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http://www.archive.org/details/cu31924022343846
A DIGEST
LAW OF PARTNEESHIP,
INCOEPOBATING THE
PAETNERSHIP ACT, 1890. ;,
BY
SiE FREDERICK POLLOCK, Baet.,
EAEEISTEB-AT-U.TV,
M.A., HOK. LL.D. EDIN.,
OOEPtrg PEOPESSOE OF JOEISPETTDENOE IN THE I7NIVEESITY OF OXEOED,
LATE FELLOV OE TEHflTT COLLEGE, CAHEEIEQE.
FIFTH EDITION.
LONDON:
STEVENS AND SONS, LIMITED,
119 & 120, CHANCEET LANE,
1890.
5 13C
LONDON :
PBINTIIII BY 0. r. KOWORTH, OEKAT NEW STREET, TETTEK LA.NE — B.C.
PREFACE,
The form of this work is no longer a matter of
private choice as to the greater part of it, and there-
fore V-O longer needs an apologetic introduction. It
wiU suffice to explain how the book has become an
edition of an Act of Parliament, and could besgme
so while preserving mo^^of Jts ca-iginal-^ubstance.
In 1877, having been asked to write a coilcise wmk
on Partnership, I determined to follow Mr. Justice
Stephen's example in his "Digest of the Law of
Evidence " (an example which then stood alone),
and to frame the book on the pattern of the Anglo-
Indian Codes. It then seemed to me possible that
Parliament might be induced to adopt Macaulay's
invention of adding authoritative illustrations to the
enacting text of a code ; I call it Macaulay's, for I
have not found in earlier writers, including Bentham,
more than slight rudiments of the idea, and its first
distinct appearance was certainly in the draft of the
Indian Penal Code. But at all events this method
of statement enables the private author of a Digest
in codified form to exhibit in the clearest and
shortest way the substance of the authorities on
«2
IV PREFACE.
which his text is founded. When such a Digest is
used as the groundwork of a Bill, and the Bill
finally becomes an Act of Parliament, as has hap-
pened with Judge Chalmers' Digest of the Law of
Bills of Exchange, and now with the present work,
the decisions exhibited by way of illustration are no
longer the only part of the work having authority,
but they remain authoritative so far as they are con-
sistent with the terms of the Act, and a summary
view of them will often be convenient, sometimes
almost necessary, for the understanding of the law
as now declared by the Legislature. Unless the law
has been purposely altered, which in a codifying
Act is a rare exception, the decisions are still the
material from which the rule of law has been
generalized. The rule has acquired a fixed and
authoritative form, but the principle is the same. It
is a minor question, in a country where the law is uni-
form, and its administration is in the hands of trained
lawyers, whether it be desirable for the Legislature
to undertake the selection and statement of illustra-
tions to a Code. Perhaps it is a thing best left to
private enterprise ; the ratlier, in this country,
that the conditions of our legislative procedure
make Parliament about the least fitted of European
legislative bodies for such a task. Meanwhile ex-
perience has shown the convenience of Macaulay's
method for the statement of a well settled branch of
law by way of private exposition, and has also
shown that it may prepare the way for codification.
PEEFACE. V
Judge Chalmers' work, which was first published
not long after this, was transformed into a Code (the
Bills of Exchange Act) in 1882, and there is e very-
reason to hope that his Digest of the Sale of Groods
will lead to a like result in the next few years. In
this case, indeed, a codifying Bill was prepared by
Judge Chalmers, and introduced by Lord Herschell
in the House of Lords, before the materials were
published in the shape of a Digest.
The history of the Partnership Act may be very
briefly told. In 1879 I drafted a Bill, intended,
first, to codify the general law of partnership ;
secondly, to authorize and regulate the formation
of private partnerships with limited liability, cor-
responding to the societe en commandite of Continental
law; and, thirdly, to establish universal and com-
pulsory registration of firms. The two latter objects
were those which my clients at that time were most
bent on. Subsequent experience has shown, I think,
that there is no real demand or need for either
innovation. The registration part was dropped in
1880 as a condition of the general approval of the
Board of Trade. In 1882 the Bill made so much
way as to be reported by a Select Committee, which,
however, declined to proceed with the limited part-
nership scheme. After being again introduced
several times without reaching the stage of effectual
debate, the Bill was, in 1888 and 1889, further
considered by the Board of Trade and the Attorney-
VI PREFACE.
Greneral with a view ,to its adoption by Ministers.
In the present year it was introduced by the Lord
Chancellor in the House of Lords, and there revised
by a Select Committee, which made various changes
in the arrangement of the sections and a certain
number of amendments. The Bill passed through
the House of Commons with a few further amend-
ments, due partly to the Attorney-General and partly
to Sir Horace Davey, and became law towards the
end of the session. The Act will come into opera-
tion on January 1, 189L Perhaps I ought to
explain that I have had nothing to do with the
preparation of the Bill for several years; but I
believe the only important alterations are those
made in Committee this year, chiefly by the House
of Lords.
It may be doubted whether the Act will add much
to the knowledge of the law possessed by practising
members of the Chancery Bar, but even to them it
may save time and trouble. Some familiar principles
for which there was but little reported authority
are now placed beyond even formal doubt, and
some doubtful points are settled according to modern
•usage and convenience. Possibly members of the
Common Law Bar, and probably students entering
on the subject, Avill be thankful for the Act; and it
ought at any rate to make the substance and reasons
of the law more comprehensible to men of business
Avho arc not lawyers. It is not to be supposed that
PREFACE. vii
difficult cases will be abolished, or to any great
extent made less difficult, by this or any other codi-
fying measure. But since difficult cases are after
all the minority, perhaps it is of some importance
for men of business to be enabled to see for them-
selves the principles applicable to easy ones.
The Act does not deal with the rules of procedure
governing actions by and against partnership firms,
which are already codified in the Rules of Court,
nor with the administration of the assets of firms
and partners in bankruptcy, which is governed by
the Bankruptcy Act and Rules, and the case-law
which that Act assumes to be known. The parts of
the present work relating to these topics are, for the
convenience of presenting the subject as a whole,
retained in their old form.
It will be observed that the Partnership Act does
not purport to abrogate the case-law on the subject,
but on the contrary declares that "the rules of
equity and common law applicable to partnership
shall continue in force except so far as they are
inconsistent with the express provisions of this Act"
(sect. 46). The Act, therefore, will doubtless be read
and applied in the light of the decisions which have
built up the existing rules. Should any practi-
tioner imagine that he might now relegate Lord
Justice Lindley's book, for example, to an upper
shelf, he would be soon undeceived. Codes are not
Vlll PREFACE.
meant to dispense lawyers from being learned, but
for the ease of the lay people and the greater
usefulness of the law. The right kind of consoli-
dating legislation is that which makes the law more
accessible without altering its principles or its
methods.
