to the business. When assu rance has re ness. express authority was given to that effect, or where the obligation had reference to business connected with the partnership (a). When, however, an act is done, or an assurance given with ference to part- reference to the business transacted by the partnership, although nership busiout of the regular course, it is still within the scope of the partners' authority, and will bind the firm (b). Even a promise or an admission by one partner, relative to a partnership transaction, would bind the firm (c). Promise or admission of partner binding on the firm. So all con tracts of sale All contracts to be binding must be in the All contracts of sale or purchase by one partner on joint and purchase. account, and for purposes connected with the partnership, are binding against the firm, each partner having an unlimited authority to deal with the partnership effects (d). But a partner has no authority to bind the partnership in any other name than that held out to the world as the name of the firm (e). Where carried Where, however, the partnership is carried on in the name of one individual partner, all acts done by him on behalf of the bind all by his partnership, and in his name, will bind all the partners collectively (ƒ). name of the firm. on in the name of one only, he will acts. May bind his copartners in breach of revenue law; A partner may render his copartner liable even for his fraud even for fraud; and misconduct, provided it have a sufficient relation to the business of the firm (g). So if a partner is guilty of a breach of the revenue law, all the partners would be liable to answer for misappro- for the partnership (h). So if a partner misapplies money belonging to other persons, left in custody with the firm, all the partners are liable to restore the same (i). If, however, a partner commit a fraud whilst trading on his own account, the firm is not liable (k). priation of money; not if com mitted whilst dealing on his own account. Copartner may bind for money or for goods he appropriates to himself. A partner may also bind his copartners by a loan contracted for his own private expenses while engaged in partnership business, or by a purchase of goods such as the firm trades in, but which he uses for his own benefit, provided there be no collu (a) Duncan v. Lowndes, 3 Camp. 478; Ex parte Nolte, 2 Glyn. & Jam. 306. (b) Sandilands v. Marsh, 2 B. & Ald. 680; Brettel v. Williams, 4 Exch. 623. (c) Pritchard v. Draper, 1 Russ. & M. 199. (d) Bond v. Gibson, 1 Camp. 185; Barton v. William, 5 B. & A. 405. (e) Kirk v. Blurton, 9 M. & W. 284. (f) South Carolina Bank v. Case, 8 B. & C. 427. (g) Ropp v. Latham, 2 B. & A. 795; Blair v. Bromley, 2 Ph. 354. (h) Lindley on Partnerships, p. 239. (i) Devaynes v. Noble, 1 Meriv. 529; Bourdillon v. Roche, 27 L. J. Ch. 681; Harman 2. Johnson, 3 C. & K. 272; Sims v. Brutton, 5 Exch. 802. (k) Bishop v. The Countess of Jersey, 2 Drew. 143. sion between him and the lender of money or the seller of goods (a). transaction does not relate to the partner ship. But the partnership will not be bound by a joint security Not if the given by one of its partners for a transaction not relating to the partnership, except where its express or implied sanction can be shown, or where the giving of such guarantee is necessary for the carrying on of the ordinary business (b). A partner Partners may would be bound by his copartner's misapplication or misappro- partner for priation of trust property (c). The partnership agreement, though under seal, does not authorise partners to bind each other by deed, unless a particular power be given for the purpose. A deed, therefore, executed by a person on behalf of himself, and his partners will be binding on him but void as to them (d). If, however, he executes it as an individual partner only, and not professedly on behalf of the others, he would not be bound unless the others execute, the execution of each being presumed upon the faith that the other partners are to be equally bound (e). Nor can a partner, without special authority, bind the other partner by a submission to arbitration, even of matters arising out of the business of the firm, though he himself would be bound by the award (ƒ). Notice by or to one partner would be notice by or to the firm (g). So payment to one partner is also payment to all, and a receipt by one partner for a joint debt is valid as against all partners (h). Each partner has authority to act for the firm in bankruptcy, proving debts, voting for assignees, and signing certificates (i). One partner has not, however, implied authority to consent to an order for a judgment in an action against himself and his (a) Bond v. Gibson, 1 Camp. 185; La Marquise De Ribeyre v. Barclay, 23 Beav. 107; Hope v. Cust, 1 East, 53. (b) Crawford v. Stirling, 4 Esp. 207. (c) La Marquise de Ribeyre v. Barclay, 23 Beav. 107. (d) Ball v. Dunsterville, 4 T. R. 313; Harrison v. Jackson, 7 T. R. 210; Elliot v. Davis, 2 B. & P. 338; Hawkshaw v. Parkins, 2 Swanst. 543. (e) Elliot v. Davis, 2 B. & P. 338; Hawkshaw v. Parkins, 2 Swanst. 543. (f) Stead v. Salt, 3 Bing. 101; Strangford v. Green, 2 Mod. 228; Hilton v. Royle, 3 H. & N. 500. (g) Mayhew v. Eames, 1 C. & P. 550; Alderson v. Pope, 1 Camp. 404. (h) Bristow v. Taylor, 2 Stark. N. P. C. 50. (i) Ex parte Hodgkinson, 19 Ves. 293; Ex parte Mitchell, 14 Ves. 597; Ex parte Hall, 17 Ves. 62. bind co misapplication of trust property. Cannot bind by deed partner him self would be bound. Not by a subbitration. mission to ar Notice by or notice by or Payment to to one is to all. one is payment to all. Each partner may act in But cannot order for judg consent to an ment. Service of a notice to one is not service to all. copartners (a). Service of a notice on one of two joint defendants who are partners, or at the partnership place of business, is not a sufficient service upon the other (b). INTRODUC- VATIONS. With reference to third persons. Bills on partnership liability. SECTION XIV. PARTNERSHIP LIABILITY. The law imposes a partnership liability upon every one who participates in the profits and loss of a concern, although there may not have been any intention to contract partnership, and nothing was done to lead others to believe that there existed a contract of partnership. This law is founded on the principle that inasmuch as he who takes a portion of all profits really takes from