 Price, 538 ; U. S. Bank v. Binney, 5 Mason, 176 ; s. c. 5 Pet, 529 ; 
Kelley v. Hurlburt, 5 Cowen, 534; Mifflin v. Smith, 17 S. & R. 25 ; {Far- 
mers' Bank of Missouri v. Bayless, 35 Mo. 428 ; Richardson v. Farmer, 
36 Mo. 35; 1 Am. Lead, Cas. 448, 4th ed.} The law with regard to 
dormant partners extends only to commercial partnerships. It has, there- 
fore, no application to dormant partners in land speculations. Pitts v. 
Waugh, 4 Mass. 424 ; Smith v. Burnham, 3 Sumn. 435. { See § 83. } 



CHAP. VIII.] LIABILITIES AND EXEMPTIONS. 253 

vidual partner, or actually applied to that use, the con- 
trary presumption would prevail. But, if the business 
of the partnership were different from the separate 
business of the individual partner, and he should bor- 
row expressly of the lender for the one business or for 
the other, the lender would be deemed to give credit to 
that particular business, and not to the other business ; 
and then the partnership would or would not be bound 
according to the fact, whether it was borrowed for their 
business or not.^ And, in such a case, it would make 
no difference, whether the lender did, or did not know, 
that there was any partnership in either business, or 
whether the money was actually applied to the business, 
for which it was expressly borrowed, or not. But in 
the absence of all proofs, as to the purpose,, for which 
the money was borrowed, or to which it was applied, it 
would be deemed to be borrowed upon the separate 
account of the individual partner.^ 

' [And the declaration by the borrower at the time, that it was on part- 
nership account lias been held sufficient proof to bind the firm. Oliphant 
v. jMathews, IG Barb. 608.] {See § 106. If one partner contracts a debt, 
representing to the creditor, that it is for the benefit of the firm, and if the 
contract is within the scope of the firm business, the firm is liable, whether 
the representations are true or false ; Stockwell v. Dillingham, 50 Me. 
442.} 

^ See Coll. on P. B. 3, c. 1, § 2, p. 275-277, 2d ed. ; Etheridge ». 
Binney, 9 Pick. 272 ; Mifflin v. Smith, 17 S. & R. 165 ; U. S. Bank v. Bin- 
ney, 5 Mason, 176 ; s. c. 5 Pet. 529 ; [Oliphant r. Mathews, 16 Barb. 608 ; 
South Carolina Bank v. Case, 8 B. «fe C. 427 ; Buckner v. Lee, 8 Ga. 285.] 
{In Furze v. Sharwood, 2 Q. B. 388, it was held, that under the peculiar 
circumstances of the case the burden of proof was on the partners to show 
that the contract sued on was on account of the separate business. Ex 
parte Law, 3 Deac. 541 ; Hubbell v. AVoolf, 15 Ind. 204.} —In U. S. Bank 
V. Binney, 5 Mason, 176, 183, 184, the court said: "In respect to both 
general and limited partnershijjs, the same general principle apjilies, that 
each partner has authority to bind the firm, as to all things within the 
scope of the partnership, but not beyond it. Where the contract is made 
in the name of the firm, it will, prima facie, bind the firm, unless it is ultra 
the business of the firm. Where the firm im[)orts, on its face, a company. 



254 PARTNERSHIP. [CHAP. VIII. 

§ 140. Various other cases may be put to illustrate 
the same rule. Thus, if a person should advance money 

as A. B. & Co., or A., B., & C, there the contracts made by the partners 
in that name bind the firm, unless they are known to be beyond the scope 
and business of the firm.^ But where the business is carried on in the 
name of one of the partners, and his name alone is the name of the firm, 
there, in order to bind the firm, it is necessaiy not only to prove the signa- 
ture, but that it was used as the signature of the firm by a party author- 
ized to use it on that occasion, and for that purpose. In other words, 
it must be shown to be used for partnership objects, and as a partnership 
act. The proof of the signature is not enough. The plaintiffs must go 
further, and show, that it is a partnership signature. In the present case, 
the signature of ' John Winship ' may be on his own individual account, as 
his personal contract, or it may be on account of the partnership. Upon 
the face of the paper it stands indifferent. The burden of proof, then, is 
upon the plaintiffs to establish, that it is a contract of the firm, and ought to 
bind them." And again: "The notes are all indorsed in the name of 
' John Winship.' For aught, therefore, that appears on the face of them, 
they were notes only binding him personally. The plaintiffs must, then, 
go further, and show either expressly or by implication, that these notes 
were ofi'ercd by Winship, as notes binding the firm, and not mei'ely on 
himself personally ; or that the discounts were made for the benefit, and 
in the course of the business of the firm. It is not sufficient for the plain- 
tiffs to prove, that the bank, in discounting these notes, acted upon the 
belief, that they bound the firm, and were for the benefit and busmess of the 
firm. They must go further and prove, that the belief was known to and 
sanctioned by Winship himself in offering the notes ; and that he inten- 
tionally held out to them, that the discounts were for the credit, and on 
the account of the firm ; and that his indorsement was the indorsement of 
the firm, and to bind them ; and that the bank discounted the notes upon 
the faith of such acts and representations of Winship. The jury will 
judge from the whole evidence, how the case stands in these respects. 
The mere fact, that the discounts so procured Avere applied to the use of 
the firm is not, of itself, sufficient to prove, that the discounts were pro- 
cured on account of the firm. It is a strong circumstance, entitled to 
weight, but not decisive." In Etheridge v. Binney, 9 Pick. 272, 274, the 
court said: " I^ow as the partner, whose name is assumed by the firm, 
may also engage in other branches of business, in which he may want 
credit on his own private account, if he applies for a loan of money to 
one, who is ignorant of the copartnership, and no information is given of 
its existence, it is a private loan, and does not bind the firm, unless the 
creditor sliall know, tliat the money borrowed, or the goods procured, by 
the individual, went to the use of the firm. The burden of proof in such 



1 [Barrett v. Swanii, 17 Me. 180; Holmes v. Porter, 39 Me. 157.] 



CHAP. VIII.] LIABILITIES AND EXEMPTIONS. 255 

for a firm, and yet take the security of one partner 
therefor, the security would bind that partner only.^ 
And indeed, under such circumstances, if the separate 
security is knowingly taken upon advances for the firm, 
it will ordinarily be treated, as an election by the cred- 

case is upon the creditor, in order to make good his claim upon the firm ; 
for he credited the individual, and not the firm, and it will be presumed to 
be fiar the private benefit of the individual, unless the contrary is proved. 
But if the existence of the firm is known to the person, who makes the 
loan, and representations are made to him by the borrower, that he bor- 
rows for the use of the company, and that they are answerable for the 
debt, so that credit is given to the company, and not to the individual 
partner, the burden of proof is upon the company, when sued, to show 
that the power confided to the individual has been abused, and that the 
money borrowed was applied to his private use, and also, that this was 
known to the lender to be his intention. This principle necessarily follows 
from cases settled. If a purchase is made in the name of a firm, or money 
borrowed, and a note given or indorsed in that name, this is prima facie 
evidence of a debt from the firm, and it can onl}- be rebutted by proof in 
the defence, that tin's was fraudulently done by the individual partner for 
his own private use, and that this was known to the creditor. So that in 
the limited partnership, if the name of the firm had been John Winship & 
Co., or Winship & Binney, all notes given to any creditor, in either of those 
names, would be company notes, unless disproved, as before stated. Xow, 
the making and oflTering of such a note is nothing more than a representa- 
tion that the money is wanted for the use of the company, and as they con- 
fide in the individual, they will be bound by his acts. The name of the 
firm here being only the name of the individual, a note offered in that 
name, unaccompanied by any representation, would of course import only a 
promise by John Winship alone ; and the credit being given to him alone, 
the creditor would not recover against the firm, without proving, that the 
money actually went into the funds of the firm. But if the borrowing part- 
ner states that he is one of a company, and that he borrows money for the 
company, or purchases goods for their use, then, as there is such company, 
and as they have given him authority to use the company credit to a certain 
extent, and as the creditor will have no means of knowing whether he is 
acting honestly towards his associates, or otherwise, if he lends the money 
or sells the goods on the faith of such representation, the company will be 
bound, unless they prove that the contract was for his private benefit, and 
known to be so by the creditor." 

1 Coll. on P. B. 3, c. 2, § 2, p. 315-324, 2d ed. ; Siffkin v. Walker, 2 
Camp. 308; Emly v. Lye, 15 East, 7. {If goods are sold to a firm, taking 
the note of one member does not discharge the firm, unless an agi'eement 
to discharge is afiirmatively shown. Folk v. Wilson, 21 Md. 53S.} 



256 PARTNERSHIP. [cHAP. VIII. 

itor, to absolve the partnership from responsibility, and 
to confine the credit to that partner only.^ Nor will it 
make any difference in such a case, that the money has 
not only been borrowed, but has been applied to part- 
nership purposes, if the contract has been exclusively 
upon the separate credit or security of one partner.^ 
On the other hand, if money is actually borrowed on 
the credit of the firm in the course of the business of 
the firm, it will make no difference in the liability of 
the other partners, that it has been misapplied by the 
borrowing partner.^ But care must be j;aken to distin- 
guish between cases of this sort, and cases, where the 
separate security of one partner has been taken, not as 
the primary debt, but merely as collateral security for 
the primary debt, as one of the firm ; for, in the latter 
case, the firm will undoubtedly be- holden, notwith- 
standing the separate security.^ 

§ 141. The custom of a particular trade or business 
may in some cases also furnish an exemption of the 
partnership upon contracts made for their benefit, and 
establish, that the credit is exclusively given to the 
contracting partners. Instances, however, of this sort 
are of rare occurrence ; and it has been remarked by a 
learned writer, that perhaps there is no ordinary trade 

» Coll. on p. B. 3, c. 2, § 2, p. 318, 319, 321, 2d ed. ; Ex parte Hunter, 
1 Atk. 223; Ex parte Emly, 1 Rose, 61; Gow on P. c. 4, § 2, p. 154-156, 
3ded. 

2 Coll. on P. B. 3, c. 2, § 2, p. 319, 320, 2d ed. ; Bevan v. Lewis, 1 
Sim. 376 ; Lloyd v. Freshfield, 2 C. & P. 325 ; Parkin v. Carruthers, 3 Esp. 
248 ; Jaques v. Marquand, 6 Cowen, 497 ; [Green v. Tanner, 8 Met. 411] ; 
{Farmers' Bank of Missouri v. Bayless, 35 Mo. 428.} 

3 Coll. on P. B. 3, c. 1, § 1, p. 263; Id. B. 3, c. 2, p. 322, and note, 
2d ed. ; Church v. Sparrow, 5 Wend. 223 ; U. S. Bank v. Binney, 5 Mason, 
176 ; s. c. 5 Pet. 529 ; Gow on P. c. 4, § 2, p. 146, 147, 3d ed. ; Id. § 3, 
p. 282-284; ante, § 105. 

^ Coll. on P. B. 3, c. 2, § 2, p. 323, 2d ed. ; Id. p. 275; Ex parte 
Brown, cited 1 Atk. 225 ; Denton v. Rodie, 3 Camp. 493 ; South Carolina 
Bank V. Case, 8 B. & C. 427 ; Ex parte Bolitho, Buck, 100. 



CHAP. VIII.] LIABILITIES AND EXEMPTIONS. 257 

or business, except that of stage-coach proprietors, in 
which the firm have been held not liable for repairs 
made, or goods supplied, by the order of one partner 
for the use of the concern.' In general, such proprie- 
tors are held bound, like all other partners." But 
under some special circumstances, the credit has been 
held to be exclusively given to the partner ordering 
the repairs or supplies. Thus, where several persons 
furnished with horses, which were their several prop- 
erty, the several stages of a coach, and in the general 
business and profits all the proprietors were partners, 
and shared the profits, it was held, that the proprie- 
tors were not all jointly liable for goods furnished to 
one partner for the use of his horses, drawing the 
coach along his part of the road ; and that the goods 
must be deemed furnished upon the exclusive credit of 
that partner.^ 

§ 142. The general rule is, as we have seen, that if a 
bill or note is drawn or indorsed in the name of one 
partner only, not being the firm name, it will not be a 
contract binding on the firm, but on himself only, even 
although it may be a transaction for the use or benefit 
of the firm.'* But, nevertheless, cases might arise, where 
the partnership might be held liable, as the drawers or 
indorsers of the note or bill, notwithstanding it was 

' Coll. on P. B. 3, c. 3, § 3, p. 329, 330, 2d ed. 

« Ibid. ; Arthur v. Dale, cited Coll. on P. B. 3, c. 2, § 3, p. 330, 2d ed. 

^ Barton v. Hanson, 2 Taunt. 49 ; s. c. 2 Camp. 97 ; Iliard v. Bigg, Man- 
ning's Nisi Prius, Index, 220; Gow on P. c. 4, § 1, p. 149, 150, 3d ed. 

^ Coll. on P. B. 3, c. 1, § 2, p. 277, 2d ed. ; Id. B. 3, c. 2, § 3, p. 331- 
347 ; Jaques v. Marquand, 6 CoAven, 497 ; Smith v. Craven, 1 Cr. & J. 500, 
507 ; ante, § 136 ; Trueman v. Loder, 11 Ad. & E. 589 ; Faith v. Richmond, 
11 Ad. & E. 3.39; ante, § 102; {Nicholson v. Ricketts, 2 E. & E. 497; 
Farmers' Bank v. Bayless, 35 Mo. 428 ; and see the eases on the negotiable 
paper of partnerships well collected in Bvlcs on Bills, 43-53. Lind. on P. 
274-282.} 

17 



258 PARTNERSHIP. [CHAP. Till. 

made or indorsed only in the name of one partner.^ 
But, then, in such cases, in order to bind the firm it 
must appear, that the other partners had constantly 
treated such note or bill, so made and indorsed, as the 
note, or bill, or indorsement of the firm in the adopted 
name of the partner, as a firm name,^;ro hac vice; or at 
least, as the note, or bill, or indorsement made by the 
firm by procuration of the partner, so that the holder 
would be at liberty to write over the partner's name 
the name of the firm by procuration of the partner (A. 
and B. by procuration of B.).^ But, whether this would 
be so, or not, it has been held, that if one partner makes 
use of an assumed firm name, not the real name of the 
firm, and signs it by procuration of the assumed firm, 
and the other partners knew his habit of so doing, and 
adopted the note, or bill, or indorsement, as that of the 
firm, the partners will be held to have adopted the new 
firm name, ^:)ro hac vice, and will be bound by the con- 
tract.^ 

^ [Palmer v. Stephens, 1 Denio, 471.] 

^ South Carolina Bank v. Case, 8 B. & C. 427; Ex jyarte Bolitho, 
Buck, 100; {1 Am. Lead. Gas. 448, 4th ed. See Ostrom v. Jacobs, 9 
Met. 454. } 

* Williamson v. Johnson, 1 B. & C. 146 ; Coll. on P. B. 3, c. 1, § 2, p. 276, 
277, 2d ed. ; Id. B. 3, c. 2, § 2, p. 319-324 ; [/« re Warren, Daveis, 320, 325 ; 
Newton V. Boodle, 3 C. B. 795 ; post, § 202 ; {Faith v. Richmond, 11 Ad. &E. 
339 ; Kirk v. Blurton, 9 M. & W. 284 ; Wilde v. Keep, 6 C. & P. 235 ; Smith's 
Merc. Law, 81, 3d Am. ed. See Tilford r. Ramsey, 37 Mo. 563, 567. } This 
liability of a partnership, notwithstanding the names of individuals only were 
used, is illustrated in the following case. Where the proprietors of a line of 
canal boats, by articles between themselves agreed that the business of the 
concern at Rochester should be conducted by J. A., one of the proprietors, in 
his own name, and that at Albany it should be conducted by W. M., an 
agent, in his name, but in behalf of and upon the responsibility of the 
defendants, who were two of the proprietors ; that no copartnership name 
should be used, and no paper made, accepted, or indorsed in the name, or 
on account of the copartnership ; and that each party should raise his share 
of the money needed by the concern upon his own responsibility, and the 
other parties were not to be liable therefor, but all the parties were to 



CHAP. YIII.] LIABILITIES AND EXEMPTIONS. 259 

§ 1-43. The doctrine has even been pressed further ; 
and it has been held, that a note or other security may 
be so signed, as at once to make the partner signing it 
separately liable, and also the firm liable thereon. Thus, 
where A. (one of the partners in the firm of A., B., and 
C.) made a promissory note in these words : " Sixty 
days after .date, I promise to pay D., E., or order," &c., 
and signed the note "For A., B., & C. — A.;" it was 
held, that the firm was liable thereon, and also that he 
was separately liable ; so that, in effect, it was treated 
as a joint and several security, a joint security of the 
firm, and a several one of the partners signing it.^ This 

share equally in the profits ; it was held, that a bill by J. A. in his own 
name, to raise money for the business of the concern, drawn upon and 
accepted by W. M., in his name, bound all the proprietors, at once as 
drawers and acceptors. Bank of Rochester v. Monteath, 1 Denio, 402 ; 
Palmer v. Stephens, 1 Denio, 471.] 

1 Lord Galway v. Matthew, 1 Camp. 403 ; Hall v. Smith, 1 B. & C. 407 ; 
[Staats V. Howlett, 4 Denio, 559.] See Story on Ag. § 154, 275, 276 ; Coll. 
on P. B. 3, c. 1, § 2, p. 277, 2d ed. — In the case of Lord Galway, 1 Camp. 
403, the firm were held liable. In the case of Hall r. Smith, 1 B. & C. 407, 
which was a note of this sort payable to bearer, and was signed A., B., and 
C. by A., the suit was against A. only; and he was held separately liable. 
Mr. Justice Bayley on this occasion said: "In pronouncing judgment for 
the plaintiff, we shaU not give to the note any different effect from that 
which it appears upon the face of it to have. The words used are ' I prom- 
ise to pay,' and it is signed by the defendant. What then is the import of 
those words ? Surely, that W. Smith promises. It is true, that he promises 
for himself and others, but he alone promises. Now, there are many cases, 
where a party, entering into a contract in his own name on behalf of others, 
may be sued, or those, for whom he contracts, may be sued, and e cotiverso, 
an agent may sue, or the parties beneficially interested may sue. If any 
hardship arise from this construction, it might have been avoided by intro- 
ducing the pronoun ' we ' instead of ' I ; ' and on the other hand, a great 
difficulty may be imposed upon the plaintiff, if he be compelled to sue all ; 
for then he would be bound to prove the partnership of all the parties, 
whereas in this action it is sufficient to prove the handwriting of the defend- 
ant. The cases of March v. Ward, and Clark v. Blackstock, import, that 
the word 'I' creates a several promise by each party that signs, and here 
a fortiori that must be the effect of it, for the party sued is the only person, 
who actually made the promise. The plaintiff is therefore entitled to re- 
cover." { Hall v. Smith, has been overruled by Ex parte Buckley, 14 M. & W. 



260 PARTNERSHIP. [CHAP. VIII. 

construction of the instrument certainly goes to th^ 
very verge of the law ; and perhaps may be thought 
to deserve further consideration. 

§ 144. Cases of a different character may occur, 
where the question, whether exclusive credit has been 
given to one partner, or joint contractor, may admit of 
much discussion and difficulty, founded upon, the pecu- 
liar circumstances thereof. Thus, in case one member 
of a club should order goods for the use and benefit of 
the club, all the members of the club, who concurred 
in the order, or subsequently ratified it, might be liable 
for the amount thereof, although the member, who 
ordered the goods, should be made debtor in the trades- 
man's books, unless it clearly appeared, that the trades- 
man meant to give exclusive credit to that member 
only ; for such entry in the books would not of itself be 
decisive of an intent to give such exclusive credit.^ 

469 ; s. c. 1 Ph. 562. See also In re Clarke, De G. 153, reversing Ex parte 
Christie, 3 Mont. D. & De G. 736 ; Owen v. Van Uster, 10 C. B. 318 ; Maclae 
V. Sutherland, 3 E. & B. 1 ; Snow v. Howard, 35 Barb. 56, 35 Law Mag. 298. | 
' Delauney v. Strickland, 2 Stark. 416 ; Flemyng v. Hector, 2 M. & W. 
172; Coll. on P. B. 1, c. 1, § 1, p. 31, 2d ed. ;' {Caldicott v. Griffiths, 8 
Exch. 898 ; Todd v. Emly, 8 M. & W. 505. Though the members of a 
club are not liable to third parties from the mere fact of association, they 
may be liable for the acts of agents whom they have authorized. Cockerell 
V. Aucompte, 2 C. B. n. s. 440; Burls v. Smith, 7 Bing. 705; Lind. 
on P. 55.} In the case of Flemyng v. Hector, Lord Abinger said: "I 
had thought, but without much consideration, at the Assizes, that these 
sort of institutions were of such a nature, as to come under the same view 
as a partnersliip, and that the same incidents might be extended to them ; 
that, where there were a body of gentlemen, forming a club, and meeting 
together for one common object, what one did in respect of the society 
bound the others, if he had been requested and had consented to act for 
them. Several cases have been cited in the course of the argument, which 
do not apply, with the exception of one of them, to societies of this nature. 
Trading associations stand on a very different footing. Where persons 
engage in a connnunity of profit and loss as partners, one partner has the 
right of property for tlie Avhole. So, any of the partners has a right, in 
any ordinary transactions, unless the contrary be clearly shown, to bind the 
partnership by a credit ; he might accept a bill of exchange in the name of 



CHAP. VIII.] LIABILITIES AND EXEMPTIONS. 261 

§ 145. Neither does it necessarily follow, because 
two persons, who are not partners, have joined together 

the firm, and as between the firm and strangers the partnership would be 
bound, although there might be an understanding in the firm that he was 
not to accept. It appears to me, that this case must stand upon the ground, 
on which the defendant put it, as a case between principal and agent ; and 
I am the more inclined to look at it in that light, by an observation, made 
by Mr. Piatt, in the course of the argument yesterday, on the subject of 
bills of exchange. I apprehend, that one of the members of this club 
could not bind another by accepting a bill of exchange, acting as a commit- 
tee man, even where there might be an apparent necessity to accept, as in 
the case of a purchase of a pipe of wine : the party might draw a bill, but 
I do not think he could accept the bill to bind the members of the club. It 
is, therefore, a question here, how far the conniiittee, who are to conduct 
the affairs of this club as agents, are authorized to enter into such con- 
tracts, as that, upon which the plaintiffs now seek to bind the members 
of the club at large ; and that depends on the constitution of the club, 
which is to be found in its own rules ; and upon two of the cases, those that 
were tried before me at Guilford, looking at these general rules, it certainly 
does strike me, that it is impossible to interpret them, so as to give the com- 
mittee the power of dealing on credit, even for the purpose of the club. It 
appears by the rules, that every member is to pay his subscription of ten 
guineas as entrance money, before he can become a member, and a yearly 
subscription of five guineas ; so, that by the provisions of the club, there is 
to be a fund in hand in order to bear the expenses. But then, again, every 
member, who makes use of the club, who either eats or drinks there, or takes 
any sort of refreshment, is to pay ready money. That shows again, that the 
club was not disposed, and not intended, to have any transactions on credit, 
even with its own members ; and it also shows, that care was taken to pro- 
vide ready money to meet every expense ; so that, if a party, or a gentle- 
man of the club, were to order any particular thing, that the club did not 
contain, he is to pay for it instanter ; so that no occasion was expected to be 
necessary for the committee's pledging the credit of the club, or even their 
own. Under these circumstances, as the rules of the club, which are in 
writing, must be taken to form the constitution of the club, and are to be 
construed as matters of law, I do not see what there was to go to the jury ; 
I do not see any thing in these rules, of which the jury are to be the judges. 
The words are, ' to manage the aflfairs of the club ; ' the question then is, 
what the affairs of the club are. They are to have in their hands a subscrip- 
tion, and they are to take care, that every member pays it before he comes 
into the club, and pays for every thing he has in the club. It therefore ap- 
pears that the members in general intended to provide a fund for the com- 
mittee to call upon. I cannot infer, that they intended the conunittee to 
deal upon credit, and unless you infer that that was the intention, how are 
the defendants bound ? " 



262 PARTNERSHIP. [CHAP. VIII. 

to make a purchase for a joint shipment, that they will 
be jointly liable to the vendor for the purchase-money ; 
for if the purchase has been made imder circumstances 
which demonstrate that the vendor gave an exclusive 
credit to each of them for a moiety (as by drawing a 
separate bill on each for a moiety), then each will be 
solely and separately liable only for his own share. ^ 
And the same rule may be justly applicable to cases 
of partnership, where such a division of the credit is 
authorized and acted upon by the vendor, with a clear un- 
derstanding that it is to be an exclusive credit, pro tanto. 
§ 146. The case of a debt, contracted prior to the 
existence of a partnership, has also sometimes been 
treated as a case where exclusive credit is given to the 
contracting party, and not to the firm, although they 
ultimately receive the benefit thereof.^ But it may be 
resolved into the more general principle, that a contract 
can be obligatory only upon those who are parties to 
it, or derive a benefit from it at the time of its incep- 
tion.^ In short, the joint interest or joint liability 
must be contemporaneous with the formation of the 
contract itself, in order to superinduce the correspond- 
ing liability to perform it ; and if there be no partner- 
ship then in existence, to be bound, or none which is a 
party or privy to the contract, it cannot be deemed 
their contract ; but solely that of those who contracted, 
and were capable of contracting it at the time. 0th er- 

' Gibson v. Lupton, 9 Bing. 297. { See Sims v. Willing, 8 S. «fe Ft. 103. } 

" See Ketchum v. Durke, 1 Hoffin. 538. 

3 Gow on P. c. 4, § 1, p. 150-153, 3d ed. ; Coll. on P. B. 3, c. 3, § 1, p. 
348-368, 2d ed. ; Saville v. Robertson, 4 T. R. 720; Ketchum v. Durkee, 
1 Hofim. 538; {Lind. on P. 23-30, 311-314.} Where no other time is 
fixed for the commencement of a partnership in an agreement between the 
parties, it is taken to have commenced on the date of the agreement, as the 
presumed intention of the parties. Williams v. Jones, 5 B. & C. 108. 
{See Battley v. Lewis, 1 Man. & G. 155, and § 194, post.} 



CHAP. VIII.] LIABILITIES AND EXEMPTIONS. 263 

wise, the law would introduce the extraordinary anom- 
aly of making a contract, consummate and perfect 
between all the original parties, expand so as to be in 
fact the contract of other parties, who had not, and 
perhaps could not, at the time, have any interest in, or 
privity, or connection therewith.^ 

' Go-w on P. c. 4, § 1, p. 150-152, 3d ed. — Mr. Gow has well stated the 
principle, and illustrated it by the cause of Saville v. Robertson, 4 T. R. 
720. Mr. Gow says, p. 151, 152, " A joint contract, however, entered in- 
to by one or more individuals, is binding only upon those who have a joint 
interest in it at the time of its inception ; for no subsequent act by any per- 
son, who may aftei-wards become a partner, not even an acknowledgment 
that he is liable, will entail upon that person the obligation of fulfilling such 
a contract, if it clearly appear, that a partnership did not exist at the time 
the contract was made. The joint interest must be contemporaneous with 
the formation of the contract itself, to superinduce the corresponding liabili- 
ty to perform it. If it were otherwise, the law would, in fact, create a sup- 
posed contract, when the real contract between the parties was consummated, 
before the joint interest and consequent joint risk was in existence. Thus, 
where several persons agreed upon a maritime adventure, and to provide a 
cargo of goods, which should, in the judgment of the majority, be proper 
for the voyage ; and permission was given to the supercargo (who was to 
have a proportionate profit, and bear an equal loss with the respective ad- 
venturers) to ship, on the joint account, as many goods as he might think 
fit ; such goods being first approved by a majority of the persons concerned 
in the adventure, as proper for the voyage; and it was afterwards agi-eed, 
that each party was to hold no other share or proportion in the adventui*e, 
than the amount of what each separately ordered and shipped ; and that the 
orders given for the cargo and outfit of the ship were to be separately paid, 
and that one was not to be bound for any goods or stores ordered or shipped 
by the other ; and that the supercargo should have free liberty to ship what 
goods were suitable to the voyage, over and above the ship and outfit, leav- 
ing room for those ordered by the adventurers ; and that the ship should be 
made over in trust for the general concern ; it was held, that if the supercar- 
go afterwards purchased goods, as part of the cargo, and the ship sailed 
with the goods so purchased, he alone was liable for them, and not his co- 
adventurers jointly with him. The reason on which this determination pro- 
ceeded, seems to have been, that, after the purchase of the goods made by 
the several adventurers, there was still, before they became joint property, 
a further act to be done, which was the putting them on board the sliip, in 
which they had a common concern for the joint adventure, and until that 
fui'ther act was done, the goods purchased by each remained tlie sc})arate 
property of the purchaser. The partnership in the goods did not arise 
until their admixture in ihe common adventure." Again he adds (p. 153) : 



264 PART>'ERSHIP. [chap. YIII. 

§ 14:7. This doctrine may easily be illustrated by 
a few cases. Thus, if two persons should separately 
purchase goods on their own separate accounts, and 
afterwards should agree to unite their interests therein, 
in one joint commercial adventure for their joint and 
mutual profit, this would create a partnership in the 
goods for that adventure. But it would not make 
them liable as partners to the vendors of the goods ; 
for they then had no joint interest in the purchase.^ 
The same rule would apply to a case where one mer- 
chant should purchase goods on his own sole account, 
and afterwards should ship them upon a joint adven- 
ture for joint profits with other persons, whom he had 
subsequently admitted as sub-purchasers, or to whom 
he had subsequently sold an undivided interest in the 
goods ; for in such a case the original credit was exclu- 
sively given to himself; and the other parties could in 
no just legal sense be deemed parties or privies to the 
contract of purchase.^ It would ordinarily be other- 

"Itis not, however, sufficient to constitute a joint liability for the capital 
brought into the trade, that there is to be a subsequent participation in 
the profit derived from it. In such a case, the right to participation can 
only take its origin from the time of the introduction of the capital; and, al- 
though communion of profit is a strong circumstance to explain a contract 
in itself doubtful, and to show, as the legal presumption is, that a pai-tuer- 
ship existed at the time amongst the participants ; yet, where the nature of 
the contract clearly appears, it cannot have such a retrospect as to alter it, 
and to substitute the responsibility of several for that of an individual con- 
tractor. Therefore, if several persons agree to form a partnership, and that 
each shall contribute a certain share of the capital, and any of the persons 
borrow or purchase the share, which is by him afterwards brought into the 
common stock, the liability for payment to the lender or vendor is not joint, 
but personal." 

i Gow on P. c. 4, § 1, p. 151-153, 3d ed. : Saville r. Robertson, 4 T. R. 
720 ; Coll. on P. B. 3, c. 3, § 1, p. 348-358, 2d ed.; Id. p. 365, 366 ; Young 
V. Hunter, 4 Taunt. 582 ; Gouthwaite v. Duckworth, 12 East, 421 ; {Duncan 
V. Lewis, 1 Duvall, 183.} 

- Gow on P. c. 4. § 1, p. 151-153. 3d ed. ; Young v. Hunter, 4 Taunt. 
582; Greenslade v. Dower, 7 B. & C. 635; Coll. on P. B. 3, c. 3, § 1, p. 



CHAP. VIII.] LIABILITIES AND EXEMPTIONS. 265 

,1 

wise, however, if the joint adventure were agreed 
upon before the purchase, and the purchase were to be 
made for all the persons concerned therein in the name 
of one.^ 

356-358, 2ded. ; Id. p. 365 ; Coope v. Eyre, 1 H. Bl. 37 ; Gardiner v. Childs, 8 
C. & P. 345; Gouthwaite v. Duckworth, 12 East, 421 ; {Davis v. Evans, 39 
Vt. 182.} 

' Gow on P. c. 4, § 1, p. 151-153, 2d ed. ; Gouthwaite r. Duckworth, 
12 East, 421, 4-'4 ; Waugh v. Carver, 2 IL Bl. 235, 246 ; Gardiner v. Childs, 
8 C. & P. 345 ; Smiths. Craven, 1 Cr. & J. 500 ; Post v. Kimberly, 9 Johns. 
470; Felichy w. Hamilton, 1 Wash. C. C.491; Coll. on P. B. 3,c. 3, § l,p. 349- 
357. — In the text the qualifying word ''ordinarily" is inserted with refer- 
ence to a suggestion of Mr. Justice Gibbs in Young v. Hunter, 4 Taunt. 582, 
583, where he is reported to have said: " I am by no means of opinion, that 
there may not be a case, where two houses shall be interested in goods from 
the beginning of the purchase, yet not be both liable to the vendor ; as if the 
parties agree amongst themselves, that one house shall purchase the goods, and 
let the other into an interest in them, that other being unknown to the ven- 
dor ; in such a case the vendor could not recover against him, although such 
other person would have the benefit of the goods. In Gouthwaite r. Duck- 
worth, 12 East, 421, 425, Lord Ellenborough said: " It comes to the question, 
whether, contemporary with the purchase of the goods, there did not exist a 
joint interest between these defendants. The goods were to be purchased, as 
Duckworth states in his examination, for the adventure ; that was the agree- 
ment. Then what was the adventure ? Did it not commence with the pur- 
chase of these goods for the purpose agreed upon, in the loss and profits of 
which the defendants were to share ? The case of Saville v. Robertson does 
indeed approach very near to this. But the distinction between the cases is, 
that there each party brought his separate parcel of goods, Avhich were after- 
wards to be mixed in the common adventure on board the ship, and till that 
admixture the partnership in the goods did not arise. But here the goods in 
question were purchased, in pursuance of the agreement for the adventure, 
of which it has been before settled, that Duckworth was to have a moiety. 
There seems also to have been some contrivance in this case to keep out of 
general view the interest Avhich Duckworth had in the goods ; the other two 
defendants were sent into the market to purchase the goods, in which he was 
to have a moiety ; and though they were not authorized, he says, to pur- 
chase on the joint account of the three ; yet, if all agree to share in goods 
to be purchased, and in consequence of that agreement one of them go in- 
to the market and make the purchase, it is the same, for this purpose, as if 
all the names had been announced to the seller, and therefore ail are lia- 
ble for the value of them." Mr. Justice Bayley added : " In Saville v. 
Robertson, after the purchase of the goods made by the several adventurers, 
there was still a further act to be done, which was the putting them on board 



266 PARTNERSHIP. [cHAP. VIII. 

§ 148. The same rule will apply to cases, where 
there is a separate loan of money to one of several 

the ship, in which they had a common concern, for the joint adventure ; and 
until that further act was done, the goods purchased by each remained the 
separate property of each. But here, as soon as the goods were purchased, 
the interest of the three attached in them at the same instant by virtue of 
the previous agreement." See Coll. on P. B. 3, c. 3, § 1, p. 356-358, 2d 
ed. ; Gardiner v. Childs, 8 C. & P. 345, and Smith v. Craven, 1 Cr. & J. 
500, where the subject was much considered. In this last case, A., B., and 
C, not being general partners, entered into a joint speculation for the 
purchase and imjjortation of corn, and each was to contribute a third. A. 
paid his share ; and the bankers of B. advanced money to B. on his individ- 
ual credit, which was applied to the payment of bills drawn by B. in the 
course of the said speculation. It was held, that A. was not liable to pay 
the bankers for the advance ; since it was manifest, that it was raised on 
his individual credit. On this occasion Bayley, J., said: "If I supply my 
agent with money, which he misapplies, and raises money elsewhere, can 
the person, from whom he obtains the money, sue me for the amount? If 
this had been a claim by the seller of the corn, no doubt he would have been 
entitled to proceed against all the parties, and might have called upon them 
all for payment. It is not a claim by the seller, but by the person, who, as 
between the parties themselves, is the mere hand, by which the money is 
advanced. Wharton having given collateral security, the plaintiffs, as his 
agents and on his credit, not knowing any thing of the other parties, pay 
the money, and pay it in discharge of that, which is the individual debt 
of their principal, and of him alone. As agents they had no notice that they 
made the payment, except on the individual behalf of Wharton ; he only 
was trusted, and the advances Avere made on his credit alone ; the plaintiffs 
were not deluded by the prospect of a partnership security, and the claim 
must be restricted to Wharton alone. See what a situation the defendant 
Craven would be placed in, were it otherwise. He was justified in sup- 
posing, that Wharton's share was raised out of his own funds. He finds, 
that all the bills are honored, when they become due, with funds, which he 
would naturally conclude were really the funds of Wharton ; and to my 
mind, it would be most unjust, if, after a lapse of time. Craven, having 
settled the full amount of what, as between himself and Wharton, he was 
bound to pay, a third person were allowed to come forward and say, ' I 
advanced the money on the credit of Wharton only, but I find, that it was 
applied in payment of your liabilities, and therefore I look to you.' A party 
is not liable as a partner, except he give to his partner express or implied 
authority to pledge his credit in the transaction, out of which the claim 
arises. Now, what authority does Craven appear to have given to Wharton 
to borrow this money from the plaintiffs ? It is not sufficient to say, that 
Craven was relieved from a liability ; for your payment of my debt does 
not make mo your debtor, unless the payment be made at my request. The 



CHAP. VIII.] LIABILITIES AND EXEMPTIONS. 267 

joint adventurers, for the purpose of founding a part- 
nership or joint adventure ; the firm, when formed, 
will not be liable for the advance ; for the case is not 
distinguishable from one, where several persons are to 
contribute their separate proportions of money towards 
a common fund for joint purposes, and each is to 
borrow, and does borrow, his own share upon his own 
separate account and credit.^ In short, in all cases of 
this sort, in order to bind the firm, the intended part- 
ner must either have had an original authority to 
purchase goods, or borrow money upon the joint 
account, and have exercised that authority by a pur- 
chase or loan on their account, and not on his own 
exclusive credit, or the transaction must have been 
subsequently ratified and adopted by the firm, as one 
for which they were originally liable, or for which they 
now elect to give their joint security.^ 

§ 149. These cases seem sufficiently clear upon prin- 
ciple. But others may arise, where the application of 
it may involve more complexity of circumstances, and 
of course more embarrassment in enunciating it. Thus, 
where A. and B., stationers, ordered certain paper- 
makers to supply paper to C. and D., printers, for the 
purpose of printing certain specified works ; and it 
turned out afterwards in proof, that C. and D. were 
interested as partners in the publication of those works, 
the question arose, whether C. and D. w^ere liable to 
the paper-makers for the paper supplied. The solution 

partnership was not liable, unless Wharton had an authority from them to bor- 
row ; and no such authority, express or implied, exists in the present case." 