With regard to the further prospects of codifica-
tion in general, I need hardly remind the learned
reader that a thoroughly revised Criminal Code Bill
has been ready these ten years, or give reasons for
the belief that the passing of any such code into
law must await a time of greater political tranquillity
and leisure than the present.
F. P.
13, Old SatrARE, Lincoln's Iinsr,
Michaelmas, 1890.
TABLE OF CONTENTS.
PART I.
THE PAETNEESHIP ACT, 1890.
(53 & 54 Vict. c. 39.).
Natuke of Pabtneeship.
sect. paob
1. Definition of partnership ...... 1
Distinction between partaership and common ownership
or sharing gross returns ...... 5
Limitation of number of partners in private partnership 8
2. Rules for determining existence of partnership . . .10
Cox V. Hickman ........ 12
3. Postponement of rights of person lending or selling in con-
sideration of share of profits in case of insolvency . 18
4. Meaning of firm ........ 20
Firm not recognized as artificial person in England . 20
Otherwise in Scotland . . . . . . .21
Use of names in general . . . . . .21
Foreign laws as to firm-names 23
Trade name and trade mark 23
Relations of Pahtnees to Persons dealing with them.
5. Power of partner to hind the firm . . . . .25
Exception where there is neither apparent nor real
authority ......... 26
General limits of partner's authority . . . .27
Implied authority of partners, and especially of partners
in trade 28
Special instances : negotiable instruments . . .30
Borrowing money , 31
X TABLE OF CONTENTS.
SHOT. ^^™
Sale and pledge 31
Purcliase .......•• 32
Eeceipt of payments and releases . . . . .32
Servants 32
Where authority not impHed : deeds . . . .32
Guaranties ......... 33
Submission, to arbitration ...... 33
6. Partners bound hy acts on hehalf of firm . . . .33
7. Partner using credit of firm for private purposes . . 34
Whether reasonable belief in partner's authority makes
a difference ........ 36
8. Effect of notice that firm will not be bound by acts of
partner ......... 37
Eestrictive agreement inoperative if not notified . . 37
9. Liability of partners ....... 39
10. Liability of the firm for lorongs . . . . .42
11. Misapplication of money or property received for or in
custody of the firm ....... 42
12. Liability for wrongs joint and several . . . .42
When principle of agency appHes . . . . .46
Misapplication of client's money by one partner . . 48
13. Improper employment of trust property for partnership
purposes ......... 48
Cannot be said to create partnership liability . . 49
14. Persons liable by " holding out" ... . . 50
What amounts to " holding out " . . . . .61
The rule applies to administration in bankruptcy . . 62
But not to bind deceased partner's estate . . .52
Liability of retired partners . . . . . .52
16. Admissions and representations of partners . . .63
16. Notice to acting partners to be notice to the firm . . 64
17. Liabilities of incoming and outgoing partners . . .65
Test of liability of new firm 57
Novation 57
18. Revocation of continuing guaranty by chaiige in firm . 58
Evidence of intention that guaranty shall continue . 59
Eelations of Partners to one anothee.
1 9. Variation by consent of terms of partnership . . .59
20. Partnership properly 61
TABLE OF CONTENTS. xi
^'^- PAOH
21. Property bought with partnership money . . . .63
22. Conversion into personal estate of land held as partnership
property 65
"What is a partner's share 66
23. Procedure against partnership property for a partner's
separate judgment debt ...... 67
24. Pules as to interests and duties of partners subject to special
agreement ......... 69
As to presumed equality of shares . . . .71
As to rights of partners to indemnity and contribution . 71
As to the right of the partners to take part in the busi-
ness .......... 72
Duty of gratuitous diligence in partnership business . 73
Consent of all required for admission of new partner . 73
Power of majority to decide differences . . . .75
25. Power to expel partner ....... 76
26. Retirement from partnership at will . . . .77
27. Where partnership for term is continued over, continuance
on old terms presumed ...... 78
28. Dtity of partners to render accounts, Sfc. . . . .80
29. Accountability of partners for private prof ts . . .81
Parallel rule in agency . . . . . . .82
30. Duty of partner not to compete with the firm . . .83
31. Rights of assignee of share in partnership . . .84
DlSSOLUTIOlf OP PabTKEESHXP AJfD ITS CoM-SEQUENCES.
32. Dissolution by expiration or notice . . . . .85
33. Dissolution by bankruptcy, death, or change . . .86
34. Dissolution by illegality of partnership . . . .87
35. Dissolution by the Court ...... 87
Dissolution at suit of partner of unsound mind . .89
Conduct of partner as ground for dissolution . . 90
36. Rights of persons dealing with firm against apparent mem-
bers affirm ........ 91
37. Right of partners to notify dissolution . . . .93
38. Continuing authority of partners for purposes of ivind-
ing M^ ......••• 94
39. Rights of partners as to application of partnership pro-
perty .......... 98
Nature of partner's right as lien 100
xu
TABLE OF CONTENTS.
SECT. I"-^™
Against whom available 100
Confined to partnership property at date of dissolution . 101
Eules as to disposal of goodwUl 102
Eights of purchaser thereof . . . . . .103
Nature and incidents of goodwill 105
Goodwill does not survive 106
Restraining subsequent use of partnership name . . 107
40. Apportionment of premium where partnership prematurely
dissolved . . . . . . . . .108
Eule in Atwood «. Maude Ill
41. Rights where partnership dissolved for fraud or misrepre-
sentation . . . . . . . . .111
42. Right of outgoing partner in certain cases to share profits
made after dissolution . . . . . .113
Claims against continuing partners qud executors or
trustees 117
Such claims must be distinct . . . . .120
Double or mixed claims for profits and interest not allowed 120
Account of profits after dissolution useless in practice . 121
"What interest given . . . . . . .121
43. Retiring or deceased partner's share to be a debt . .121
Surviving partner, as such, is not trustee . . .121
Statute of Limitations applies ..... 122
44. Rule for distribution of assets on final settlement of
accounts ......... 122
45. Definitions of " Court" and " business" . . . . 124
46. Saving for rules of equity and com,mon law . . . 124
47. Provision as to bankruptcy in Scotland .... 124
48. Repeal 124
49. Commencement of Act ....... 124
60. Short title 125
TABLE OF CONTENTS.
PART II.
PEOOEDTJEE AM) ADMINISTEATION.
CHAPTER I.
Peocedtjiie in Actions by and against Pabtnees.