the creditors a part of that fund which is the proper security to them for the payment of their debts, it is but right that he should become liable to third persons to losses, if losses arise. But what difference does it make to third persons whether the money is withdrawn in the shape of interest for money lent, or as a portion of realised profits, provided there be no interference in the management of the partnership? Third persons will rather be the gainers where the money is invested at a contingent rate of profit rather than lent at interest, because whilst the lender at interest will withdraw the interest, whether there be loss or gain in the business, the participator in the profit and loss will withdraw his profits only when there has been actual gain; and whilst the lender at interest will rank with creditors for the amount lent, and for interest, no matter at what an exorbitant rate the money was lent, the participator in the profits must wait till all the creditors are satisfied before he can claim any part of the investment, or any interest or profit thereon. To amend the law on the subject, a bill was introduced in the House of Commons, in 1855, providing that the lending of money on condition to receive a portion of the profit, or a sum varying according to the amount of such profits, either in lieu of, or in addition to, any interest for or on account of such loan, (a) Hambridge v. De la Crouće, 3 C. B. 742. (b) Mosedon v. Wyer, 6 Scott, N. R. 945. should not constitute a partnership between the lender and borrower. It was required, however, that such loans should be registered, and that in the event of bankruptcy of the borrower the rights of the lender should be postponed until all the creditors have been satisfied. To this there was added a clause that no agent should be deemed a partner by reason simply of his receiving in lieu of or in addition to wages for his service a portion of the profits made by his principal, or a sum varying according to the amount of such profits. This bill was rejected by the Commons on the ground that the publication of the names of the lenders on such terms might lead to a fictitious credit. In 1856 another bill was introduced to the same effect not providing for any registration, and with the addition that no person receiving by way of annuity or otherwise any portion of the profits made by any trader in his business, shall by reason only of such receipt be deemed to be a partner or be subject to any liabilities incurred by such trader. Considerable opposition was, however, offered to the progress of the bill; and upon the passing of a clause for the registration of such lenders, the framer of the bill, Mr. Lowe, withdrew it. Since then no further attempt has been made to legislate on the subject, and as the law of limited liability applies only to companies of seven or more partners, the unlimited liability in private partnership continues unaltered. BRITISH LAW. All the partners in a concern, whether active, nominal, or All partners dormant, are equally liable to third persons for all the debts and equally liable. engagements of the partnership, not only to the extent of their interest in the joint stock, but also to the whole extent of their separate property (a). The unlimited responsibility of partners may, however, be Responsibility may be limited expressly limited by contract as between the parties themselves, between the and by special notice as between them and third persons (b). partners. So where a partner gives notice to a person who has been in the habit of supplying the firm with goods that he will no longer (a) Carlen v. Drury, 1 V. & B. 157. (b) Re Athenæum Ins. Co.,,7 Week. Rep. 137, 1 Johnson, 80; Hallett v. Dowdale, 21 L. J. Q. B. 98; Vice v. Fleming, 1 You. & Jer. 227; Hassell v. Or by special third party. notice to a Commencement and termination of liability. Incoming partner not liable for former acts. be answerable for such goods he cannot be charged for goods subsequently supplied (a). The liability of a partner commences with the commencement of the partnership, and ceases upon his dissolving it and giving notice of the dissolution (b). The firm is, therefore, not liable for debts contracted by any of the partners prior to the formation of the partnership, even if such debts were contracted for the purpose of founding the partnership (c). So an incoming partner is not liable for debts contracted previous to his joining the partnership, unless there be an express covenant for that purpose between the partners themselves, or a tacit or express agreement between the new partner and the Not even by creditor. The simple ratification of the former acts by the new partner would not render him liable. Therefore, where one purchased goods and another is afterwards permitted to share in the adventure, the seller could not recover against such other person the price of the goods (d). ratification of former acts. Liability contracted by receiving a benefit from former acts. Incoming partner subject to the same terms as as incoming Dormant partner liable. If, however, the incoming partner receives a benefit from the contract, and there be sufficient evidence that he has assented to debts previously contracted by the firm, he will be liable (e). Slight circumstances would be sufficient to establish the liability of an incoming partner, where at any subsequent time he has acquired all the benefit of it (f). An incoming partner joining without specifying the terms on which he becomes such partner would have the same rights and would be subject to the same liabilities as the original partners (g). An infant partner coming of age and not disaffirming the partnership will stand in the same capacity of an incoming partner, but will in no case be liable for past contracts, unless he ratifies such contracts, or renews in writing the promise made during infancy (h). A dormant or secret partner is liable for all the contracts of a (a) Vice v. Fleming, 1 You. & Jer. 226; Lord Galway v. Mathew, 10 East, 266. (b) Battley v. Lewis, 1 M. & G. 155; Heath v. Sansom, 4 B. & A. 172. (c) Greenslade v. Dower, 7 B. & C. 635; Wilson v. Whitehead, 10 M. & W. 503; Saville v. Robertson, 4 T. R. 720. (d) Young v. Hunter, 4 Taunt. 582. (e) Ex parte Jackson, 1 Ves. 131; Ex parte Peele, 6 Ves. 602. (f) Ex parte Peele, 6 Ves. 601. (g) Austen v. Boyd, 24 Beav. 598. (h) Goode v. Harrison, B. & Ald. 150. |