The Court of Equity will interfere by injunction where there is a breach of contract in the articles of partnership sufficiently important to authorise the complaining party to call for a dissolution; also where the partnership property is applied to other purposes than those authorised by the articles, or where it is taken in execution for the separate debts of one partner (a).

of receiver.

The Court of Equity will appoint a receiver or a manager of Appointment a partnership where there has been some breach of the duty of a partner, or of the contract of partnership, or some culpable conduct, or in cases of a collusion, or of exclusion of a partner from his full share of management, provided in all cases sufficient cause is shown to entitle the plaintiff to a dissolution (b).

The Court would not decree an account between partners unless upon the dissolution of the partnership, though it might in some cases direct an account of past transactions whilst the partnership is being carried on. But after six years' acquiescence unexplained by circumstances, the Court would not decree an account between a surviving partner and the estate of a deceased partner (c).

Court will not account unless upon dissolu

decree an

tion.

SECTION XVII.

ACTIONS BY AND AGAINST PARTNERS.

BRITISH LAW.

Where the same person is member of

Where the same person is a member of two different firms the partners of one could not maintain an action against the partners of the other for transactions which took place while two firms. such person was partner of both firms, and that whether the action be brought in the lifetime of the common partner or after his decease, yet after his decease the surviving partner of the one house may sue the surviving partner of the other house

(a) Newell v. Townsend, 6 Sim. 419.

(b) Wilson v. Greenwood, 1 Swanst. 481; Const v. Harris, 1 Turn. & Russ. 517.

(c) Blackeney v. Dufaur, 15 Beav. 40; Richards v. Davies, 2 Russ. & M. 347; Knebell v. White, 2 Y. & C. 15.

No action maintained when the

partnership is illegal.

All who were parties to the contract must join.

under seal

upon transactions subsequent to the decease of the common partner (a).

Where the partnership is illegal no action could be maintained by the partners on any contract arising out of their partnership dealings (b). So no suit could be maintained by a partnership where one or more of the partners are domiciled in an enemy's country.

In all actions to enforce contracts made with the firm, all who were partners at the time the contract was made must join in the suit (c). Where a contract is under seal, if it was made in the name of one partner only, he alone can sue, and if it was in the Contracts not name of all the partners, then all must join in it (d). Yet a contract not under seal may be enforced either by those for whose benefit it was effected or by those whose names appear in the contract (e). So an action may be maintained upon a bond expressed to be payable to a mercantile firm by the persons who constituted the firm when the bond was executed (f); though if a note has been made payable to one partner to secure a debt due to the firm, the rest cannot join to sue thereon (g).

may be enforced by parties benefited.

Optional to join nominal or dormant partner.

Guarantee.

It is optional with a dormant partner, as well as with a nominal partner having no interest, unless he be expressly named, to join in a suit with the ostensible partner; but both of them may be sued for the debts and contracts of the partnership (h).

When new partners are admitted, those only who originally made the contract must sue on securities granted to the original partners (i). So a guarantee made in favour of an existing firm, or a continuing contract made with such, would cease to be in force upon any change in the old firm, except a special

(a) Bosanquet v. Wray, 6 Taunt. 598; De Tastet v. Shaw, 1 B. & Ald. 664.

(b) Morse v. Wilson, 4 T. R. 353; Griswold v. Waddington, 16 Johns. 438; M'Connell v. Hector, 3 B. & P. 113. (c) Anderson v. Martindale, 1 East, 497.

(d) Vernon v. Jefferys, 2 Str. 1146; Scott v. Godwin, 1 B. & P. 67.

(e) Hall v. Smith, 2 Dow. & Ry. 584; Grove v. Dubois, 1 T. R. 112; Gordon v. Ellis, 13 L. J. C. P. 179; 2 C. B. 821.

(f) Moller v. Lambert, 2 Camp. 548; Phelps v. Lyle, 10 Ad. & E. 113. (g) Siffkin v. Walker, 2 Camp.