AST- PAOB
1. [Order XVI. r. 14 {No. 136)] Actions in name of firm . 127
2. [Order VII. r. 2 {No. 43)] Discovery of partners' names
in actions by firm . . . . . . .128
3. [Order IX. r. 6 {No. 53)] Service of writ in action against
firm 129
4. [Order XII. r. 15 {No. 85)] Appearance of partners . 129
5. [Order XLII. r. 10 {No. 588)] Execution upon judgment
against firm ........ 130
CHAPTEE II.
Peocedtjee ts BANKErPTCT against Paetnees.
1. Consolidation of proceedings under joint and separate
petitions . . . . . . . . .133
2. Creditor of firm may petition against one partner . .133
3. Court may dismiss petition as to some respondents only . 133
4. One trustee for property of partners separately bankrupt . 134
5. Creditor of firm may prove in separate bankruptcy for
purpose of voting . . . . . . . 13t
6. Dividends of joint and separate properties generally de-
clared together . . . . . . . .134
7. Actions in names of trustee and solvent partners . . 135
CHAPTEE ni.
Administeation op Paetneeship Estates.
1. General rule of administration : joint and separate estate . 137
Dicta stating the rule I39
Provisions of Bankruptcy Act, 1883 .... 140
Eule of Indian Contract Act 141
AET.
TABLE OF CONTENTS.
PAOB
Discrepance between the legal and the mercantile system
of administration ^'^■^
Law of Scotland 1^2
Law of France, Switzerland, and Germany . • -143
2. Cases where joint creditors may prove against separate
estate .....■••• ^**
3. Where joint estate may prove against separate estates or
estate of minor firm ..■•■•• '■^^
4. Partners must not compete with creditors {subject to special
exceptions) ....•••■• ■'^*°
Loan to firm by wife of partner 148
The exceptional right of proof in cases of fraudulent con-
version considered : judgment in Lacey v. Hill . • 153
Creditors' right against estate of deceased partner . .157
5. Rights of joint creditors holding separate security, or con-
versely ......-■• 158
6. Double proof allowed on distinct contracts with firm arid
with its members severally . . . ■ ■ .161
7. Effect of separate discharge of partner .... 162
LifDEX 163
REFERENCES, ETC.
Eeferenoes to the Law Journal are now supplied for cases in the
Superior Courts of Comiiion Law down to the commencement of the
Law Eeports. All modem cases decided by Superior Courts are
also dated. The consecutive number of the voliunes of the Law
Journal (N.S., Chancery and Common Law Series) for a given legal
year, i. e. Michaelmas term to Michaelmas term, may be found by
subtracting 30 from the year of the century in which that legal year
begins. To find the corresponding volume of the Weekly Eeporter,
subtract 51.
Lindley on Partnership (5th edition, 1888) is cited by the author's
name alone.
The Indian Contract Act (IX. of 1872) is cited by the abbreviation
L C. A.
I have sonaetimes referred to my own book on " Principles of Contract"
(6th edition, 1889) for the fuller explanation of matters belonging to
that general svibject rather than to the Law of Partnership.
Matters of practice and procedure which occur incidentsJly in the facts
of the cases cited as Illustrations have been tacitly adapted to the
present state of the law.
( XV )
TABLE OF CASES.
A.
PAGE
Adam v. Townend . . 130
Adamson, Ex parte . 144
Agace, Ex parte . . 54
Airey v. Borham . 73, 110
Akhurst v. Jackson . 109
Alder v. Pouracre . . 82
Alderson v. Pope . . 38
Allen?;.!. &S.W. E.Oo. 47
Anonymous(2K.&J.441) 88,90
AiundeU ■;;. Bell
Asliworth V. Munn
V. Outram
Astle V. Wright
Atkins, Ex parte
Att.-Gen. v. Hubbuck
Atwood V. Maude 91,
Austen v. Boys
B.
107
65
86
110
152
65, 66
109, 110,
111
. 107
59
Backliouse v. Hall .
Badeley v. Consolidated
Bank . . .17, 20, 41
Baird's Case ... 26
Bank "of Australasia v.
BreiUat 29, 30, 31, .34, 35
of England Case . 64
Banks v. Gibson . . 107
Barber, Ex parte . . 60
Barfield v. Lougbborough. 96
Baring's Case ... 44
Bate, Ex parte . . 159
Baxter v. West . . 90
Bayley v. Manchester, &o.
EaUway Co. . . 47
Beckett v. Eamsdale 41, 158
PAGE
Bentley v. Craven . , 82
Bignold V. Waterbouse . 37
Bilborougb v. Holmes . 57
Binney v. Mutrie . . 123
Bisbop V. Countess of
Jersey ... 44
Blain, Ex parte . . 131
Blair v. Bromley . ,. 42, 43
Bbsset V. Daniel . . 75, 76
Bluok I). Oapstick . . Ill
Bolingbroke v. Swindon
Local Board . . 47
Bonbonus, Ex parte . 32
Bond V. Gibson . . 32
Brettel I). Williams. . 33
Brice's Case ... 93
Brown v. De Tastet 74, 114, 115,
120
V. Leonard .
Buckley v. Barber .
Bucknall v. Eoiston
Bullen V. Sharp
Bullock V. Crockett
Burdon v. Barkus 62
Burgess v. Burgess .
Burmester v. Norris
Bury V. Allen .
Butchart v. Dresser
Butcher, Ex parte .
C.
Cambefort & Co. v. Chap-
man .
Campbell v. Mullett
Oarrw.L.&N.W.E. Co
Carter v. Whalley .
Castell, Ex parte
39
97
102
12, 13
110
69, 72
22
31
no
95, 97
139
41
65
51
53, 92
146
TABLE OF CASES.
Chandler, Ex parte .
Cheesman v. Price .
Childs, Ee . . .
Chippendale, Ex parte
(German Mining Com-
PAGE
41
90
86
pany's Case)
Churton v. Douglas
Clark V. CuUen
■ V. Leach.
Clayton's Case
Cleather v. Twisden
Clegg V. Edmondson
Clements v. HaU
V. Norris .
CoUinge, Ex parte .
Const V. Harris 69, 60
Cook, Ex parte
V. Collingridge
Cookson V. Cookson
Coomer v. Bromley
Cooper V. Prichard .
Cope V. Evans
Corhett, Ex parte .
Ooiildery v. ]3artrum
Coventry v. Barclay
Cox V. Hickman . 12
V. WUloughby
Craven v. Edmondson
Crawshay v. Collins
V. Maiile 5
Croft V. Pike .
69, 71, 72
103, 104,
105
131
79
56, 93
44, 46
82
82
75
150
61, 75
151
105
79
46
44
24
21
159
60
38, 39
78
96
114
62, 86
99
D.