' Coll. on P. B. 3, c. 3, § 1, p. 357-360, 2d ed. ; Saville i'. Robertson, 4 
T. R. 720; Greenslade v. Dower, 7 B. & C. 635; Wilson v. Whitehead, 10 
M. & W. 503; {Donnally v. Ryan, 41 Penn. St. 306.} 

2 Coll. on P. B. 3, c. 3, § 1, p. 357, 359, 360, 2d ed. ; Saville v. Robert- 
son, 4 T. R. 720; Gouthwaite v. Duckworth, 12 East, 421 ; Browne v. Gib- 
bins, 5 Bro. P. C. by Tomlins, 491 ; Gow on P. c. 4, p. 150-153, 3d ed. 



268 PARTNERSHIP. [CHAP. VIII. 

of that question depended upon another, and that was ; 
when the partnership in the pubUcation of those works 
commenced, whether before or after the paper was 
ordered. If before, then all the partners were liable, 
and C. and D. among them ; if after, then A. and B. 
only were liable. And to arrive at a just conclusion 
on the subject, it might be material to consider, 
whether the ordering of the goods Avas the exclusive 
act of A. and B., and intended to be upon their own 
exclusive credit ; or was to be on that of the joint 
concern, with the approbation of all who were to par- 
ticipate in the publications.^ So, where A., B., and C. 
verbally agreed that they should bring out and be 
jointly interested in a periodical publication. A. was 
to be the publisher, and to make and receive general 
payments ; B. was to be the editor ; and C. to be the 
printer ; and after payment of all expenses they were 
to share the profits of the work equally ; C. was to 
furnish the paper and charge it to the account at cost 
prices ; and no profits were ever made, nor any 
accounts settled ; the question arose, whether a third 
person, who furnished the paper to A. for the purpose 
of being used by him in printing the periodical, could 
maintain an action therefor against A., B., and C, or 
was limited to an action against C. only. The court 
held that A., B., and C. were not jointly liable therefor, 
but C. only.^ 

§ 150. So, in other 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 establishing the same, it 
is often a matter of no small nicety to ascertain who 

» Gardiner v. Cliilds, 8 C. & P. 345; Coll. on P. B. 3, c. 3, § 1, p. 356, 
357, 2d ed. 

2 Wilson V. Whitehead, 10 M. & W. 503. 



CHAP. VIII.] LIABILITIES AND EXEMPTIONS. 269 

of the parties are liable therefor.^ In contemplation 
of law, the joint liabilities will of course commence 
only from the time when the parties have agreed to 
act together for the common purpose, and that precise 
time is sometimes difficult to ascertain.^ There is a 

1 Coll. on P. B. 3, c. 3, § 2, p. 365, 2d ed. ; 2 Bell, Comm. B. 7, c. 3, 
p. 649-G52, 5th ed. ; Young v. Hunter, 4 Taunt. 582 ; Bourne v. Freeth, 9 
B. & C. 632 ; Braithwaite v. Skofield, 9 B. & C. 401 ; Howell r. Brodie, 6 
Bing. N. C. 44. 

■ 2 [See Atkins v. Hunt, 14 X. H. 205, 206. — Gilchrist, J., here observed : 
" There is of course an essential difference between a mere proposition to 
form a partnership, audits actual constitution. Persons may take a deep 
interest in the objects to be accomplished by the company ; may make 
donations to aid its progress ; or may sign their names to subscription 
papers for the same end, without being liable for debts which other persons 
may contract in the prosecution of the same purpose. But a difficult ques- 
tion often arises, as to where the proposition to make the contract ends, 
and the contract itself begins. In Bourne v. Freeth, 9 B. & C. 632, a 
prospectus was issued, stating the conditions upon which the company was 
formed ; that the concern was to be divided into twenty share?, to be under 
the management of a committee, and ten per cent of the subscriptions to be 
paid in by a certain date. It was held that this prospectus imported only 
that a company was to be formed, and not that it was actually formed, and 
that the signature to the prospectus did not indicate to any person who 
should read it that the signer had become a member of a company already 
formed. So in a case where all the acts proved and relied on were equally 
consistent with the supposition of an intention on the part of the defendant 
to become a partner in a trade or business to be afterwards carried on, pro- 
vided certain things were done, as with that of an existing partnership, it 
was held that he was not a partner. Dickinson v. Valpy, 10 B. & C. 128, 
per Parke, J. And where a prospectus for a company was issued, to be 
conducted pursuant to the terms of a deed to be drawn up, it was held that 
an application for shares, and payment of the first deposit, did not constitute 
one a partner who had not otherwise interfered in the concern. Fox v. 
Clifton, 6 Bing. 776. It was an important element in that decision, that 
the deed was not executed by the defendant who Avas sought to be charged 
as a partner. In Howell v. Brodie, 6 Bing. N. C. 44, the defendant, from 
1829 until 1833 advanced various sums, with a view to a partnership in a 
market about to be erected ; knew that the money was applied towards the 
erection, and was consulted in every stage. In October, 1833, it was settled 
by a written agreement that he should have a seventh share of it; but it 
was held that he was not liable as a partner until October, 1833, although 
profits had been made but not accounted for to him before that time. Lord 
C. J. Tindal mentions the fact that no account of profits was rendered pre- 



270 PARTNERSHIP. [CHAP. VIII. 

gradual progress even in the formation of schemes of 
this nature ; and preliminary acts are sometimes done, 
and orders given by several persons, before they have 
absolutely fixed upon being concerned in the joint 
undertaking ; and yet it rests in negotiation, whether 
they shall, or shall not, become partners.^ In such 

vious to October, 1833, as being in favor of the defendant."] {Lind. on 
P. 23-25 ; Gabriel v. EviU, 9 M. & W. 297 ; Be Hall, 15 Ir. Ch. 287. 
Osborne v. Jullion, 3 Drew. 596 ; Davis v. Evans, 39 Vt. 182. See Jef- 
ferj's V. Smith, 3 Russ. 158.} 

1 Questions of this sort often arise in cases of unincorporated joint-stock 
companies, in which every member is liable in solido for the debts con- 
tracted on account of the partnership, as every member is in ordinary 
commercial partnerships. In joint-stock companies many preliminary acts 
are done towards the establishment of the company ; and it often becomes 
a matter of nicety to ascertain, when a person is actually a member and 
partner, or not. The general doctrine is well summed up by Mr. Collyer 
(Coll. on P. B. 5, c. 1, § 2, p. 735-743). He says: "In joint-stock 
companies, more than in any other kind of partnership, a variety of acts 
are done before the partnership is actually 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 launching the 
company ; yet they cannot by such proceedings bind those who merely 
answer their invitation ; those for instance, who name themselves sub- 
scribers, 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 partnership, as regards these passive sub- 
scribers, is executory only, and may be abandoned, if the terms of the 
partnership are not reasonably fulfilled by the projectors. Under such 
circumstances, they 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 previous conditions 



CHAP. VIII.] LIABILITIES AND EXEMPTIONS. 271 

cases the question 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 liable, 
who have acted and ordered the materials, or work, or 
labor, or services.^ 

§ 151. Upon the like ground, where, previous to the 
formation of a company, a prospectus, signed by the 
defendant, was issued, indicating that it was in contem- 
plation to form the company ; and it appeared, that 
the defendant solicited others to become share-holders, 
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 afterwards 
taken ; but he never paid his subscription ; it was held, 
that the defendant 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 

are performed, he gives no authority at all to any other individual, until all 
those contracts are performed. 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.' " See also Fox v. Clifton, 6 Bing. 776 ; s. c. 9 Bing. 115 ; Harvey v. 
Kay, 9 B. & C. 356; Bourne v. Freeth, 9 B. & C. 632, 638; Dickinson v. 
Valpy, 10 B. & C. 128, 142; Doubleday v. Muskett, 7 Bing. 110, 118; 
Pitchford V. Davis, 5 M. & W. 2 ; Howell v. Brodie, 6 Bing. N. C. 44. 

' Coll. on P. B. 3, c. 3, § 1, p. 348-350, 2d ed. ; Id. 365, 366 ; Id. B. 5, c. 
1, § 2, p. 735-743; Howell v. Brodie, 6 Bing. X. C. 44; Gouthwaite 
V. Duckworth, 12 East, 421 ; Young v. Hunter, 4 Taunt. 582 ; 2 Bell, 
Comm. B. 7, c. 3, p. 649-652, 5th ed. [Thus where certain per- 
sons, proposing to form a company, applied to the defendant to become 
president, to which he assented, and permitted himself to be publicly 
named as such ; but the company was never formed, though meetings pre- 
liminary to its formation were had, at one of Avhich the defendant presided ; 
it was held that the jury might, if they thought fit, infer that the defendant 
held himself out as contracting for work to be done in respect of such pre- 
liminary meetings, though the order for such work was not directly given 
by the defendant ; and that the defendant, if he so held himself out, was 
liable for the work performed. Lake v. Duke of Argyll, 6 Q. B. 477 ; 
Wood V. Duke of Argyll, 6 Mann. & G. 928.] 



272 PARTNERSHIP. [cHAP. VIII. 

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, and 
had been present at a meeting of the company, and a 
party to a resolution to purchase the goods.^ On the 

1 Bourne r. Frecth, 9 B. & C. G32 ; Dickinson i'. Valpy, 10 B. & C. 
128. See Forrester v. Bell, 10 Ir. Law, ooo ; Fox v. Clifton, 6 
Bing. 776; {Lind. on P. 25-30. See Reynell v. Lewis, 15 M. & W. 
517 ; Hutton v. Thompson, 3 H. L. Cas. 161 ; Briglit v. Hutton, lb. 
341, 368.} In Fox v. Clifton, Lord Chief Justice Tindal said: "Upon 
this first question, therefore, whether a partnership was actually formed, 
we think, if the right to participate in the profits of a joint concern is 
to be taken, as undoubtedly it ought to be, as a test of a partnership, 
these defendants were not entitled at any time to demand a share of profits, 
if profits had been made ; inasmuch as they had never fulfilled the condi- 
tions, upon which they subscribed. We think the matter proceeded no fur- 
ther, than that the defendants had oflfered to become partners in a projected 
concern, and that the concern proved abortive before the period, at which 
the partnership was to commence : and, therefore, with re^^pect to the 
agency of the directors, which is the legal consequence of a partnership com- 
pletely formed, we think the directors proceeded to act before they had au- 
thority from these defendants ; for they began to act in the name of the 
whole, before little more than half the capital was subscribed for, or half the 
shares were allotted. The persons, therefore, who contracted with the di- 
rectors, must rest upon the security of the directors, who made such con- 
tract, and of those subscribers, who by executing the deed have declared 
themselves partners, and of any, who have by their subsequent conduct rec- 
ognized and adopted the acts and contracts of the directors. But they 
have not the security of the present defendants, who are not proved by the 
evidence to stand in any one of such predicaments. It is unnecessary to 
advert to any of the cases, which have been referred to, each of which must 
I'est upon its own peculiar circumstances ; except that with re.>;pect to Per- 
ring V. Hone, decided in this court, we think it right to observe, that the 
great point, whether there was a partnership or not, does not appear to have 
been made the prominent subject of argument, but to have been rather as- 
sumed than disputed ; for the advertisement or prospectus was not brought 
to the attention of the court, nor is there any argument upon the terms of 
it. It is not incompatible with that determination, that the court might 
have hold the proof of partnership inconqjlete, if the same materials had 
been brought before them, which are presented to us." 

2 Ibid. ; Braithwaite v. Skofield, 9 B. & C. 401 ; Fox v. Clifton, 6 Bing. 
776 ; Howell v. Brodie, 6 Bing. N. C. 44. 

» Ibid.; {Tredwen v. Bourne, 6 M. & W. 461; Peel v. Thomas, 15 
C. B. 714.} 



CHAP. VIII.] LIABILITIES AND EXEMPTIONS. 273 

other hand, if a party supposes himself by mistake to 
liave an interest in a company ah'eady formed, and he 
has not ; if he does not hold himself out as a partner, 
and no credit is given to him, the contracts of the com- 
pany will not bind him, although he should afterwards, 
acting under the mistake, declare himself to have an 
interest therein.^ 

§ 152. From what has been already stated, it is ap- 
parent, that an incoming partner (that is, a new 
partner coming into an existing firm) will not be liable 
in respect to debts, contracted by the firm previously 
to his entering it.^ But although this is the clearly 
established doctrine, yet it does not follow, that an 
incoming partner may not become liable for such debts, 
by expressly assuming them upon a proper considera- 
tion, or otherwise dealing with the creditor in such a 
manner as to create an implied obligation and duty to 
pay the same in common with the old firm. The pre- 
sumption of law, indeed, is against any such liability ; 
but the presumption, like many others, may be re- 
moved by due and satisfactory proofs of the contrary 
intention and agreement.^ Thus, for example, if the 
balance due from the old firm be with the consent of 
the creditor, and all of the new firm carried to the 
debit of the new firm, the latter deriving a benefit 
therefrom, as a credit or deposit, it is very clear, that 

^ Vice V. Anson, 7 B. «fe C. 409. [Explained in Owen v. Van 
Uster, 10 C. B. 318, 1 Eng. L. & Eq. 396.] {Xewton v. Belcher, 
12, Q. B. 921.} 

* Coll. on P. B. 3, c. 3, § 2, p. 361, 2d ed. ; Sbirreff v. WUks 
1 East, 48; Williams v. Jones, 5 B. & C. 108; Vere v. Ashby, 10 B 
& C. 288; [A}Tault v. Chamberlin, 26 Barb. 83]; {Lind. on P 
314-318.} 

' Ibid. ; Catt v. Howard, 3 Stark. 3; Ex paiie Jackson, 1 Ves. Jr. 131 
Kirwan v. Kirwan, 2 Cr. & M. 617 ; Helsby v. Mears, 5 B. & C. 504 
[Beale v. Mouls, 10 Q. B. 976] ; {Rolfe v. Flower, Law Rep. 1 P. C. 27 ; 
s. c. 3 Moore P. C. N. s. 365 ; Smead v. Lacey, Disney, 239. } 

18 



274 PARTNERSHIP. [cHAP. VIII. 

the new firm will be bound thereby and therefor, as 
their own debt.^ A fortiori, the same rule will apply, 
where it is an express stipulation of the partnership 
between the old firm and the incoming partner, that 
the new firm shall assume all the outstanding debts 
of the firm, and shall pay the same, and the creditor 
shall assent thereto and take the new fixm, as his 
debtors.^ 

§ 153. Indeed, it may be generally stated, that, in 
all cases of this nature, the primary consideration is, 
not so much to ascertain between what parties the orig- 
inal contract was actually made, as it is to ascertain 
whether there has subsequently been, with the consent 
of all the parties, any change or extinguishment of 
that contract. Where it is established by satisfactory 
evidence, that, upon the accession of a new partner, a 
new promise has been made by the entire new firm, in 
respect of the old debt, with the consent of the old 
partners, as well as of the creditor, it will amount to a 
novation of the debt, as it is called in the Roman law 
(novatio dehiti), and the new partner will be chargeable 
with the debt. But such an adoption or ratification of 
the new promise by the new partner must be clearly 
shown, otherwise it will not be obligatory upon him ; 
and it cannot be inferred from the mere act of joinmg 
in the partnership, without other circumstances in aid 
of the inference.^ 

§ 154:. Hitherto we have been principally consider- 
ing cases, where either an exclusive credit has been 

> Coll. on P. B. 3, c. 3, § 2, p. 361-365, 2d ed. ; Ex jmrte Peele, 6 Yes. 
602. 

* Ibid.; {Ex parte 'Wlnimove., 3 Deac. 365.} 

3 Coll. ou P. B. 3, c. 3, § 2, p. 364, 365, 2d ed. ; Vere v. Ashby, 10 B. 

6 C. 288. See also Lloyd v. Asbby, 2 B. «& Ad. 23 ; Hoby v. Roebuck, 

7 Taunt. 157: Ketchum v. Durkee, HeflF, 538; {Lind. on P. 317; 
Stemburg v. Callanan, 1-4 Iowa, 251.} 



CHAP. YIII.] LIABILITIES AND EXEMPTIONS. 275 

given to one partner in the partnership business, or 
where the transaction could not, from its nature and 
character, or its period of commencement or origin, be 
deemed to bind the partnership. But it is quite pos- 
sible for third persons to enter into a contract with one 
partner, under an impression that the particular con- 
tract is made with and binding on the firm, when in 
point of law it has no such obligation. (1.) Thus, in 
the first place (as we have seen),^ if a person should 
lend and advance money to a firm at the request of 
one partner, and take his separate note or bill, or other 
security, for the amount, not intending thereby to give 
an exclusive credit to such partner, it is very clear, 
that he cannot sue the partnership on such note or bill, 
or other security, whatever might be his remedy against 
the fu'm for the money lent and advanced.^ (2.) In 
the next place, if a third person should contract with 
one partner in a matter beyond, or unconnected with 
the partnership business, the firm will not be liable to 
him upon such contract, although he may have im- 
plicitly trusted to the credit of the firm, and not to the 
individual partner alone.^ (3.) In the next place, a 
third person may, upon receiving a consideration, assent 
to such private arrangements Qf a firm, as will deprive 
him in point of law of any remedy against the firm, 
or a part of them, although he did not so intend.'* (■!.) 
And in the next place (as we have seen),^ the custom 
of a particular trade may essentially affect the liability 

1 Ante, § 136, 137, 140, 142. 

2 Coll. ou P. B. 3, c. 2, § 2, p. 315-323, 2d ed.; Siffkin v. Walker, 2 
Camp. 308 ; Emly v. Lye, 15 East, 7 ; Denton v. Rodie, 3 Camp. 493 ; [Watt 
V. Kirby, 15 111. 200.] 

* Coll. on P.B. 3, c. 2, § 2, p. 31G, 324-326 ; Ex parte Agace, 2 Cox, 312. 
4 Coll. on P. B. 3, c. 2, § 2, p. 316, 326-329, 2d ed. ; Bolton i\ Puliei-, 1 
B. & P. 539. 
^ Ante, § 141. 



276 PARTNERSHIP. [cHAP. VIII. 

of the firm to a third person upon a contract, made 
with one of the partners, if that person has full notice 
of the custom, and is therefore bound by it, whatever 
might have been his own private interpretation there- 
of, as to its being an obligation binding on the firm.-^ 

§ 155. The liability of the firm to third persons may 
thus, in the very origin or progress of the transactions 
of one partner, or other person, assuming to act in be- 
half of the firm, not only never arise, or it may be 
varied, limited, or qualified ; but even when the liability 
has clearly attached, and become absolute and binding, 
subsequent transactions between such third persons and 
one of the partners may work an extinguishment of 
such liability, either Avholly or partially.^ Thus, if a 
partnership were originally liable to a creditor for a 
debt, and he should afterwards accept a security of one 
partner, at all events, if it should be a security of a 
higher or negotiable nature, for the whole debt, as a 
satisfaction thereof, wholly or in part, it will operate 
as an extinguishment of the debt of the partnership.^ 

' Coll. on P. B. 3, c. 2, § 2, p. 316, 329-331, 2d ed. ; Barton v. Hanson, 2 
Taunt. 49 ; Hiard v. Bigg, Manning's Nisi Prius, Dig. Index, 220 ; Gow on 
P. c. 4, § l,p. 149, 150, 3d ed. 

^ Coll. on P. B. 3, c. 3, § 3, p. 376-383 ; Id. p. 385-389, 2d ed. ; Gow on P. 
c. 3, §1, p. 129, 3d ed.; Newmarcli v. Clay, 14 East, 239; 2 Bell, Comm. 
B. 7, c. 2, p. 638, 639,5th ed.; ante, § 146, 150. {On releases, see § 168.} 

3 Gow on P. c. 4, § 1, p. 155-157, 3d ed. ; Coll. on P. B. 3, c. 3, § 3, 
p. 385-389, 2d ed. ; Keed v. White, 5 Esp. 122 ; Evans v. Drumraond, 4 Esp. 
89, 92; Newmarch v. Clay, 14 East, 239 ; [Stephens v. Thompson, 28 Vt. 77] ; 
Thompson ?;. Percival, 5 B. & Ad. 925. — It is laid down in Gow on P. c.4, 
§ 1, p. 155-157, 3d ed., that the security should be of a higher nature than the 
original debt, in order to extinguish the partnership debt. But that doctrine 
has since been overturned. The very question was before the court in Thomp- 
son V. Percival, 5 B. & Ad. 925. On that occasion Lord Denman, in deliver- 
ing the opinion of the court, said : " It appears to us, that the facts proved 
raised a question for the jury, whether it was agreed between the plaintiffs 
and James, that the former should accept the latter as their sole debtor, and 
should take the bill of exchange accepted by him alone, by way of satisfac- 
tion for the debt due from both. If it was so agreed, we think, that the 



CHAP. Vril.] LIABILITIES AND EXEMPTIONS. 277 

Upon the like ground, if the creditor should receive 
the separate security of each partner, for his own share 

agreement and receipt of the bill -would be a good answer on the part of 
Charles Pereival to this demand, by way of accord and satisfaction. It is not 
necessary to determine, whether the assent of Charles to this agreement was 
necessary, in order to give it such an operation ; because if it was, there is 
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 
partnership debts. It cannot be doubted, but that, if a chattel of any kind 
had been, by the agreement of the plaintiffs, and both the defendants, given 
and accepted in satisfaction of the debt, it would have been a good discharge. 
It is not required, that the chattel should be of equal value ; for the party re- 
ceiving it is always taken to be the best judge of that in matters of uncertain 
value. Andrew v. Boughey, Dyer, 75, a. Nor can it be questioned, but 
that the bill of exchange of third persons, given and accepted in satisfaction of 
the debt, would be a good discharge. But it is contended, that the accept- 
ance of a bill of exchange by one of two debtors cannot be a good satisfac- 
tion, because the creditor gets nothing which he had not before. The written 
security, however, which was negotiable, and transferable, is of itself some- 
thing different from that which he had before ; and many cases may be con- 
ceived, in which the sole liability of one of two debtors may be more benefi- 
cial 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 sui*- 
vlvorship, or In various other ways; and whether It was actually more 
beneficial in each particular case, cannot be made the subject of Inquiry. 
The cases of Lodge v. Dicas, 3 B. & Aid. 611, and David v. Ellice, 5 B. & C. 
196, are said to be against this view of the law. [Lodge v. Dicas, may now 
be considered as overruled. Lyth v. Ault, 7 Exch. 669, 11 Eng. Law & Eq. 
580. See Wildes v. Fessenden, 4 Met. 12 ; Harris v. Lindsay, 4 Wash. C. C. 
271.] In the former, however, no new negotiable security was given, nor 
does the difference between the joint liability of two, and the sejmrate lia- 
bility of one, appear to have been brought under the consideration of the 
court. In the latter, no bill of exchange was given, and that decision, 
on consideration. Is not altogether satisfactory to us. We cannot but 
think, that there was abundant evidence in that case to go to a jury (and 
upon which the court might have decided), of the payment of the old 
debt by IngHs, Ellice & Co. to the plaintiff, and a new loan to the new firm ; 
which might have been as well effected by a transfer of account by mutual 
consent, as by actual payment of money. The cases of Evans v. Drummond, 
4 Esp. 89, and Reed v. White, 5 Esp. 122, are authorities the other way. In 
the former, Lord Kenyon points out forcibly the altered relation of the par- 
ties by the substitution of the bill of the remaining partner for tliat of the 
firm ; and it is difficult to see on what ground he decided the case, unless upon 
this, viz., that such substitution under an agreement oi)erated as a satisfaction, 
as far as regarded the retiring partners; and in Heed i\ AVhite, Lord Ellen- 



2 78 PARTNERSHIP. [CHAP. Till. 

of the debt, in satisfaction thereof, all joint liability of 
the partnership for the debt wonld henceforth be gone/ 
The doctrine is eqnallv true in the converse case, where 
a partnership is a creditor, and the separate and distinct 
security of the debtor is taken to each partner severally 
for his share of the debt.- 

§ 156. This question most generally occurs in cases 
of a retiring partner, where the creditor, knowing of his 
retirement, subsequently gives credit to the remaining 

borough acted lapon that authority, and so directed a special jury of merchants, 
who entirely agi-eed with him. These cases were afterwards brought to the no- 
tice of Lord Ellenborough, who expressed his approbation of them, in Bedford v. 
Deakin, 2 Stark. 178. That case, however (which was also before the court, 
in 2 B. & Aid. 210), was distinguished from them, because the creditor there 
expressly reserved the liabiUty of the original debtors. If, therefore, the 
plaintiffs in this case did expressly agree to take, and did take the separate 
bill of exchange of James in satisfaction of the joint debt, we are of opinion 
that his doing so amounted to a discharge of Charles," See s. p. Earwan v. 
Kirwan, 2 Cr. & M. 617 ; Hai-t v. Alexander, 2 M. & W. 484 ; Harris v. [Far- 
well, 15 Beav. 31,15 Eng. L. & Eq. 70 ; Benson v. Hadfield, 4 Hare, 32] ; 
Coll. on P. B. 3, c. 3, § 3, p. 385-398, 2d ed. {A bond given by one partner 
for a partnership debt extinguishes the original debt, unless it be shown to 
have been intended only as a collateral security. See cases collected in 
1 Sm. Lead. Cas. 571, [459], 6th Am. ed. So judgment against one part- 
ner merges a*firm debt. 1 Sm. Lead. Cas. 6th Am. ed., ubi supra ; Lind. 
on P. 368-370; Ex parte Higgins, 3 De 6. & J. 33. Equity will some- 
times interfere to give relief against the partnership after a bond has been 
given by one of the partners. See Smith v. Black, 9 S. & R. 142, McNaugh- 
ten «. Partridge, 11 Ohio, 223; Xiday v. Harvey, 9 Gratt 454. Taking 
the securit}- of one partner for a firm security of no higher nature does not of 
itself extinguish the latter in the absence of some express or implied agree- 
ment. Byles on Bills, 369 : Bottomley r. Nuttall, 5 C. B. x. s. 122 ; Waydell 
V. Luer, 3 Denio, 410 ; Hill r. Voorhies, 22 Penn. St. 68 ; Potter r. McCoy, 
26 Penn. St 458 ; 1 Sm. Lead. Cas. 566. [453], 6th Am. ed. ; Lyth v. Ault, 
American note, 7 Exch. 675. Whether this would be the case in those States, 
such as Massachusetts and Vermont, where the giving of a note is prima facie 
pavment is a qucere suggested by Professor Parsons. Parsons on P. 111. See 
Stephen v. Thompson, 28 Yt. 7 7, where a receipt from one partner " to bal- 
ance account " was held prima facie a discharge of the partnership. } 

1 Gow on P. c. 3, § 1. p. 129, 130, 3d ed. ; (Garret v. Taylor, 1 Esp. X. P. 
117 ; Kirkham v. Newstead, 1 Esp. X. P. 117 ; Coll. on P. B. 3, c. 5, § 1, p. 
467, 2d ed. ; AVats. on P. c. 8, p. 420, 2d ed. 

= Ibid. 



CHAP. VIII.] LIABILITIES AND EXEMPTIONS. 279 

partners, or to the new firm, and enters into new and 
separate contracts with the latter, touching his debt, or 
allows his property to remain under their control and 
management, as, for example, by way of new deposit, 
or by carrying the balance to the debit of the new firm, 
or by deferring payment of balances upon receiving 
additional interest, or by receiving a separate security 
therefor, or upon other considerations. In such cases 
the general conclusion is, that exclusive credit is in- 
tended to be given to the new firm ; and if so, then the 
retiring partner is discharged.^ But the mere striking 
of the balance, and carrying the same to a new account, 
opened with the new firm, will not alone extinguish the 
original debt against the old firm, unless accompanied 
by other circumstances, which establish, that a new and 
exclusive credit is given to the new firm." 

8 157. In cases of this sort, where there are runnino^ 
accounts between the firm and third persons, and one 
of the partners retires, the question, as to the appropri- 
ation of payments, subsequently made by the partners 
remaining in the firm, often arises, and especially in re- 

' Evans v. Drummond, 4 Esp. 89 ; Reed v. White, 5 Esp. 122 ; Oakley 
V. Pasheller, 10 BHgb, n. s. 548 ; s. c. 4 CI. & Fin. 207 ; Hart v. Alexander, 
2 M. & W. 484 ; Thompson v. Percival, 5 B. & Ad. 925 ; Devaynes v. 
Noble, 1 Mer. 530 ; [Farrar v. Deliinne, 1 C. & K. 580] ; 2 BeU, Comm. B. 
7, c. 2, p. 638, 639, 5th ed. ; Gow on P. c. 5, § 2, p. 244, 245, 3d ed. ; Coll. 
onP. B. 3, c. 3, § 3, p. 376-398, 2ded. {See Lind. on P. 353-367.} The 
cases of David v. Ellice, 5 B. & C. 196, and Lodge v. Dicas, 3 B. & Aid. 
611, are the other way. But their authority seems shaken, if not entirely 
overturned, in the more recent decisions, and especially in the cases of 
Thompson v. Percival, 5 B. «fc Ad. 925, and Hart v. Alexander, 2 M. & W. 
484 ; [Harris r. Farwell, 15 Beav. 31, 15 Eng. L. & Eq. 70 ; Lyth v. Ault, 7 
Exch. 669, 11 Eng. L. & Eq. 580.] See Coll. on P. B. 3, c. 3, § 3, p. 383- 
398, 2d ed. ; Id. B. 3, c. 3, § 2, p. 326, 327, where all the authorities are 
collected and commented on. See also Gow on P. c. 4, § 1, p. 155-159, 
3ded. 

^ Coll. on P. B. 3, c. 3, § 3, p. 391, 392, 2d ed. ; David c. Ellice, 5 B. 
& C. 196; Lodge v. Dicas, 3 B. & Aid. 611; Hart c. Alexander, 2 M. 
& W. 484. 



280 PARTNERSHIP. [cHAP. VIII. 

lation to banking transactions. As to this the doctrine 
has been generally laid do\yn, that where divers debts 
are due from a person, and he pays money to his cred- 
itor, the debtor may, if he pleases, appropriate the pay- 
ment 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 appropri- 
ation by either party, and there is an account current 
between them (as is the case between banker and cus- 
tomer), the law makes an appropriation according to 
the order of the items of the account, the iirst item on 
the debit side of the account being discharged or re- 
duced by the first item on the credit side.^ 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 ac- 
count be continued, the balance, for w^hich the retiring 
partner is liable, will be diminished by every payment, 
which is made by the new firm, supposing such pay- 
ment not to be appropriated to the discharge of any 
specific item ; because in such case, it is the first item 
on the debit side of the account, which is discharged or 
reduced by the first item on the credit side." 

1 Coll. on P. B. 3, c. 3, § 3, p. 376-383, 2d ed. ; Davavnes v. ISToble, 
Clayton's Case, 1 Mer. 572. See Copland v. Toulrain, 1 West, H. L. 164; 
s. c. 7 CI. & Fin. 349; {Xewmarch v. Clay, 14 East, 239; Brooke v. 
Enderby, 2 Brod. & B. 70; Smith v. Wigley, 3 Moore & Sc. 174; Stern- 
dale V. Hankinson, 1 Sim. 393 ; Bank of Scotland v. Christie, 8 CI. & Fin. 
214 ; Allcott V. Strong, 9 Cush. 323 ; Stanwood v. Owen, 14 Gray, 195 ; 
Logan V. Mason, 6 W. & S. 9.} 

2 Post, § 253-256 ; Ibid. — Mr. Collyer has added in another place 
(p. 321), the following remarks : "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 pa}TQent, if made by the 
payee. Sir William Grant was inclined to hold, according to the principles 



CHAP. VIII.] LIABILITIES AND EXEMPTIONS. 281 

§ 158. It frequently happens, that upon the retire- 
ment of one partner, the remaining partners undertake 

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, vehere such a rule, 
if strictly adhered to, would be productive of injustice ; and it is manifestly 
at variance with the decisions on this subject in the courts of common law. 
On the other hand, those courts have been inclined to favor the creditor too 
much, and have in many cases ' extended the proposition — that if the 
debtor does not apply the payment, the creditor may make the application 
to what debt he pleases — much beyond its original meaning, so as in 
general to authorize the creditor to make his election when he thinks fit.' 
In a recent case, however, the court of King's Bench came to a very just 
decision on this important subject. Thus, in Simson v. Ingham, an action 
on a bond was brought by Bruce & Co., bankers, against the heirs and 
devisees of Benjamin Ingham. The bond was given by Ingham and another, 
bankers, at Huddersfield, to the plaintiiJs, their London correspondents, 
conditioned for remitting money to provide for bills, and for the repayment 
of such sums as Bruce & Co. might advance on account of persons consti- 
tuting the Huddersfield Bank. The damages were assessed by an arbitrator 
at £13,845, subject to the opinion of the court, upon the following facts : 
The house of Bruce & Co. were in the habit of sending to the Hudders- 
field 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 balance of that account was greatly in favor of 
Bruce & Co. No alteration in the account was made in the books of Bruce 
& Co. immediately on the death of Benjamin Ingham; but, during the 
residue of that month and a part of October, the remittances made by the 
Huddersfield Bank, and the payments made for them by Bruce & Co., were 
entered in continuation of the former account. Before, however, any 
account was transmitted to the Huddersfield Bank, subsequent to that for 
August, Bruce & Co., in consequence of a communication 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. & 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 month of October. 
From this time the old and new accounts were kept separate in the books of 
Bruce & Co. The Huddersfield Bank did not appear to have ever objected 
to the accounts being kept separately by Bruce & Co., although in their own 
books they only kept one account. The arbitrator was of opinion, that. 