308.

(h) Cothay v. Fennell, 10 B. & C. 671; Beckham v. Drake, 9 M. &. W. 79; Teed v. Elworthy, 14 East, 210; Kell v. Naisby, 10 B. & C. 20; Guidon v. Robson, 2 Camp. 304.

(i) Metcalf v. Bruin, 12 East, 400; Barclay v. Lucas, 1 T. R. 291; Robson v. Drummond, 2 B. & Ad. 303.

provision has been made importing a continuing liability notwithstanding any change in the firm (a).

libel.

Partners in their collective capacity possess the same rights Actions for and remedies in equity against third persons which are enjoyed by every private individual. So an action for libel or tort or a defamation of the firm may be brought jointly, but the partners can recover damages for such injuries only as they may have sustained in their joint trade or business (b).

In an action against the firm all those who were partners at Actions against the the time the contract was made may be joined as defendants (c). firm. A partner who was an infant when the contract was made need not be joined as a defendant unless he has since attained his majority and ratified the contract in writing (d). A bankrupt Bankrupt partner who has obtained his certificate need not be joined in not be joined. the suit as co-defendant.

partner need

Where one of the partners dies the action may be brought Surviving partner may against his survivors. All partners being jointly and seve- be sued. rally bound for all the debts of the partnership, it is in the Creditor may option of the creditor to sue either partner for his debt, or he partner. may discharge any of them without affecting the liability of the others.

sue either

SECTION XVIII.

DISSOLUTION OF PARTNERSHIP.

BRITISH LAW.

solution.

The dissolution of partnership takes place by the death of Causes of disone or more of the partners; by the expiration of the time for which it had been constituted; by the happening of the Death. event which the deed contemplated for its dissolution; by Bankruptcy. the bankruptcy of the partnership; by the bankruptcy, out- Felony. lawry, or felony of any one of the partners; and by the mar- Marriage of riage of a feme sole partner. Just causes for decreeing a dissolution may also be the impossibility of proceeding in the busi- Impossibility of proceeding.

(a) Metcalf v. Bruin, 12 East, 400; Barclay v. Lucas, 1 T. R. 291; Robson v. Drummond, 2 B. & Ad. 303..

(b) Haythorn v. Lawson, 3 C. & P. 196.

(c) Bristow v. James, 7 T. R. 257; Lodge v. Dicas, 3 B. & Ald. 611.

(d) Thornton v. Illingsworth, 2 B. & C. 824; Ex parte Henderson, 4 Ves. 164.

feme sole.

Lunacy.

Partnership at will deter

mined at will.

Partnership for a time may be dis

ness; the hopeless state of the concern; and the lunacy of any of the partners.

A partnership at will may be determined when either party thinks proper, provided the renunciation be made fairly, from no improper motive, and at no inconvenient time. It would not be in good faith if the partner does it for the purpose of taking advantage to himself at the expense of the company (a).

A partnership for a specific time will be dissolved at the expiration of such time, or before such time by the mutual consent solved by con- of the parties. Where, however, such a partnership is continued

sent.

tinuation.

Stipulation to prevent dissolution by death.

after the expiration of the original term, and no arrangement has been made for its further duration, the partnership is held to be a partnership at will, and may be dissolved by the will of Terms of con- any of the partners (b). But though a partnership for a specific time continued after the expiration of such time is held to be partnership dissolvable at the will of the parties, all the covenants of the old partnership, except that of its duration, are considered as adopted by the new partnership (c). Although the death of any of the partners dissolves, ipso facto, the partnership as respects all the partners, a stipulation may be made in the deed to avert such a consequence by providing that the partnership shall subsist notwithstanding the death of any one, or that the heir or representative shall take the place of the deceased (d). That insanity may be a ground for dissolution it must be confirmed and incurable. And even where insanity is proved to have existed before the filing of the bill, a decree of dissolution by the Court of Equity will not be made in a disputed case without a further inquiry, whether, at the time when the relief is sought, the party is in such a state of mind as to be able to conduct the business of the firm in partnership with the other members, according to the articles of partnership. The affirmation of this issue would then lie with the party who had been of unsound mind, who would have to show that he was so far restored as to be able to conduct the business (e). A

Insanity may be a ground for dissolution.