Darby v. Darby . 65, 100
Darlington, &c. Banking
Go., Ex parte 26,30,34,35
Davison, Re , . . 41
Dawson v. Beeson . . 105
Dean v. MacDowell . 84
Dear, Ex parte . 139, 140
DeTiiSLSBe, Ex parte . . 15
Derry I). Peek . . . 113
Devaynes v. Noble. 43, 44, 56,
93
Didkin, Ex 2^"rte . 135,160
Dickinson v. Valpy . 31
Du Boulay v.Uu Boulay 23
Dundonald (Earl of) v.
Masterman ... 46
Dutton V. Morrison . 141
E.
Ebbs V. Boulnois .
Edmonds, Ex parte
V. Eobinson
England v. Curling
Eno V. Dunn .
Esposito V. Bowden
Essel V. Hayward .
Essex V. Essex
Eyre, E.r parte
PAGE
134
150
111
6, 60
25
87
88
78
45
E.
Farquhar v. Hadden . 67
Fawcett v. Whitehouse . 82
Peatherstonhaugh?;.Een-
-wick . . . . 79, 81
Elockton V. Bunning . 118
Fox V. Clifton . . 40, 51
V. Hanbiiry . . 95, 99
Fraser v. Kershaw . . 95
Freeland v. Stansfeld 109, 110
French v. Styring . . 2
G.
GaUway (Lord) v. Mathew 38
Garland v. Jacomb . . 37
German Mining Com-
pany's Case . 69, 71, 72
GiUett !■. Thornton . . 79
Ginesi < . Cooper & Co. . 103
Glassington v. Thwaites . 83
Gliddon, Ex parte . . 153
Gordon, Ex parte . , 150
Grain's Case ... 58
Gray c. Chiswell . . 141
Grazebrook, Ex parte . 151
Greatrex -v. Greatrex . 70
Green v. Beesley . . 2
Griswold V. Waddington 87
H.
Hall r. Barrows
Hamil v. Stokes
Hammond, Ex parte
Harman v. Johnson
104
109
162
43
TABLE OF GASES.
xvii
PAGE
Haxris, Ex parte 145, 146, 147,
134, 155
33
89
52, 148
. 53, 95
35
Harrison v. Jackson
V. Tennant
Hayman, Ex parte
Heath, v. Sansom
Heilbut V. Nevill
Helmore v. Snuth . . 68
Hendriks v. Montagu . 24
Hendry v. Turner . . 94
Hinds, Ex parte . 62, 147, 156
Hodgson, Re . . 41, 158
Holloway v. Holloway . 22
Hohne v. Hammond . 13, 27
S^onej, Ex parte . 161,162
Sort's Case ... 58
Houlton's Case . . 93
Ide, Ex parte . . 130, 132
Jackson v. Litchfield . 130
Jennings v. Baddeley . 89
V. Hammond . 9
Jones V. FoxaU . 119, 121
V. Lloyd . . .86, 89
i;.Noy ... 88
KeUy V. Hutton . . 74
Kemptner, Ex parte . 66
Kendal v. Wood . . 35, 36
Kendall v. Hamilton . 40, 41
Kewney v. Attrill . . 68
Kilshaw v. Jukes . . 13
King V. Chuck . . 79
Knox v.Qje. . 82, 122
L.
Labouchere^». Dawson 103,104,
105
Lacev v. Hill 54, 145, 148, 151,
153, 154, 156, 157
Lacy V. Woolcott . . 96
P.
PAGE
Langmead's Trusts, Be 100, 101
Lawson v. Bank of London 25
Leaf V. Coles ... 88
Leary v. Shout . . 90
Lee V. Haley ... 24
V. Page . . .111
Leggott V. Barrett . . 103
Levieson v. Lane , . 35
Levy «». Walker 22, 103, 104, 108
Lewis V. Eeilly . 37, 96, 97
Limpus V. Greneral Omni-
bus Co. ... 47
Llewellyn v. Eutherford . 105
Lodge and Eendal, Ex
parte . 147, 153
V. Priohard, 138, 140, 141
London Financial Asso-
ciation V. Kelk . . 3
Lyon V. Haynes . . 94
V. KJQOwles . . 3
V. TweddeU . 91,111
M.
M'Kenna, Exparte (Bank
of England Case) . 64
Mackensde, Exparte . 132
Manchester and County
Bank, Exparte . . 160
Marsh V. Keating . . 45
Martyn v. Gray . . 51, 52
Massam ■w.Thorley'sCattle
Food Co. ... 22
Maud, Exparte . . 152
Maughan v. Sharpe . 22
Mellersh v. Keen . . 86
Menendez v. Holt . . 106
Merchant Banking Co. of
London v. Merchants'
Joiut Stock Bank . 22
Metcalf V. Bruin . . 59
Mills, Ex parte . . 19
Mollwo, March & Co. v.
Court of Wards . 5, 16, 50
Morley, Ex parte . 139, 140
Munster v. Cox . 128, 131
V. EaUton . 128
Mycock V. Beatson . . 112
TABLE OF OASES.
N.
PAGE
Nanson v. Gordon . . 150
Natusch V. Irving . . 75
Neilson v. Mossend Iron
Co. , ... 80
Nerot V. Burnand . . 62
Newbigging i». Adam . 112
Nottingham, Ex parte . 149
NoweU V. NoweU . .122
0.
Oakford v. European and
American Steam Ship-
piag Co. ... 56
Oven, Ex parte . . 97
Padstow Assurance Asso-
ciation ... 9
Page V. Cowasjee Eduljee 100
Parker, Be . . . 158
Parsons v. Hayward . 78, 79
Pawsey v. Armstrong . 6
Payne v. Hornby . . 102
Pearson v. Pearson . 104, 105
Pease v. Hewitt . . 110
Philps, Ex parte . . 134
Pickering v. Stephenson . 76
Plumer v. Gregory . . 42, 44
Plummer, Be . . . 159
Pooley V. Driver . . 15, 18
Potter V. Jackson . . 123
Poiiltont/.L,&S.W.E.Co. 47
Q.
Quarman v. Burnett . 53
E.
Head v. Bailey 145, 147, 148,
153, 154, 156, 1J7
Eoade v. Bentloy . . 14
Eidgway v. Olaro . 138, 141
Eobinson, Ex parte . . 92, 94
V. Ashton . 63
PAGE
EoHe V. Plower . 57, 140, 159
Eoss V. ParkjTis . . 13
Eowe V. Wood . . 72
Eowland & Cranksha-w,
i;e . . . . 52
EufBn, Ex parte . . 66
EusseU V. Cambefort . 129
V. Eussell . . 77
St. Aubyn v. Smart . 42
Salting, Ex parte . . 144
Sargood's Claim . . 69
Scarf V. Jardine . . 67
Scott V. Eayment . . 6
V. Eowlaad . . 108
Seixo V. Provezende . 24
Sbaw V. Benson . . 9
Sbeen, Ex parte . . 148
SbeU, Ex piarte . . 20
Sbeppard, E:c parte . 158
Shirrefi ?;. Wilks . . 36
SiddaU, Be . . . 9
SiUitoe, Ex parte . 149, 152
Simpson, Be . . . 139
v. Chapman 114, 119,
120
44
25
24
99
56,93
9
106
64
95, 96
159
Sims V. Brutton
Singer Manufacturing Co
V, Loog
V. Wilson
Skipp V. Haxwood .