282 PARTNERSHIP. [CHAP. VIII. 

to pay the debts and to secure the credits of the firm. 
This is a mere matter of private arrangement and 
agreement between the partners ; ^ and can in no re- 
spect be admitte(i^ to vary the rights of the existing 
creditors of the firm.^ But in all cases of this sort 
it may be stated, as a general doctrine, that if the 
arrangement is made known to a creditor, and he 
assents to it, and by his subsequent act, or conduct, or 
binding contract, he agrees to consider the remaining 
partners as his exclusive debtors, he may lose all right 
and claim against the retiring partner, especially if the 
retiring partner will sustain a prejudice, and the cred- 
itor will receive a benefit from such act, conduct, or 
contract.^ Some illustrations of this doctrine have 
been already stated in the cases of an exclusive credit 

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 tlie sum above aAvarded ; 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 debtors, were not 
conclusive on the creditors, and consequently, that the general legal appro- 
priation, 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 credi- 
tor making no appropriation at the time of payment, and if, after such pay- 
ment, 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." 

* [And if the new firm misapply the assets, they w^ill be liable to the out- 
going partner for any payments by him of the old debts. Peyton v. Lewis, 
12 B. Mon. 356.] 

2 Coll. on P. B. 8, c. 2, § 2, p. 327-329, 2d ed. ; Id. B. 3, c. 3, § 3, p. 
383-400. 

3 Coll. on P. B. 3, c. 3, § 3, p. 383-398, 2d ed. 



CHAr. VIII,] LIABILITIES AND EXEMPTIONS. 283 

given to the new firm.^ So, if the creditor should give 
up the securities of the old firm, and take those of the 
new firm in lieu thereof; or should give a prolonged 
credit to the new firm for the old debt, receiving from 
the latter, in consideration thereof, an additional inter- 
est, or a new security ; in all such cases the retiring 
partner would be held discharged.^ But the mere fact 
of the creditor's taking an additional security from the 
new firm without surrendering the old, or of his re- 
ceiving interest from the new^ firm, without varying 
from that due on the old debt ; or of his acquiescing in 
delay, without contracting upon any new consideration 
to prolong the credit, will not absolve the retiring part- 
ner from his original responsibility.^ 

§ 159. In this connection, it seems proper to inquire 
into the circumstances, which will or will not exonerate 

1 Ante, § 152. 

* Coll. on P. B. 3, c. 3, § 3, p. 383-398, 2d ed. ; Evans v. Drummond, 
4 Esp. 89 ; Reed v. White, 5 Esp. 122 ; Thompson v. Percival, 5 B. & Ad. 
92.5 ; Oakley t\ Pasheller, lOBligh, n. s. 548 ; s. c. 4 CI. &Fin. 207 ; Goughv. 
Davies, 4 Price, 200 ; Harris v. Lindsay, 4 Wash. C. C. 271 ; Hart v. Alex- 
ander, 2 M. & W. 484. [But see Yarnell v. Anderson, 14 Mo. 619] ; 
{Winter v. Innes, 4 Myl. & C. 101; Oakford v. Eur. & Am. Steamship 
Co., 1 Hemm. & M. 182.} 

3 Coll. on P. B. 3, c. 3, § 3, p. 383-398, 2d ed. ; Featherstone v. Hunt, 
1 B. & C. 113; Bedford v. Deakin, 2 B. & Aid. 210; Daniel v. Cross, 3 
Ves. 277 ; Harris v. Lindsay, 4 Wash. C. C. 271 ; Blew v. AVyatt, 5 C. & 
P. 397; Smith v. Rogers, 17 Johns. 340; {Winter v. Innes, 4 Myl. & C. 
101. But in Brown v. Gordon, 16 Beav. 302, creditors of a banking firm 
were held to have accepted surviving partners as their debtors and to 
have discharged the estate of a deceased partner by a delay of sixteen 
years. See Robinson v. Wilkinson, 3 Price, 538} ; [Harris v. Farwell, 15 
Beav. 31, 15 Eng. L. & Eq. 70. In this case a firm consisted of three 
members. One of them died in 1837, and a new partner was admitted. A 
creditor of the old firm received interest on his debt from the new firm 
until 1841, when they became bankrujit. He then proved his claim against 
the new firm, swearing they were indebted to ihim for money received to 
his use. The separate estate of the deceased partner was held not dis- 
charged thereby.] All these cases turn upon the same general considera- 
tion ; whether there has been a new and exclusive credit given to the 
new firm inextinguishment of the debt, or to the prejudice of the firm. 



284 PARTNERSHIP. [cHAP. VIII. 

a retiring partner from future liability for the new 
debts and liabilities, contracted by the firm with third 
persons, after his retirement.^ Of course the retiring 
partner is not by his retirement exonerated from the 
prior debts and liabilities of the firra.^ In the first 
place, then, a dormant partner is not liable for any 
debts or other contracts of the firm, except for those 
which are contracted during the period that he remains 
a dormant partner. Upon his retirement his liability 
ceases, as it began, de jure, only with his accession to 
the firm.^ The reason is, that no credit is, in fact, in 
any such case given to the dormant partner. His lia- 
bility is created by operation of law, independent of his 
intention, from his mere participation in the profits of 
the business ; and therefore it ceases by operation of 
law, as soon as such participation in the profit ceases, 
whether notice of his retirement be given or not.'* But 
this doctrine must be taken with its appropriate qualifi- 
cations ; and it is strictly applicable only, where the 
persons dealing with the firm have no knowledge what- 
soever, that he is a dormant partner. If the fact of his 
being a dormant partner be unknown to all the credi- 
tors, no notice whatever of his retirement is necessary ; 
if it be known to a few, notice to those few is neces- 

' {SeeLind. on P. 327.} 

2 Gow on P. c. 5, § 2, p. 240-251, od ed. ; Coll. on P. B. 3, c. 3, § 3, 
p. 369-372, 2d ed. [Thus, if goods be sent to a firm to sell on commission, 
and one partner retires before they are all sold, he still continues liable to 
the consignor for the receipts of sales by the continuing partner ; since the 
liability attaches on receipt of the goods ; Briggs v. Briggs, 15 N. Y. 
471 ; and notice to the consignor of the fact of dissolution would not ex- 
onerate the retiring partner. Dean v. McFaul, 23 Mo. 76.] 

^ Coll. on P. B. 1, c. 2, § 2, p. 74, 2d ed. ; Id. B. 3, c. 3, § 3, p. 370, 
371 ; Gow on P. c. 5, § 2, p. 251, 3d ed. ; 3 Kent, 68. 

* Coll. on P. B. 1, c. 2, § 2, p. 74, 2d ed.: Id. B. 3, c. 3, § 3, p. 370, 371 ; 
Gow on P. 0. 5, § 2, p. 251, 3d ed.; 3 Kent, 68 ; [Ayrault v. Chamberlin, 26 
Barb. 89]; {Warren v. Ball, 37 111. 76; Chamberlain v. Dow, 10 Mich. 
319.{ 



CHAP. YIII.] LIABILITIES AND EXEMPTIONS. 285 

sary ; because they may fairly be presumed to have 
given credit to the firm with reference to their knowl- 
edge of the dormant partner.^ 

§ 160.. In the next place, where an ostensible or 
known partner retires from the firm, he will still 
remain liable for all the debts and contracts of the 
firm, as to all persons, who have previously dealt with 
the firm, and have no notice of his retirement.^ This 
is a just result of the principle, that where one of two 
innocent persons must suff"er from giving a credit, he 
who has misled the confidence of the other, and has 
been the cause of the credit, either by his representa- 
tion, or his negligence, or his fraud, ought to suffer, 
instead of the other. And where a person notoriously 
holds himself out as a partner, all the world, who deal 
with the firm, are presumed to deal with it upon his 
credit, as well as upon that of the other members of 
the firm- ; and his omission to give them notice of his 
retirement is equivalent to a continual representation, 
that he still remains a member of the firm, and liable 
therefor.^ But, as to persons who have had no previ- 

* Ibid. ; Evans v. Drummond, 4 Esp. 89 ; Newmarch v. Clay, 14 East, 
239; Farrar v. Deflinne, 1 C. & K. 580; {Carter v. Whalley, 1 B. & Ad. 
11; Heath v. Sansom, 4 B. &. Ad. 172; Grosvener v. Lloyd, 1 Met. 19; 
Edwards v. McFall, 5 La. Ann. 167 ; Cregler v. Durham, 9 Ind. 3 75; Park 
V. Wooten, 35 Ala. 242; Lind. on P. 326; 1 Sm. Lead. Cas. 1186, 6th 
Am. ed. But see Goddard v. Pratt, 16 Pick. 412,428; Deford v. Reynolds, 
36 Penn. St. 325. See also AVestern Bank of Scotland v. Needell, 1 Fost. 
& Fin. 461.} 

- Coll. on P. B. 3, c. 3, § 2, p. 368-371, 2d ed. ; Gow on P. c. 5, § 2, 
p. 240-2.52, 3d ed. ; 2 Bell, Comm. B. 7, c. 2, p. 640, 641, 5th ed. ; [Clapp 
V. Rogers, 2 Kern. 283; Pope v. Risley, 23 Mo. 185.] {On Avhat consti- 
tutes a previous dealing, see Lyon i'. Johnson, 28 Conn. 1 ; Mechanics' 
Bank v. Livingston, 33 Barb. 458 ; Bank of the Commonwealth v. Mud- 
gett, 45 Barb. 663. } 

« Coll. on P. B. 3, c. 3, § 3, p. 369-375, 2d ed. ; 3 Kent, 66-68 ; Gow on 
P. c. 0, § 2, p. 248-251, 3d ed. ; Id. c. 4, § 1, p. 198; Graham v. Hope, 
Peake, 154 ; Gorham v. Thompson, Peake, 42 ; [AVardwell r. Ilaight, 2 
Barb. 549] ; Wats, on P. c. 7, p. 384, 385, 2d ed. ; [Davis i\ Allen, 3 
Comst. 168] ; {Lind. on P. 329.} 



286 PARTNERSHIP. [CHAP. VITI. 

ous dealings with the firm, and no knowledge who are 
or have been partners therein, a different rnle may 
prevail. In such cases, unless the ostensible partner, 
who has retired, suffers his name still to appear, as one 
of the firm, so as to mislead the public (as by its being 
stated, and still remaining in the firm name), he will 
not be liable to mere strangers, who have no knowledge 
of the persons who compose the firm, for the future 
debts and liabilities of the firm, notwithstanding his 
omission to give public notice of his retirement ; for it 
cannot truly be said in such cases, that any credit is 
given to the retiring partner by such strangers. Every 
new creditor or new customer is- bound to inquire, who 
are the parties really interested at the time in the firm 
if he would be safe in his credit and dealings with 
them. Unit squis que debet esse gnarus conditionis ejus, 
cum quo contrahU} A fortiori, if public notice has 

1 2 Bell, Coram. B. 7, p. 042, 5tli ed. ; Coll. on P. B.-3, c. 3, § 2, 
p. 369-375, 2d ed. ; {Lind. on P. 329} ; Parkin v. Carmthers, 3 Esp. 248; 
3 Kent, 67, 68; Williams v. Keats, 2 Stark. 290; Brown v. Leonard, 2 
Chitty, 120 ; Nevvsome v. Coles, 2 Camp. 617 ; Dolman v. Orchard, 2 C. & 
P. 104; Tombeckbee Bank v. Dumell, 5 Mason, 66; Lansing v. Gaine, 2 
Johns. 300 ; Ketcham v. Clark, 6 Johns. 144, 148 ; Carter v. Whalley, 1 B. & 
Ad. 11 ; Le Roy v. Johnson, 2 Pet. 186, 198, 200. — I am aware, that the doc- 
trine is sometimes laid down more broadly, and the liability is made to at- 
tach, unless the partner has given public notice of the dissolution. Thus, 
in Parkin v. Carmthers, 3 Esp. 248, 249, Mr. Justice Le Blanc said : 
"The principle on which I proceed is this: — That there was a partner- 
ship subsisting, under the firm of Parkin, Campbell, & Co., which con- 
tinued after the retirement of John Campbell. The rule of law is clear, 
that where there is a partnership of any number of persons, if any change 
is made in the partnership, and no notice is given, any person dealing with 
the partnership, either before or after such change, has a right to call 
upon all the parties, who at first composed the firm." In summing up to 
the jury, his I^ordship laid it down as the law on the subject, " Tiiat if the 
plaintiff advanced the money, even after the time that one of the partners 
had retired, if he did not know of such retirement, he had a right to sue 
all who before constituted the partnership. In jioint of fact in this case, 
John Campbell had retired ; but still, if this was really a partnership, and 
the money was lent to the persons carrying on trade under that firm, all 
were liable." But iu this case, CampbelTs name was in tlie name of thg 



CHAP. YIII.] LIABILITIES AND EXEMPTIONS. 287 

been given of his retirement, the retiring partner will 
not be liable to new creditors or customers, even if 

firm. See also Gow on P. c. 5, § 2, p. 248, 249, 8d ed. ; Id. p. 251- 
253; 2 Bell, Comm. B. 7, e. 2, p. 640-642, oth ed. It strikes me, 
however, that the text contains the true principle. Where a partner- 
ship is in fact dissolved by the retirement of a partner, who is known, but 
whose name is not in the firm, it does not seem right to make him liable 
to third persons, who afterwards trust the firm, without knowing who 
compose it at the time, or of the jirevious connection of the retiring partner. 
His case does not, under such circumstances, seem essentially to differ from 
that of a dormant partner ; for such third persons give no credit to him, 
and he receives no share of the profits derived therefrom. Mr. Watson 
has stated the true princlpfe ; that "as credit is given to the whole firm, 
justice requires, that all those, who belonged to it, should be bound, while 
it is supposed to exist." But to whom bound ? Certainly, to those only, 
who give credit to the firm, believing, that the original partners, whom they 
knew, still continued in it. The case of Carter v. Whalley, 1 B. & Ad. 11, 
eeems directly in 2)oint, in support of the doctrine of the text. There the 
debt was contracted after the retirement of one partner, and no public 
notice had been given thereof. But although it was known to some persons, 
that he was a partner, yet it did not appear, that this creditor knew it, or 
believed it, or gave credit to the partner. Mr. Justice Parke, on that occa- 
sion, said : " The plaintiff was bound to show an acceptance by four parties ; 
that is, that Veysey, who did accept the bill, was authorized to do so 
by the three others named in the declaration. Saunders had given no direct 
authority ; he was not a jiartner at the time. But he may by his conduct 
have represented himself as one, and induced the plaintiff to give him credit 
as such, and so be liable to the plaintiff. Such would have been the case, 
if he had done business with the plaintiff before, as a member of a firm, or 
had so publicly appeared as a partner, as to satisfy a jury, that the plaintiff 
must have believed him to be such ; and if he had suffered the plaintlif to 
continue in and act upon that belief, by omitting to give notice of his 
having ceased to be a partner, after he really had ceased, he would be 
responsible for the consequences of his original representation, uncontra- 
dicted by a subsequent notice. But in order to render him liable on this 
ground, it is necessary, that he should have been known as a member of 
the firm to the plaintiffs, either by direct transactions, or public notoriety. 
In the present instance, that was not so. The name of the company gave 
no information as to the parties composing it, and the plaintiff did not show 
that Saunders had dealt with him in the character of a partner, or had held 
himself out so publicly to be one, as that the plaintiff must have known it. 
Carter, the plaintiff, lived at Birmingham ; it should have appeared, that 
there had been such a dealing at that place by Saunders, or that his con- 
nection with the company had been so generally known there, tliat a knowl- 
edge of it by Carter must have been pi'esumed. There having been no 
evidence tor the jury on these points, I think the nonsuit was right." {In 
City Bank of Brooklyn v. iNlcChesney, 20 N. Y. 240, a retired partner was 



288 PARTNERSHIP. [cHAP. VIII. 

they have never seen such notice, or had any knowledge 
or hiformation thereof ; ^ smce the retirmg partner has 
done all, which can be reasonably required to give 
public notice of his withdrawal.^ 

§ 161. What will amount to due and sufficient notice 
of the retirement of a partner is a question of fact, often 
of no small nicety and difficulty ; for notice needs not 
be express ; but it may be constructive, and be imphed 
from circumstances.^ A notice in one of the public and 

held liable to a subsequent creditor who had had notice of the prior partner- 
ship, and had had no notice of the dissolution, though he had had no prior 
dealings with the firm. There had been in this case no notice of the dissolu- 
tion published in the newspapers. See Holdane v. Butterworth, 5 Bosw. 1 ; 
Pratt V. Page, 32 Yt. 13.} 

1 Coll. on P. B. 3, c. 3, § 3, p. 369-372, 2d ed. ; Parkin v. Carruthers, 3 
Esp. 248 ; Gow on P. c. 5, § 2, p. 248, 249, 3d ed. ; Newsome v. Coles, 2 
Camp. 617 ; Godfrey v. Turnbull, 1 Esp. 371 ; Wright v. Pulham, 2 Chitty, 
121 ; s. c. sub noni. Wrightson v. Pullan, 1 Stark. 375. 

^ Ibid. — We are of course to understand this doctrine with the qualifi- 
cation, that nothing is otherwise done by the retiring partner to continue 
his liability ; such, for example, as by authorizing the negotiable securities of 
the old firm to be issued and negotiated in the name of the old firm ; for in 
such case, he would be bound by such indorsement. Coll. on P. B. 3, c. 3, 
§ 3, p. 372-375, 2d ed. See also Abel v. Sutton, 3 Esp. 108; Kilgour v. 
Finlyson, 1 H. Bl. 155; Heath v. Sansom, 4 B. & Ad. 172. {Burton v. 
Issitt, 5 B. & Aid. 267 ; Brown v. Leonard, 2 Chitty, 120; Smith i\ Winter, 
4 M. & W. 454 ; Yale v. Eames, 1 Met. 486 ; Waite v. Foster, 33 Me. 424 ; 
Richardson r. Moies, 31 Mo. 430. See § 322, post. } [The rules of notice, 
proper to ordinary trading partnerships, are not applicable always to 
companies established under statutes. For instance ; A., B., C., and D., who 
carried on business under the firm of G. P. & Co., in 1840 opened an ac- 
count with a banking company, established under the 7 Geo. 4, c. 46, and 1 
& 2 Yict. c. 96. In 1842, A. retired from the firm; but this fact was not 
advertised in the London Gazette ; nor was any change made in the pass- 
book. It was held, that the mere fact of D., one of the firm of G. P. & Co., 
being also a director of the banking company (but having, as such, no share 
in the management of or interference in the banking accounts) did not 
amount to notice — actual or constructive — to the bank of the dissolution, 
so as to discharge A. in respect of a debt subsequently accruing ; a banking 
company, so established, differing in this respect from an ordinary trading 
partnership. Powles v. Page, 3 C. B. 16.] 

2 {Lind. on P. 335 ; Amidown r. Osgood, 24 Yt. 278 ; Wait v. Brewster, 
31 Vt. 516 ; American Linen Thread Co. v. Wortendyke, 24 N. Y. 550; Wil- 
liamson V. Fox, 38 Penn. St. 214 ; Clapp i: Upson, 12 Wis. 492.} 



CHAP. VIII.] LIABILITIES AND EXEMPTIONS. 289 

regular newspapers of the city or county, where the 
partnership business was carried on, is the usual mode 
of giving the information, and may, in ordinary cases, 
be quite sufficient. But even the sufficiency of that 
notice might be questioned in many cases, unless it is 
shown, that the party entitled to notice is in the habit 
of reading the paper.^ Public notice given in some 
such reasonable way, will not be deemed actual and 
express notice ; but it will be good presumptive evi- 
dence, and sufficient for a jury to conclude all persons, 
who have not had any previous dealings with the firm. 
As to persons, who have been previously in the habit of 
dealing with the firm, it is requisite, that actual notice 
should be brought home to the creditor, or at least, that 
the credit should be given under circumstances, from 
which actual notice may be inferred.^ If the facts are 
all found or ascertained, the reasonableness of notice 
may be a question of law for the Court. But gener- 
ally it will be a mixed question of law and fact, to be 
submitted to a jury under the direction of the Court, 
whether notice in the particular case, under all the cir- 
cumstances, has been sufficient to justify the mference 
of actual or constructive knowledge of the fact of the 
dissolution. The weight of authority seems now to be, 
that notice in one of the usual advertising gazettes of 
the place, w^here the business was carried on, when 
published in a fair and usual manner, is of itself notice ^ 
of the fact to all persons, who have not been previous 
dealers with the partnership.^ 

1 [Pope V. Kisley, 23 Mo. 185.] 

2 [SeePager. Brant 18111. 37.] {Little r. Clarke, 3G Penn. St. 114 ; Reilly 
V. Smith, 16 La. An. 31 ; Scheiffelin v. Stevens, 1 Winst. Law, 106. Kirk- 
man v. Snodgrass, 3 Head. 370. } 

^ [But see Boyd v. McCann, 10 Md, 118.] 

* 3 Kent, 67, 68. — I have followed almost the very words of Mr. Chancel- 
lor Kent, in his excellent Commentaries. See also, on the same subject, 

19 



290 PARTNERSHIP. [cHAP. VIII. 

§ 162. The same principles apply to notice in the 
case of a dissolution of the partnership by the acts of 
the parties, as ordinarily apply to the case of a retiring 
partner.^ Until due notice is given of the dissolution, 
each partner will remain liable for the acts and contracts 
of the others in relation to the partnership, so far as 
they respect persons who have previously dealt with the 
firm, or have known the names of the partners, or have 
given credit thereto ; although not to mere strangers, 
who do not fall under the like predicament.^ But 
very different considerations apply in the case of a 
dissolution of the partnership by mere operation of 
law, as by the death of a partner ; for in such a case 
his estate is not bound or liable for any subsequent 
debts or contracts, entered into by the survivors of the 
firm.^ This subject, however, Avill more properly come 
under review, when the effects of a dissolution by death 
come under consideration, and may therefore be here 
dismissed with this brief notice. 

§ 163. There is another case, in which a retiring 
partner may, notwithstanding notice of his withdrawal. 

Coll. on P. B. 3, c. 3, § 3, p. 368-371, 2d ed. ; Gow on P. c. 5, § 2, p. 248-251, 
3d ed. ; Wats, on P. c. 7, p. 384, 385, 2d ed. ; 2 Bell, Comm. B. 7, p. 640- 
643, 5th ed. ; { City Bank of Brooklyn v. McChesney, 20 N. Y. 240 ; Hol- 
dane v. Butterworth, 5 Bosw. 1.} 

' I In Troughton v. Hunter, 18 Beav. 470, a partnership was dissolved by 
decree. The Gazette would not insert an advertisement of the dissolution 
unless signed by both partners. One partner refused to sign. He was or- 
dered by the court to do so.} 

2 Ante, § 128, 129,160; Gow on P.c. 5, § 2, p. 248-251, 3d ed. ; Coll. on P. 
B. 3,c. 3, § 3, p. 368-375, 2d ed. ; Id. B. 1, c. 2, § 3, p. 75. {A partner- 
ship note is taken out of the operation of the Statute of Limitations by a part 
payment thereof made by one partner within six years, although the firm had 
then been dissolved by the voluntary act of the partners, if the holder of the note 
had previous dealings with the firm, and was not notified, and had no knowledge 
of the dissolution. Sage v. Ensign, 2 All. 245 ; Tappan». Kimball, 10 Fost. 136.} 

2 3 Kent, 63 ; Gow on P. c. 5, § 2, p. 248, note ; Id. c, 5, § 4, p. 362, 3d 
ed. ; Vulliamy v. Noble, 3 Mer, 593, 614 ; 3 Chitty on Comm. and Manuf. c. 4, 
p, 250; {§ 336, 343.} 



CHAP. VIII.] LIABILITIES AND EXEMPTIONS. 291 

be responsible, not only for the past debts of the old 
firm, but for the new debts contracted by the new 
firm ; and that is, in a case of positive or constructive 
fraud. This may take place, when, upon the actual in- 
solvency of the firm, known to all the partners, they 
permit the retiring partner to withdraw a portion of 
the partnership funds out of the reach of the joint cred- 
itors of the new firm, for the purpose of cheating or 
defrauding the latter ; for in such a case the fraud viti- 
ates the whole transaction ; and the retiring partner 
will be held liable to the full extent of all the funds 
so fraudulently withdrawn.^ But the mere fact, that 

1 Anderson V. Maltby, 2 Ves. Jr. 244 ; s. c. 4 Bro. Ch. 423 ; Coll. on P. 
B. 3, c. 3, § 3, p. 400-404, 2d ed. — In this case Lord Loughborough said : 
" The case resolves itself into a plain question whether in 1784, upon the first 
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 transaction is to be void, 
under the color, in which it presents itself to me, it is an imposition, not upon 
them only, because they were consenting, but upon the creditors, who must 
deal with the partnership of the two contrived upon a certain foresight of 
bankruptcy at no very remote period, though the exact time was not certain, 
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 transactions between Brough and George Maltby 
from the commencement of their partnership, for it can go no further back, 
and the defendant, with an inquiry into the state of accounts at that period 
between them, to see, whether there was any consideration whatsoever, 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 office, or by discussion of an issue at law, is a point, upon which 
1 doubt. Consider wliich will best attain justice. As to the last, it depends 
so much upon writing and accounts, that it will hardly come within the pe- 
riod, in which a trial at law can be had with advantage. I do not think it a 
case, in which, if a trial can be had, I should be unwilling to have the assist- 
ance of a jury to decide it. But I would not let it go to an action, but cer- 
tainly would direct an issue ; for I must take care to have the true question 
tried exactly upon the merits in equity, which affect the real justice of the 
case, and not upon the points not relating to that, which would be made in an 



292 PARTNERSHIP. [cHAP. VIII. 

a retiring partner knows at the time that the partner- 
ship is insolvent, will not of itself involve him in any 
liabilities for the new firm, or vitiate the dissolution, 
if it was without any intention of fraud, and entirely 
consistent in all its circumstances with good faith. ^ 

§ 164. In joint-stock and other large companies, 
which are not incorporated, but are a simple, although 
an extensive partnership, their liabilities to third per- 
sons are generally governed by the same rules and 
principles, which regulate common commercial partner- 
ships.^ In such companies the fundamental articles 
generally divide the stock into shares, and make them 
transferable by assignment or delivery ; and the whole 
business is conducted by a select board of trustees or 
directors. Without undertaking to assert in what cases 
such companies may or may not be deemed illegal, and 
the members liable to be treated as universally respon- 
sible, upon the ground of usurping and attempting to 
exercise the proper functions of a cor])oration. which 
the legislature or government is alone competent to 
establish ; ^ it may well deserve inquiry, how far any 

action. I agree with the defendant, that if any of these payments cannot be 
recovered at law, there would be no equity for it. There can be no differ- 
ence between a court of law and of equity as to this. The true question for 
an issue would be, whether the partnership was indebted to the retiring part- 
ner on account of his share in the partnership." 

1 Coll. on P. B. 3, c. 3, § 3, p. 400-402, •2d ed. : Parker v. Ramsbottom, 3 
B. & C. 257; Ex parte Peake, 1 Madd. 346 ; Gow on P. c. 5, § 2, p. 237, 
238, 3d ed. 

2 3 Chitty on Comm. and Manuf. c. 4, p. 22G ; Coll. on P. B. 5, c. 1, § 1, 
p. 721-734, 2d ed. ; 2 Bell, Comm. B. 7, c. 2, § 2, p. 627-630. [But see 
Powles V. Page, 3 C. B. 16. In Irvine v. Forbes, 11 Barb. 587, it was held, 
that the members of a telegraph company, formed as a private association, 
were not partners, but tenants in common, and that the majority had no pow- 
er to bind the minority, except by agreement.] {See Parsons on P. c. 18 ; 
Lind. on P. 3.} 

« Coll. on P. B. 5, c. 2, § 1, p. 7:30-734, 2d ed. ; Joseph v. Pebrer, 3 B. 
& C. 639 ; Blundell v. AYinsor, 8 Sim. 601 ; Walburn r. Ingilby, 1 Myl. & 
K. 61, 76; {Lind. on P. 145.} 



CHAP. VIII.] LIABILITIES AND EXEMPTIONS. 293 

stipulation in those articles, and 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 a stipulation, and contract 
their debts with reference thereto. This question, 
many years ago, was presented to the Supreme Court 
of the United States ; but the cause went off without 
any decision upon the point. It seems to have been 
thought, that such a stipulation can in no wise operate 
as a limitation of the general liability of all the part- 
ners for all their debts, even though the creditors have 
full notice thereof.^ It may, however, be still deemed 
an open question, whether creditors, with such notice, 
can proceed against the members upon their general 
responsibility, as partners, where they have expressly 
contracted only to look to the social funds ; and, 
whether, if they have notice of the qualifying stipula- 
tion, and contract with reference to it, it may not be 
easy to assign a reason, why it does not amount to an 

> See Blundell v. Winsor, 8 Sim. 601 ; Walburn v. Ingllby, 1 ]\Iyl. & K. 
61, 76. — In this last case Lord Broiigliam said: "The clause intimating 
that each subscriber is only to be liable to the extent of his share, is not 
enough to make the association illegal. Such a regulation is wholly 
nugatory, indeed, as between the company and strangers, and can serve no 
purpose whatever, unless to give notice. In that light it is not to be viewed 
as criminal, or as a means of deception ; for the publicity of it may tend to 
inform such as deal with the company, and a proof of that publicity in the 
neighborhood of parties so dealing might go to fix them with notice. For 
any other purpose, for the purpose of restricting the liability of the share- 
holders, it would plainly be of no avail ; and whosoever became a subscriber 
upon the faith of the restricting clause, or of the limited responsibility, 
which that holds out, would have himself to blame, and be the victim of his 
ignorance of the known law of the land." This language does not seem 
necessarily addressed to a case, where the creditor contracts with a knowl- 
edge of the restrictive clause ; but may be satisfied by referring it to cases, 
where no such knowledge exists. The Vice-Chancellor's decision, in 8 Sim. 
601, is susceptible of a like interpretation. [See Greenwood's Case, 3 
De G. M. & G. 459, 23 Eng. L. & Eq. 422 ; Hallett v. Dowdall, 18 Q. 
B. 2, 9 Eng. L. & Eq. 347 ; Peel v. Thomas, 15 C. B. 714; 29 Eng. L. & 
Eq. 276.] 



294 PARTNERSHIP. [CHAP. VIII. 

implied agreement to be bound by it, as much as if it 
were expressly agreed to. There is certainly nothing 
illegal in a creditor's agreeing" to such a limited respon- 
sibility, as a qualification or condition of his contract; 
and in many other analogous cases contracts of this 
sort are deemed perfectly proper, and unexceptionable ; 
as for example, where a commission merchant agrees to 
look exclusively to the goods for the reimbursement of 
his advances ; or a mortgagee agrees to look exclu- 
sively to the mortgaged property for his debt. But 
a qualified agreement of this nature must be proved, 
and is never presumed without some reasonable proof 
thereof. 

§ 165. The law of Scotland has recognized a distinc- 
tion, grounded on these considerations, between the 
nature, character, and effect of such joint associations, 
and those of mere private partnerships ; confining the 
responsibility of shareholders in such companies to the 
extent of three shares. This great question was tried 
about the middle of the last century, in the case of the 
Arran Fishing Company. The doctrine established in 
that case was this : That there is a clear distinction be- 
tween the case of a joint-stock company, and that of a 
company trading without relation to a stock. That in 
the former case, the managers are liable for the debt, 
which they contract, while each partner is bound to 
make good his subscription. That there is no ground 
of further responsibility against the shareholders ; nei- 
ther on their contract, nor on any ground of mandate, 
beyond their share ; the very meaning of confining the 
trade to a joint-stock being, that each shall be liable 
for what he subscribes, and no further. That in ordi- 
nary partnerships, there is a universal mandate and a 
joint 'pntpoi^itura^ by which each partner is hisfitor of 
the whole trade to an unlimited extent, each being liable 



CHAP. VIII.] LIABILITIES AND EXEMPTIONS. 295 

in solido for the company debts. ^ In this respect the 
Scottish law seems to have followed the general doc- 
trine of the Roman law, that in all partnerships each 
of the partners should be liable, not in solido^ but only 
for his own share. ^ And this also is the general rule of 
the French law in all cases, except of partnerships for 
commercial purposes, where, upon grounds of public 
policy, each of the partners is held liable in solido? 

§ 166. We have thus far considered the liabilities and 
exemptions of partners in cases arising under contracts ; 
and the inquiry next presented is, when, and under 
what cu'cumstances, partners are liable for torts, done 
in the course of the partnership concerns, or by any 
one of the partners under color thereof. As to torts 
not committed in the course of the partnership busi- 
ness, it is very clear, that the partnership is not liable 
therefor in its social character, unless indeed they are 
assented to or adopted as the act of the partnership."* 
But torts may arise in the course of the business of the 
partnership, for which all the partners will be liable, 
although the act may not in fact have been assented to 
by all the partners.^ Thus, for example, if one of the 
partners should commit a fraud in the course of the 
partnership business, all the partners will be liable there- 
for, although they have not all concurred in the act.^ 
So, if one of a firm of commission merchants should sell 

1 2 Bell, Coram. B. 7, p. 627, 628, 5th ed. * j) 45^ 9, n, § 1, o. 
3 Both, de Soc. n. 96, 103, 104. 

* {Taylor v. Jones, 42 N. H. 25 ; Cutter v. Fanning, 2 Iowa, 580. See 
Stevens v. Faucet, 24 111. 483. } 

* Coll. on F. B. 3, c. 1, § 6, p. 305-307, 2d ed. ; Gow on P. e. 4, § 1, 
p. 160, 161, 3d ed. ; [Ex parte Eyre, 3 Mont. D. & De G. 12 ; Stockton v. 
Frey, 4 Gill, 406.] 

6 Coll. onP.B. 3, c. 1, § 5, p. 296, 297; Id. B. 3, c. 1, § 6, p. 305-307, 
2d ed. ; Gow on P. c. 4, § 1, p. 160, 161, 3d ed. See Rapp v. Latham, 2 B. 
& Aid. 795 ; Stone v. Marsh, 6 B. & C. 551 5 Kilby v. Wilson, Ry. & Moo. 
178; {§108, 131, 168, 368.} 



296 PARTNERSHIP. [CHAP. Till. 

goods, consigned to the partnership, fraudulently, or in 
violation of instructions, all the partners would be lia- 
ble for the conversion in an action of trover.^ So, if one 
of a firm, who are common carriers, should unlawfully 
convert the goods intrusted to the firm for carriage, or 
should negligently lose or injure them, all the partners 
would or might be held liable in tort therefor.^ The 
same doctrine would apply to a conversion or loss by 
the negligence or fraud of an agent of the firm.^ So, 
if partners own a ship, and by the negligence of the 
master, goods, shipped on board on freight, are neg- 
ligently injured or lost ; or another ship is by such 
negligence injured by a collision with her, the partners 
will be liable for the loss.^ For in all such cases the 
maxim applies : Qui facit per al'ium, facit per se ; and 
the master in such a case acts not only personally, but 
as the agent or prcepositus of the entire firm.^ The 
doctrine has been carried further ; and the partnership 
has been held liable for a libel, which was published 
and sold by one partner in the course of the business of 
the firm, as, for example, by a printer or bookseller, 
one of the firm in that business.^ The same rule might 

^ Coll. on P. B. 3, c. 1, § 6, p. 305, 806, 2d ed. ; Nicoll v. Glennie, 1 
M. & S. 588; {§ 108, 168, note; Castle v. BuUard, 23 How. 172. See 
Stevens v. Faucet, 24 HI. 483.} 

2 Gow on P. c. 4, § 1, p. 160, 161, 3d ed. ; Coll. on P. B. 3, c. 1, § 1, 
p. 305, 306. 2ded. ; Moreton v. Hardern, 4 B. & C. 223. 