(a) Benham v. Gray, 5 C. B. 138; Peacock v. Peacock, 16 Ves. 49; Nerot v. Burnand, 4 Russ. 260; Featherstonaugh v. Fenwick, 17 Ves. 298; Crawshay v. Maule, 1 Swanst. 506; Marshall v. Marshall, Jan. 26, 1815, Fac. Dec. (Scotch).

(b) Montgomerry v. Forrester, &c., June 17, 1791, M. 14, 583 (Scotch); Featherstonaugh v. Fenwick, 17 Ves. 307. (c) Per Sir A. Hart, Molloy, 466. (d) Gillespie v. Hamilton, 3 Madd. 251. (e) Wrexham v. Huddleston, 1 Swanst. 517; Nerot v. Burnand, 4 Russ. 260;

right of dissolution may also accrue where there arises an incapacity or habitual infirmity on the part of any of the partners (a).

breach of

faith.

A Court of Equity will also decree a dissolution in cases of In case of breach of faith between the partners; of exclusion of one from his interest in the partnership; where any of the partners raises money for private use on the credit of the firm; or fails to fulfil his engagement; or has acted fraudulently. Where a partner has been guilty of embezzlement or has done acts inconsistent with the duty of a partner, and of a nature to destroy the mutual confidence which ought to subsist between partners, and makes it impossible that the business can be conducted in partnership with benefit, then the Court will decree its dissolution, even before the expiration of the time for which the partnership was entered into (b). A partnership will be dissolved when one of When one partner is in the partners belongs to, and resides in a country declared to be the enemy's at war with the United Kingdom (c). And where the undertaking is found impracticable, and cannot be carried on as profit without further capital, the Court will decree a dissolution (d). A notice in the Gazette is a sufficient notice of dissolution, but a circular letter, announcing the fact, should be sent to the correspondents of the firm. No notice, however, is necessary in case of death (e).

A partnership formed by deed must also be dissolved by deed, and if the dissolution is to be immediate the deed must contain express words to that effect.

country.

Notice in the

Gazette and

circular sutti

cient.

Partnership by deed dis solvable by

deed.

mutual

The dissolution of a partnership operates as the revocation of Revocation of the mutual powers of the partners to bind each other to buy or powers. to sell, or to dispose of the partnership property, to sign bills of exchange in the name of the firm, or to do any act in furtherance of partnership affairs. The partners cease to incur any Cessation of liability for future transactions, though they continue liable for liability.

Sayer v. Bennet, 1 Cox, 107; Sadler v. Lee, 6 Beav. 324; Waters v. Taylor, 2 V. & B. 303; Leaf v. Coles, 1 De Gex, M. & G. 175; Anonymous, 2 Kay & Johns. 41.

(a) Jones v. Noy, 2 My. & K. 125. (b) Smith v. Jeyes, 4 Beav. 503; Essell v. Hayward, 29 L. J. Ch. 806. (c) Grienwoold v. Waddington, 16 Johns. 438 (American).

(d) Baring v. Dix, 1 Cox, 213; Jennings v. Baddeley, 3 K. & J. 78; Harrison v. Tennant, 21 Beav. 482; Waters v. Taylor, 2 Ves. & B. 299; Jones v. Noy, 2 My. & K. 125; Smith v. Jeyes, 4 Beav. 503; Liardet v. Adam, 1 Mont. Part. 112.

(e) Doe v. Miles, 1 Stark. 181; Emmet v. Butler, 7 Taunt. 599.

mutual