Sleech's Case .
Smith V, Anderson .
V. Everett .
V. Smith
!'. Winter .
Societe Generale de Paris
)'. Geen
South Wales Atlantic
Steamship Co., Be
Stables V. Eley . . 53
Stead V. Salt . . 32, 33, 54
Steel V. Lester . . 2
SteigUtz V. Egginton . 32
Steuart v. Gladstone 76, 107
Steward r. Blakeway . 5, 63
Stocken r. Dawson. 99, 101
Stone, Ex parte . . 162
, Be. . . . 19
Stroud V. Gwyer . . 119
TABLE OF CASES.
XIX
PAGE
Swire v. Redman . . 66
Syers v. Syers . . 14, 18
Taylor, Ex parte . . 19
^ — V. Neate . . 102
Teimant, Ex parte . . 13
Thomason v. Frere . . 96
Topping, Ex parte . . 151
Travis v. Miliie . .120
TroTigliton v. Himter . 93
Tuff, Be . . . .149
Turner v. Major . 108, 115
Tumey, Ex parte . . 160
Turton v. Tuiton . . 22
Tussaudi^. Tussaud. . 22
Variables v. Wood . . 14
Vernon v. HaUam . 104, 105
Vyse V. Foster 113, 117, 119,
120, 121
W.
WaddeU's Contract, Be
Wakeman, Be
Walker v. TTirsch .
V. Mottram .
V. Eooke
134
153
6
104
132
PAGE
Walton V. Butler . . 64
Waterer v. Waterer . 63
Watney v. Wells . . 90
Wedderbum v. Wedder-
burn . . 62, 105, 115
West V. Skip . . 99, 102
Westcott, Ex parte . . 152
Wbetbam v. Davey . 68, 74
Whinoup V. Hughes . . 108
WMtcomb V. Oonyerse . 122
Whitwell V. Arthur
Wiokham v. Wickham
WUlett V. Blandf ord .
Williamson, Ex parte
V. Barbour
WUson V. Johnstone
V. Whiteliead
53
114, 116,
117
72
. 54, 55
110, 111
14
Woodi;. Woad . . 76
Woodbridge v. Swann . 95
Worcester Com Exchange
Co 72
Y.
Tates V. Dalton . . 30
V. Finn. 79, 113, 114, 115
Tonge, Ex parte 145, 152, 155
Yorkshire Banking Co. v.
Beatson ... 28
Young, Ex parte . . 128
A DIGEST
LAW OF PARTNEESHIP.
PART I.
THE PARTNERSHIP ACT, 1890.
(53 & 54 YicT. c. 39.)
[For the Arrangement of Sections, see the general Table of Contents.]
An Act to declare and amend the Law of Partnership.
[14tli August, 1890.]
Be it enacted by the Queen's most Excellent
Majesty, by and with the advice and consent of
the Lords Spiritual and Temporal, and Com-
mons, in this present Parliament assembled, and
by the authority of the same, as follows :
Nature of Partnership.
1. — (1.) Partnership is the relation which sect, i.
subsists between persons carrying on a business Definition of
. » /> partnership.
in common with a view of profit.
(2.) But the relation between members of
any company or association which is —
(a.) Registered as a company under the 25&26Vict.
P. n
^/7
PARTNERSHIP ACT, 1890.
Parti. Companies Act, 1862, or any other Act of
Sect. 1. Parliament for the time being in force and
relating to the registration of joint stock
companies ; Of
{I.) Formed or incorporated by or in pursu-
ance of any other Act of Parliament or
letters patent, or Royal Charter ; or
(c.) A company engaged in working mines
within and subject to the jurisdiction of
the Stannaries :
is not a partnership within the meaning of this
Act.
Illustrations.
1. A. agrees witli B. to carry the mail by horse and cart
from Northampton to BracHey on the following terms : B. is
to pay to A. ^9 per mile per annum, and A. and B. are to
share the expenses of repairing and replacing the carts, and
to divide equally the money received for conveying parcels,
and the loss consequent on any loss or damage thereof. A.
and B. are partners.^
2. A., the owner of a vessel, employs B. for some time as
skipper, and then agrees with B. that B. may take the vessel
where he likes, and engage the crew and take cargoes at his
discretion, paying to A. one-third of the net profits. A. and
B. are probably partners in the adventure.'
3. A. and B. are owners in common of a race-horse, and
agree to share its winnings and the expenses of its keep, A.
having the management of the horse and paying all expenses
in the first instance. A. and B. are not partners as to the horse.
It is doubtful whether they are partners as to the profits that
may be made by its employment.'
1 Green v. Beeslaj (1835), 2 Bing. N. 0. 108.
» Steel v. Letter (IS?*?), 3 0. P. D. 121, see judgment of Lind-
ley, J.
' French v. Styring (1857), 2 C. B. N. S. 357 ; 26 L. J. 0. P.
181.
DEFINITION OF PABTNEBSHIP. g
4. A. and B., tenants in common of a house, and desiring part I.
to let it, agree that A. shall have the general management, ~~
and provide funds for putting the house in tenantable repair, ^^''*' ^'
and that the net rent shall be divided between them equally.
A. and B. are not partners.^
5. A., the proprietor of a theatre, lets the use of it to B.,
who provides the acting company and takes on himself the
whole management, A. paying for the general service and
expenses of the theatre. The gross receipts are divided equally
between A. and B. A. is not a partner with B., and is not
answerable for any infringement of dramatic copyright in the
performances given by B. under this arrangement."
6. A., B., and 0. agree to purchase " on joint account " the
X. estate, " each paying one-third of the cost and each having
one-third interest in it," and to form a new company to deal
with the property. This agreement does not constitute a
partnership between A., B., and C
Nature of Partnership.
The definition now adopted. by the legislature is the Definition of
result of a very large number of attempts made by various ^ ^^^^ '^'
writers in England, America, and elsewhere. A collection
of these may be seen at the beginning of Lord Justice
Lindley's book. Kent's (Comm. iii. 23) was the most
business-like, and I still think it was substantially accurate,
and might well have been accepted with more or less
verbal condensation and amendment.
The definition given by the Indian Contract Act, s. 239,
is Kent's in a more concise form, and runs as follows : —
Partnership is the relation which subsists between per-
1 Per Willes, J., 2 0. B. N. S. at p. 366. But il they furnished
the house at their joint expense, and then let portions of the house
as lodgings, they might well be partners. Letting a house is not a
husiaess, but letting furnished rooms is.