3 Coll. on P. B. 3, c. 1, § 5, p. 296, 297, 2d ed. ; Id. B. 3, c. 1, § 6, 
p. 305, 306 ; Id. B. 3, c. 6, § 5, p. 505 ; Id. § 7, p. 527 ; {Linton v. Hurley, 
14 Gray, 191 ; McKnight v. Ratcliff, 44 Penn. St. 156.} 

" Gow on P. c. 4, § 1, p. 160, 3d ed. ; Coll. on P. B. 3, c. 1, § 6, p. 305- 
307, 2d ed. ; Mitchell v. Tarbutt, 5 T. R. 649 ; Morley v. Gaisford, 2 H. 
Bl. 442 ; Moreton v. Hardern, 4 B. & C. 223. 

» Gow on P. c. 4, § 1, p. 160, 3d ed. ; Coll. on P. B. 3, c. 1, § 6, p. 305, 3d 
ed. ; [Uoyd i: Bellis, 37 Eng. L. & Eq. 545] ; Wats, on P. c. 4, p. 235, 2d ed. 

« Wats, on P. c. 4, p. 241, 2d ed. ; Rex ?;. Almon, 5 Burr. 2686 ; Coll. on 
P. B. 3, c. 1, § 6, p. 306, 2d ed. ; Gow on P. c. 4, § 1, p. 161, 3d ed. ; Rex 
0. Pearce, Peake, 75 ; Rex v. Topham, 4 T. R. 1 26 ; Rex v. Marsh, 2 B. & C. 
717, 723; Attorney General v. Stannyforth, Bunb. 97. 



CHAP. VITI.] LIABILITIES AND EXEMPTIONS. 297 

apply to cases of written slander, as by declaring a rival 
merchant a bankrupt, or a cheat, if written in the name, 
and as the act of the firm. So, if breaches of the rev- 
enue laws by fraudulent importations, or smuggling, or 
entries at the custom-house are committed by one of 
the firm in the course of the business thereof, all the 
firm would be liable penally, as well as civillv, there- 
for.i 

§ 167. But, in all cases of this sort, although the 
partners are jointly liable as wrongdoers, it by no 
means follows, that they must all be sued. On the 
contrary, as the law treats all torts as several, as well 
as joint, the party injured may, at his election, either 
sue all the partners, or any one or more of them for 
the tort ; and it will constitute no objection, that his 
partners were also concerned in it.~ This is a rule by 
no means peculiar to partnerships ; but it extends to 
all cases of joint torts and trespasses at the common 
law, whether positive or constructive. 

§ 168. From what has been already suggested, it is 
obvious, that a tort committed by one partner, or by 
any other agent of the partnership, will not bind the 
partnership, unless it be either authorized or adopted 
by the firm, or be within the proper scope and business 
of the partnership. And, as in either way, partners 
may thus all be afiected by the tort of one partner, so 
also a discharge or release of one, on account of the 
tort, will amount to a discharge or release of all the 
other partners. This, again, is the result of a general 
rule of the common law, applicable to all cases of joint 

' Coll. on P. B. 3, c. 1, § 6, p. 306-308, 2d ed. ; Gow on P. c. 4, § 1, 
p. 161, 3d ed. ; Attorney General v. Burges, Bunb. 223. 

2 Coll. on P. B. 3, c. 1, § 6, p. 306, 307, 2d ed. ; Id. B. 3, c. 6, § 3, p. 505 ; 
Id. p. 527 ; Gow on P. c. 4, § 1, p. 160, 161, 3d ed. ; Edmonson v. Davis, 4 
Esp. 14 ; Attorney General v. Burges, Bunb. 223 ; Wats, on P. c. 4, p. 235, 
2d ed. ; {White v. Smith, 12 Rich. Law, 595.} 



298 PARTNERSHIP. [CHAP. VIII. 

torts and trespasses ; and has been recognized from 
the earliest times.^ 

§ 168 a. In respect to what acts of one partner the 
others will and ought to be held to have notice of, so as 
to bind them all by implied consent or acquiescence, it 
may be laid down as a general rule, for the protection 
of those who deal with partners, that all of the part- 
ners have such knowledge and notice of the acts of 
any of their partners relative to their business, as in 
discharge of their plain duty they might or ought to 
have obtained." 

1 Co. Litt. 232, a : Bac. Abr. Itdease (G) ; Com. Dig, Release, B. 4 ; Id. 
Pleader, S M. 12 ; Kiffin v. Willis, 4 Mod. 379. {A release to one partner is 
a release to all, whether the claim released arise ex contractu or ex delicto. 
Cocks V. Nash, 9 Bing. 341 ; Clieetham v. Ward, 1 B. & P. 630. Secus with 
a covenant not to sue. Lind. on P. 351 ; Couch i\ Mills, 21 Wend. 424.' If 
it clearly apjjears from the terms of the release that it is intended to enure 
only to the benefit of the releasee it will not discharge the other partners. 
Solly V. Forbes, 2 Brod. & B. 38 ; Price v. Barker, 4 E. & B. 760. Hartley 
V. Manton, 5 Q. B. 247 ; Roberts v. Strang, 38 Ala. 566. See also Wig- 
gin V. Tudor, 23 Pick. 434, 444; McAllester v. Sprague. 34 Me. 296.} 
[The distinction between the liability of the firm, and of an individual 
partner for a tortious act, committed by one partner on pi-operty in the 
custody of the firm, is illustrated by a recent English decision. Thus; a 
customer deposited a box containing various securities with his bankers for 
safe custody, and afterwards granted a loan of a portion of such securities to 
one of the other partners in the banking-house, for his own jirivate purposes, 
upon his depositing in the box certain railway shares, to secure the replacing 
of the securities. This partner afterwards for his own purposes, and with- 
out the knowledge of the customer, subtracted the railway shares, and sub- 
stituted others of a less value. It was held, that, as the proceeds of the 
railway shares were not applied to the use of the partnership, the banking 
firm were not answerable for this tortious act of their partner for his own 
benefit, nor for any loss occasioned by this subtraction of the shares, on the 
ground of negligence. Ex parte Eyre, 3 Mont. D. & De G. 12. See 
another instance in Coomer v. Bromley, 5 De G. & Sm. 532, 12 Eng. L. & 
Eq. 307, where Blair v. Bromley, 2 Ph. 354, is commented upon, and distin- 
guished.] {See Bishop v. Countess of Jersey, 2 Drew. 143 ; § 108, note.} 

* Sadler v. Lee, 6 Beav. 324. 



CHAP. IX.] RIGHTS AND DUTIES OF PARTNERS. 299 



CHAPTER IX. 

RIGHTS, DDTIES, AND OBLIGATIONS OF PARTNERS BETWEEN 

THEMSELVES. 

{ § 169. Partners bound to exercise good faith, diligence, and discretion. 

1 70. Roman law. 

171. French law. 

172. Opinion of Cicero. 

173. Duty of conforming to the terms of the partnership. 

174. Partner cannot stipulate for his private advantage. 

1 75. Nor sell or buy in the partnership) business for his own advantage. 

176. French and Roman law. 

177, 178. Carrying on a business adverse to the partnership. 

179. Case of newspapers. 

180. Conflict of duties where one is executor of his deceased partner. 

181. Duty to account and right to manage. 

182. Extra compensation not allowed; allowance of interest on capital. 

183. Reasonable discretion required. 

184. Pothier on the duties and rights of partners. 

185. Partners allowed for necessary expenses, but not for extra services. 

186. Opinion of Voet. } 

§ 169. We come, in the next place, to the considera- 
tion of the rights, duties, and obHgations of partners 
between themselves. And here it may be stated, that 
as the contract itself has its solid foundation in the 
mutual respect, confidence, and belief in the entire 
integrity of each partner, and his sincere devotion to 
the business and true interests of the partnership ; 
good faith, reasonable skill, and diligence, and the 
exercise of sound judgment and discretion, are natu- 
rally, if not necessarily, implied from the very nature 
and character of the relation of partnership. In this 
respect, the same doctrine applies, which ordinarily 
applies to the cases of mandataries or agents for hire ; ^ 

> Story on Ag. § 182-189 ; Story on Bailm. § 421, 455. 



300 PARTNERSHIP. [cHAP. IX. 

and to other cases of bailment for the mutual benefit 
of both parties. Hence, if the partnership suffers any 
loss from the gross negligence, unskilfulness, fraud, or 
wanton misconduct of any partner in the course of the 
partnership business, he will ordinarily be responsible 
over to the other partners for all the losses, and injuries, 
and damages sustained thereby, whether directly, or 
through their own liability to third persons.^ Of course 
all losses, injuries, and damages sustained by the part- 
nership from the positive breach of the stipulations 
contained in the articles of partnership, on the part of 
any partner, are to be borne exclusively by that part- 
ner, and he must respond over to them therefor. 

§ 170. This is the dictate of common sense and 
justice ; and it has been expressly affirmed by the 
Roman law. In relation to third persons, that law 
declares, that partners are liable, not only for fraud, 
but for negligence as well as fraud. Thus, in one 
place, after enumerating other contracts, it is said: 
Sed ubi utriusque utilitas vertitur, ut in emj^to, ut in 
locato, ut in dote, ut in pignore, ut hi societate, et dolus, 
et culiKi prcustatuT^ As between the partners them- 
selves, the like redress was also given. 8i quid dolo 
nostro socius damni ceperit, a nobis rejjetat.^ Venit 
autem in hoc judicium j^ro socio honafides.'^ And again: 
Utrum ergo tantmn doluni, an etiam cidpam prcestare 
socium oporteat, quceritur f Celsus ita scripsit. Socios 
inter se dolum et cidpam prcestare op)ortet. Si in coe- 

' Ibid. {In Lefever v. Underwood, 41 Penn. St. 505, a partner deposited 
partnership money in a bank in his own name. The bank failed. The partner 
was held liable to his copartners. } 

2 D. 13, 6, 5, 2; Poth. Pand. 13, 6, n. 12; Story on Ag. § 182, 183; 
Poth. Pand. 17, 2, n. 27. 

3 D. 17,2, 59, 1 ; Id. 17, 2, 52, 1 ; Poth. Pand. 17, 2, n. 36 ; Domat, 1, 8, 
4, art. 3, 4, 7, 8. 

* {D. 17,2, 52, 1.} 



CHAP. IX.] RIGHTS AND DUTIES OF PARTNERS. 301 

unda societate (inquit) artem operamve pollicitus est 
alter, &c., nimirum ibi etiam culpa prcestanda est. 
Quod si rei communi socius jiocuit, magis adinittit, cid- 
pam quoque venWe} Again : Socius socio etiam cidpoi 
nomine tenetur, id est, desidice cdque neglig entice.^ 
Again: Si qui societatem ad emendum coierint, deinde 
res alterius dolo vel culpa non empta sit, pro socio esse 
actionem coiistat.^ But it is added : Damna, quce im- 
prudentibus accidimt, hoc est, damna fatalia, socH non 
cogentur proistareJ^ And the general principle, which 
runs through the whole matter, is summed up in the fol- 
lowing expressive words. Culpa aidem non ad exactis- 
simam diligentiam dirigenda est ; sufficit etenim talem 
diligentiam communihus rebus adhibere, qualem suis 
rebus adhibere solet ; quia, qui parum dUigentem sibi 
socium adquirit, de se queri debet.^ It would, perhaps, 
have been more exact to say, that in cases of partner- 
ship the same diligence is ordinarily required of each 
partner, as reasonable and prudent men generally em- 
ploy about the like business ; unless the circumstances 
of the particular case repel such a conclusion.*^ 

§ 171. The same doctrine runs through the whole 
structure of the French law on the same subject.^ 
Pothier even presses it to a somewhat further extent, 
in which he also follows the Roman law, holding, that a 
partner cannot absolve himself from losses, occasioned 
by his fault and negligence in one business, by placing, 

in opposition to such claim, as a compensation, the 

I 

1 D. 17, 2,52, 2; Poth. Pand. 17, 2, n. 3G. 

2 D. 17, 2, 72; Poth. Pand. 17, 2, n. 3G. 

3 D. 17, 2, 52, 11 ; Poth. Pand. 17, 2, n. 36. 

•• D. 17, 2, 52,3; Poth. Pand. 17, 2, n. 36 ; Doniat, 1, 8, 4, art. 3, 4. 
* D. 17, 2, 72 ; Poth. Pand. 17, 2, n. 36 ; Domat, 1, 8, 4, art. 2, 3, 7, 8. 

6 Story on Ag.§ 182-185 ; Story on BaUm. § 11,13-15,18; Id. § 455 ; 
Jones on Bailna. 98 ; Poth. de Soc. n. 124. 

7 Poth. de Soc. n. 124, 125. 



302 PARTNERSHIP. [CHAP. IX. 

profits, which he has brought to the partnership by his 
industry and dihgence in other business of the firm. 
The reason he afiirms to be. that the partner, who thus 
exerts his industry and diligence, does no more than 
his duty thereto ; and therefore the firm is not indebted 
to him on that account.^ Non oh earn rem minus ad 
periculum socii pertinet, quod negligentia ejus periisset, 
quod in ^9/er«s^2«e aliis industria ejus societas aucta 
fuisset. Et ideo, si socius qucedam neglig enter in socie- 
tate egisset, in 2^^erisque aiifem societatem auxisset, non 
com2?ensaiur comp)endium cum negligentia.^ The doc- 
trine, thus stated, although somewhat strict and austere, 
may perhaps be deemed salutary and convenient, as 
creating a deep interest in partners to perform all their 
duties with fidelity and diligence. It does not, however, 
seem to have been held applicable to a series of con- 
nected acts, all of which form a part of the same entire 
business transaction, such, for example, as the sale of a 
cargo of goods by one partner, who manages the whole 
sale, where, although there may be some negligence, as 
to the sale of a part, by which some loss has been in- 
curred, yet there has been a great profit upon other 
parts ; so that the loss is much more than compensated 
for by the extra rate of profits. 

§ 172. The necessity of entire good faith, and of the 
absence of fraud on the part of partners towards each 
other, is inculcated by Cicero in terms of deep import 
and sound morality. In rebus minorihus socium fallere 
turpissimuni est; neque injuria; propter ea quod aux- 
ilium sihi se ptutat adjunxisse, qui cum altero rem com,- 
municavit. Ad cujus igitur fidem confugiet^ cum per 
ejusfidem loiditur, cui se commiserit? Atque ea sunt 

> Poth. (le Soc. n. 125. 

- D. 17, 2, 25 ; Id. 17, 2, 26; Poth. Pand. 17, 2, n. 29 ; Domat, 1, 8, 4, 
art. 8. 



CHAP. IX.] RIGHTS AND DUTIES OF PARTNERS. 303 

animadvertenda peccafa maxime, cpice difficiUiine prcB- 
caventur. Tecti esse ad alienos possumus ; intimi multa 
apertioi^a videant necesse est. Socium vero cavere qui 
possu7nus ? Quern, etiam si metuimus, jus officii Icedi- 
mus. Rede igitur majores eum, qui socium fefeUisset, 
in virorum honormn numero non putarunt haberi opor- 
tere} The Roman law has also expressed the obligation 
of good faith in exceedingly strong language. In 
societatis contractibus fides exuberet.^ Good faith not 
only requires, that every partner should not make any 
false representation to his partners, but also that he 
should abstain from all concealments, which may be in- 
jimous to the partnership business. If, therefore, any 
partner is guilty of any such concealment, and derives a 
private benefit therefrom, he will be compelled in equity 
to account therefor to the partnership. Upon the like 
ground, where one partner, who exclusively superin- 
tended the accounts of the concern, had agreed to pur- 
chase the share of his copartners in the business for a 
sum, which he knew, from the accounts in his posses- 
sion, but which he concealed from them, to be for an 
madequate consideration, the bargain was set aside in 
equity, as a constructive fraud ; for he could not in 
fairness deal with the other partners for their share of 
the profits of the concern without putting them in 
possession of all the information, which he himself had 
with respect to the state of the accounts and the value 
of the concern.^ 

§ 173. One of the most obvious duties and obliga- 

* Cicero, Pro Roscio. Amer. c. 40, cited by Puf'endorf, B. 5, c. 8, § 4, and 
by Coll. on P. B 2, c. 2, p. 117, 2d ed. 

- Cod. Lib. 4, 37, 3; Domat, 1, 8, 4, art. 1, 2; {Blisset v. Daniel, 10 
Hare, 493.} 

' Maddeford v. Austwick, 1 Sim. 89 ; { Perens v. Johnson, 3 Sm. & G. 
419; Sexton r. Sexton, 9 Gratt. 204; Hopkins v. Watt, 13 111. 298. See 
Knight V. Marjoribanks, 11 Beav. 322; s. c. 2 Macn. & G. 10.} 



304 PARTNERSHIP. [cHAP. IX. 

tions of all the partners is, strictly to conform themselves 
to all the stipulations contained in the partnership arti- 
cles ; ^ and also to keep within the bounds and limitations 
of the rights, powers, authorities, and acts, belonging 
and. appropriate to the due discharge of the partnership 
trade or business. Of course, every known deviation 
from, and every excess in the exercise of such rights, 
powers, authorities, and acts, which produce any loss or 
injury to the partnership, are to that extent to be borne 
by the partner who causes or occasions the loss or in- 
jury, and he is bound to indemnify the other partners 
therefor.^ The same doctrine is recognized by Pothier, 

' Coll. on P. B. 2, c. 2, § 2,i). 131-161, 2d ed. 

^ The doctrine here stated is sometimes of great practical importance in 
the settlement of partnership accounts. An illustration of it occurred in 
the case of Stoughton v. Lynch, 1 Johns. Ch. 467, as to funds, which 
one partner had withdrawn from the partnership contrary to the articles. 
On that occasion, Mr. Chancellor Kent said : " The articles of copartner- 
ship intended to preserve, in a state of progressive accumulation, the 
funds of the house ; and the clause, upon which the question before me 
has arisen, is to be taken strictly. This is evidently the sense and spirit 
of the agreement. It is expressly stipulated, that the capital and profits 
of the company were to remain in the house, and to be employed for the ben- 
efit of the concern, during the partnership, with this special exception, that 
such part only was to be withdi'awn, as might be necessary for private ex- 
penses. And to show the care, with which the parties guarded the funds 
from being diverted by either of them, it was further stipulated, that neither 
of them was to do business at New York on their private account, nor lend 
any of the capital stock, or enter into acceptances ; but each party was to 
do his best to promote the advantage of the company. Afler reading these 
articles, it is impossible not to view most of the charges, which the defendant 
wishes to include under the special exception, as palpably inadmissible. To 
consider plate, musical instruments, carriages and horses, and the whole fur- 
niture of a house, as coming within the permission granted to the parties to 
withdraw the funds of the house only when necessary for private expenses, 
is, in my judgment, an unreasonable and extravagant pretension. The object 
of the decretal order, of last July, was, not to exempt from interest all those 
moneys withdrawn, that were not supjiosed to be employed in land specula- 
tions. I then observed, that, if the funds so withdrawn had been employed 
in trade, the party would have had to account, not merely for interest, but 
for the profits of that trade ; and we find authority for this in Brown v. Lit- 
ton, 1 P. Wms. 140, and in Crawshay v. Collins, 15 Ves. 218, where the prin- 



CHAP. IX.] RIGHTS AND DUTIES OF PARTNERS. 305 

as existing in the French law ; ^ and it seems, indeed, so 
clearly the result of natural justice as to require no 
particular exposition.^ 

§ 174. But there are many implied duties and obliga- 
tions of an equally important, although not perhaps 
always of so obvious a nature. Thus, for example, it 
is a violation of good faith, for any partner, in conduct- 
ing the partnership business, to stipulate clandestinely 
with third persons for any private and selfish advantage 

ciple is stated, that if one partner trade alone on a joint stock, he shall divide 
the profits. The least that I could do in this case was to make him pay inter- 
est on all moneys withdrawn beyond the private necessity expressed in the 
contract. The interest of the parties as joint traders, the obvious policy and 
meaning of the contract, and that good faith, which is the animating principle 
in all mercantile associations, unitedly concur in recommending us to view the 
claims set up by either party, under the exception, with a jealous and scru- 
pulous eye. Without such a rule of construction, a partnership, like the pres- 
ent, with all its provisions to preserve the funds of the house untouched, 
might soon languish under the carelessness, or dissipation, or discordant and 
rival views of either of the contracting parties. The parties, then, had in 
view, that funds were to be withdrawn only when necessary for private ex- 
penses ; and when at any time withdrawn, the party must have done it with 
a view to that necessity. I'hat must have been the purpose, for which they 
were withdrawn. The more safe and regular way would have been, to have 
stated, in each case, the object of the apjjropriation, so that each party, at the 
end of every year, when a fair balance of the books, according to the articles, 
was to be made, signed, and approved, might have known and judged of the 
requisite appropriation. But it would, perhaps, be too rigorous to require the 
production of such an original entry to justify every such appropriation ; 
and I am willing even to presume, that a fair and reasonable sum, drawn 
away in each year, was necessary for the private expenses of each individ- 
ual partner during that year. Beyond this presumption I cannot go. All 
the European expenses of the defendant are, therefore, to be laid out of the 
case ; because, as I understand from the suggestions of the counsel upon the 
argument, there was no concurrent, or any thing like contemporary, appro- 
priations, or drafts, with any presumed reference to those expenses. I am to 
presume, then, and I do presume and believe, that the defendant never 
deemed it necessary, at the time, to recur to the permission granted under 
these articles, to meet and defray those expenses. The idea of including them 
under this article was an afterthought, arising many years after those ex- 
penses had been borne and forgotten." 

> Poth. de Soc. n. 133. 

2 Poth. Pand. 17, 2, n. 36 ; Domat, 1, 8, 4, art. 3,4, 7. 

20 



306 PARTNERSHIP. [cHAP. IX. 

and benefit to himself, exclnsive of the partnership ; for 
all the partnership property and partnership contracts 
should be managed for the equal benefit of all partners, 
according to their respective interests and shares there- 
in.^ If, therefore, any one partner should so stipulate 
clandestinely for any private advantage or benefit to 
himself, to the disadvantage, or in fraud of his partners, 
he will in equity be compelled to divide such gains with 
them.^ ' The same principle will apply to clandestine 
bargains for his o^^ll private advantage and benefit, 
made in contemplation of establishing a partnership 
with other persons, and as a premium for his services 
therein.^ So, if a purchase is made on the partnership 
account by one partner, who clandestinely stipulates and 
receives any reward or allowance from the seller for his 
own private profit, he will be compelled to share the 
same with his partners."* So, where one partner obtains 
the renewal of a partnership lease secretly in his own 
name, he will be held a trustee for the firm in the re- 
newed lease.'' 

' Coll. on P. B. 2, c. 2, § 1, p. 117-120, 2d ed. ; 3 Kent, 51 ; {Gardner r. 
McCutclieon, 4 Beav. 534; Lind. on P. 494.} 

^ Ibid. ; Russell r. Austwick, 1 Sim. 52. 

3 Fawcett v. Whitehouse, 1 Russ. & M. 132, 148, 149; Hiehens r. Con- 
greve, 4 Russ. 562. { See Beck v. Kantorowicz, 3 Kay & J. 230,} 

* Carter v. Home, 1 Eq. Cas. Abr. Account, A. pi. 13. {But see Wheeler 
V. Sage, 1 Wallace, (u. s. s. c.) 518.} 

* Featherstonhaugh v. Fen wick, 17 Yes. 298; Hiehens v. Congreve, 1 
Russ. & M. 150, note B. ; s. C. 4 Russ. 562; Coll. on P. B. 2, c. 2, § 1, p. 
120, 121, 2d ed.; Dougherty r. Van Nostrand, 1 Hoff. 68, 69, 70; {Clegg 
V. Fishwick, 1 Macn. & G. 294. See Clements v. Hall, 2 De G. & J. 173, 
reversing s. c. 24 Beav. 333.} [But see Anderson v. Lemon, 4 Sand. 552.] 
— Lord Eldon in Featherstonhaugh v. Fenwick, 1 7 Yes. 311, said : " It is clear, 
that one partner cannot treat privately, and behind the backs of his copart- 
ners, for a lease of the jiremises, where the joint trade is carried on, for his 
own individual benefit. If he does so treat, and obtains a lease in his own 
name, it is a trust for the partnership ; and this renewal must be held to have 
been so obtained. Consider, what an unreasonable advantage one partner 
would, upon a different principle, obtain over the rest. In this respect, there 



CHAP. IX. J RIGHTS AND DUTIES OF PARTNERS. 307 

^ 115. The same doctrine is applied to other analo- 
gous cases. In all purchases and sales, made on account 
of the partnership, every partner is bound to act ex- 
pressly for the benefit of the partnership ; and, there- 
fore, he has no right, and cannot consistently with his 

can be no distinction, whether the partnership is for a definite, or indefinite 
period. If one partner might so act in the latter case, he might equally in 
the former. Supposing the lease and the partnership to have different 
terms of duration, he might, having clandestinely obtained a renewal of the 
lease*, say to the other partners : ' The premises, on which we carried on our 
trade, have become mine exclusively ; and I am entitled to demand from 
you whatever terms I think fit, as the condition for permitting you to carry 
on the trade here.' Is it possible to permit one partner to take such an 
advantage ? When the application was made for a renewal, no notice of 
dissolution had been given ; nor had the plaintiff notice of any intention of 
renewing the lease. It is not true, as has been represented, that the im- 
pediment to a renewal to the partnership arose solely from the indisposition 
of Mr. Wilkinson to any connection with the plaintiff; as, before any ob- 
jection had been made on that or any other ground, the defendant goes Avith 
the intention, and for the dire(;t purpose, of obtaining a renewal for himself 
and his sou exclusively. He makes the application to Murray ; who says, 
the proposal was for a renewal for the benefit of the defendants ; expressly 
excluding the plaintiff, with whom it was represented, that George Fenwick 
was determined to have no further connection in trade ; and though it may 
be true, that Wilkinson afterwards said, he would not have granted a lease 
to the defendants jointly with the plaintiff, that declaration had become 
quite unnecessary, by the resolution, preAnously expressed by the defendant, 
not to take a lease jointly with him. This clandestine conduct was very 
unfair towards the plaintiff. The defendants had not intimated to him, that 
they would not have any further connection with him, and that they in- 
tended to appl)' for a lease on their own account. They ought first to have 
given him notice, and to have placed him on equal terms with them : and 
then, If Mr. Wilkinson had thought proper to give them the preference, the 
case might admit of a different consideration. Instead of that, they clandes- 
tinely obtained an advantage, which would enable them to dissolve the 
partnership on terms very unfavorable to the plaintiff; and they evidently 
had that object in view. If they can hold this lease, and the partnership 
stock is not brought to sale, they are by no means on ecpial terms. The 
stock cannot be of equal value to the plaintiff, who was to carry it away, 
and seek some place, in which to put it, as to the defendants, who were to 
continue it in the place where the trade was already established ; and if the 
stock was sold, the same circumstance would give them an advantage over 
other bidders. In effect they would have secured the good-will of the trade 
to themselves, in exclusion of their partner." 



308 PARTNERSHIP. [cHAP. IX. 

duty, voluntarily place himself in a situation, in which 
his bias, as well as his interest, is in opposition to the 
interest of the partnership. Thus, if a partner buys 
goods for the partnership account, and makes the bar- 
gain by a barter of his own private goods on his own 
sole account, and charges the partnership with the full 
cash value and price of the goods, as if they were bought 
for cash ; it will be a constructive fraud upon the part- 
nership ; and he will be compelled in equity to account 
for any private profit so made in the barter.^ The same 
rule will apply to the converse case of a sale of the part- 
nership property under the like circumstances ; for the 
general doctrine is, that there is an implied obligation 
between partners, that they are to use the partner- 
ship property for the benefit thereof, and not other- 
wise.^ 

§ 176. This wholesome principle of justice has been 
adopted in many other cases, where peculiar relations 

' Burton v. Wookey, G Madd. 367 ; Coll. on P. B. 2, c. 2, § 1, p. 122, 2d 
ed. — On this occasion Sir John Leach (the Vice-Chancellor) said : " It is a 
maxim of the courts of equity, that a person, who stands in the relation of 
trust or confidence to another, shall not be permitted, in pursuit of his pri- 
vate advantage, to place himself in a situation, which gives him a bias against 
the due discharge of that trust or confidence. The defendant here stood in 
relation of trust or confidence towards the plaintiff, which made it his duty to 
purchase the lapis calaminaris at the lowest possible price ; when in the place 
of purchasing the lapis calaminaris, he obtained it by barter for his own shop 
goods, he had a bias against a fair discharge of his duty to the plaintiff. The 
more goods he gave in barter for the article jwrchased, the greater was the 
profit, which he derived from the dealing in store goods ; and as this profit be- 
longed to him individually, and as the saving by a low price of the article pur- 
chased was to be equally divided between him and the plaintiff, he had plainly 
a bias against the due discharge of his trust or confidence towards the plaintiff. 
I must, therefore, decree an account of the profit made by the defendant in 
his barter of goods, and must declare, that the plaintiff' is entitled to an equal 
division of that profit with the defendant." 6 i\Iaild. 36 7 ; [ Bentlcy v. Craven, 
18 Beav. 75.} 

2 Crawshay r. Collins, 15 Ves. 218, 227. { See Westcott v. Tyson, 38 Penn. 
St. 389.1 



CHAP. IX.] RIGHTS AND DUTIES OF PARTNERS. 309 

exist between the parties, by courts of equity.^ Pothier 
has directly apphed it, not only to cases of bargains 
during the partnership,^ but also to a case, where a 
partner contemplates a dissolution solely to aid his own 
sinister and selfish purposes. In order (says he) to 
enable a partner to dissolve a partnership, two things 
must concur; (1.) the renunciation of the partnership 
must be made in good faith ; (2.) it must not be made at 
an unreasonable time (contre fe???^;s). Debet esse facta 
bona fide et temjjestive. The renunciation is not made in 
good faith, when the partner renounces to appropriate 
to himself alone the profits, which the other partners 
proposed for the partnership, when it was formed.^ This 
is the very doctrine inculcated by courts of equity under 
the like circumstances.^ It is also the doctrine of the 
Roman law. Si societatem ineamus ad aliquam reim 
emendani ; deinde solus volueris earn emere, ideoque re- 
nuntiaveris societati, ut solus emeres ; teneberis quanti 
interest mea. Sed si ideo renuntiaveiHs, quia emj^tio 
tibi displicebat, non teneberis quamvis ego enter o ; quia 
hie nulla fraus est.^ 

§ 177. Upon similar grounds it is the implied obliga- 
tion and duty of every partner, not to engage in any 
other business or speculation, which must necessarily 
deprive the partnership of a portion of the skill, indus- 
try, diligence, or capital, which he is bound to employ 
therein.'^ In other words, he is not at liberty to deal 
on his own private account in any matter or business, 
which is obviously at variance with, or adverse to, the 

1 1 Story, Eq. Jur. § 315, 316, 321 ; Id. § 221 ; 2 Story, Eq. Jar. § 12G1, 
1265 ; Stoughton v. Lynch, 1 Johns. Ch. 4G7, 470. 

2 Poth. de Soc. n. 59. * Poth. de Soc. n. 150. 

* Featherstonhaugh w. Fenwick, 17 Ves. 298. 

* D. 17, 2, 65, 4; Poth. Pand. 17, 2, n. 64; Domat, 1,8, 4, art. 5, 17. 
8 3 Kent, 51 ; Burton v. Wookey, 6 Madd. 367. 



310 PARTNERSHIP. [cHAP. IX. 

business or interest of the partnership. The object of 
this prohibitory rule is, to withdraw from each partner 
the temptation to bestow more attention, and to exercise 
a sharper sagacity in respect to his own purchases and 
sales and negotiations, than he does in respect to the 
concerns of the partnership, in the same or in a con- 
flicting line of business.^ It is, therefore, a rule founded 
in the soundest policy. Pothier lays down the same 
rule, and inculcates it in emphatic language, insisting 
that no partner has a right to prefer his own particular 
interest to that of the firm, or to take away the profits 
of a bargain from the firm, and appropriate them to his 
own private advantage.^ Boulay Paty is equally ex- 
pressive on the same subject ; and he applies it, as well 
to cases of masters of ships, as to partners.^ 

§ 178. If, therefore, one partner should clandestinely 
carry on another trade, or the same trade for his own 
private advantage, and in a manner injurious to the 
true interests of the partnership, or should divert the 
capital or funds of the partnership to such secret and 
sinister purposes, he will be compelled in equity to ac- 
count for all the profits made thereby.'^ So, if one 
partner should purchase articles upon his own private 
account in some special trade and business, in which 
the partnership was engaged, and injuriously to the 
partnership, as for example, by purchasing lapis ccdami- 
naris of neighboring miners, on his own private account, 
that being also the business of the partnership, he 
would be held to account for the profits made thereby.^ 

' 3 Kent, 51. " Poth. de Soc. n. 59. 

^ 2 Boulay Paty, Droit Comm. § 19, p. 94. 

* Long V. Majestre, 1 Johns. Ch. 305 ; Glassington v. Thwaites, 1 Sim. & 
St. 124, 133 ; 3 Kent, 51 ; Burton v. Wookey, 6 Madd. 867 ; Stoughton v. 
Lynch, 1 Johns. Ch. 4G7, 4 70; {Lock v. Lynam, 4 Ir. Ch. 188; England v. 
Curling, 8 Beav. 12!) ; Herrick v. Ames, 8 Bosw. 115.} 

' Burton y. Wookey, 6 Madd. 367. 