^ Lyon V. KnowUs (1863), 3 B. & S. 556; 32 L. J. Q. B. 71.
^London Financial Association t. Kelk (1884), 26 Ch. D. 107,
143.
b2
PARTNERSHIP ACT, 1890.
Part I. sons who have agreed to combine their property, labour, or
Sect. 1. skill in some business, and to share the profits thereof
between them.
Kent's definition was criticized by Jessel, M.E>., in
Pookyy. Driver (1876), 5 Ch. D. at p. 472, on the ground
that there may be partners who do not contribute any
property, labour, or skill, as where a share is given to the
widow of a former partner. " Whether or not the associa-
tion requires that one or more of the partners shall con-
tribute labour or skill, or what they shall contribute, is a
question which may be considered as subsidiary." At the
same time a partner's share is not the less his property
because it may have been given to him for the purpose
of being used in that way, and even given out of the share
of another partner. On the other hand, division of profits,
as we shall immediately see, is not a sufficient, though it is
a necessary, test of the existence of a partnership. A man
may in sundry ways take a share of the profits of a busiaess
without having such a share in the business as will make
him a partner. He will not be a partner unless he has a
direct and principal interest iu the business, or, as expressed
in Cox V. Hickman (notes on sect. 2, below), unless the
busiaess is conducted on his behalf.
In order to meet this criticism I proposed, in the last
two editions of the present work, the following state-
ment : —
Partnership is the relation which subsists between per-
sons who have agreed to share the profits of a business
carried on by all or any of them on behalf of all of
them.
The nearest approach to a definition which has been
given by judicial authority in England is the statement
that " to constitute a partnership the parties must have
agreed to carry on business and to share the profits in some
DEFINITION OF PARTNERSHIP. 5
way in common ; " ^ where " profits " means the excess of Part I.
returns over outlay. From this the new statutory defini- sect. i.
tion appears to have heen formed. This principle at once
excludes several kinds of transactions which at first sight
have some appearance of partnership.
Among its applications, exemplified iu the cases above Wlat is not
cited as illustrations, are these :— The common ownership common*'^ '
of any property does not of itself create any partnership o"«f"ership.
between the owners ; moreover, there may be an agreement
as to the management and use of the property, and the
application of the produce or gains derived from it, with-
out any partnership arising. ^ On the other hand, there
may be a part ownership without partnership in the pro-
perty itself, together with a real partnership in the business
of managing it for the common benefit.'
The sharing of gross returns, with or without a common Sharing gross
interest in property from which the returns come, does not "™^'
of itself create any partnership.* Even an agreement to Agreement to
bear a definite share of loss as well as take a definite share ^i^iogg°
of profit is not necessarily a partnership, for the purpose of
giving either party the rights of a partner as against the
other, though an xmqualified agreement to share profit and
•loss is very strong evidence of partnership.' The rules
1 Mollwo, March & Co. v. Court of Wards (18'72), L. E. 4 P. 0. at
p. 436.
2 mustrations 2, 3, and 6 : — Lindley, 18, 51 sjj. As to part
o-wTiers of ships (the most common and important case), see Liadley,
60; Maude and Pollock on Merchant Shipping (4th Ed.), 100;
Maclachlan on Merchant Shipping (2nd Ed.), 90, 102; Kent, Com.
ui. 154, 155 ; and Story on Partnership, ch. x-vi. passim.
'Illustration 2:— Cockbum, C.J., 2 C. B. N. S. 363 (1857);
cp. Crawshay v. Maule (1818), 1 Swanst. at p. 523; Steward v.
Blakeway (1869), 4 Oh. 603.
4 lUust. 6.
' Walker v. Eirscli (1884), 27 Cb. Diy. 460. Pawsnj v. Armstrong
PARTNERSHIP ACT, 1890.
Part I.
Sect. 1.
Specific per-
formance of
partnership
contracts.
"Joint ad-
venture."
stated in this and the foregoing paragraph are now
declared by the Act itself in sect. 2, which see. It is prac-
tically more important to exclude from the definition these
relations more or less resembling it at first sight than to
make the definition affirmatively complete.
The remedy of specific performance is generally not
applicable to an agreement to enter into partnership : for
"it is impossible to make persons, who will not concur, carry
on a business jointly for their own common advantage."
But where such an agreement has been acted on, the execu-
tion of a formal deed recording its terms may be ordered
by way of specific performance if necessary to do justice
between the parties.'-
Scottish writers make a difference between partnership
proper and " joint adventure," which is thus defined in
Bell's Principles, art. 392 :—
Joiat adventure or joint trade is a Umited partnership,
confined to a particular adventm'e, speculation, course of
trade, or voyage ; and in which the partners, either latent
or known, use no firm or social name, and incur no respon-
sibility beyond the limits of the adventure.
I do not find that the incidents of a " joint adventure,"
as far as it extends, can be distinguished from those of
partnership ; but, whatever the importance of the distinc-
tion may be, it is not met with in the English authorities.*
We may compare with "joint adventure" the "association
en participation" recognized by French law (Code de
Comm. 47 — 50). But this seems to include transactions
which, according to our rules, are not partnerships at all.
(1881), 18 Oil. D. 698, cannot now be relied on; see the remarks of
tlio Lords Justices on it in Walker v. Ilirsch.
' England v. Ciirh'nt/ (1844), 8 Beav. 129, 137; Scott v. Payment
(18C8), 7 Eq. 112.
2 Lord Eldon seems to have denied it. 3 Dow, at p. 229.
DEFINITION OF PARTNERSEIP. 7
such as the purchase of goods on common account to be Part I.
divided among the associates. See the collection of autho- seot. 1.
rities ia the Codes Annot^s. In the same way sociiti is
a wider term than our "partnership." It covers such
matters as the sharing of benefit derived from the common
use or enjoyment of anything by owners or tenants in
common.
It will be observed that by sect. 45 of the Act, " busiaess " " Business."
includes every trade, occupation, or profession. This, of
course, does not abrogate or vary any rule of law or
judicially recognized usage which forbids any particular
occupation or profession to be exercised in partnership, e. g.,
the profession of a barrister.
The provision of sect. 1, sub-sect. 2, is made necessary Exclusion of
by the fact that there are many joint-stock companies and an^^ssooL-
other associations, established for the purpose of carrying *^°"^ ^°^
on busiaess and with a view to profit, which come within ordinary law
the general conception of partnership, and indeed are ship,
within the terms of almost every definition that has been
attempted, but, for reasons of policy and convenience, or
iu some cases in consequence of their peculiar origin and
history, are governed by special regulations and not by
the law which governs ordinary private partnerships.
These are therefore excluded from the scope of the present
Act. A similar provision, upon which this is modelled, is
in the Indian Contract Act, s. 266. The great substantial
difference between partnerships and companies is that an
ordinary partnership is founded on personal confidence
between the partners, and gives every partner equal rights
in the conduct of the business, as we shall see hereafter,
unless there is an express agreement to the contrary. A
commercial company, on the other hand, is regularly com-
posed of a ininority of active members, designated as
directors or by some other name of office, and of a
PAETNERSHIP ACT, 1890.
Part I.
Sect, 1.
Limits to
nimiber of
partners in
private
partuership.
majority who need not and most commonly do not know
anything of one another, and have no part in the ordinary
conduct of the husiness.^
By the Companies Act, 1862,^ a private partnership
cannot be formed of more than ten persons for banking,
or twenty for any other business.
At common law there was no limit to the number of
persons who might enter into partnership, and it is the
better opinion ^ that there was nothing to prevent them, as
a matter of law, from dividing the capital rato transferable
shares and acting as a joiat-stook company; but there
were always great practical inconveniences about this. A
partnership not complying with the conditions of the
Companies Act is now illegal, and the members of such an
association would be unable to enforce any claim arising
out of the partnership dealings, although they would be
individually liable for the debts of the concern to a
creditor who had dealt with the firm without notice of the
state of things making its business illegal.*
Associations carrying on that which at common law
would be a partnership business, but exceeding the number
of ten in the case of banking, and twenty in the case of
any other business, and complying with the law by coming
within one of the special categories laid down in the
Companies Act (substantially identical with those of the
sub-section now before us), may be called extraordinary
1 See Lindley, 5.
2 25 & 26 Vict. c. 89, s. 4.
' Lindley on Companies, 135, 136.
1 See Lindley, 103. A creditor who has notice, e.g. a solicitor
who has rendered professional services in forming and carrying on
the association, knowing the number of members to exceed twenty,
cannot recover: Re S. Wales Atlantic Steamship Co. (1875-6), 2 Ch.
Div. 763.
DEFINITION OF PARTNERSHIP.
partnerships. They are governed by special rules of law, Part I.
for the most part statutory, which we shaU not here enter seot. 1.
upon. The statutes, however, are to a considerahle extent
founded upon the principles of ordinary partnership law,
so that they cannot he sufficiently understood without a
knowledge of those principles.
Of the kinds of extraordinary partnerships above speci-
fied, the class {a) are necessarily corporations, the associa-
tion beiug made an artificial person with rights and duties
distinct from those of the natural persons who at any given
time are members of it.
The class (6) are generally but not necessarily ^ incorpo-
rated.
The class (c) are in no case incorporated, but are ordinary
partnerships modified by local custom, and since 1869 by
statute also.^
It may be useful to note here that there are associations
which, though not partnerships, yet exist for the acquisi-
tion of gain by their members within the meaning of the
Companies Act, and are therefore unlawful if not regis-
tered: for example, a mutual marine insurance associa-
tion,' or mutual benefit * or loan * society. On the other
hand societies may be formed for such purposes as invest-
ment of money, or buying property and re-selling it to the
individual members, which are neither partnerships nor for
the acquisition of gain on a common account; and such
societies do not need registration even if the number of
members exceed twenty.^
' By 7 Wm. 4 & 1 Vict. c. 73, the Crown may establish, com-
panies by letters patent without incorporation.
' The Stannaries Act, 32 & 33 Vict. c. 19.
= Padstow Assurance Association (1882), 20 Ch. Div. 137.
i Jennings v. Hammond (1882), 9 Q. B. D. 225.
5 Shaw V. Benson (1883), 11 Q. B. Div. 563.
« Re Siddall (1885), 29 Ch. Div. 1 ; cp. Smith v. Anderson (1880),
5 Ch. D. 247.
10 PARTNERSHIP ACT, 1890.
Parti. 2. In determining whether a partnership
Sect. 2. does or does not exist, regard shall be had
determining to the following rules :
existence of / -. \ t • • • • j.
partnership. (l._) Jomt tenancy, tenancy m common, joint
■ property, common property, or part owner-
ship does not of itself create a partnership
as to anything so held or owned, whether
the tenants or owners do or do not share
any profits made by the use thereof.
(2.) The sharing of gross returns does not of
itself create a partnership, whether the
persons sharing such returns have or have
not a joint or common right or interest in
any property from which or from the use
of which the returns are derived.
(3.) The receipt by a person of a share of the
profits of a business is prima facie evidence
that he is a partner in the business, but
the receipt of such a share, or of a payment
contingent on or varying with the profits
of a business, does not of itself make him
a partner in the business ; and in parti-
cular —
(«.) The receipt by a person of a debt or
other liquidated amount by instal-
ments or otherwise out of the accruing
profits of a business does not of itself
make him a partner in the business or
liable as such:
[h.) A contract for the remuneration of a
RULES AS TO PARTNERSHIP. H
servant or agent of a person engaged. Part i.
in a business by a share of the profits sect. 2,
of the business does not of itself make
the servant or agent a partner in the
business or liable as such :
(c.) A person being the widow or child
of a deceased, partner, and receiving
by way of annuity a portion of the
profits made in the business in which
the deceased, person was a partner, is
not by reason only of such receipt a
partner in the business or liable as
such :
[d.) The advance of money by way of
loan to a person engaged or about to
engage in any business on a contract
with that person that the lender shall
receive a rate of interest varying with
the profits, or shall receive a share of
the profits arising from carrying on
the business, does not of itself make
the lender a partner with the person
or persons carrying on the business or
liable as such. Provided that the
contract is in writing, and signed by
or on behalf of all the parties thereto :
{e.) A person receiving byway of annuity
or otherwise a portion of the profits
of a business in consideration of the
sale by him of the goodwill of the
12 PARTNERSHIP ACT, 1890.
Part I. business is not by reason only of such
Sect. 2. receipt a partner in the business or
liable as such.
Illustrations.
A. As to sub-sections 1 and 2. See illustrations and
commentary to sect. 1 above.
B. As to the general enactment of sub-section 3.
Eulein Cox -v. \. A trader is indebted to several creditors, and they enter
later 'awplira- ^'^^^ ^'^ arrangement with him by which the trade is to be
tions. conducted under their superintendence, and they are to be
gradually paid off out of the profits. These creditors do not
thereby become partners of the debtor in his trade, or liable
for the debts of the concern : for " the real ground of the
liability," where such liability exists, " is that the trade has
been carried on by persons acting on his behalf;"^ and in
the case of such an arrangement as this, the trade is not
carried on by or on account of the creditors. The test of
liability is not merely whether there is a participation of
profits, but whether there is such a participation of profits as
to constitute the relation of principal and agent between the
person taking the profits and those actually carrying on the
business.''