CHAP. IX.] RIGHTS AND DUTIES OF PARTNERS. 311 

Indeed courts of equity will go further in cases of this 
sort, and restrain the partner by injunction from carry- 
ing on any trade or business, which is thus inconsistent 
with the rights and interests of the partnership ; for 
(as has been well remarked) the principles of courts 
of equity will not permit, that parties, bound to each 
other, by an express or implied contract, to promote an 
undertaking for the common benefit, should any of 
them engage m another concern, which necessarily 
gives them a direct interest adverse to that under- 
taking.^ But if there be no such necessary conflict 
or incompatibility of interests, the mere circumstance, 
that the partner may thereby be exposed to the tempta- 
tion to be dishonest, or to abuse his trust, or to betray 
his duty, has not been thought sufficient to justify courts 
of equity in imposing such restraint by injunction.^ 

§ 179. The principle and the exception may readily 
be illustrated bv the case of two rival mornino: news- 
papers, and two evening newspapers. All newspapers 
are, to some extent, rivals ; and there is also neces- 
sarily some degree of rivalry between a morning and 
an evening paper, especially in the country. The 
question may, therefore, very properly arise in many 
cases, whether a person, engaged as a partner in the 
management of a morning paper, is at liberty to assist 
with his skill, labor, and property, the publication of 
an evening newspaper, which may affect the interests 
of the former. If both papers are published in the 
same city, for the Hke general circulation, it will be 
difficult to escape the conclusion, that the interest in 
the one is adverse to and in conflict with that of the 
other. But, if one is published in another city, or one 
is designed mainly for city cumulation, and the other 

1 Glassington r. Thwaites, 1 Sim. & St 124, 133. 

2 Ibid. 



312 PARTNERSHIP, [cHAP. IX. 

exclusively for country circulation, or the one is a daily, 
and the other a weekly paper, the same conflict and 
adversary interests may not arise ; and the nature and 
objects of the particular papers, as well as the habits 
and usages of the trade, may furnish material ingredi- 
ents for a distinction between the cases. ^ 

' Glassington v. Thwaites, 1 Sim. & St. 124, 131, 133. — On this occa- 
sion Sir John Leach (the Vice-Chancellor) said : " AH newspapers are to 
some extent rivals. The competition is more immediate between two 
morning papers and two evening pa|)ers ; but there is necessarily some 
degree of rivalry between a morning and an evening pajier, especially in 
the country. It might, therefore, have been made a question, whether it 
would be a due act of management in the partnership concern of a morning 
paper, to assist with its property and its labor the publication of any other 
newspaper, so as to enable the majority of the partners in that respect to 
bind the minority. But the question does not arise ; because the plaintiff 
himself is to be considered as a party to the practice, before his copartners 
became the proprietors of the evening paper; and because there is evi- 
dence, that the proprietors of other morning papers have adopted the same 
practice with respect to other evening papers, so as to form a sort of usage 
in the trade to this effect. And it is to be considered, that the annual sum, 
paid by the evening jjaper for the accommodation afforded to it, outweighs the 
danger of inci'eased competition. The true question here is, whether it 
makes any difference, that the other proprietors of the Herald have now be- 
come the proprietors of the evening paper ; and 1 tliink it does not make a 
material difference. It is true, that a considerable part of the expense of a 
newspaper is occasioned by procuring information ; and if some of the pro- 
prietors of a morning paper are also the proprietors of an evening paper, 
they may have a stronger interest to promote the success of the evening 
paper than of the morning paper, and a strong temptation to use the infor- 
mation obtained at the expense of the morning paper for the benefit of the 
evening paper. This temptation forms a powerful objection in all cases to 
the partner in the concern of one newspaper being permitted to be a partner 
in the concern of any other newspaper. But it is an objection founded on 
the principle of policy and discretion, against which parties may protect 
themselves by their contracts ; and accordingly, it is a common covenant in 
such partnership articles, that no partner shall be the proprietor of any other 
newspaper. In the present case, there is actually a covenant, that the pro- 
prietors will not be concerned in any other morning paper, which, by impli- 
cation, affords the conclusion, that it was the intention of the parties, that 
they might engage in the concern of any evening paper. Where there is no 
such covenant of restraint, it is clear, that, at law, a partner in one newspaper 
may be a proprietor in any other ncAvspaper ; and in this case, equity must 
follow law ; and it cannot be intended, that the parties meant to impose a 



CHAP. IX.] RIGHTS AND DUTIES OF PARTNERS. 313 

§ 180. Cases of a very delicate and embarrassing 
nature sometimes arise in cases of partnership, where 
one partner dies, and one or all of the survivors are 
appointed his executors, and the partnership is con- 
tinued as between the survivors. Under such circum- 
stances, it may be difficult to say, that there may not 
sometimes arise conflicting duties and obligations in 
their diflerent acts and characters, as partners and as 
executors. Still greater embarrassments may occur, 
where the executors also sustain the character of guar- 
dians of the children of the testator, who by the articles 
have a right upon arriving at their majority to come 
into the firm. It has been well remarked by a learned 
writer, that it is clear, that surviving partners so situ- 
ated, have inconsistent duties to perform. It is true, 
that the difficulties of this situation are not so obvious, 
where the parties claiming under the testator are all 
sui juris, as where some of them are infants. But 
even in the former case, the surviving partner cannot, 
without the full knowledge and consent of these parties, 
make his situation of executor a means of advantage to 
his copartnership ; and in the latter case, the difficulties, 

restraint, which they might have expressed, and have not expressed, and 
where it is plain their attention was directed to the subject. The princi- 
ples of courts of equity would not permit, that parties bound to each 
other by express or implied contract to promote an undertaking for the 
common benefit, should any of them engage in another concern, which 
necessarily gave them a direct interest adverse to that undertaking. But 
the argument here is, not that the defendants, by becoming the proprie- 
tors of the evening paper, place themselves in a situation, in which they 
are necessarily required to betray their duty to the morning paper ; but 
that, if their interest be greater in the evening paper than the morning 
paper, they are exposed to a temptation to be dishonest and to betray their 
duty to the morning pa])er. If they act honestly, it is immaterial to the 
morning paper, whether the defendants are or not the proprietors of the 
evening paper. And for this reason it is, that it makes no difference in 
the present case, that the defendants have become the proprietors of the 
evening paper." 



314 PARTNERSHIP. [cHAP. IX. 

in the absence of specific contract, seem to be insuper- 
able, unless the whole partnership concern be wound 
up, or recourse be had to a court of equity.^ 

§ 181. In the next place, there is an implied obliga- 
tion and duty upon all the partners, as a matter of 
good faith, to which they are mutually pledged to each 
other, that the business of the partnership shall be 
conducted in such a manner, as that each of the part- 
ners may be enabled to see, that it is carrying on for 

' Coll. on P. B. 2, c. 2, § 1, p. 123, 2d ed. ; Id. B. 2, c. 3, § 4, p. 210, 211. 
— The case of Wedderburn v. Wedderburn, 2 Keen, 722 ; s. c. 4 Myl. & C. 
41, demonstrates the truth of these remarks. In that case the accounts of 
successive partnerships and retirements of partners, after the death of the 
first partner (the testator), were overhauled in equity, after a lapse of thirty 
years from the testator's death. The decretal order in that case contains 
the form of the proper order to be made in such cases, and may serve as a 
valuable precedent. 2 Keen, 752, 753. This case was affirmed upon the 
appeal by Lord Cottenham, who then used the following language : "I 
have had many occasions to consider, and have frequently expressed my 
sense of the difficulties, which the court has to encounter in administering 
equity according to its acknowledged principles in cases of this description. 
So many decisions have established the right of parties to participate in the 
profits of trade, carried on under circumstances similar to the present, that 
no question can be raised as to the duty of the court in decreeing such 
relief, when a proper case arises for it ; but it is obvious, that very great 
difficulties exist in enforcing this right. Great expense, great delay, and 
great hardship upon the defendants frequently attend the prosecution of 
decrees for this purpose, and the apparent benefit decreed to the plaintiff is 
frequently much diminished, if not lost, in the attempt to enforce it. For 
these reasons it appears to me, that these are cases, in which, above all 
others, it is for the interest of all parties to settle the matters in contest 
between them by private arrangement and compromise ; and I earnestly 
recommend to the parties to take this into their serious consideration. I 
have no doubt but that a settlement might be effected, which would secure 
to the plaintiffs more than they can possibly obtain from the most successful 
prosecution of the decree, and which would, at the same time, protect the 
defendants against much of the expense, inconvenience, and hardship, to 
which they must be exposed if it be adversely prosecuted. This, however, 
is entirely for their private consideration. ]\Iy duty is only to dispose of 
the matters litigated upon this appeal, which, for the reasons I have before 
given, I now do by dismissing the appeal with costs." 4 Myl. & C. 55. 
{Millar v. Craig, 6 Beav. 433; Stocken v. Dawson, 6 Beav. 371; Town- 
end V. Townend, 1 GiflP. 201.} 



CHAP. IX.] RIGHTS AND DUTIES OF PARTNERS. 315 

their mutual advantage, and not injuriously to the 
common interest.^ It seems, therefore, the proper duty 
of each partner to keep precise accounts of all his own 
transactions for the firm, and to have them always 
ready for inspection and explanation." And if one 
partner receives any moneys for the partnership, he 
ought at once to enter the receipt thereof in the books 
of the firm, so that the same may be open to the in- 
spection of all the partners.^ This, indeed, is one of 
the ordinary stipulations of partnership articles ; but it 
is a mere affirmance of the general doctrine of the law.^ 
It follows from these considerations, that one partner 
cannot exclude another from a personal interposition, 
and an equal management in the concerns of the part- 
nership. The powers of all are in this respect co-ordi- 
nate and co-extensive, whether the partnership be in 
full operation, or be subsisting only for the purpose of 
winding up the affairs thereof.^ There may be excep- 
tions and limitations growing out of the particular 
articles or other incidents of the partnership, as where 
one partner has sole authority to act in the manage- 
ment of the concern ; or where one partner is the sole 
owner of the property, and the other partners are only 
to share the profits. '^ The Roman law inculcated a 
similar doctrine ; and if one partner was prevented by 
the others from an equal participation in any of the 



' Coll. on P. B. 2, c. 2, § 1, p. 126, 2d ed. ; Peacock v. Peacock, 16 
Ves. 49, 51 ; 3 Chitty on Comm. & Manuf. c. 4, p. 236. 

2 Coll. on P. B. 2, c. 2, § 1, p. 121, 126, 2d ed. ; Id. B. 2, c. 2, § 2, 
p. 142 ; Rowe v. Wood, 2 Jac. & W. 553, 558 ; Ex parte Yonge, 3 Ves. & B. 
31, 36 ; {Lind. on P. 659-666.} 

3 Goodman v. AVhitcomb, 1 Jac. & W. 589, 593. 

* Coll. on P. B. 2, c. 2, § 2, p. 142, 2d ed. 

* Coll. on P. B. 2, c. 2, § 1, p. 126, 2d ed. ; Rowe v. Woods, 2 Jac. & 
W. 553, 558. 

« Ibid. 



316 PARTNERSHIP. [CHAP. IX. 

partnership property, he might, even during the con- 
tinuance thereof, maintain an action pro socio} 

§ 182. In the next place, as there is an implied obli- 
gation in every partner to exercise due dihgence and 
skill, and to devote his services and labors for the pro- 
motion of the common benefit of the concern, it hence 
follows, that he must do it without any reward or com- 
pensation, unless, indeed, it be expressly stipulated for 
between the partners, as it well may be under peculiar 
circumstances.^ The reason is, that each partner, in 
taking care of the joint property, is in fact taking care 
of his own interest, and is performing his own duties 
and obligations, implied in, and constituting a part of, 
the consideration for the others to engage in the part- 
nership ; and the law never undertakes to measure and 
settle between the partners the relative value of their 
various and unequal services bestowed on the joint busi- 
ness, for the obvious reason, that it is impossible to see, 
how far in the original estimate of the parties, when 
the connection was formed, the relative experience, 
skill, ability, or even the known character and reputa- 
tion of each, entered as ingredients into the adjustment 
of the terms thereof.^ 

1 D. 17, 2, 52, 13; Poth. Pand. 17, 2, n. 33. 

^ Thornton v. Proctor, 1 Anst. 94 ; Franklin v. Robinson, 1 Johns. Ch. 
157, 165; Bradford v. Kimberly, 3 Johns. Ch. 431, 434; Cakhvell w. 
Leiber, 7 Paige, 483; Burden v. Burden, 1 Ves. & B. 170; Lee v. Lash- 
brooke, 8 Dana, 214; Whittle v. M'Farlane, 1 Knapp, 311, 315; [Lewis v. 
MofTett, 11 111. 392 ; Lyman v. Lyman, 2 Paine, C. C. 11 ; King v. Hamilton, 
16 111. 190; Coursen v. Hamlin, 2 Duer, 513; {Hutcheson v. Smith, 5 Ir. 
Eq. 117 ; Lind. on P. 636. But see Levi v. Karrick, 13 Iowa, 344.} And 
on the same principle a surviving partner has been held not entitled to 
compensation for services in winding up the affairs of the firm. Beatty v. 
Wray, 19 Penn. St. 516]; {Stocken v. Dawson, 6 Beav. 371; Brown v. 
McFarland, 41 Penn. St. 129 ; Piper v. Smith, 1 Head, 93. But see Feather- 
stonhaugh v. Turner, 25 Beav. 382, 392.} 

^ [Interest on advances of capital by one of the partners to the firm, 
will be allowed, where there is any agreement or understanding to that 



CHAP. IX.] RIGHTS AND DUTIES OF PARTNERS. 317 

§ 183. Nor is good faith alone required in all part- 
nership acts ; but also the exercise of a sound and rea- 
sonable discretion by each partner, for the mutual ben- 
efit and interest of the concern. It is, therefore, the 
duty of each partner to avoid transgressing or abusing 
in any way the ordinary privileges of a partner in the 
management of the concern ; as, for example, by pro- 
fuse, or wanton, or unnecessary expenditures in the 
partnership business, or by rash and imprudent specu- 
lations, or by negligent or extravagant sacrifices of the 
partnership property.^ Even where a right is reserved 
to one partner to assign his share to another, who shall 
thereby be entitled to admission as a partner, good 

effect. Coll. on P. (Perkins's ed.) B. 2, c. 3, § 338, note, p. 309 ; Winsor v. 
Savage, 9 Met. 346 ; Hodges v. Parker, 17 Vt. 242 ; Millaudon v. Sylves- 
tre, 8 La. (Curry), 262; Reynolds v. Mardis, 17 Ala. 32; {Pond v. 
Clark, 24 Conn. 370; Lind. on P. 649.} But it has been distinctly 
declared by an American court that, in the absence of any such evidence, 
neither of the partners will be entitled to intei-est on advances before a 
general settlement or dissolution. Lee v. Lashbrooke, 8 Dana, 214; Jones 
V. Jones, 1 Ired. Eq. 332 ; Honore v. Colmesnil, 7 Dana, 199 ; Waggoner 
w.'Gray, 2 Hen. & Mun. 603; Dexter v. Arnold, 3 Mason, 284; Desha v. 
Smith, 20 Ala. 747. An eminent English judge has intimated a contrary 
opinion. According to him, the law is not clear, that, where partners are 
equally laborious aiid equally attentive to the business, interest should not 
be allowed on any excess of capital, and the parties thus be put on equal 
terms in that respect. "Can one believe," he says, commenting on the 
facts of a case in judgment, " that the party, to whom the whole capital 
belonged, renounced his advantage in that respect, and continuing to take 
an equally laborious part in the transaction of the business, should bring in 
his whole income, both partnership and private, and yet intend to reserve 
no advantage of that income upon the settlement of accounts l)etween him- 
self and copartner.'' I must say, I have a great difFiculty in coming to such 
a conclusion as that." Millar v. Craig, 6 Beav. 433 ; Hodges v. Parker, 
17 Vt. 242 ; Stoughton v. Lynch, 1 Johnson, Ch. 467 ; Simpson v. Feltz, 1 
McCord, Ch. 213; Ex parte Chippendale, 4 De G. M. & G. 19, s. c. sub 
nam. In re German Mining Co. 19 Eng. L. & Eq. 591 ; Beacham i'. Eck- 
ford, 2 Sand. Ch. 116. See post, § 349, note]; {Morris v. Allen, 1 Mc- 
Carter, 44. See Wood v. Scoles, Law Rep. 1 Ch. 369 ; W\atncy v. Wells, 
Law Rep. 2 Ch. 2r)0 ; Hill v. King, 9 Jur. n. s. 527.} 
> Coll. on P. B. 2, c. 2, § 1, p. 127, 2d ed. 



318 PARTNERSHIP. [CHAP. IX. 

faith would seem to require, that the assignment should 
be to a person of competent skill and honesty, and not 
to a mere insolvent, or to a known profligate ; for this 
would seem to be an abuse, and not a fair exercise of 
the right of assignment.^ 

§ 18 J:. Pothier, in discussing the subject of the rights, 
duties, and obligations of partners, in respect to each 
other, has laid down a number of general rules, as 
guides and principles. First. That each partner may 
use the property, belonging to the partnership, accord- 
ing to its proper use and destination, and not otherwise, 
reciprocally allowing to his other partners the like use 
and privilege." Second. That each partner has a right 
to compel the other partners to bear then share of the 
expenses, which are necessary for the preservation of 
the common property.^ Third. No partner has a right 
to make any material change or innovation upon the 
common, permanent, or fixed property, or inheritable 
estate of the fii-m, even though it may be beneficial to 
the firm, without the consent of his partners ; for this 
is deemed an authority not delegated by the firm, and 

> Coll. on P. B. 2, c. 2, § 1, p. 129, 130, 2d ed. ; 2 Bell, Comm. B. 7, 
p. 620, 5th ed. — In the case of JefFerys v. Smith, 3 Russ. 158, 168, Sir 
John Copley (Master of the Rolls) seemed to think, that the insolvency of 
the assignee constituted no just objection. On that occasion he said: "It 
is said, that the assignment was colorable ; that is, that it was made for the 
sake of securing the assignor from future liability. Suppose he made it 
with that view, he had a right so to pi'Otect himself from future liability. It 
is alleged, that the assignee was not a responsible person. Let it be so ; 
Guppy, for the purpose of securing himself, had a right to assign to a 
person not responsible. The only ground of objection would be, that, 
though there was an assignment in form, there was an understanding 
between the parties, that the assignee should be a trustee for the assignor. 
Here there is no pretence for such a supposition. I must hold, therefore, 
that, at all events, the assignment, coupled with the notice, freed Guppy 
from future liability." But ought not a court of equity to interfere, where 
an assignment is made to a notoriously incompetent person, or to one of 
bad and dissolute habits? See 2 Bell, Comm. B. 7, p. 620, 5th ed. 

* Both, de Soc. n. 8i, 85. ^ ^^^Yi. de Soc. n. 86. 



CHAP. IX.] RIGHTS AND DUTIES OF PARTNERS. 319 

which any one may prohibit from being done.^ Fourth. 
No partner can alienate or bind the property of the 
firm, except to the extent of his own interest therein.^ 
These rules may not be unreasonable in themselves ; 
but it cannot be affirmed, that all of them have a just 
foundation in our law. On the contrary, as we have 
seen, some of them are repudiated.^ Pothier afterwards 
adds some other obligations of partners inter sese ; as 
for example, that each partner is bound to account to 
the others for all that he owes to the firm, deducting 
what is due to him by the firm.'* So, also, each partner 
is bound to account to the extent of the share, which 
he has in the partnership, for whatever is due to his 
other partners by the firm, deducting whatever those 
partners owe to the firm.^ These rules seem little 
more than an expansion of the principles of the Roman 
law on the same subject.^ 

§ 185. This is but a very summary view of the lead- 
ing rights, duties, and obligations of partners inter sese, 
implied by law ; and indeed a full enumeration of them, 
with reference to the cu'cumstances of each particular 
kind of partnership, would be found at once tediously 
minute, and of little value, even if it were practicable. 
The rights, duties, and obligations of partners inter sese 
must necessarily be expanded or restrained, to meet the 
exigencies of their peculiar trade and business ; and 
general rules can do little more than to point out the 
ordinary course in common transactions. We shall 
have occasion hereafter to consider the rights, duties, 
and obligations, expressed in, and arising under articles 

1 Poth. de Soc. n. 87, 88. 

2 Poth. de Soc. n. 89. ' Ante, § 95. 

* Poth. de Soc. n. 108-123. * Poth. de Soc. n. 108, n. 12G-132. 

« Poth. Pand. 17, 2, n. 26-29 ; Id. n. 33 ; Id. n. 36. See also Domat, 
8, 8, 4, art. 7, 10-16. 



320 PARTNERSHIP. [cHAP. IX. 

of partnership, and the interpretation thereof. But, in 
concluding this part of the subject, it may be remarked, 
that partners are entitled inter sese to be allowed all 
charges, losses, and expenditures, which they have prop- 
erly, or necessarily, or unavoidably, incurred in trans- 
acting the partnership business.^ On the other hand 
(as we have seen),^ no partner is entitled, unless under 
some special agreement, to any compensation, commis- 
sion, or reward, for his skill, labor, or services, while em- 
ployed in the partnership business.^ The nature of the 
contract implying, that each partner shall gratuitously 
give and exert all his skill, labor, and services, so far as 
they may be properly required for the due accomplish- 
ment and success of the partnership operation.^ If any 
allowance is intended to be made for extra services or 
labor, it is a fit matter to be adjusted in the articles, 
under which the partnership is formed. 

§ 186. John Voet lays down the like doctrine in 
expressive terms, admitting at the same time, that, by 
custom or special agreement, a compensation may be 
allowed to one or more partners for extraordinary labor, 
skill, or services. " Salarium sen honorarium quod at- 
tinet^ licet rarior ejus in societate, quam quidem in 
mandato, usus sit, dum partes lucri singidis ohvenientes 
sufficlens operm pretkmi sunt ; nihil tamen impedit, quo 
minus uni socio, negotia societatis forte p>otissimum aut 

' See Domat, 1,8, 4, art. 11, 12; Thornton v. Proctor, 1 Anst. 94. 

2 Ante, § 1.82. 

' Coll. on P. B. 2, c. 2,§ l,p. 130; Id. §2, p. 142, 151, 2d ed. ; Franklin v. 
Robinson, 1 Johns. Ch. 157, 165 ; Whittle v. M'Farlane, 1 Knapp, 311; 
Dougherty v. Van Nostrand, 1 HofF. 68 ; Burden v. Burden, 1 Ves. & B. 
170 ; ante, § 183. 

* Ante, § 183 ; Franklin v. Boblnson, 1 Johns. Ch, 157, 165 ; Whittle v. 
M'Farlane, 1 Knapp, 311 ; Bradford v. Kimberly, 3 Johns. Ch. 431 ; 
Dougherty v. Van Nostrand, 1 Hoff. 68 ; Burden v. Burden, 1 Ves. & B. 
170. 



CHAP. IX.] RIGHTS AND DUTIES OF PARTNERS. 321 

wiice tractanti ac promoventi, cum ad iUam operam 
supra ceteros prcestandam ex conventione non teneretur^ 
vel ah initio salarium aliquod assigtietur, vel 2^osiea 
viri honi arhitratu adjudiceUir, idque extraor dinar ia 
potius tnagnistratus cogtiitione, quam ordinaria pro socio 
actione intentata, argmnento eoriiin quce de salario in 
mandata interveniente dicta sunt. Quod et moribus 
hodiernis conveniens esse, patet ex responso Juriscon- 
sultorum et mercatorum inter Responsa Jurisconsulto- 
rmn HoIIandue" ^ The same doctrine may be traced 
back to the Roman law.^ 

' 1 Voet, ad Pand. 17, 2, § 19, p. 757. • Domat, 1, 8, 4, art. 11, 12. 



322 PARTNERSHIP. [cHAP. X. 



CHAPTER X. 

RIGHTS, DUTIES, AND OBLIGATIONS OF PARTNERS UNDER 
THE ARTICLES THEREOF. 

{ § 187. Partnership articles. 

188, 189. Specific performance of an agreement for partnership. 

190. Construction of general words. 

191. Articles explained by conduct under them. 

192. Articles modified and waived by acts of the partners. 

193. Business not to be extended beyond the articles. 

194. Commencement of partnership. 

195. Partnership dissolved by death, notwithstanding articles. 

196. Roman law. 

197. 198. Partnership continued beyond the time hmited in the articles. 

199. Continuance of partnership, notwithstanding death. 

200. Same subject. Appointment of successor. 

201. Same subject. Election of executor or appointee. 

201 a. Same subject. Liability of the assets of the deceased. 

202. Firm name. 

203. Advances of capital. 

204. Management of the firm business. 

205. Ownei'ship of partnership property. 

206. Annual accounts. 

207. 208. Pui'chase of shares on dissolution. 

209. Prohibition from carrying on business during the partnership. 
210-212. After dissolution. 

213. Power of a majority. 

214. Expulsion of partners. 

215. Reference to arbitration. } 

§ 187. Hitherto, we have been mainly considering 
the rights, duties, and obligations of partners inter sese, 
implied by law. But, as written articles often exist 
relative to the formation, management, rights, duties, 
and obligations of the particular partnership, it may 
not be without use to bring together some of the more 
important stipulations and arrangements usually con- 
tained in those articles, and to ascertain what, in point 



CHAP. X.] CONSTRUCTION OF ARTICLES. 323 

of law, is the true interpretation, application, and ob- 
jects thereof ; and, incidentally, how far they are capable 
of being enforced, either in Courts of Law, or in Courts 
of Equity.^ 

§ 188. At the threshold of these inquiries we are met 
with the question, whether Courts of Equity (for it is 
clear, that Courts of Common Law have no jurisdiction, 
except to give damages), are competent to decree the 
specific performance of a preliminary agreement to 
enter into a partnership ; and if so, under what circum- 
stances a specific performance wdll be decreed. In re- 
spect to this matter, it may be at once perceived how 
full of delicacy, diflftculty, and embarrassment every at- 
tempt to enforce a preliminary contract of this sort 
must be. The success of every partnership is usually 
so essentially dependent upon the hearty co-operation 
and exertions of all the partners for the common good ; 
and reluctance, and discontent, and resistance are so 
incompatible with such success ; that at first it would 
seem, that no Court of Equity ought to exert any such 
authority to compel an observance of a mere treaty to 
form a partnership. But, on the other hand, there 
may be serious evils, resulting from a total refusal to in- 
terfere in all cases of this sort under any circumstances ; 
for one or more of the partners may have incurred re- 
sponsibilities on account of the intended firm, or prelimi- 
nary steps for the business of the intended partnership 
may have been taken, and acts done, putting the same 
into an inchoate and imperfect operation upon the full 
faith and confidence of the punctilious discharge of 

* I liave availed myself throughout this whole chapter mainly of the 
materials contained in Mr. Collyer's able work on Partnership, B. 2, e. 2, § 2, 
p. 131-1 G2, 2d ed. Mr. Bell has also devoted a considerable space to the 
examination of the same subject, which will well reward the attentive ex- 
amination of the learned x-eader. 2 Bell, Comm. B. 7, c. 2, § 4, p. 645-648, 
6th ed. 



324 PARTNERSHIP. [CHAP. X. 

duties by the other side, so that it may work a most se- 
rious, if not an irreparable mischief and injury, not to 
enforce the specific performance of the contract, so as 
to bind all parties to the acts so done, and to the respon- 
sibilities so incurred. 

§ 189. Courts of Equity have upon this subject adopted 
an intermediate ground ; while, on the one hand, they 
will not ordinarily entertain bills for a specific perform- 
ance of such a preliminary contract ; they will, on the 
other hand, under special and peculiar circumstances, 
in order to suppress frauds, or manifestly mischievous 
consequences, compel such a performance.^ One of the 
cases, in which Courts of Equity will not ordinarily in- 
terfere, is, where the partnership is to continue during 
the mere pleasure of the parties ; for in such a case it 
seems utterly nugatory to decree a partnership, which 
may be immediately dissolved at the will of the dissatis- 
fied party.^ On the other hand, where the partnership 

' Buxton V. Lister, 3 Atk. 383, 385 ; Hibbert v. Hibbert, cited Coll. on 
P. B. 2, c. 2, § 2, p. 132, 133, 2d ed,; Wats, on P. c. 1, p. 60, 2d ed. ; Anon. 
2 Ves. Sr. 629, 630; Gow on P. c. 2, §4, p. 109, 110, 3d ed. ; 1 Story, Eq. 
Jur. § 666, and note ; Coll. on P. B. 2, c. 2, § 2, p. 131-133, 2d ed. ; {Lind. on 
P. 796 ; Sichel r. Rosenthal, 30 Beav. 371 ; Manning v. Wadsworth, 4 Md. 59.} 
Lord Hardwicke, in Buxton v. Lister, 3 Atk. 385, arguendo, said : " Suppose two 
partners should enter into an agreement by such a memorandum as is in the 
present case, to carry on a trade together, and that it should be specified 
in the memorandum, that articles should be drawn pursuant to it, and be- 
fore they are drawn, one of the parties flies off; I should be of opinion, 
upon a bill brought by the other in this court for a specific performance, 
that, notwithstanding it is in relation to a chattel interest, yet a specific 
performance ought to be decreed." 

* Hercy v. Birch, 9 Ves. 357, 359 ; 1 Madd. Ch. Pract. 411, note (x) ; 
Coll. on P. B. 2, c. 2, § 2, p. 133-135, 2d ed. ; Van Sandau v. Moore, 1 Russ. 
441, 463. But see Gow on P. c. 2, §4, p. 110, 111, 3d ed. — Mr. Swanston, 
in his learned note to Crawshay v. Maule, 1 Swans. 495, 513, has remai'ked : 
"It seems clear, that, in general, the Court of Chancery will compel specific 
performance of an agreement for a partnership, Buxton v. Lister, 3 Atk. 
385; Anon. 2 Ves. 629; but Lord Eldon is represented to have held, that 
this doctrine is not api)licable to partnerships, which may be immediately dis- 
solved. Hercy v. Birch, 9 Ves. 360. See 1 Madd. Prine. & Pract. 411, 2d ed. 



CHAP. X.] CONSTRUCTION OF ARTICLES. 325 

has informally gone into operation, or it is for a specific 
term of time, Courts of Equity have not unfrequently 
decreed a specific performance, with the view of invest- 
ing the parties fully with all their legal rights.^ 

§ 190. Passing from these preliminary considera- 
tions, let us, in the next place, attend to some of the 
more important stipulations usually contained in arti- 
cles of partnership. And here it is to be observed, 
that the same rules of construction apply, as in ordinary 
cases ; that is to say, to ascertain what is the real 
intention of the parties in particular stipulations ; and, 
when ascertained, to carry it into effect, limiting any 
general language, incautiously used, to the particular 
purposes and objects and transactions specified.^ On 
the other hand, general language, and especially such 
as relates to the nature and extent of covenants, may 
frequently be applied, and deemed to run through the 
whole body of the articles. Thus, for example, the 
words of covenant, which usually occur at the com- 
mencement, or introductory part of the articles, usually 
declare the covenant to be joint and several ; and 
words of covenant in the succeeding stipulations of 
the mstrument are on that account usually construed, 

This distinction, however, must be received, it is presumed, not without 
qualification. In many such cases, though the partnership could be imme- 
diately dissolved, the performance of the agreement (like the execution of a 
lease after the expiration of the term, see Nesbitt v. Meyer, 1 Swans. 223, 226), 
might be important, as investing the party with the legal rights, for which he 
contracted." {England v. Curling, 8 Beav. 129; Whitworth r. Harris, 40 
Miss. 483.} We have already seen (ante, § 181), that, although in ordinary 
partnerships the Roman law only gave the action pro socio after a dissolution 
of the partnersliip ; yet in certain peculiar partnerships for collection of the pub- 
lic revenue (Cou.s'a Vecligalium), the action jn'o socio for an account lay during 
the continuance of the partnership. Poth. Pand. 17, 2, n. 33 ; D. 17, 2, 65, 15. 

> Coll. on P. B. 2, c. 2, § 2, p. 135, 2d ed. ; Gow on P. c. 2, § 4, p. 109, 
110, 3d ed. But see Downs v. Collins, 6 Hare, 418 ; [Lind. on P. 797.} 

- Coll. on P. B. 2, c. 2, p. 137 ; 1 Fonbl. Eq. B. 1, c. 6, § 16, and note 
(1) ; Gainsborough v. Stoi'k, Barnard. Ch. 312. 



326 PARTNERSHIP. [CHAP. X. 

although not so expressed, to be also intended to be 
joint and several.^ 

§ 191. It is not, however, less important, in order to 
arrive at correct results, to take into consideration 
other matters. Thus, although the articles of part- 
nership regulate the rights, duties, obligations, and 
interests of the parties thereto, in certain specified 
cases ; yet they leave in full force all the other rights, 
duties, obligations, and interests, implied by law, so 
far as they are not superseded, controlled, qualified 
or limited by those articles.^ In the next place, in 
all cases of doubtful interpretation, the actual construc- 
tion, adopted by the partners in their partnership trans- 
actions, will be, and indeed ought to be, adopted,- as the 
true, legitimate, and appropriate interpretation intend- 
ed by themselves.^ 

§ 192. In the next place, partnership articles in the 
view of Courts of Equity, whatever may be the rule at 
law, are liable to be controlled, superseded, qualified, 
or waived by the acts and transactions of the partner- 
ship, in the course of the business thereof, wherever 
the assent of all the partners thereto may be fairly 
inferred, and however positive, or stringent, those pro- 
visions may be."^ In short, in many cases of this kind, 

> Coll. on P. B. 2, c. 2, § 2, p. 139, 2d ed. ; Id. B. 2, c. 8, § 1, p. 169. 

'^ Coll. on P. B. 2, c. 2, § 2, p. 138, 139; Cra\yshay v. Collins, 15 Ves. 
218, 226 ; Jackson v. Sedgwick, 1 Swans. 460, 469 ; Pettyt v. Janeson, 
6 Madd. 146 ; {Smith v. Jeyes, 4 Beav. 503.} 

3 Coll. on P. B. 2, c. 2, § 2, p. 139, 2d ed. ; Geddes v. Wallace, 2 Bligh, 
270, 271, 297, 298; [Beacham v. Eckford, 2 Sand. Ch. 116. Entries in 
the books of a partnershijD have been said to be as conclusive of the rights 
of the partners, as if prescribed in a regular contract. Stewart v. Forbes, 
1 Hall & Tw. 461 ; s. c. 1 Macn. & G. 137.] 

■* ["Partners," it has been said, "if they please, may, in the course of 
the partnership, daily come to a new arrangement for the purpose of having 
some addition or alteration in the terms on which they carry on business, 
provided those additions or alterations be made with the unanimous concur- 



CHAP. X.] CONSTRUCTION OF ARTICLES. 327 

looking to the course of conduct of the partners, and 
the special circumstances of their business, or to their 
general acquiescence, or their positive acts, we may often 
have the most satisfactory evidence that the partnership 
articles have been laid aside, either pro tanto^ or in 
whole, and that new articles and arrangements have 
been entered into in their stead.^ Hence, it has been 

rence of all the partners." England v. Curling, 8 Beav. 129 ; McDou- 
galdw. Banks, 13 Ga. 451.] 

* Geddes v. Wallace, 2 Bligh, 270, 297, 298 ; Jackson v. Sedgwick, 1 
Swans. 460, 469; [England v. Curling, 8 Beav. 129; Stewart v. Forbes, 1 
Hall & Tw. 461 ; s. c. 1 Macn. & G. 137] ; Const v. Harris, Turn. & R. 496, 
523 ; Gow on P. c. 1, § 1, p. 9, 10, 3d ed. ; | Coventry v. Barclay, 33 Beav. 
1, affirmed on appeal, 12 Weekly Rep. 500, 10 Jur. N. s. Digest, 158.} 
— In Const I'. Harris, Turn. & R. 523, Lord Eldon said: "In ordinary 
partnerships nothing is more clear than this, that although partners enter 
into a written agreement, stating the terms, upon which the joint concern is 
to be carried on, yet, if there be a long course of dealing, or a course of 
dealing, not long, but still so long as to demonstrate, that they have all 
agreed to change the terms of the original written agreement, they may be 
held to have changed those terms by conduct. For instance, if in a com- 
mon partnership, the parties agree, that no one of them shall draw or accept 
a biU of exchange in his own name, without the concurrence of all the 
othei's ; yet, if they afterwards slide into a habit of permitting one of them 
to draw or accept bills, without the concurrence of the others, this court will 
hold, that they have varied the terms of the original agreement in that re- 
spect. So, in this case, if it can be shown, that in the administration of this 
property, the proprietors in general, after 1812, pursued a different course 
from that provided for by the deed of March, 1812, they must be taken to 
have altered the agreement, and to have substituted the terms, to which, in 
their conduct, they have adhered, instead of the terms contained in the 
original agreement. And, with respect to the present plaintiff, there can be 
no doubt, that if, after the deed of 1812 was executed, his testatrix gave in 
to a course of administration of the property, different from the course pro- 
vided for by the deed ; if her acts, or the acts of others with her consent, 
afforded such evidence of departure from the terms of the written agree- 
ment, as to amount to the substitution of a ncAv agreement, though evidenced 
only by parol, instead of the written agreement ; lie, claiming under her, 
must be bound by her acts, and cannot be at liberty to revert back from 
those acts, establishing a new agreement, to call into operation again the old 
agi'eement, and to insist, that the non-execution of the old agreement is, in 
such circumstances, a breach of trust. So, again, it is a principle of this 
court with respect to partnership concerns, that a partner, who complains 
that the other partners do not do their duty towards him, must be ready at 
all times, and offer himself to do his dutv toward them." 



328 PARTNERSHIP. ' [cHAP. X. 

judicially declared, that, in Courts of Equity, articles 
of partnership, containing clauses, which have not been 
acted upon by the parties, are read, as if those clauses 
were expunged, or were not inserted therein.^ 

§ 193. In respect to the nature, and extent, and 
kind of business of the 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 business, of a different nature, extent, or 
kind ; and if it is attempted, they will interpose by 
way of injunction to restrain the offending parties.^ 

§ 194. In the next place, as to the commencement 
of the partnership. If no other time is fixed by the 
articles, the commencement will take place from the 
date and execution of the instrument.^ And this rule 
is so inflexible at law, that parol evidence has been 
deemed inadmissible to control this intendment, al- 
though the partnership would thus be rendered illegal 
at least, if thereby the true construction of the words 
of the instrument would be varied.'* This is certainly 
pressing the law of implied construction to a great, 
but perhaps not to an undue extent. It would not 
probably be acted upon by Courts of Equity, unless 

' Jackson v. Sedgwick, 1 Swans. 460, 469 ; Coll. on P. B. 2, c. 2, § 2, 
p. 139, 2d ed. 

2 Natusch V. Irving, Gow on P. Ap. 398, 407, 3d ed. : Id. p. Ill, 112. 

3 Coll. on P. B. 2, c. 2, § 2, p. 140, 2d ed. 

4 Williams v. Jones, 5 B. & C. 108; {Lind. on P. 685; Dix v. Otis, 5 
Pick. 38. But see Davis v. Jones, 17 C. B. 625; Reboul v. Chalker, 27 
Conn. 114.} — Perhaps Williams v. Jones requires a more full exposition. 
The ground, upon which the learned judges put it, was, that the evidence 
made the instrument conditional, instead of being, as it was in terms, abso- 
lute. But, suppose the instrument had been signed on the first day of Janu- 
ary, and it was agreed between the parties by parol, that it should commence 
on the first day of the ensuing February, would the like objection have 
applied ? 



CHAP. X.] CONSTRUCTION OF ARTICLES. 329 

the parol evidence was repugnant to the terms of the 
written contract, as, for example, by making the agree- 
ment conditional, when upon its face it was absolute ; 
and not merely a supplement thereto. 

§ 195. In the next place, as to the duration of the 
partnership. Although the partnership be fixed to a 
particular term or period of time, yet it is always 
understood, as an implied condition or reservation 
(unless the contrary is expressly stipulated), that it is 
dissolved by the death of either of the partners, at 
any time within that period.^ This doctrine seems an 
exception to the ordinary rules of the common law in 
the interpretation of contracts ; and it has sometimes 
been complained of as unreasonable. But it seems 
founded in very equitable principles, and is a natural 
result of the peculiar objects of the contract.^ Every 
partnership is founded upon a delectus jiersonce., which 
implies confidence and knowledge of the personal 
character and skill and ability of the other associates ; 
and their personal co-operation, advice, and aid, in all 

1 Coll. on P. B. 1, c. 2, § 2, jj. 73, 74, 2d etl. ; Id. B. 2, c. 2, § 2, p. 140 ; 
Crawford v. Hamilton, 3 Madd. 251 ; Scholefield v. Eichelberger, 7 Pet. 586, 
594 ; VuUiamy v. JJoble, 3 Mer. 593, 614 ; Gow on P. c. 5, § 1, p. 219, 220, 3d 
ed. ; Gratz v. Bayard, 11 S. & R. 41 ; {Bell v. Nevin, 15 Weekly Rep. 85 ; 
6 Am. Law Reg. n. s. 181.} 

^ In Crawsbay v. Maule, 1 Swans. 495, 509, Lord Eldon said: "The 
doctrine, that death or notice ends a partnership, has been called unrea- 
sonable. It is not necessary to examine that opinion ; but much remains 
to be considered before It can be approved. If men will enter into a 
partnership, as into a marriage, for better and worse, they must abide by 
it ; but if they enter into it without saying how long it shall iendure, they 
are understood to take that course in the expectation, that circumstances 
may arise, in which a dissolution will be the only means of saving them from 
ruin ; and considering what persons death might introduce into the partner- 
ship, unless it works a dissolution, there is strong reason for saying, that such 
should be its effect. Is the surviving partner to receive into the partnership, 
at all hazards, the executor or administrator of the deceased, his next of kin, 
or possibly a creditor taking administration, or whoever claims by represen- 
tation, or assignment from his representative ? " ' 



330 PARTNERSHIP. [CHAP. X. 

the transactions thereof. The death of any one part- 
ner necessarily puts an end to all such co-operation, 
advice, and skill. If, therefore, the partnership were 
not, whatever might be the stipulated terms for its 
continuance, put an end to by the death of any one 
partner, one of two things must follow ; either that the 
whole business of the partnership must be carried on 
by the surviving partners exclusively, at the hazard of 
the estate and interests of the deceased partner ; or 
else that the personal representative of the deceased, 
toties quoties, who may be a mere stranger, or even a 
woman, wholly unfit for and unacquainted with the 
business, must be admitted into the management. We 
see at once, that either alternative may be highly 
inconvenient or injurious to the rights, interests, and 
objects of the original concern.^ The law, therefore, 
will not force it upon the parties ; but it presumes, in 
the absence of all contrary stipulations, that by a tacit 
consent, death is to dissolve the partnership, because it 
dissolves the power of a personal choice, confidence, 
and management of the concern.^ 

§ 196. The Roman law adopted this doctrine in its 
fullest extent, and did not (as we have seen), even per- 
mit the parties by their private stipulations to agree, that 
upon the death of a partner, his heir should be admitted 
into the partnership for the reasons before suggested. 
Solmtur adhuc societas etiam morte socii ; quia qui so- 
cietatem contrahit, certa7n jjersonam, sibi eliglt Sed et, 
si consensu plurium societas contracta sit, morte unius 
socii solviiur, etsi j^hires supersint ; nisi in coeunda so- 
cietate aliter convenerit.^ This last qualification, as we 

1 See Pearcev. Chamberlain, 2 Ves. Sr. 33, 34 ; Poth. de Soc. n. 144, 145 ; 
Domat, 1, 8, 4, art. 14 ; Id. 1, 8, 2, art. 3, 4. 

^ Gow on P. c. 5, § 1, p. 218-220, 3d ed. ; Mr. Swanston's note to Craw- 
shay V. Maule, 1 Swans. 509, note (a). 

3 Inst. 3, 2G, 5. 



CHAP. X.] CONSTRUCTION OF ARTICLES. 331 

shall presently see, applied only to the continuance of 
the partnership by the survivors.^ Nemo 2^otest societa- 
tem heredi suo sic parere^ ut ipse heres socius sit.^ Idem 
respondit, societatem non posse idtra mortem porrlgi ; 
et ideo nee lihei^tatem de suprem,is judiciis constrimjere 
quis poterit, vel cognatum ulteriorem proximiorihus in- 
ferre.^ Again : Adeo, moi^te socii solvitwr socletas, ut 
nee ah initio 2^cicisci possimns^ ut heres etiam succedat 
societati.^ Societas quemadmodum ad heredes socii 
non transit, ita nee ad adrogatorem ; Ne alioquin in- 
vitus quis socius efficiatur, cui non vult.^ The law of 
England, as well as that of France (as we have seen), is 
contrary in this respect to the Roman law ; and permits 
the parties, by express stipulation, to provide for the 
continuance of the partnership after the death of one 
partner, and for the admission thereto of his heir, or 
other representative.'^ 

§ 197. But suppose the original term of the partner- 
ship should expire by the mere effluxion of time, and 
still the partnership should (as indeed not unfrequently 
happens) continue to be carried on by the same parties, 
without the execution of any new articles of partnership, 
or without any express recognition of the old articles ; 
the question would arise, as to what ought, under such 
circumstances, to be deemed the terms and stipulations 
of the continued partnership. Is it to be presumed to 
be renewed for the like period of time, and upon the 
like stipulations and conditions, as those which were 
contained in the old articles ? Or is it to be deemed a 

' Domat, 1, 8, 5, art. 14, 15. 

* D. 17, 2, 35. == D. 17, 2, 52, 9. 

* D. 17, 2, 59. ^ D. 17, 2, 65, 11 ; D. 3, 2, 6, 6. 

^ Ante, § 5; Pearce v. Cliamberlain, 2 Yes. Sr. 33; Baliiiain v. Shore, 9 
Ves. 500; Crawshay v. Maule, 1 Swans. 495, 508; Poth. de Soc. n. 144, 145; 
Gow on P.c. 5, § 1, p. 219, 220, 3d ed.; Coll. on P. B. 2, c. 2, § 2, p. 140, 147, 
2d ed.; Gratz v. Bayard, 11 S. & R. 41. 



332 PARTNERSHIP. [cHAP. X. 

mere partnership during the pleasure of both parties, 
and dissoluble instantaneously at the will of either] 
And, if the latter be the true predicament thereof, then, 
are the interests of the parties, and their shares in the 
profits, while it is actually continued, to be governed 
and guided by the stipulations of the old articles or 
not? 

§ 198. Perhaps these inquiries cannot be answered 
universally in the same manner, as equally applicable 
to the circumstances of all cases ; for the habits of the 
trade, and the conduct of the parties, may often estab- 
lish the fact satisfactorily, that some of the articles have 
been practically waived, or abrogated, or qualified, while 
others are necessarily implied, as being in full force and 
operation. In such cases, the presumption of the actual 
state of the partnership contract will necessarily vary 
with the circumstances, and be governed by them, and 
not govern them. In the absence, however, of all pre- 
sumptions of this nature, the general rule seems to be, 
that the partnership is to be deemed one for no definite 
period, but dissoluble at the will of any of the part- 
ners ; ^ but that, in other respects, the old articles of the 
expired partnership are to be deemed adopted by impli- 
cation, as the basis of the new partnership during its 
actual continuance.^ 

' Featherstonhaugh v. Fenwick, 17 Ves. 298, 307. [See Gould v. Horner, 
12 Barb. fiOl.] 

^ Bootli V. Parks, 1 Molloy, 4G5 ; Crawshay v. Collins, 15 Ves. 218, 
228; U. S. Bank v. Binney, 5 Mason, 176, 185. — In this last case 
the Court said : " Whether the present be a limited or general partner- 
ship, is to be determined by the whole evidence in the case. It is certain, 
that by the articles it is a limited coi^artnership, and confined to the soap 
and candle business. Those articles expired, by their own limitation, in two 
years, and had force no longer, unless the parties elected to continue the 
partnership on the same terms. That is matter of evidence upon the whole 
facts. The natural presumption is, that as the partnershij) was continued in 
fact, it was continued on the same terms as before, unless that presumption 



CHAP. X.] CONSTRUCTION OF ARTICLES. 333 

§ 199. In this connection, it may be well to say a few 
words, as to clauses in articles of partnership, stipulat- 
ing for the continuance thereof, notwithstanding the 
death of one or more of the partners.^ Such a clause 
is usually introduced into partnerships for a long term 
of years, where the outlay of capital is great in perma- 
nent fixtures and manufacturing establishments, and the 
locality of the trade renders it important in point of 
profit and good-will, that it should be steadily carried 
on, as long as may be, under the same proprietors or 
their representatives. In cases of this sort, the clause 
commonly empowers the representative of the deceased 



is rebutted by the other circumstances in the case. There is no written 
agreement respecting the extension of the copartnership ; and therefore it 
is open for inquiry upon all the evidence. The present notes were made 
and indorsed long after the term of two years expired. The plaintiffs con- 
tend, that the partnership was then general ; the defendants, that it was lim- 
ited, as before. The jury must determine between them, upon weighing all 
the facts and presumptions." [Thus, if by the written agreement one jiart- 
ner is to receive no compensation for his time and services unless a profit is 
realized from the business, and by the articles of partnership it was to con- 
tinue for one year, but was in fact continued two years without any new 
agreement, it was held that the same provision must apply to the second 
year. Bradley v. Chamberlin, 16 Vt. 613]; {Essex v. Essex, 20 Beav. 
442; Parsons v. Hayward, 31 Beav. 199, affirmed on appeal 8 Jur. n. s. 
924; s. c. 6 L. T. N. s. 628; Mifflin v. Smith, 17 S. & R. 165. A memo- 
randum of a partnership between A., B., and C. provided that, if one died, the 
survivors should pay to his executors the value of his capital as appearing on 
the last account. A. died, and B. and C. continued the business. B. after- 
wards died. Held, from the conduct of the parties, that the same stipulation 
was continued in existence, and that C. should pay to B.'s executors the value 
of his capital as appearing on the last account. King v. Chuck, 17 Beav. 
325. But where the articles of a partnership for a term provided that 
either partner might, in the event of specified conduct on the part of the 
other, dissolve the partnership by notice, and that the latter partner should, 
in that case, be considered as quitting the business of the former, this pro- 
vision was held not applicable to a continuation of the partnership, afler the 
term, without an express renewal. Clark v. Leach, 32 Beav. 14, affirmed on 
appeal. 1 De G. J. & S. 409.} 

* {See Laughlin v. Lorenz's Adm'rs, 48 Penn. 275; Stan wood v. Owen, 
14 Gray, 195.} 



334 PARTNERSHIP. [CHAP. X. 

partner to carry on the trade, in conjunction with the 
survivors, for the benefit of the widow and children of 
the deceased partner ; and frequently, also, for the ad- 
mission of one or more of his children into the concern, 
upon his or their arrival at majority.^ Sometimes the 
provision partakes of the character of a settlement, giv- 
ing an interest in the partnership to the widow, during 
her life, and dividing her share, after her death, equally 
among all the children.^ Under such circumstances, 
the question may arise, whether all the children take a 
vested interest in the partnership trade, from time to 
time, as they are born, so that, although they should die 
during the lifetime of their mother, yet their shares 
thereof will be transmissible ; or, whether such children 
only, as are living at the death of the mother, are en- 
titled to take a vested share or interest. It has been 
decided, that the latter is the true interpretation to be 
put upon such provisions ; upon the ground, that the 
primary object of all such clauses is the continuance of 
the partnership ; and that all the other provisions, con- 
tained therein, ought to be treated as subservient to this 
leading purpose.^ 

' Coll. on P. B. 2, c. 2, § 2, p. 147, 148, 2d ed. [See Downs v. Collins, 
6 Hare, 418.] 

2 Ibid. {See Skirving v. Williams, 24 Beav. 275.} 

3 Coll. on P. B. 2, c. 2, § 2, p. 147, 148, 2ded. ; Balmain v. Shore, 9 Ves. 
500, 506, 507. — The case of Balmain w. Shore was of this nature ; and Sir 
William Grant, in delivering his judgment, said : " The object of these very 
ill-drawn articles is to constitute a partnership for the very unusual term of 
99 years. As it was not to be expected any of the parties should live so long, 
it was necessary to ascertain in what mode the partnership was to continue 
after their death ; and it appears to have been intended for their own bene- 
fit, and that of their families, called, in some parts of the articles, their se- 
quels in right. From the manner in which the interests are given in the 
clause, more particulai-ly ascertaining the mode of succession to the shares, 
the question arises, whether the words are to be construed as they would 
be, if applied to dispositions of property in general ; or a different con- 
struction is to be made, from the consideration of the subject. It must be 



CHAP. X.] CONSTRUCTION OF ARTICLES. 335 

§ 200. Sometimes the clause provides for the con- 
tinuance of the partnership, by stipuhiting, that the 
interest of the deceased partner in the concern, after 
his death, and during the term of the partnership, 
shall go to such persons as he shall by his will name 
and appoint ; and in default of such appointment, that 
it shall devolve on his wife, and in case of her death, 
upon his children, in equal shares ; and in case of the 
death of all his children, to his executors and adminis- 
trators, who are to succeed to all his rights and powers 

admitted, that if this were a settlement of a sum of money, or other proper- 
ty, the children would take vested interests ; and the words, ' after the de- 
cease of such widow,' &c., would postpone, not the commencement of the 
interest, but only the commencement of the possession. Accordingly, it 
was contended, on the one hand, that under this instrument all the children 
took vested interests in the partnership shares, as they were born ; and 
though some died before their mothers, yet their shares were transmissible ; 
on the other, that the words in the clause, to which I have alluded, are tb 
have a different construction ; and that such children only Avill be entitled 
to a share, as shall be living at the death of the widow. The words, I think, 
must receive their construction from the consideration of the particular in- 
strument. The primary object was to constitute a partnership, and to as- 
certain the manner in which the shares were to be enjoyed in succession. It 
was but a secondary object, and through that medium, to give a benefit to 
the families ; and it appears to me, the object of this clause was to designate 
and ascertain, who are to supply the vacancies, as they shall happen ; that 
no interest was intended by anticijiation to any one ; but the object was to 
provide for the filling up of that vacancy, which might happen by the death 
of any partner interested in the partnership. For instance, where one of 
the original partners died, and left a widow, she instantly was to succeed to 
a share ; when she died, and left children, they were instantly to succeed 
to that share ; and, until a vacancy happened, there was no room for ascer- 
taining the objects, who were to come in the place of the party dying ; and 
therefore such children only, as should be living at the time the vacancy 
happened, could be intended to succeed upon that vacancy. That is more 
evident from the provision as to the sale of a share ; which is perfectly in- 
compatible with the supposition, that the children, as they were born, 
should take vested interests in the partnership shares of their parents. 
It was impossible the children, then born, could take such a vested inter- 
est, as they must at all events succeed to. It was only upon the suppo- 
sition, that the p'artner left a share, that there could be any successor; 
and the vacancy must happen, before the succession could be ascertained." 



336 PAKTNERSHIP. [CHAP. X. 

in the business and management of the partnership. 
Now, under such circumstances, the question may arise, 
in what manner this power of appointment is to be 
construed ; whether as a technical power of appoint- 
ment, or not. If as a technical power, then it will be 
necessary for the testator, in making the appointment 
by will, to allude in some distinct manner to the power, 
so as to demonstrate, that it is thereby intended to be 
executed ; for a general gift of all his estate and effects 
to one or more of his children, will not be deemed a 
specific execution of the power. But, if not to be con- 
strued technically, then such a gift will amount to a 
sufficient designation of the donee or donees, as ap- 
pointees of his share and interest in the concern, as 
succeeding partners. Upon the same enlarged view of 
the objects of this clause (as to the continuance of the 
partnership business), it has been held, that such a 
power of appointment is not to be treated as technical ; 
and, therefore, that the appointment is well executed 
by such a general gift.^ 

§ 201. Another question may arise under clauses 
for the continuance of the partnership, and the admis- 
sion of the executor and administrator of the deceased 
partner into the firm, and that is, whether, when the 

' Coll. on P. B. 2, c. 2, § 2, p. 148, 149, 2d ed. ; Ponton v. Dunn, 1 
Russ. & M. 402. — On this occasion Sir John Leach (Master of the Rolls) 
said : " It is true, the words ' name and appoint ' are used in the deed ; but 
considering the relation of the parties, I cannot understand them to be used 
with a view to create a power of appointment in its technical sense, and to 
limit the testator's power of disposition by will over this part of his prop- 
erty. Without this stipulation, those who claimed through him, would have 
had no title to share in the partnership profits after his death ; and it is a 
mere bargain with his partner, that he should have a power of disposition 
by will, and if he died without a will, that the property should devolve to 
his family in the manner stated. This property will therefore pass under 
the description in his will, of ' all other his estate and effects, of whatsoever 
nature or description.'" 



CHAP. X.] CONSTRUCTION OF ARTICLES. 337 

partnership is intended to be continued after the death 
of the partner, it is a matter of election with the 
widow, children, appointee, or executor, or administra- 
tor, of the deceased, to continue the same, or not ; or 
whether it is absolute and peremptory upon them. In 
respect to clauses of this nature, the general rule is, in 
the absence of all clear and well-defined declarations 
to the contrary, that they are to be construed, as giving 
the executor or administrator an option, so that he may 
continue the partnership, or not, as he may think 
proper ; and of course a reasonable time will be allow- 
ed to him for that purpose.^ Probably the same rule 
would prevail in the case of a widow, a child, a legatee, 
or appointee, unless the language of the provision 
clearly established a positive direction, that at all 
events the partnership should be continued.^ If it 
did, then it would seem clear, that every such party 
must take, if he takes at all, according to the terms 
of the will, and not otherwise ; and that he cannot 

' Coll. on P. B. 2, c. 2, § 2, p. 149, 150, 2d ed. ; Pigott v. Bagley, 1 ]\Ic- 
Cle. & Y. 569; [Downs v. Collins, 6 Hare, 418] ; {Madgwick v. Wimble, 
6 Beav. 495.} Where the articles provide, that the executors or ad- 
ministrators shall continue the partnership, if they think fit, they will be 
considered as partners unless they give notice within a reasonable time to 
the contrary. Coll. on P. B. 2, c. 2, § 2, p. 151, 2d ed. ; Morris v. Harri- 
son, CoUes, 157. 

2 Kershaw v. Matthews, 2 Russ. 62 ; Pigott v. Bagley, 1 McCle. & Y. 
509. — In the former case Lord Eldon said : " If there is a partnership car- 
ried on under articles, which stipulate that, upon the death of a partner, he 
shall be succeeded in the business, either by some person, whom he shall 
appoint, or by his executors, it may happen, that his appointees or his ex- 
ecutors do not think proper to come into his place on the same terms on 
which he was a partiier in the concern. In that case, the death of the party 
puts an end to the partnership. The stipulation may be, that the appointee 
or executor of the deceased partner is to be a partner only, if he does this 
or that particular thing. If the executor or appointee refuses to comply 
with the proviso, the whole concern must be wound up. But the dissolution 
which takes place, is not a dissolution wrouglit l)y the exclusion of the ex- 
ecutor or appointee ; for he never becomes a partner." 

22 



338 PARTNERSHIP. [CHAP. X. 

elect to take the benefit without continuing the part- 
nership.^ 

§ 201 a. Another question of a very important na- 
ture may arise out of a provision for the continuation 
of a partnership after the death of one of the partners, 
as to the extent to which contracts made after the 
death of that partner bind his assets.^ A testator, 
directing the continuance of a partnership, may, if he 
so choose, bind his general assets for all the debts of 
the partnership contracted after his death.^ But he 
may also limit his responsibility, either to the funds 
already embarked in the trade, or to any specific 
amount to be invested therein for that purpose ; and 
then the creditors can resort to that fund or amount 
only, and not to the general assets of the testator's 
estate, although the partner, or executor, or other 
person carrying on the trade, may be personally re- 
sponsible for all the debts contracted.^ And this leads 

> Coll. on P. B. 2, c. 2, § 2, p. 149, 150, 2d ed. ; Crawshay v. Maule, 1 
Swans. 495, 512. {See Page v. Cox, 10 Hare, 163. } [Where the option was 
secured to " the executor or administrator,*' on giving notice within three 
months after the decease of the parties ; and the parties dying intestate, the 
widow gave such notice within the three months, but without taking out let- 
ters of administration till some time after the three months, it was held, 
that she had not effectually complied with the condition, so as to be admit- 
ted into the firm. Holland v. King, 6 C. B. 727.] 

* Burwell u.'Mandeville's Ex'r, 2 How. 560, 576. ,See also Ex parte Gar- 
land, 10 Ves. 110, 119 ; Ex parte Richardson in re Hodgson, 3 Madd. 138 ; 
Thompson v. Andrews, 1 Myl. & K. 116; Pitkin v. Pitkin, 7 Conn. 307; 
Scholefield v. Eichelberger, 7 Pet. 586, 594; Gratz v. Bayard, 11 S. & R. 
41. [7n re Xorthern Coal Mining Co., 10 Eng. L. & Eq. 171 ; s, c. siib nom. 
Ex parte Blakeley's Ex'rs, 3 Macn. & G. 726.] {See § 319 a. } 

' {Laughlin v. Lorenz's Adm'r, 48 Penn. St. 275 ; Davis v. Christian, 15 
Gratt. 11. But see Stanwood v. Owen, 14 Gray, 195. | 
• * This is clearly established by the case Ex parte Garland, 10 Ves. 110, 
where the subject was fully discussed by Lord Eldon, and Ex parte Rich- 
ardson, 3 Madd. 138, 157, where the like doctrine was affirmed by Sir John 
Leach (then Vice-Chancellor), and by the same learned judge, when 
Master of the Rolls, in Thompson v. Andrews, 1 Myl. & K. 116. The case 
of Hankey v. Hammock, before Lord Kenyon, when Master of the Rolls, 



CHAP. X.] CONSTRUCTION OF ARTICLES. 339 

US to remark, that nothing but the most clear and 
unambiguous language, demonstrating in the most 
positive manner that the testator intends to make his 
general assets liable for all debts contracted in the 
continued trade after his death, and not merely to 
limit it to the funds embarked in that trade, would 
justify the court in arriving at such a conclusion, from 
the manifest inconvenience thereof, and the utter im- 
possibility of paying off the legacies bequeathed by 
the testator's will, or distributing the residue of his 
estate, without in effect saying at the same time that 
the payments may be recalled, if the trade should 
become unsuccessful or ruinous. Such a result would 
ordinarily be at war with the testator's intention in 
bequeathing such legacies and residue, and would, or 
might postpone the settlement of the estate for a half- 
centm'y, or until long after the trade or continued 
partnership should terminate. Lord Eldon^ put the 
inconvenience in a strong light, by suggesting several 
cases where the doctrine would create the most mani- 
fest embarrassments, if not utter injustice ; and he said, 
that the convenience of mankind required him to hold, 
that the creditors of the trade, as such, have not a claim 
against the distributed assets in the hands of third per- 
sons, under the directions in the same will, which has 



reported in Cook's Bankrupt Law, 67, 5th ed., and more fully in a note to 
3 Madd. 148 ; so far as may be thought to decide that the testators assets 
are generally liable under all circumstances, where the trade is directed to 
be carried on after his death, has been completely overturned by other later 
cases, and expressly overruled by Lord Eldon, in Ex parte Garland, 10 
Ves. 110, 121, 122, where he stated that it stood alone, and he felt 
compelled to decide against its authority. The case of Pitkin v. Pitkin, 
7 Conn. 307, is fully in point to the same effect. See also Burwell v. 
Mandeville's Ex'r, 2 How. 560, 576, where the doctrine stated in the text 
was affirmed. 

' Ex paHe Garland, 10 Ves, 110, 121, 122. 



340 PARTNERSHIP. [cHAP. X. 

authorized the trade to be carried on for the benefit of 
other persons.^ 

§ 202. In partnership articles it is also often agreed 
what shall be the proper style of the firm, as for 
example, John Doe and Company ; and, under such 
circumstances, it is a part of the duty of every partner, 
in signing contracts and other instruments, punctili- 
ously to observe and follow the very formulary.^ This 
may be necessary, not only to bind the firm itself, but 
also to absolve him from any personal liability, not 
only to third persons, but also to his partner.^ It will 

^ This, also, was mauifestly the opinion of Sir John Leach in the cases 
Ex par^e Richardson, 3 Madd. 138; Thompson v. Andrews, 1 Myl. & K. 
116, and was expressly held in the case in Pitkin v. Pitkin, 7 Conn. 307. 
|In Kirkman v. Booth, 11 Beav. 273, 280, Lord Langdale, M. R., says: 
"It is, and it has been admitted to be, a rule without exception, that, to 
authorize executors to carry on a trade or permit it to be carried on with 
the property of a testator held by them in trust, there ought to be the most 
distinct and positive authority and direction given by the will itself for that 
purpose." So Cutbush v. Cutbush, 1 Beav. 184 ; McISTeillie v. Acton, 4 De 
G. M. & G. 744. In Stanwood v. Owen, 14 Gray, 195, it was held, 
that a stipulation that, on the death of either partner, the survivor might 
carry on the business for one year for the benefit of the parties, did not 
• justify the allowance, against the insolvent estate of a deceased partner, xjf a 
debt contracted by the survivor within the year. In Laughlin v. Lorenz's 
Adm'r, 48 Penn. St. 275, articles of partnership provided that in the case 
of the death of either partner, the partnership should continue to the next 
1st of August, and should then be settled up "in such manner as may be 
decided on by the survivor and the representatives of the deceased partner." 
One partner died, and on the next 1st of August, his representative, the 
surviving partner, and a third person, formed a partnership for five years 
under the name of the old firm, continuing its business, collecting its assets 
and paying its debts. Held, that the estate of the deceased partner was 
liable for the debts of the new firm. This case seems to go far beyond any 
other of the recent cases in extending the liability of the estate of the 
deceased partner. The court seem to consider that the presumption is in 
favor of binding the general assets, and not against it as would appear to be 
considered in the cases cited above. In Davis v. Christian, 15 Gratt. 11, a 
deceased partner's general assets were held liable.} 

2 Coll. on P. B. 2, c. 2, §'2, p. 241, 2d ed. 

•■' See ante, § 102 ; Shipton v. Thornton, 9 Ad. & E. 314, 329-332 ; 
Faith V. Richmond, 11 Ad. & E. 339 ; ante, § 102, 136, 142. 



CHAP. X.] CONSTRUCTION OF ARTICLES. 341 

be a clear breach of such duty and engagement, to use 
another firm name as that of the firm ; as, for example, 
if the firm name be Doe & Roe, to use the name of 
Doe & Company, or Doe & Roe & Company.^ It will 
be equally a breach for one partner to sign his own 
name, adding " for self and partners ; " because by 
those words it can no more be known, who are his 
partners, whom he means to bind, than by any other 
general words.^ This doctrine applies, a fortiori^ where 
the firm name is intended to express the names of all, 
who are partners, as for example, John & Richard Doe; 
for in such a case it may be for the benefit of each 
partner, that he may be known to the world to be a 
member in that concern, and also, that, as between the 
partners themselves and the world, it should not be 
left as a mere matter of speculation, who are really 
partners, or who are not dormant partners ; but that 
the firm may have the credit, and the public the confi- 
dence, resulting from the knowledge of the fact.^ And 
probably a Court of Equity might, in a case of this sort, 
interfere by way of injunction, to prevent any mischief 
to the firm, by thus exposing it to the consequence of 
being made liable for proceedings of one partner, to 
which it did not really assent.^ 

' Coll. on P. B. 2, c. 2, § 2, p. 141, 2(1 ed. ; Marshall v. Colman, 2 Jac. 
& W. 266, 268, 269. [But where a partnership was to be carried on "in 
the name of Seymour & Ayres," a signature of these names, with the addi- 
tion of their respective Christian names, was held to bind the partnership. 
Newton v. Boodle, 3 C. B. 795. But see In re Warren, Daveis, 320, 326.] 

^ Ibid. » Marshall v. Colman, 2 Jac. & W. 26G, 269. 

* In Marshall v. Colman, 2 Jac. & W. 266, a bill was filed for such an 
injunction, not asking for a dissolution. But it was denied upon special 
grounds. On that occasion Lord Eldon said : "There is only this point in 
the case now before me, which I wish seriously to consider, namely, that 
although this Court will interfere, where there is a breach of covenants in 
articles of partnership, so important in its consequences, as to authorize the 
party complaining to call lor a dissolution of the partnership, whether (and 
it is a matter that will deserve a great deal of consideration before it goes 



342 PARTNERSHIP. [CHAP. X. 

■ § 203. In the next place, partnership articles often 
contain provisions for the advance of particular amounts 

so far) it will entertain the jurisdiction of producing a decree (for this is 
what is to be done in the cause, in which this motion is now made) for a per- 
petual injunction, as to a particular covenant, the partnership not being dis- 
solved by the Court. There is one case, which is constantly occurring, that 
of a partner raising money for his private use on the credit of the partner- 
ship firm ; and the Court interferes then, because there is a gi-ound for dis- 
solving the partnership. But then the danger must be such, there must be 
that abuse of good faith between the members of the partnership, that the 
Court will try the question, whether the partnership should not be dissolved 
in consequence. But it is quite a different thing, and it would be quite a 
new head of equity for the Court to interfere, where one party violates a 
particular covenant, and the other party does not choose to put an end to 
the partnership ; in that way there may be a separate suit and a perpetual 
injunction in respect of each covenant; that is, a jurisdiction, that we have 
never decidedly entertained. All this bill seeks is a jserpetual injunction 
against using any other than this particular firm and name ; and the ques- 
tion would be, if very serious mischief were to arise from not using it, 
whether the party would not be obliged to frame his bill differently. I 
have no difficulty in saying, that, where the members of a partnership 
contract by covenant, that the firm shall be A., B., C, and D., it is a 
breach of that covenant for' A. -to sign those instruments, to which the 
covenant refers, in the name A. and Co. ; but it is no less a breach of that 
covenant for D. to sign his own name, adding ' for self and partners,' 
because by these words it can no more be known, who are his partners, 
than by the word Co. When partners enter into such contracts, the 
meaning and intent is, that, in the first place, it may be known to the 
world, for the benefit of each partner, that he is a partner in that con- 
cern, and also that, as between each partner and the world, it should not 
be left to them to speculate, who are really partners, or who are dormant 
partners, and so on. It is intended, that each individual may have the 
credit, which belongs to his name, and may not be exposed to conse- 
quences, which might arise from his name not being used. But it must 
be made out to be a case, which goes further than this does, to entitle 
the Court to grant an injunction against the breach of such a contract; 
it must be a studied, intentional, prolonged, and continued inattention to 
the application of one party calling upon the other to observe that con- 
tract. Looking at the circumstances of this case altogether, recollecting 
that the application was only made by the plaintiff in April last, and even 
admitting, that some of the letters, as has been insisted, may amount to 
contracts binding on the plaintiff, the question is, whether it was not 
known who were really partners ? I do not mean to say, that there has 
been such au exact performance of the contract as there ought to be ; and 
these gentlemen will do well (if they mean to protect themselves from the 



CHAP. X.] CONSTRUCTION OF ARTICLES. 343 

towards the capital stock, at particular periods, or pro- 
visions for the admission of other partners, upon the 
payment of particular sums of money, by them, by in- 
stalments. In all such cases the party so contracting is 
treated as a debtor to the firm, to the full amount so to 
be contributed or paid, as debitum in prcesenti, sohen- 
dum in futuro ; and, indeed, he stands in equity as to 
such debts, precisely in the same relation to them, as if 
he were a third person, who was a debtor thereto.^ 

§ 20-1. In the next place, partnership articles some- 
times provide, that one or more of the partners shall 
exclusively manage and administer all the concerns 
thereof, or one or more particular departments of the 
business. In cases of this sort, courts of equity wiU 
uphold with a steady hand every such stipulation, and 
give it full effect during the continuance of the part- 
nership, and inhibit the non-competent partners from 
intermeddling therewith.^ And this is entirely in coin- 
interference of this Court) to use all the names in the concern, — they 
must do that, or the Court will be under the necessity of awarding an 
injunction, or dissolving the partnership." The motion was refused Avith- 
out costs. As to whether the right to use the partnership firm, after the 
death of one partner, belongs to the survivor, or is a part of the good- 
will of the partnership, see ante, § 100, and Lewis v. Langdon, 7 Sim. 421. 
See also Webster v. TV^ebster, 3 Swans. 490, n. In Miles v. Thomas, 9 
Sim. 606, Sir Launcelot Shadwell (the Vice-Chancellor) thought, that an 
injunction might be granted, whenever the act complained of is one that 
leads to the destruction of the partnership property, notwithstanding a 
dissolution thereof may not be prayed. 

' Coll. on P. B. 2, c. 2, § 2, p. 141, 2d ed. ; Akhurst i'. Jackson, 1 Swans. 85, 89. 
[See also Bury v. Allen, 1 Coll. 589, 607] ; { Stevens v. Yeatman, 19 Md. 480. 
In Featherstonhaugh v. Turner, 25 Beav. 382, it is said that a person selling 
a share in his business and becoming a partner with the purchaser, for an in- 
definite period, cannot, in equity, immediately dissolve the partncrsliip and 
retain the premium, and to a similar effect are the decisions in Astle v. Wright, 
23 Beav. 77, and Freeland v. Stansfeld, 2 Sm. & G. 479. On the allowance 
of interest on advances, see § 182, n., and on the return of premiums on dis- 
solution, see Airey v. Borham, 29 Beav. 620; Pease v. Hewitt, 31 Beav. 22; 
Bullock v. Crockett, 3 Giff. 507 ; Lee v. Page, 30 Law J. x. s. Ch. 857.} 

^ Ante,§ 173, 182, 193, 202; Coll. on P. B. 5, c. 1, § 3, p. 753-759, 2ded. 



344 PARTNERSHIP. [cHAP. X. 

cidence with the French law on the same subject ; for, 
by that law, where by the articles one or more partners 
are exclusively to administer the affairs of the partner- 
ship, the power is deemed irrevocable during the con- 
tinuance of the partnership, and cannot be lawfully in- 
terfered with by the other partners.^ The Roman law 
seems impliedly to have promulgated the same doc- 
trine.^ The Code of Louisiana has also made it a part 
of its own positive regulations.^ 

§ 205. In the next place, in partnership articles it is 
sometimes agreed, that the real estate and fixtures, be- 
longing to the firm, shall not be treated as partnership 
property, as between the partners ; but that all the 
partners shall have a several and individual interest 
therein. In such cases, the interests of the partners 
will be treated throughout, as their several and sepa- 
rate estate ; and of course, in cases of bankruptcy of 
the partners, it will be distributable to and among their 
separate creditors respectively, in preference to their 
joint creditors.^ The rule is, or at least may be, differ- 
ent in cases of mere personal property, which still re- 
mains in the reputed ownership of the partnership, 
although it will be the same, if the property be clearly 
and exclusively in the ownership of one partner, as his 
separate personal property.^ 

• Poth.de Soc. n. 71, 72. 

2 D. 14, 1, 1, § 13, 14 ; Poth. Pand. 14, 1, n. 4. 

' Code of Louisiana (1825), arts. 2838-2840. 

■» Coll. on P. B. 2, c. 2,§ 2, p. 141, 2d ed.; Id. B. 4, c. 2, § 1, p. 595, 596, 
600; Id. B. 2, c. 1, § 2, p. 113; Smith v. Smith, 5 Ves. 189; Ex parte Smith, 
3 Madd. 63. {Where the owner of a lease admits another to be his partner 
in the use of a part only of the demised property, and afterwards dissolves 
the partnership, the partner no longer has any interest in the lease. Burdon 
V. Barkus, 3 Giff. 412.} 

* Coll. on P. B. 2, c. 2, § 2, p. 141, 2d ed. ; Id. B. 4, c. 2, § 1, p. 595, 
596, 600 ; Id. B. 2, c. 1, § 2, p. 113 ; Smith v. Smith, 5 Ves. 189 ; Ex parte 
Smith, 3 Madd. 63 ; Coll. on P. B. 4, c. 2, § 1, p. 596-605, 2d ed. {See 
Parsons on P. 252 ; Penny v. Black, 9 Bosw. 310.} 



CHAP. X.] CONSTRUCTION OF ARTICLES. 345 

§ 206. Connected with this stipulation is ordinarily 
another for an annual account, valuation, and balance 
of the moneys, stock in trade, and credits of the part- 
nership, and also of the debts due by the partnership ; ^ 
and sometimes also for an annual division of the profits, 
or of a portion thereof. The annual accounts, when so 
settled and balanced, are ordinarily held to be conclu- 
sive, unless some error is shown ; and to guard against 
the opening of such accounts, upon suggested errors at 
distant periods, it is not unfrequently further provided, 
that such annual statements and settlements of the ac- 
counts shall be binding and conclusive upon all the 
parties, notwithstanding any errors, unless they are dis- 
covered in the lifetime of the partners, or during the 
term of the partnership.^ But all such clauses are 
nugatory, in cases where the error has arisen from the 
fraud of any of the partners ; for fraud will vitiate any, 
even the most solemn transactions.^ 

§ 207. Another usual stipulation in the articles is for 
a general account of all the partnership property and 
concerns, upon the dissolution or expiration of the 
partnership, which is followed up by another, pointing 
out the mode of winding up the concerns, and of divid- 
ing and distributing the partnership property and effects. 
This is generally provided for in one of two modes. One 
mode is, by a general conversion of all the partnership 
assets into cash, by a sale, and dividing the produce 
thereof, after providing for the payment of the debt's of 
the firm, among all the parties, in proportion to their 
respective shares and interests. Another mode is by 

1 Coll. on P. B. 2, c. 2, § 2, p. 144, 145, 2d ed. 

2 See Coll. on P. B. 2, c. 2, § 2, p. 145, 146, 2d ed. ; Oldaker v. Laven- 
der, 6 Sim. 239; {Coventry?;. Barclay, 33 Beav. 1, affirmed on appeal, 12 
Weekly Rep. 500 ; s. c. 10 Jur. N. s. Digest, 158.} 

3 See Coll. on P. B. 2, c. 2, § 2, p. 145,. 146, 2d ed. ; Oldaker v. Laven- 
der, 6 Sim. 239. 



346 PARTNERSHIP. [CHAP. X. 

providing, that one or more of the partners shall be 
entitled to purchase the shares of the other at a valu- 
ation.^ The former mode is that constantly adopted by 
Courts of Equity, in the absence of any express stipu- 
lations; the latter mode can be insisted upon, only 
when there is an express stipulation to that very effect.^ 
A mere stipulation for the division of the partnership 
stock and effects, at the end of the partnership, will not 
be deemed by Courts of Equity sufficient to entitle one 
or more of the partners to purchase them at a valua- 
tion ; but merely to provide for a division in the usual 
manner, by a sale.^ The same rule of a sale is applied 
in all cases, where the mode prescribed by the partner- 
ship articles becomes impracticable, or cannot otherwise 
be fairly obtained.'' 

§ 208. Under the clause in the articles for the pur- 
chase at a valuation, upon the dissolution of a part- 
nership, the question has arisen, whether that clause is 
applicable to a dissolution by bankruptcy. It has been 
thought that it is not, although the point has not ex- 
pressly come under decision ; but a strong inclination 
of opinion, in that direction, was expressed by Lord 
Eldon.^ The question turns upon this, whether a man 

' Coll. on P. B. 2, c. 2, § 2, p. 145, 146, 2d ed., which cites 7 Jarman's 
Convey. 31 ; Cookson v. Cookson, 8 Sim. 529. {See Burfield v. Rouch, 31 
Beav. 241 ; Homfray v. Fothergill, Law Rep. 1 Eq. 567.} 

^ Ibid.; Wilson v. Greenwood, 1 Swans. 471, 482 ; Featherstonhaugh w. 
Fenwick, 17 Ves. 298; {Dickinson v. Dickinson, 29 Conn. 600.} 

3 Coll. on P. B. 2, c. 2, § 2, p. 146; Rigden v. Pierce, 6 Madd. 353 ; Cook 
V. Collingridge, Jac. 607. 

^ Cook V. Collingridge, Jac. 607. 

° Wilson V. Greenwood, 1 Swans. 471, 481, and the Reporter's note (a) ; 
Gow on P. c. 5, § 3, p. 300, 3d ed.; Coll. on P. B. 2, c. 2, § 2, p. 145, 146, 2d 
ed. ; post, § 396. — Mr. Swanston in his note says: " The following are some 
of" the principal authorities applicable to this point. Lockyer i\ Savage, 2 
Str. 947 ; Roe v. Galliers, 2 T. R. 133 ; Ex parte Hill, Cook's Bankr. Law, 
228 ; 1 Cox, 300 ; Ex parte Bennet, Cook's Bankr. Law, 229. In the mat- 
ter of Murphy, 1 Sch. & Lef. 44 ; Ex parte Henecy, cit. Id. ; In the matter 



CHAP. X.] CONSTRUCTION OF ARTICLES. 347 

can, by contract, or otherwise, provide for a particular 
disposition of his property, in an event which deprives 
him of all disposing power over it, and vests that right 
in other persons.^ 

§ 209. We have already seen, that it is an implied 
duty and obligation of every partner, not to carry on 
any business inconsistent with, or contrary to the true 
interest of the partnership.^ But this is often expressly 
provided for by a special stipulation in the partnership 
articles. Where the language is general, it will, of 
course, be construed to apply to all other business, inju- 
rious to, or interfering with the interest and business 
of the partnership. But if the stipulation be limited to 
engaging in the same business on the separate account 
of the partner, or to engaging in any other particularly 
specified business, during the continuance of the part- 
nership, there, it would seem to leave the partner free 
to engage in any other than the excepted business, upon 
the known maxim of the law, that ExiJressio imius est 
exdusio alterius.^ 

of Meaghan, 1 Sch. & Lef. 179; Dommett v. Bedford, 6 T. K. 684; 3 Ves. 
149 ; Ex parte Cooke, 8 Ves. 353 ; Ex pai-te Hinton, 14 Ves. 598 ; Ex parte 
Oxley, 1 Ball & Beat. 257; Higinbotham v. Holme, 19 Ves. 88; Ex parte 
Vere, 19 Ves. 93; 1 Rose, 281; Ex parte Young, Buck, 179; 3 Madd. 
124; Ex parte Hodgson, 19 Ves. 206. And see Brandon v. Robinson, 18 
Ves. 429. The general distinction seems to be, that the owner of property 
may, on alienation, qualify the interest of his alienee, by a condition to take 
effect on bankruptcy ; but cannot, by contract or otherwise, qualify his own 
interest by a like condition, determining or controlling it in the event of his 
own bankruptcy, to the disappointment or delay of his creditoi'S ; the^ws dispo- 
nendi, which for the first purpose is absolute, being, in the latter instance, 
subject to the disposition previously prescribed by law." 

' Ibid. 

- Ante, § 178, 179. 

3 Coll. on P. B. 2, c. 2, § 2, p. 143, 2d ed.; (iHassington v. Thwaites, 1 Sim. 
& St. 124. — Mr. Collyer (Coll. on P. B. 2, c. 2, § 1, p. 142, 143, 2d ed.) has 
remarked : " If several persons enter into partnership, under a stipulation, 
that the copartners, or any of them, shall not, during the continuance of the 
copartnership, engage in any business otherwise than upon the account and 



348 PARTNERSHIP. [CHAP. X. 

§ 210. The like language, in partnership articles, will 
also, in some cases, be construed to import a prohibition 
to engage in the same trade, upon a withdrawal from 
the partnership, even when there are no express words 
to the purpose, but the prohibition arises by mere im- 
plication. Thus, where by the articles it was agreed, 
that the trade of the partnership (that of a brewer) 
should continue for eleven years, with a proviso, that if 
either of the parties should be so minded, upon giving 
six months' notice to the other, he should be at liberty 
to quit the trade and mystery of a brewer, and the other 
party should be at liberty to continue the trade upon 
his own account; it was held by the Court, that the 
party giving such notice, upon the true interpretation 
of the words, "to be at liberty to quit the trade and 
mystery of a brewer, &c." was not at liberty to engage 
in the brewery business on his own account, but was 
bound to quit it altogether.^ 

§ 211. So, where, upon the retirement of one of two 
partners from a partnership in trade, it was left to arbi- 
trators to determine (among other things) what was to 
be paid to the retiring partner for the good-will of the 
trade ; and the arbitrators, upon the understanding that 
the retiring partner would not set up the trade in the 
same street or vicinity, awarded to him a certain sum 
for liis share of the good- will thereof, which was accord- 
ingly paid by the other partner ; and he afterwards set 

for the benefit of the same copartnership ; and, after the execution of the 
articles, one of the partners with the consent of the others becomes a partner 
in a separate firm, the articles of partnership, coupled with such consent, will 
not operate to make the other partners of the original firm partners also in the 
separate firm. But a person may, by the decree of a Court of Equity, be- 
come a partner in the separate business of his copartner, entered into without 
his consent, in violation of the articles." 

' {Lind. on P. 705-712; ante, § 99, 100, and notes} ; Cooper v. Wat- 
lington, 3 Doug. 413 ; s. c. 2 Chitty, 451. 



CHAP. X,] CONSTRUCTION OF ARTICLES. 349 

up the trade in the same neighborhood ; the Court, not- 
withstanding the arbitrators had laid no express restraint 
on the retiring partner, in their award, held, that he 
should be restrained by injunction from carrying on the 
trade there, as it was a violation of the implied parol 
understanding of all parties at the time.^ 

§ 212. A fortiori^ an injunction will lie in a case, 
where, upon the withdrawal of a partner, it is agreed 
between the parties, that the business shall be carried on 
by the remaining partners alone, if such retiring part- 
ner should act in any manner inconsistent with such an 
agreement. Thus, where the plaintiff and defendant 
had been partners in stage-coaches ; and by an agreement 
on the dissolution of their partnership, it was stipulated, 
that the business, so far as it was carried on between 
Newbury and London, should belong to the plaintiff, 
and that the defendant should not carry on the business 
of coach proprietor between Newbury and London ; the 
defendant afterwards set up a stage-coach, which began 
its journey at a place a few miles distant from Newbury, 
but travelled through Newbury to London. On a bill 
filed, and an affidavit in support thereof, Lord Eldon 
granted an injunction to restrain the defendant from 
carrying on the business between Newbury and London, 
So, where a company, in which A. and B. were partners, 
contracted with the Postmaster-General for the service 
of the mail, each partner supplying horses for a distinct 
part of the road ; but in consequence of the bad manner, 
in which A. horsed the coach, the Postmaster-General 
had been frequently obliged to suspend the contract ; it 
was held, that B, might maintain an injunction against 
A. to restrain him from interfering with B.'s portion of 
the road, upon the ground of the irreparable injury to 

' Harrison v. Gardner, 2 Madd. 198 ; Gow on P. c. 2, § 4, p. 107, 3d ed. 



350 PARTNERSHIP. [cHAP. X. 

the partnership, which would ensue from such an inter- 
ference.^ 

§ 213. We have, also, already seen Avhat the general 
rule of law is, as to the right and authority of a major- 
ity, or of a definite number, to direct and regulate the 
concerns of the partnership.^ This subject, in cases of 
partnerships, composed of numerous persons, frequently 
constitutes a matter of a special provision in the arti- 
cles ; and so far as the provision extends, it will form 
the rule of the partnership.^ But it will not be extended 
by implication to any collateral cases, although they 
may fall within the same, or even a greater, mischief.^ 
Thus, for example, if it is intended, that, in cases of dif- 
ficulty, the majority shall have power to wind up or sell 
the concern, the authority must be expressly given ; for 
it will not be inferred frpm the general language of any 
provision, that the majority, or any definite number, 
shall have authority to direct and regulate the concerns 
of the partnership.^ And in these, as in the like cases 
the provision itself, so far at least as Courts of Equity 
may be called upon to enforce it, may be controlled, or 
waived by the acquiescence, or action, of the partners 
habitually in a different course.^ 

§ 214. Provision is, also, often made in partnership 
articles, for the expulsion of a partner for gross mis- 
conduct, or in case of insolvency, or bankruptcy, or 
other special enumerated cases. Of course, such a 
provision will govern in all cases to which it properly 

' Coll. on P. B. 2, c. 3, § o, p. 238, 2d ed. ; Williams v. Williams, 1 
Wils. Ch. 473, note ; Anderson v. Wallace, 2 Molloy, 540. 

* Ante, § 123-125. 

' Coll. on P. B. 2, c. 2, § 2, p. 143, 144, 2d ed. 

* Ibid. 

^ Ibid. ; Chappie v. Cadell, Jac. 537. 

^ Ante, § 192 ; Glassington v. Thwaites, 1 Sim. & St. 124 ; Jackson v. 
Sedgwick, 1 Swans. 460. 



CHAP. X.] CONSTRUCTION OF ARTICLES. 351 

applies.^ And where a provision is made for insolvency, 
the question may arise whether it means a technical in- 
solvency under the insolvent debtor's act, or a mere ina- 
bility to pay just debts, according to the common use of 
the phrase in commercial transactions. The latter, it 
should seem, is to be deemed the true sense.^ 

§ 215. It is also usual to insert in articles of partner- 
ship, a stipulation that disputes and controversies between 
the partners shall be referred to arbitrators, to be named 
by the respective partners. It seems, that no action at 
law is maintainable for a breach of any stipulation of 
this sort, as it is against the policy of the common law, 
and has a tendency to exclude the jurisdiction of the 
Supreme Courts, which are provided by the Govern- 
ment with ample means to entertain and decide all legal 
controversies.^ Besides ; there is this additional diffi- 

' [See the late important case of Blisset v. Daniel, 10 Hare, 493, 23 Eng. 
L. & Eq. 105]; {Patterson v. Silliman, 28 Penn. St. 304. See Smith u. 
Mules, 9 Hare, 556. On expulsion from a club, see Hopkinson v. Marquis 
of Exeter, Law Rep. 5 Eq. 63. Evans v. Philadelphia Club, 50 Penn. St. 
107.} 

2 Coll. on P. B. 2, c. 2, § 2, p. 151, 152, 2d ed. ; Parker v. Gossage, 2 
Cr. M. & R. 617 ; Biddlecome v. Bond, 4 Ad. & E. 332. 

' Gow on P. c. 2, § 3, p. 72, 89, 3d ed. ; Figes v. Cutler, 3 Stark. 139 ; 
Coll. on P. B. 2, c. 3, § 1, p. 165, 166, 2d ed. ; Kill v. Hollister, 1 Wils. 
129 ; Wats, on P. c. 7, p. 383, 2d ed. [The more recent cases in England 
establish the doctrine, that an agreement to submit a controversy to ai'bitra- 
tion before a suit is brought, is binding upon the parties making it. See 
Scott V. Avery, 8 Exch. 487 ; 5 H. L. Cas. 811 ; Livingston v. Ralli, 5 E. & 
B. 132 ; Russell v. Pelligrini, 6 E. & B. 1020.] {In Livingston v. Ralli, 5 E. 
& B. 132, it was held that an action lay for breach of a covenant to refer. 
An agreement to reier, and arbitrators named, and a covenant not to sue, 
and a power to examine witnesses under oatli, and to make the submission 
a rule of court, prevents a party from filing a bill with the view of withdraw- 
ing the case from the arbitration. Dimsdale v. Robertson, 2 Jones & Lat. 
58. But an agreement to submit the affairs of a partnership to arbitra- 
tion, and that the submission shall be made a rule of court, cannot be pleaded 
in bar to a bill in equity seeking discovery, complaining that the plaintiff is 
harassed by actions, and praying for a receiver; though before the bill was 
filed, arbitrators were appointed, and, since bill filed, the submission has 



352 PARTNERSHIP. [CHAP. X. 

culty, that it would be impracticable for the party to 
establish at the trial, that, upon such an arbitration, he 
would have succeeded, so as to entitle him to damages.^ 
In either view, the stipulation would seem to be nuga- 
tory and futile. But be this as it may, it is very clear, that 
no stipulation of this sort will be decreed to be specifi- 
cally performed by a Court of Equity ; not merely upon 
the ground of public policy, but also upon the ground of 
the utter inadequacy of arbitrators to administer entire 
justice between the parties, from a defect of power 
in them to examine under oath, and to compel the 
production of papers, as well as upon the ground of 
the utter impracticability of a Court of Equity's com- 
pelling a suitable performance of such a stipulation 
between the parties.^ But, under a clause of this 

been made a rule of court. Cooke v. Cooke, Law Rep. 4 Eq. 77. See 
Horton v. Sayer, 4 H. & N. 643 ; Wallis v. Hirscli, 1 C. B. n. s. 316 ; 
Scott V. Corporation of Liverpool, 3 De G. & J. 334, Elliott v. Royal Ex- 
change Assurance Co., Law Rep. 2 Ex. 237 ; Lee v. Page, Law J. n. s. 
Ch. 857 ; Wood v. Robson, 15 Weekly Rep. 756.} 

1 Ibid. ; Tattersall v. Groote, 2 B. & P. 131 ; Street v. Rigby, 6 Ves. 
815, 818. 

2 Coll. on P. B. 2, c. 3, § 1, p. 165-168, 2d ed. ; Street v. Rigby, 9 Ves. 
815, 817, 818; Tattersall ??. Groote, 2 B. & P. 131, 135, 136; Wellington 
V. Mcintosh, 2 Atk. 569 ; {Agar v. Macklew, 2 Sim. & St. 418 ; Darbey v. 
Whitaker, 4 Drew. 134. See Jackson v. Jackson, 1 Sm. & G. 184.} 
Gow on P. c. 2, § 4, p. 103, 104, 3d ed. ; 1 Story, Eq. Jur. § 670. —In 
the case of Street v. Rigby, 6 Ves. 815, Lord Eldon discussed the subject 
at large, upon a covenant of this nature, and said : "It has occurred to me, 
that in almost every case of this sort, the parties have adopted a fancy, that 
they can make any thing, in the contemplation of the court, fit to be consid- 
ered matter of dispute, upon Avhich they think proper to dispute. That is 
not so. It must be that which a Court will say is fairly and reasonably 
made matter of dis^jute. Another circumstance is, that the parties do not 
frequently appreciate the effect of such a covenant. First, at law, in the 
case in the Court of Common Pleas, the Judges, Heath and Rooke, 
seemed to think it futile, and tantamount to a covenant to forbear suit. I 
take notice of the circumstance, as material with regard to Halfhide v. 
Penning ; for if the meaning of a covenant to refer is to forbear suit 
altogether, that covenant to refer, before you bring suit, and to suspend it 
in the mean time, wouh] stand upon principles, pro temjiore, that it would 



CHAP. X.] CONSTRUCTION OF ARTICLES. 353 

nature, where the partners do actually refer matters to 
arbitrators, questions may arise as to the nature and 

be very difficult to say, do not apply to both those covenants. Sup- 
pose an action brought. The question would be, what the damages would 
have been, if the defendant had joined, and named an arbiti'ator, and evi- 
dence had been produced (and what would be, could by no means be cor- 
rectly proved), and an award had been made, giving some sujiposed sum, 
which no proof could ascertain. The effect, thei-efore, of such a covenant 
is, that, as the damages are not to be ascertained by evidence, nominal 
damages only can be got. Whose fault is it ? There are prudential ways 
of drawing these articles. There might have been an agreement for liqui- 
dated damages, to enforce a specific performance, if an action could not 
produce sufficient damages, or equity would not entertain a bill for a specific 
performance. If they had enforced their legal remedy by such a stipulated 
security, it would be very difficult to say, they would also have a remedy in 
equity. In the case from Astley's Theatre, Astley v. Weldon, 2 B. & P. 
346, there was no dispute in the Court of Common Pleas, that the actress 
might have agreed upon a liquidated sum to be forfeited for non-attendance, 
&c. The Court were of opinion, very properly, that where there was a 
stipulated sum in the covenant, that was the stij^ulated damages ; and the 
general sum of £200 for breach of any of the articles was a penalty ; but 
it was not doubted that sum might have been made the liquidated damages, 
if they thought proper. The party must put himself in a situation to have 
substantial damages. In this case, upon an action, they could have only Is. ; 
for they could not ascertain what more they were to have. Then, what can 
they have in equity ? There is considerable weight as evidence of what the 
law is, in the circumstance, that no instance is to be found of a decree for 
sjjecific performance of an agreement to name arbitrators ; or that any dis- 
cussion upon it has taken place in experience for the last twenty-five years. 
I was counsel in Price v. Williams, 3 Bro. Ch. 168 ; 1 Yes. Jr. 365, a case 
which justifies considerable doubts, whether the eulogia upon the domestic 
forum of arbitrators are well founded. That was a case before Lord Thur- 
low, upon a bill for specific performance of such an agreement, sending 
parties to arbitrators, who might or might not be able to come to a decision ; 
and Lord Thurlow was of opinion that the Court would not perform such an 
agreement. The Court, if it is not part of the agreement, cannot give 
them authority to examine upon oath ; and the agi-eement itself cannot 
authorize any person to administer an oath. A difficulty arises from the 
want of the conscience of the party. This court has given credit to itself, 
notwithstanding what has passed in the Court of King's Bench, in their 
rules upon attachments, as likely to decide as well as arbitrators ; and it re- 
quires a strong case to deprive a person of the right to a decision here. In 
Price V. Williams, the account came back very favorably to my client ; the 
result being, that a very small sum was due from him. A vast number of 
exceptions were taken ; and the Court felt that soi-t of difficulty of dealing 

23 



354 PARTNERSHIP. [CHAP. X. 

extent of the matters upon which the arbitrators may 
make their award. Thus, for example, if there should 

with the exceptions, that led to an arbitration ; though at first the Court 
would not hear of it ; and the party, who had not been able to establish any 
thing before the Master, in that mode gained several thousand pounds. 
Then the difficulty occurred about the power of this Court to review the 
decision of arbitrators ; and in the end my client fared much worse than he 
would have done before the Master. That case and others led me to adopt a 
rule never to advise an arbitration afterwards. If such a bill never has been 
usually filed in this Court, and if in that instance Lord Thurlow was of opinion 
it could not be maintained, the jurisdiction would stand upon principles not 
very intelligible, if a party, who by the imbecility belonging to the covenant 
could recover only Is. damages in an action, coming to this Court for sub- 
stantial justice, to have an account taken, that person, who could not file a 
bill for a specific execution of the agreement to refer, can say, that though 
he admits, neither of them could recover more than Is. at law, and he can- 
not demand the relief by way of a specific performance, he can have it by 
pleading the covenant, if he is brought in the character of a defendant ; and 
can compel the other to go to that tribunal, to which the defendant, com- 
ing in the character of plaintiff, could not oblige him to resort. It is very 
difficult to say, that should be the law of the Court. Then, is it so ? I 
look upon the case of Wellington v. Mcintosh as an authority, that at that 
time it was not the law of the Court. At that period the distinction, taken 
in later cases, had not obtained ; that the plea, though it might have been 
good as to the relief, is bad, if bad as to the discovery. As to that, the 
course of the later authorities seems to have altered the law of pleading. 
But quoad such a point as this, the plea, if good to the relief, must be good 
to the discovery; for this plea means this, if any thing; that the parties will 
not harass themselves by going to courts of justice ; but will state to each 
other what is in dispute, and refer that to arbitrators ; and entering into such 
a covenant they must be taken to mean, that they will be content with a 
decision upon such discovery as arbitrators can compel, without subjecting 
each other to the necessity for either to be examined upon oath before arbi- 
trators, who cannot examine them upon oath. They choose, therefore, that 
forum, exclusive of the jurisdiction of the country to all intents and pur- 
poses ; meaning that arbitrators shall, from beginning to end, do that which 
they are enabled to do, viz., to decide between them as well as they can. It 
would be a breach of covenant, that would entitle them to nominal damages, 
to file a bill for discovery, as much as a bill for discovery and relief In 
Half hide v. Fenning, the whole of my argument, according to the report, 
amounts to taking the distinction between discovery and relief, and putting 
the case upon that distinction ; and if it was so argued, I am not surprised, 
that Lord Kenyon should take it, that the counsel thought, if not put upon 
that, it could not be supported. But it is not to be put upon that distinction 
but upon the ground I have stated. It is said, courts of law think these 



CHAP. X.] CONSTRUCTION OF ARTICLES. 355 

be a submission to arbitrators of all matters in difference 
between the partners, the question may arise, whether it 

agreements very wise. Kill v, Hollister, however, shows, that courts of law 
are ready enough to say the agreement of the parties shall not oust their 
jurisdiction ; though they permit it to oust the jurisdiction of courts of equity. 
But they enforce the agreement, not as agreement, but by granting an at- 
tachment for breach of the rule. It is dealing a little imperiously to say, 
that an agreement which, made out of Court, would not bar an action, if 
made in Court, shall bar a bill. It was justly observed upon the passage in 
Atkyns, Wellington v. Mcintosh, 2 Atk. 569, that arbitrators cannot ad- 
minister an oath ; and the agreement will not enable them. We see in daily 
practice at law, the Court administers the oath ; and under that the parties 
go before the arbitrators. It is said, the party must have discovery some 
way. But if the distinction cannot be maintained between a bill for discov- 
ery only, and for both discovery and relief, it must be said, they are bound 
to go first before the arbitrators ; and the party must be brought there, and 
must refer ; the parties to be examined upon honor, for they cannot upon 
oath ; and then it is said, as in the'argument of these cases, if it so turns out, 
then they are come to this Court ; saying, there is then a failure of the jus- 
tice, for which they covenanted ; and therefore there is a jurisdiction in this 
Court. Till Half hide v. Fenning no such decree was ever heard of. Next, 
expressing it in terms of the highest respect and veneration for that noble 
and learned person, now no more, I doubt whether it is a very wise exercise 
of the jurisdiction of this Court, recollecting, that it is to give a relief be- 
yond the law, not to order the parties to go to law to take the effect of the 
stipulated remedy, but under a jiositive covenant, not a negative covenant, 
that they will not sue (upon which there would be considerable difficulty), 
to send them by way of experiment to that jurisdiction, so likely to miscarry, 
under the circumstance that it has not, unless received under the authority 
of the Court, a power to administer an oath, where the justice that tribunal 
can render is so insufficient, though they have not expressly bound themselves 
by covenant ; and, whether the court would not act more discreetly by say- 
ing, they are in a Court, where justice can certainly be done ; and as they 
have not stipulated to the contrary, their fate shall be decided here, instead 
of sending them to so improvident a tribunal. I recollect passages, in which 
courts of justice, however full of eulogia upon these domestic forums, have 
recollected their own dignity sufficiently to say, they would not be ancillary 
to those forums ; that the parties should not be permitted to take their relief 
from them, coming here for discovery. It is enough for me to say, it is not 
a necessary consequence of a covenant to refer, that the i^arty thereby 
agreed to forbear to sue. I do not enter into the question of the effiict at 
law of a covenant to forbear to sue. But, supposing it good, in strict law it 
cannot be maintained, that, having covenanted to refer, the party has cov- 
enanted to forbear to sue ; and if not, he has only left himself open to an 
action for damages, if he does not refer ; which the suit does not prevent, if 



356 PARTNERSHIP. [CHAP. X. 

is within the competency of the arbitrators to award a dis- 
solntion of the partnership ; and it has been held, that 

thought advisable. It would be very strong to say, that where the legal 
remedy they have provided for themselves is utterly incompetent to justice, 
this Court is precluded from granting its ordinary remedy by a covenant, 
■which does not in terms express an undertaking not to resort, to this Court, 
and must hold that doctrine upon a plea ; in that shape permitting the de- 
fendant to have in substance a specific performance, which would have been 
refused to him as a plaintiff; at the hazard of doing substantial injustice, of 
a delay of justice almost of necessity, and where the examination cannot be 
addressed to the conscience of either the parties or the witnesses ; from which 
the subject cannot be debarred, unless by express terms, or necessary impli- 
cation. That this has not the effect of barring the legal remedy, is clear 
from the cases at law, which agree that it is still competent to him to take the 
legal remedy. Then why not the equitable ? The competency to take both 
stands upon the same principle." See also Wilks v. Davis, 3 Mer. 507. 
Mr. Collyer has remarked (Coll. on P. B..2, c. 3, § 1, p. 167, 168) : "This 
leads us to a more general consideration of clauses of this nature. There 
are many covenants, to which such clauses may be added with effect ; but 
there are others, the breach of which does not admit of compensation by 
liquidated damages, and to which, therefore, they cannot properly be ap- 
plied. Thus, on the one hand, if the covenant be such, that the breach of 
it must of necessity be uncertain in its nature and amount, then, if liqui- 
dated damages be reserved, they will be deemed the real damages, and a 
verdict in an action on the covenant will be found for the amount of the liq- 
uidated damages. On the other hand, if the breach of covenant be attended 
with certain damage, as, for instance, if it consist in the omission to pay a 
certain sum of money, in such case, although liquidated damages be reserved 
eo nomine, they will be considered by a jury only in the nature of a penalty, 
and the real damages will be measured by the sum omitted to be paid. In 
a late case, even where the real damage was uncertain, yet, as it was evi- 
dently far less than the amount of the liquidated damages, the Court of 
Common Pleas, although the language in which the liquidated damages were 
agreed to be paid was the strongest that could be employed, referred it to 
the prothonotary, to ascertain what damages, if any, the plaintiff had sus- 
tained, and how much, if any thing, ought to be paid to the plaintiff. Mr. 
Jarman, in commenting upon this case, observes, that, upon the reasoning 
there adopted by the Court, it is obvious, that a covenant to pay a sum of 
money as liquidated damages, on the breach of any one of a series of 
stipulations, must in all cases be nugatory, as the covenant necessarily em- 
braces acts of various degrees of importance, all which cannot with equal 
justice be compensated for by the payment of the same sum ; if it were 
sufficient in regard to some, it must be excessive as to others ; the conse- 
quence is, that, in order to give an effectual remedy for the recovery of a 
sum of money as stipulated damages in such a case, a distinct and separate 



CHAP. X.] CONSTRUCTION OF ARTICLES. 357 

they may.^ So, upon a like broad submission, and also 
giving authority to arbitrators to dissolve the partnership, 
upon such terms and conditions as they might prescribe, 
it has been held, that the arbitrators may provide, that 
upon the dissolution, one partner shall not carry on the 
trade within a particular prescribed distance of the place 
where the remaining partners are to carry it on.^ So, 
upon a general submission by partners of all actions, notes, 
accounts, dealings, controversies, and demands, in law 
or equity, it has been held, that it is competent for the 
arbitrators to award that one of the partners shall take 
all the joint property, he paying to the other a sum in 
gross, and also discharging all the partnership debts. ^ 

amount should be assessed, as the measure of compensation on the breach 
of each several contract." 

' Coll. on P. B. 2, c. 2, § 2, p. 152, 2d ed. ; Green v. Waring, 1 W. 
Bl. 475. 

*= Coll. on P. B. 2, c. 2, § 2, p. 152, 2d ed. ; Green v. Waring, 1 W. Bl. 
475 ; Morley v. Newman, 5 Dowl. & R. 317. 

« Byers v. Van Deusen, 5 Wend. 268; {§ 299-301, and see Burton v. 
Wigley, 1 Bing. N. C. 665 ; Wood v. Wilson, 2 Cr. M. & K. 241 ; Wilkin- 
son V. Page, 1 Hare, 276. But it is said that an ai'bitrator cannot appoint a 
receiver. Cook v. Catchpole, 10 Jur. n. s. 1068 ; s. c. 34 L. J. n. s. Ch. 60.} 



358 PARTNERSHIP. [cHAP, XI. 



CHAPTER XI. 

REMEDIES BETWEEN PARTNERS. 

{ § 216. Preliminary. 

217. Remedies between partners. 

218. Action lies for breach of stipulation in articles. 

219. No action lies foi' money paid on partnership account. 

220. Nor for money paid on account of torts affecting the partnership. 

221. Reasons whj- no action lies. 

222. Remedies in equity. 

223. Roman law. 

224. Enforcement of positive and negative obligations. 
225-227. When an injunction will be granted. 

228. Appointment of a receiver during the continuance of the partner- 

ship. 

229. Whether an injunction will be decreed without a dissolution. 

230. Roman law. 

231. Appointment of a receiver. 

232. Partnership declared void for fraud. 

233. Relief against losses caused by misconduct. Rights lost by 

delay. } 

§ 216. These are the most material considerations, 
which seem proper to be brought before the learned 
reader, as to the true interpretation and construction of 
partnership articles, so far as they have, as yet, come 
under judicial cognizance and decision. They are ne- 
cessarily imperfect ; but at the same time they may serve, 
in some degree, as lights and guides, to direct our in- 
quiries in analogous cases, and to point out the diffi- 
culties to be surmounted, as well as the defects to be 
avoided. 

§ 217. The next inquiry naturally presented is, as to 
the remedies, which belong to partners themselves, 
either at law or in equit}' , during the continuance of 
the partnership, either to enforce the particular stipu- 



CHAP. XI.] REMEDIES BETWEEN PARTNERS. 359 

lations, contained in the articles of partnership, or other 
duties and obligations which arise by operation and im- 
pUcation of law. A full examination of this topic prop- 
erly belongs to a treatise on remedies and pleadings at 
law and in equity, and is beside the purpose of the pres- 
ent Commentaries ; but it may be found discussed at 
large in elementary works, devoted to the consideration 
of remedies at law and in equity.^ It may not, how- 
ever, be without use to bring together, in this place, 
some general suggestions and doctrines applicable to 
the subject, which may serve to explain other decisions, 
or to clear away lurking doubts. 

§ 218. Wherever there is an express stipulation in 
the partnership articles, which is violated by any part- 
ner, an action at law, either assumpsit, or covenant, as 
the case may require, will ordinarily lie, to recover dam- 
ages for the breach thereof."^ In many cases, indeed, 
such damages may be merely nominal, and inadequate 
for redress. But still we must take the law as we find 
it ; and in such cases, as in some other relations in life, 
we enter into the connection for better or for worse. ^ 

^ See Coll. on P. B. 2, c. 3, § 1-5, p. 162-257, 2d ed. ; Gow on P. c. 2, 
§ 3, 4, p. 69-116, 3ded. 

■ Gow on P. c. 2, § 3, p. 69-73, 3d ed. ; {Lind. on P. 730 ; Leighton v. 
Wales, 3 M. & W. 545 ; White v. Ansdell, Tyrw. & G. 785 ; Bagley v. Smith, 
10 N. Y. 489 ; Glover v. Tuck, 24 Wend. 153 ; See Holyoke t'.Mayo, 50 
Me. 385 ; Capen v. Barrows, 1 Gray, 376 ; Addams v. Tutton, 39 Penn. St. 
447; MuUany y. Keenan, 10 Iowa, 224; Lock v. Purdon, 2 All. (Xew 
Bruns.) 33. } 

3 Coll. on P. B. 2, c. 2, § 1, p. 131, 2d ed. ; Goodman v. Whitcomb, 1 
Jac. & W. 589, 592; Wray ». Hutchinson, 2 Uy\. & K. 235; 1 Story, Eq. 
Jur. §659-665; Gow on P. c. 2, § 3, p. 69-93, 3ded. — The action of 
account seems properly applicable only to cases where the partnership is 
ended. See 1 Story. Eq. Jur. § 659-665 ; Gow on P. c. 2, § 3, p. 68-70 ; 
Id. p. 73, 74, 3d ed. ; Wray v. Milestone, 5 M. & W. 21 ; Foster v. Allan- 
son, 2 T. R. 479 ; Duncan v. Lyon, 3 Johns. Ch. 351, 361, 362. Actions of 
tort can scarcely be maintained at law by one partner against the other, 
touching the partnership property ; even if one partner should wilfully 
destroy the property. Gow on P. c. 2, § 3, p. 89-93, 3d ed. ; Coll. on P. 



360 PARTNERSHIP. [cHAP. XI. 

§ 219. It is sometimes laid down by elementary writ- 
ers, that, during the continuance of tlie partnership, an 
action at law will lie by one partner against the others, 
for moneys advanced, or paid, or contributed, on account 
of the partnership, or of the debts and obligations in- 
curred thereby.^ But this doctrine, in the general terms 
in which it is laid down, is utterly untenable, and incon- 
sistent with the rights, and duties, and relations of the . 
partners with each other.^ It is true, that one partner 

B. 2, c. 3, § 8, p. 257, 268, 2d ed. The appropriate remedy seems to be in 
equity. {But see Liud. on P. 740 ; Maybew v. Herrick, 7 C. B. 229 ; Barton 
V. Williams, 5 B. & Aid. 395, affirmed, sub nom. Williams v. Barton, 3 
Bing. 139.} 

> See Gow on P. c. 2, § 3, p. 79-81, citing Abbot v. Smith, 2 Yf . BI. 
947, and what was said by Lord Kenyon in Merryweather v. Xixon, 8 T. R. 
186, and by Mr. Justice Bayley in Ansell v. Waterhouse, 6 M. & S. 385, 390, 
and Holmes «. Williamson, 6 M. & S. 158* See also 1 Mont, on P. c. 4, p. 
50 ; Gary on P. 65 ; [Hamilton v. Hamilton, 18 Penn. St. 20.] 

^ Most of the cases which are supposed to inculcate this doctrine, turn 
upon other very distinct grounds. They are nearly all summed up in Mr. 
GoUyer's valuable Treatise. Goll. on P. B. 2, c. 3, § 2, p. 174-193; 
{Lind. on P. 728, Met. on Gontr. 130.} They are cases, (1.) where either 
the debt was a separate debt and not a partnership debt. Smith v. Bai-row, 
2 T. R. 476 ; {See next note} ; Gow on P. c. 2, § 3, p. 75-77, 3d ed. (2.) 
Or, a separate and distinct security, or negotiable instrument, was given by 
one partner to another, on the partnership account. Preston v. Strutton, 1 
Anst. 50; Venning v. Leckie, 13 East, 7; [Gridley v. Dole, 4 Gomst. 
486] ; {Van Ness v. Forrest, 8 Granch, 30; Rockwell v. Wilder, 4 Met. 
556 ; Ghamberlain v. Walker, 10 All. 429.} (3.) Or, where the contract was 
preliminary to the partnership, and merely in contemplation of it ; such as a 
promise to contribute so much to the partnership funds, in stock or money. 
Gale V. Leckie, 2 Stark. 107; Venning v. Leckie, 13 East, 7; Helme v. 
Smith, 7 Bing. 709; [Vance v. Blair, 18 Ohio, 532] ; {Elgie v. Webster, 
5 M. & W. 518; Brown v. Tapscott, 6 M. & W. 119; French v. Styring, 
2 G. B. N. s. 357 ; Gurrier v. Webster, 45 N. H. 226 ; Gurrier v. Rowe, 
46 N. H. 72.} (4.) Or, where the case is one of part-owners or joint-con- 
tractors, and not of partners. Helme v. Smith, 7 Bing. 709 ; Graham v. 
Robertson, 2 T. R. 282; Sadler v. Nixon, 5 B. & Ad. 936; [French 
V. Styring, 2 G. B. n. s. 357 ; s. c. 40 Eng. L. & Eq. 274.] (5.) Or, 
where the money or funds have been voluntarily se^jarated from the 
partnership stock or moneys, and appropriated to one partner, and he 
alone is interested in a contract touching the same. Goffee v. Brian, 3 
Bing. 54 ; Jackson v. Stopherd, 2 Gr. & M. 361 ; Wilson v. Gutting, 10 



CHAP. XI.] REMEDIES BETWEEN PARTNERS. 361 

may maintain an action at law against the other part- 
ners, or any one or more of them, for moneys advanced, 
or paid, or contributed, at their request, for their sepa- 
rate and distinct account and benefit. But this is upon 
the plain ground, that it has no connection with the 
partnership concerns and liabilities ; and that the trans- 
actions or contracts are between the parties in their sev- 

Bing. 436; Sharp v. Warren, 6 Price, 131; {Caswell v. Cooper, 18 111. 
532.} (6.) Or, where a balance has been struck, and a separate promise 
made to pay the same to one partner. {Whether an express promise 
to pay a balance is necessary to support an action, is a point on which 
the cases are in much conflict. To the effect that no express promise 
is necessary, are Wray v. Milestone, 5 M. & W. 21 ; Fanning v. Chad- 
wick, 3 Pick. 420 ; M'Coll v. Oliver, 1 Stew. 510. See Spear v. Newell, 
13 Vt. 288 ; Van Amringe v. Ellmaker, 4 Penn. St. 281 ; Wright v. 
Cumpsty, 41 Penn. St. 102 ; Wycoff v. Purnell, 10 Iowa, 332. To the 
effect that an express promise is necessary are Westerlo v. Evertson, 1 
Wend. 532; Pattison v. Blanchard, 6 Barb. 537; Chadsey t>. Harrison, 11 
111. 151; Course v. Prince, 3 Mills, Const. R. 416. See Gulick v. Gulick, 
2 Green, 578} ; Moravia v. Levy, 2 T. R. 483, note; Foster v. Allanson, 2 
T. R. 479 ; Preston v. Strutton, 1 Anst. 50 ; Brierly v. Cripps, 7 C. «& P. 
709.; Wray v. Milestone, 5 M. & W. 21; Henley v. Soper, 8 B. & C. 16; 
Winter v. White, 1 Brod. & B. 350. See also Gow on P. c. 2, § 3, p. 69- 
97, 3d ed. ; Fremont v. Coupland, 2 Bing. 170; Carr v. Smith, 5 Q. B. 
128, 138. But the mere fact that an account has been taken and balance 
struck between partners at a certain period during the partnership, would 
not entitle any partner to maintain an action therefor, unless agreed to 
generally by all the partners. See Morrow v. Riley, 15 Ala. 710. In 
Carr v. Smith, 5 Q. B. 138, Lord Denman said: "The case of Fremont v. 
Coupland, and other similar cases, seem to limit the action to a settlement 
of accounts on a final close of all partnership transactions ; but this case 
does not necessarily raise that question ; for at all events the settlement, in 
order to ground an action, must be one which is binding and conclusive 
upon the partners. Now it does not appear here that the adjustment and 
settlement was ever agreed to by all the partners, nor indeed by the plain- 
tiff and the testator ; if, therefore, it were binding and conclusive on them, 
it must have been so by reason of the power confided to the persons who 
drew it up, and in that case it would be an award, and required a stamp. 
It would come within the authority of Jebb v. McKierman, rather than 
within Boyd v. Emmerson, Sybray v. White, and similar cases." {Lind. on 
P. 735, Holyoke v. Mayo, 50 Me. 385. See also Gibson v. Moore, 6 N. H. 
547 ; Williams v. Henshaw, 11 Pick. 83 ; s. c. 12 Pick. 378 ; Dickinson v. Gran- 
ger, 18 Pick. 315, 317 ; Sikes v. Work, 6 Gray, 433 ; Shattuck v. Lawson, 10 
Gray, 405 ; Wiggin v. Cumings, 8 All. 353 ; Warren v.Wheelock, 21 Vt. 323.} 



362 PARTNERSHIP. [cHAP. XI. 

era], distinct, and independent capacities, separate from 
the partnership. For there is no incompetency in part- 
ners to enter mto contracts with each other, as individ- 
uals, in matters dehors the partnership concerns and 
business.^ But this is very different from the case of 
a partner's entering into contracts with the partnership, 
as such, or of his paying moneys, or incurring Kabilities 
on account thereof, he being in all such cases one of the 
parties in interest, and, as such, bound jointly with the 
others to contribute towards the discharge of the com- 
mon obligations of the partnership."^ 

§ 220. This doctrine is not confined to cases of 
moneys paid, or debts incurred, or contributions made, 

» Gow on P. c. 2, § 3, p. 75, 76, 3d ed. ; Coffee v. Brian, 3 Bing. 54 ; 
Smith V. Barrow, 2 T. R. 476 ; Nockels v. Crosby, 3 B. & C. 814; Coll. on 
P. B. 2, c. 3, § 2, p. 175-178, 2d ed. ; 1 Story Eq. Jur. § 664-666 ; 
Wats, on P. c. 8, p. 394-409, 2d ed ; {Cross v. Cheshire, 7 Exch. 43 ; Cham- 
berlain V. Walker, 10 All. 429 ; Paine v. Thaoher, 25 Wend. 450 ; Roberts 
V. Fitler, 13 Penn. St. 265; Wright v. Michie, 6 Gratt. 354; Edens v. 
Williams, 36 111. 252 ; Elder v. Hood, 38 111. 533. See Coleman v. Cole- 
man, 12 Rich. 183.} 

* Gow on P. c. 2, § 3, p. 77-79; Holmes v. Higgins, 1 B. & C. 74; 
IMilburn v. Codd, 7B. «& C. 419 ; [Caldicott v. Griffiths, 8 Exch. 898 ; s. c. 
22 Eng. L. & Eq. 527] ; Xeale v. Turton, 4 Bing. 149 ; league v. Hubbard, 
8 B. & C. 345; Geddes v. Wallace, 2 Bligh, 270; Coll. on P. B. 2, c. 3, 
§ 2, p. 174-178, 2d ed. ; Worrall v. Grayson, Tyrw. & G. 477, 480; s. c. 
1 M. & W. 166 ; Brown v. Tapscott, 6 M. & W. 119, 123; BoviU v. Ham- 
mond, 6 B. & C. 149; Pearson v. Skelton, 1 M. & W. 504; s. c. Tyrw. & 
G. 848 ; Sadler v. Nixon, 5 B. & Ad. 936 ; Haskell v. Adams, 7 Pick. 59 ; 
1 Story, Eq. Jur. § 679-681 ; {Harris v. Harris, 39 N. H. 45; Ordiorne v. 
Woodman, 39 N. H. 541; White v. Harlow, 5 Gray, 463; Ives v. Miller, 
19 Barb. 196 ; Crottes v. Frigerio, 18 La. Ann. 283 ; De Jarnette v, Mc- 
Queen, 31 AJa. 230. } [In a late English case. A., B., & C. were shareholders 
in a joint-stock mining company, and money being necessary to carry on 
the mine, a loan was made upon the joint and several promissory note of 
the three, and applied to the use of- the mine. A. being compelled to pay 
the whole note, was allowed to sue the others for contribution. Sedgwick 
V. Daniell, 2 H. & N. 319. So, also, if partners, by an express agreement, 
separate a distinct matter from the partnership dealing, and one party 
expressly agrees to pay the other a specific sum for that matter, assumpsit 
will lie on that promise, although the matter arose from their partnership 
dealing. Collamer v. Foster, 26 Vt. 754.] 



CHAP. XI.] REMEDIES BETWEEN PARTMERS. 363 

by one partner on account of liabilities of the partner- 
ship, resulting from contracts binding the same ; but it 
equally applies to moneys paid, and debts incurred, and 
contributions made, by one partner on account of negli- 
gences and torts, affecting the partnership.^ In the 
ordinary course of things there is not, indeed, as is well 
known, any right of contribution allowed by the com- 
mon law between joint wrong-doers, where one has 
paid the whole damages or expenses occasioned there- 
by.^ And this rule is just as applicable to partners as 
to other persons.^ But, then, the rule is to be under- 
stood according to its true sense and meaning, which is, 
where the tort is a known, meditated wrong, and not 
where the party is acting under the supposition of the 
entire innocence and propriety of the act, and the tort 
is merely one by construction or inference of law.^ In 
the latter case, although not in the former, there may 
be, and properly is, a contribution allowed by law, for 
such payments and expenses between the constructive 
wrong-doers, whether partners, or not.° Still, however, 
the same difficulty occurs at law in such cases of con- 
structive torts, as in cases of contracts ; and no remedy 
at law is maintainable therefor between the partners. 
The remedy, as we shall presently see, must be admin- 
istered in another tribunal.^ 

1 Pearson v. Skelton, 1 M. & W. 504; s. c. Tyrw. & G. 848. 

^ Merryweather v. Nixan, 8 T. R. 186. 

» Pearson v. Skelton, 1 M. & W. 504 ; s. c. Tyrw. & G. 848. 

* Adamson v. Jarvls, 4 Bing. 66. ° Ibid. 

« Pearson v. Skelton, 1 M. & W. 504; s. c. Tyrw. & G. 848. — In 
this case Baron Parke is reported, in Tyrw. & G. 850, 851, to have said: 
" How were the profits divided? Did the partners divide the net profits, 
after the payment of all expenses, or the gross profits according to the 
number of miles that each partner horsed the coach ? If the latter was the 
case, there was no common fund, and you will be entitled to a rule ; but if 
there was a partnership fund, out of which losses were to be paid, your 
remedy is in equity. We will consult the Lord Chief Justice, and ascertain 



364 PARTNERSHIP. [CHAP. XI. 

§ 221. The ground, why at law, independent of any 
special covenant, or any distinct several contract, one 
partner cannot maintain a suit against the other part- 
ners, for moneys paid, or advanced, or contributed, or 
liabilities incurred, on account of the partnership/ may be 
readily explained in a satisfactory manner. In the first 
place, upon the mere technical principles of the common 
law, one partner cannot sue the others for a contribution 
or payment made for a just partnership liability ; for in 
such a suit all the partners, including himself, must be 
made defendants ; and it is clear, upon the acknowledged 
principles of pleading at the common law, that a party 
cannot at once be a plaintiff and a defendant in the same 
suit ; or, in other words, he cannot sue himself, either 
alone, or in conjunction with others.^ But a reason, far 

what evidence he has upon his notes, as to the existence of a partnership 
fund. With respect to the first objection taken at the trial, it does not 
apply." On a subsequent day Parke, B., said, "that on consulting the 
notes of the Lord Chief Justice, it appeared that there was a partnership 
fund, out of which the expenses were first to be paid, and the residue 
divided among the partners ; consequently the nonsuit was right." See 
ante, § 61, and note. 

' [Or for neglect of the partnership business. Capen v. Barrows, 1 
Gray, 376.] 

2 Coll. on P. B. 2, c. 3, § 2, p. 188-193, 2d ed. ; Bosanquet v. Wray, 6 
Taunt. 597 ; MofFatt v. Van Millingen, cited 2 B. & P. 124, note ; Mainwaring 
V. Newman, 2 B. & P. 120 ; De Tastet v. Shaw, 1 B. & Aid. 664 ; Neale v. 
Turton, 4 Bing. 149 ; Teague v. Hubbard, 8 B. & C. 345 ; Brown v. Tap- 
scott, 6 M. & W. 119, 123 ; Holmes v. Higgins, 1 B. & C. 74 ; Malyne's 
Lex Merc. p. 310; Niven v. Spickerman, 12 Johns. 401; 1 Story, Eq. Jur. 
§664,665,679; Jones v. Yates, 9 B. & C. 532; [Rawlinson v. Clarke, 15 
M. & W. 292; Cruikshank v. M'Vicar, 8 Beav. 106] ; {Met. on Contr. 
131, 132.} — In this respect the Roman law, the law of France, and the law 
of Scotland, present a marked contrast to the common law. In the juris- 
prudence of each of these latter countries, the firm is treated, in its aggre- 
gate capacity, as having an independent existence, somewhat like a quasi 
corporation ; and the firm may, therefore, sue and be sued, by a single 
partner, without any repugnancy, exactly as a member of a corporation 
may sue and be sued by the corporation itself. In this respect there 
is an analogy to the proceedings in our Courts of Equity, where one 



CHAP. XI.] REMEDIES BETWEEN PARTNERS. 365 

more satisfactory, because it is in no shape founded 
upon technical principles, is, that until all the partner- 
partner is entitled to sue all the other partners, for an adjustment of the 
partnership concerns, or for any transactions growing out of the same con- 
cerns. Mr. Bell (2 Bell, Comm. B. 7, p. 619, 620, 5th ed.) states the Scot- 
tish law as follows : " Some lawyers have considered the obligation of the 
company as only the joint and several obligations of the partners. But 
this is not correct in the law of Scotland. The partnership is held as, in 
law, a separate person ; capable of maintaining independently the relations 
of debtor and creditor. As a separate person, the company is known and 
recognized in obligations and contracts by its separate name or firm, as its 
personal appellation. But it cannot hold feudal property in the so- 
cial name. It is a consequence of this separate existence of the company 
as a person, that an action cannot directly, and in the first instance, be 
maintained against a partner for the debt of the company. The demand 
must be made, first, against the company ; or the company must have failed 
to pay, or have dishonored their bill, before the partner can be called on. 
It also follows that the partners are guarantees or sureties for the company ; 
not proper or principal debtors. And so, although diligence may proceed 
against the partners directly, the company having failed to pay according to 
their obligation ; and although personal diligence necessarily can proceed 
only against the individuals, the estate of the partner can, in bankruptcy, be 
charged only with the balance remaining due, after what may be drawn from 
the company estate. Another consequence is, that the creditors of a part- 
ner, if they would attach his share, must arrest in the hands of the company 
as a separate person. Action or diligence seems to be legally competent by 
a company firm, or against the partnership by its firm ; though personal ex- 
ecution, of course, is possible only against the individuals. But so many 
doubts have been raised of late on these points, that the safer course is to 
use the names of the partners. Sequestration of the company''s estate pro- 
ceeds in the name of the firm. In England, a doctrine prevails, which does 
not accord with the law of Scotland, and which, perhaps, is to be ascribed 
to a difference of principle, on the point now under discussion. At law, in 
England, there can be no debt between two partnerships, of each of which 
one person is a partner ; and this on the ground, that ' no man can con- 
tract with himself, and, therefore, cannot bind himself in the society of one 
set of persons to another, in which he is also a partner.' It is allowed that 
the contract is available in equity, but not in law. In Scotland, debts be- 
tween companies, in which the same individual is partner, are every day 
sustained as quite unexceptionable." See Poth. de Soc. n. 135, 136. The 
Roman law, while it ordinarily gave the action pro socio only in cases of a 
dissolution of the partnership, excepted special cases. Nonnunquam necessa- 
rium est, et manente societate, agi pro socio ; veluti, cum societas, vectiga- 
lium causa, coita est, propter([ue varios contractus neutri expcdiat recedere 
a societate, nee refertur in medium, quod ad alterum pervenerit. D. 17, 
2, 65, 15 ; Id. 17, 2, 52 ; Poth. Pand. 17, 2, n. 33. 



366 PARTNERSHIP. [cHAP. XI. 

ship concerns are ascertained and adjusted, it is impossi- 
ble to know whether a particular partner be a debtor or 
a creditor of the firm ; for although he may have ad- 
vanced large sums of money on account thereof, he may 
be indebted to the firm in a much larger amount. Now, 
a settlement of all the partnership concerns is ordina- 
rily, during the continuance of the partnership, unat- 
tainable at law ; and even in equity it is not ordinarily 
enforced, except upon a dissolution of the partaership. 
If one partner could recover against the other partners 
the whole amount paid by him on account of the part- 
nership, they would immediately have a cross action 
against him for the whole amount, or his share thereof; 
and if he could recover only their shares thereof, then, 
in order to ascertain those shares, a full account of all 
the partnership concerns must be taken, and the part- 
nership itself wound up. This would manifestly be a 
most serious inconvenience, as well as a change of the 
original contract, from a joint contract of all the part- 
ners, ill solido, to a several contract, each for his own 
aliquot part of the final balance, due to a particular 
partner upon a special transaction.^ And in cases of 
this sort the maxim may justly apply : Friistra petis^ 
quod statim alteri reddere cogeris : ^ or, as it is some- 
times expressed, Frustra peteret, quod mox restiturus 
esset.^ 

§ 222. But, although, in cases of the sort above men- 
tioned, no remedy lies at law, yet in equity an appro- 
priate remedy may and will be granted, wherever it is 
ex cequo et bono necessary and proper ; for, in equity, 
there is no difficulty in one partner's suing the other 

1 Coll. on P. B. 2, c. 3, § 2, p. 174-193, 2d ed. ; Harvey v. Crickett, 5 
M. & S. 336 ; Gow on P. c. 2, § 3, p. 69-77, 3d ed. ; Id. c. 2, § 4, p. 93-102 ; 
{Towle V. Meserve, 38 N. H. 9 ; Stoddard v. Wood, 9 Gray, 90.} 

* Branch, Maxims, p. 51, Am. Ed. 1824 ; Jenkins, Cent. 25G. 

=> Coll. on P. B. 2, c. 3, § 2, p. 175, 2d ed. ; 1 Story, Eq. Jur. § 664. 



CHAP. XI.] REMEDIES BETWEEN PARTNERS. 367 

partners for money advanced, or contributions made, or 
liabilities incurred, simply on the ground that it has 
its foundation in a partnership transaction, if in other 
respects the suit is unobjectionable, as no technical 
difficulty occurs in equity, as to the joinder of all the 
proper parties to the suit.^ Indeed, the ordinary remedy 
now administered, in matters of account, or requiring 
an account between partners, is exclusively in equity.^ 
But this subject, which is rarely if ever acted upon 
in Courts of Equity, except upon a dissolution of the 
partnership, will more appropriately occur in another 
place.^ 

§ 223. The Roman law did not to the same extent 
or precisely in the same manner as our law, recognize 
the distinction between remedies at law and remedies in 
equity, although it is very clear, that an analogous dis- 
tinction, between suits in the ordinary forum, and suits 
ex cequo et bono before the Praetor's forum, was well un- 
derstood, and fully acted upon. But, in cases of part- 
nership, owing to the complicated nature thereof, a 
special remedy was provided, commonly called the Actio 
2)ro socio, the nature, character, and operation whereof 
are fully explained in the Digest.'' 

§ 224. And, here, a question, of a local and general 

> Coll. on P. B. 2, c. 3, § 2, p. 174-193, 2d ed. ; Id. c. 3, § 7, p. 245-249 ; 
Abbot V. Smith, 2 W. Bl. 947 ; Gow on P. c. 2, § 4, p. 93-102, 3d ed. ; 1 
Story, Eq. Jur. § 666-674 ; Id. § 679, 680 ; Pearson v. Skelton, 1 M. & W. 
504 ; s. c. T\Tw. & G. 848. 

2 Coll. on P. B. 2, c. 3, § 4, p. 197-232, 2d ed. ; Duncan v. Lyon, 
3 Johns. Ch. 351, 361-363; Gow on P. c. 2, § 3, p. 73, 74, 3d ed. ; Id. c. 
2, § 4, p. 93-102. 

3 Ibid. ; post, § 228, 229 ; Forman v. Hoinfray, 2 Ves. & B. 329 ; Har- 
rison V. Armitage, 4 Madd. 143 ; Richards v. Davies, 2 Russ. & M. 347 ; Los- 
combe V. Russell, 4 Sim. 8 ; Knebell v. White, 2 You. & C. Ex. 15 ; Glassing- 
ton V. Thwaites, 1 Sim. & St. 124, and the Reporter's notes (a) and (b) ; 
Natusch V. Irving, Gow on P. App. 398, 3d ed. ; Wallworth v. Holt, 4 Myl. 
& C. 619, 635, 639. 

* Dig. 17, 2, 31-34, &c. ; Poth. Pand. 17, 2, n. 30-54. 



368 PARTNERSHIP. [cHAP. XI. 

nature may arise, when, and under what circumstances, 
and to what extent, Courts of Equity will interfere to 
enforce either the express or implied duties and obliga- 
tions of partners inter sese. In respect to such duties 
and obligations 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 objec- 
tion does not seem to iipply to cases where the relief 
sought is to enforce the due observance of negative 
duties and obligations ; for, here, all that is required is, 
that the Court should restrain the partner from violat- 
ing 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 part- 
nership business, yet it may interpose by injunction to 
restrain him from wasting the partnership property, 
from misusing the partnership name, from interfering 
to stop the partnership business, or from fraudulent 
practices injurious or ruinous to the partnership, in vio- 
lation of his express duties or express contracts." 

' Kemble v. Kean, 6 Sim. 333 ; Clarke v. Price, 2 Wils. Ch. 157 ; 
Kimberley v. Jennings, 6 Sim. 340 ; [Downs v. Collins, 6 Hare, 418] ; Coll. 
on P. B. 2, c. 2, § 2, p. 142, 2d ed. ; Id. B. 2, c. 2, § 1, p. 131 ; 2 Story, 
Eq. Jur. § 722 a. 

2 Ibid. ; Coll. on P. B. 2, c. 3, § 5, p. 233-240, 2d ed. ; Id. B. 2, c. 2, § 
2, p. 142 ; 3 Kent, 60; Miles v. Thomas, 9 Sim. 606. — The comments of the 
Vice-Chancellor (Sir L. Shadwell) on this subject, in Kemble v. Kean, 6 Sim. 
333, are so important, that they deserve to be cited at large. "In the case of 
a mere contract between two persons, who are both carrying on the same trade, 
that one shall not cany on his trade within a limited distance in which the 
party contracted with intends to carry on his trade, the whole agreement is of 
so genuine a kind, that the Court would enforce the performance of the agree- 
ment by restraining the party by injunction from breaking the agreement so 
made. In the case where the parties are partners, and one of the partners 



CHAP. XI.] REMEDIES BETWEEN PARTNERS. 369 

§ 225. A few illustrations of the general doctrine 
may be here properly introduced. Courts of Equity, 

contracts that he shall exert himself for the benefit of the partnership, though 
the Court, it is true, cannot compel a specific performance of that part of the 
agreement, yet, there being a partnership subsisting, the Court will restrain 
that party (if he has covenanted that he will not carry on the same trade 
with other persons) from breaking that part of the agreement. That is in 
case of a partnership. In the case of Morris v. Colman, 18 Ves. 437, the 
bill was fil<;d by ]Morris against Colman for the purpose of having a question 
upon the articles of partnership determined, and for restraining Colman from 
doing many acts which he was disposed to do ; and I think, in that case (for 
I was counsel for Colman from the beginning to the end), that Colman al- 
ways stood on the defensive. The only question was, whether Colman should 
be at liberty to do certain acts, which he insisted he was at liberty to do, and 
Morris contended that he was not. Xow, I apprehend, that what Lord El- 
don says, in giving his judgment upon that point, must be taken with refer- 
ence to the subject that was before him ; and I perfectly well recollect the 
time when the injunction was granted to restrain Mr. Colman, but I am not 
quite sure it is exactly in the way in which the report represents. But Col- 
man insisted, generally, tliat he had a right to write dramatic pieces for other 
theatres ; and then there was an injunction granted to restrain the represen- 
tation of one of the pieces which he had written, and which was intended to 
be represented, I think, at Covent-garden Theatre. In the argument jt was 
said, that the particular provision which is stated in the case, was a provision 
restraining Colman from writing dramatic pieces for any other theatre ; and 
in the argument it was said by the counsel for the plaintiff, that that provi- 
sion was no more against public policy, than a stipulation that Mr. Garrick 
should not perform at any other theatre than that at which he was engaged, 
would have been. Xow, with reference to what was said by counsel, upon 
arguing the case of a partnership, Lord Eldon says : ' If Mr. Garrick was 
now living, would it be unreasonable that he should contract with Mr. Col- 
man to perform only at the Haymarket Theatre, and Mr. Colman with him to 
write for that theatre alone ? Why should they not thus engage for the tal- 
ents of each other ? ' That mode of putting the question appears to me to 
show, that Lord Eldon is speaking of a case Avhere the parties are in part- 
nership together ; because it would be a strange thing that one should con- 
tract to perform only at the Haymarket Theatre, and the other to write for 
that theatre alone, except in the case of a partnership, where botii parties 
would be exerting themselves for their mutual benefit; because if they were 
not in partnership, the effect of such an agreement might be, that neither 
might exert his talents at all. In this case, however, there is no partnership 
whatever between the proprietors of Covent-garden Theatre and Mr. Kean ; 
but the contract is nothing more than this, that ^Ir. Kean shall, for a given 
remuneration, act a certain number of nights at Covent-garden Theatre, 
with a proviso, that in the mean time he shall not act at any other theatre. 

24 



370 PARTNERSHIP. [cHAP. XI. 

in interfering by way of injunction in cases of part- 
nership, act upon a sound discretion, and will not 

And it is quite clear, that this bill is filed for the purpose of having the per- 
formance of an agreement with regard to his contract to act. [His Honor 
here stated the substance of the bill, and then proceeded] ; — So that it was 
an agreement to act at Covent-garden Theati-e, a certain number of nights in 
the season, 1830-31, and that, in the mean time, the defendant should not 
act in London ; and the bill is filed for the purpose of enforcing the per- 
formance of that agreement, which mainly consists in the fact of his acting; 
and it appears to me, that it is utterly impossible that this Court can execute 
such an agreement. In the first place, independently of the difficulty of 
compelling a man to act, there is no time stated, and it is not stated in what 
characters he shall act ; and the thing is altogether so loose, that it is per- 
fectly impossible for the Court to determine upon what scheme of things 
Mr. Kean shall perform his agreement. There can be no prospective 
declaration or direction of the Court, as to the performance of the agree- 
ment ; and, supposing Mr. Kean should resist, how is such an agreement to 
be performed by the Court ? Sequestration is out of the question ; and 
can it be said, that a man can be compelled to perform an agreement to act 
at a theatre by this Court sending him to the Fleet for refusing to act at all ? 
There is no method of arriving at that which is the substance of the contract 
between the parties, by means of any process, which this Court is enabled 
to issue ; and, therefore (unless there is some positive authority to the con- 
trary), my opinion is, that, where the agreement is mainly and substantially 
of an active nature, and is so undetermined that it is impossible to have 
performance of it in this Court, and it is only guarded by a negative pro- 
vision, this Court will leave the parties altogether to a court of law, and 
will not give partial relief by enforcing only a negative stipulation. I 
think, for the reasons which I have stated, that what Lord Eldon has said in 
the case of Morris v. Colman, bears upon this case. In Clarke v. Price, 2 
Wils. Ch. 157 (in which, also, I was counsel), there was a positive stipula- 
tion, by Price, that he would write reports for Clarke the bookseller. Lord 
Eldon says, in his judgment, upon that case: 'The case of Morris v. Col- 
man is essentially different from the present. In that case, Morris, Colman, 
and other persons were engaged in a partnership in the Haymarket Theatre, 
which was to have continuance for a very long period, as long indeed as the 
theatre should exist. Colman had entered into an agreement, which I was 
very unwilling to enforce, not that he would write for the Haymarket 
Theatre, but that he would not write for any other theatre. It appeared to 
me, that the Court could enforce that agreement by restraining him from 
writing for any other theatre. The Court could not compel him to write for 
the Haymai'ket Theatre ; but it did the only thing in its power ; it induced 
hira, indirectly, to do one thing by prohibiting him from doing another. 
There was an express covenant on his part, contained in the articles of 
partnership. But the tei'ms of the prayer of this bill do not solve the diffi- 



CHAP. XI.] REMEDIES BETWEEN PARTNERS. 371 

incerfere to remedy 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. A mere fugitive, temporary breach, 
involving no serious evils or mischiefs, and not endan- 
gering the future success and operations of the part- 
nership, will, therefore, not constitute any case for 
equitable relief.^ It is upon this ground, that Courts 
of Equity will not interfere in cases of frivolous vexa- 
tion, or for mere differences of temper, casual disputes, 
or other minor grievances between the parties ; but 
will deem, as in some other more important relations 
in life, that the parties enter into them with a fair un- 
derstanding, that such infirmities are to be borne with, 
and that a separation of interests, or an injunction 
against acts, is not to be decreed, because one of the 
parties is more sullen or less good-tempered than the 
other.^ 

§ 226. It was upon the same ground of the fugitive 

culty ; for, if this contract is one which the Court will not carry into execu- 
tion, the Court cannot, indirectly, enforce it by restraining Mr. Price from 
doing some other act.' His Lordship then proceeds to observe upon the 
express terms of the contract, and says, that he will not, in that case, inter- 
fere to enforce an implied negative stipulation ; for that is the utmost that 
can be made of his Lordship's observations in that case. For the reasons, 
which I have stated, I am of opinion, that, if this cause were now being 
heard, and the agreement were admitted to be such, as it appears to be, this 
Court could not make any decree, but must dismiss the bill." See 2 Story, 
Eq. Jur.