2. 0. H. becomes security for £10,000 for his son W. H.,
on W. H. becoming a member of Lloyd's. "W. H. agrees in
writing with C. H. that, among other things, S. and no other
person shall underwrite in the name of W. H. ; that S. shall
be paid £200 a year and one-fiith of the net profits of under-
writing ; that C. H. may withdraw his security on notice, and
S. shaU thereupon cease to underwrite for "W. H. ; and that
> Cox V. Hickman (1860), 8 H. L. C. 268, 306 (the leading case
which put the law on its present footing).
' Lord Wensleydalo in Cox v. Hickman (1860), 8 H. L. C. at pp.
312-3 ; Blackburn, J., in B-ullen v. Sharp (1865) (Ex. Oh.), L. E.
1 0. P. at pp. 111-12; Cleasbj', B., lb. at p. 118; and further on
the effect of Cox v. Hickman, BramweU, B., Ih. at p. 127.
Sect. 2,
RULES AS TO PARTNERSHIP. 13
oae-half of the net profits, after deducting the share of S., Part I.
shall, together with the sum of £25 per annum, be considered
as owing and he paid to C. H. by "W. H. Under this agree-
ment C. H. is not a partner but a creditor of "W. H.'
3. A partnership is entered into for a term certain, and it
is provided by a clause in the articles that if a partner dies
before the end of the term his representatives shall during the
rest of the term receive the share of profits he would have
been entitled to if living : a partner having died, his share
of profits is paid from time to time to his executors under
this agreement ; the executors do not thereby become
partners.*
4. The business of an underwriter is conducted by A. in the
name of B., and A. receives a fixed salary and one-fifth of the
profits, subject as to this one-fifth to be wholly or partially
refunded in the event of unexpected losses becoming known
after the division of profits in any year. The contract be-
tween A. and B. is not one of partnership, but of hiring and
of service.'
5. A creditor, J., makes an agreement with his debtors, T.
and W., by which the sum due to him is to be paid out of the
profits of a building speculation to be executed by T. and W.,
J. furnishing that part of the materials which belongs to his
own trade ; and after payment of the debt, and paying for
these new materials, the surplus is to belong to T. and W.
J. does not become a partner of T. and W., and is not liable
for the price of goods ordered by them for the purpose of
being used in the building.*
6. A., a publisher, agrees to publish at his own expense a
book written by B., and to pay to B. half the net profits, if
any, as ascertained by a certain conventional method of
taking accounts. It is doubtful whether this does or does not
1 Ex parte Tennant (1877), 6 Ch. Div. 303. Compare Bulhn v.
Slmrp (1865) (Ex. Ch), L. E. 1 C. P. 86, a somewhat similar case,
where there was no actual division of profits.
2 Holme V. Hammond (1872), L. E. 7 Ex. 218.
3 Boss V. Parhyna (1875), 20 Eq. 331.
' Kilshaw v. Jukes (1863), 3 B. & S. 847 ; 32 L, J, Q. B. 217.
14 PARTNERSHIP ACT, 1890.
Part I. constitute a partnership between A. and B. ; ' but B. ii
— liable to a paper-maker for paper supplied to A. for
general purposes
. 2
general purposes of A.'s pubUsbing business, and usee
printing B.'s book.^
C. As to the cases provided for under the special claus
sub-sect. 3.
7. A., the proprietor of a music-hall, signs and gives t(
in consideration of an advance of £250, a paper in the fol
ing terms : " In consideration of the sum of £250 this
paid to me, I hereby undertake to execute a deed of
partnership to you for one-eighth share in the profits oi
0. music-hall, to be drawn up under the Limited Partnei
Act of 28 & 29 Vict. c. 86.'" This is not a contract for a s
of profits within the Act, but constitutes a partnership at
in which, as between A. and B., B. is to share profit wit
being liable for loss.*
8. B. & Co. are traders in partnership. A. lends mon(
the firm on a contract in writing, under which B. & Co. aj
among other things, to repay the loan at the end of
partnership, to conform to the partnership deed, which
be open to A.'s inspection, and to pay annually on accou
profits a definite share of net profits during the continu
of the loan. The agreement also contains a provision th
the event of A.'s bankruptcy B. & Co. may pay off the
1 In Reade v. Bentley (1858), 4 E. & J. 656, Lord Hatherley,
V.-C. Wood, sfeems to have thought the "half-profits" coi
did create a partnership. Lord Justice Lindley (On Partnei
14, note (j/)) thinks otherwise. So did the Court in the Scotcl
of VenaUes v. Wood, there cited by him. (see next note) ; but 1
even if there had been a partnership, it was very difficult to
out that the debt sued for was a partnership debt.
- VeiiablesY. Wood (1839), 3 Ross, L. C. on Commercial
520; op. Wilson Y. Whitehead (1842), 10 M. & W. 503; 12
Exoh. 43.
^ The present clause [d) of sub-sect. 3 is equivalent to sect
this Act, which it superseded. The Act of 28 & 29 Vict, is rej
by tho principal Act (s. 48, below).
•' Sijvrs v. /S//tcs (1876), 1 Ap. Ca. 174.
Sect. 2.
RULEU AS TO PARTNERSHIP. 15
and determine the agreement, a provision for settlement of Part I.
accounts at the end of the partnership, and payment of the
loan and stipulated share of profits out of assets, subject to
the refunding by A. of any sum not exceeding the amount of
the original advance which may appear to have been overpaid
on accoiint of profits, and an arbitration clause. The agree-
ment expressly purports to be for an advance by way of loan
under the provisions of 28 & 29 Vict. c. 86.' This transaction
is merely colourable as a loan, and is not within the Act, and
A. is liable as a partner for the debts of B. & Co.'
9. A., B., and C. enter into an agreement in writing,
expressly referring to 28 & 29 Vict. c. 86,' and reciting that A.
and B. have agreed to become partners in a certain business,
and have requested 0. to lend them £10,000 to be invested in
it. The agreement declares that the money is advanced by
C. to A. and B. by way of loan under the 1st section of the
Act, and such advance shall not be considered to make C. a
partner. This sum of £10,000 appears by the agreement to
be, and in fact is, the whole capital of the business.
By other clauses of the agreement 0. is entitled to inspect
the books and receive a copy of the annual account, and to
share profits in a fixed proportion, and has the option of
demanding a dissolution of the partnership and conducting
the liquidation of the business in certain events. O.'s capital
invested in the business is not to be withdrawn till the termi-
nation of the partnership. Under this agreement C. is a
partner with A. and B.^
The first section has laid down in general terms what General
. , . . , limitations of
partnership is. The second section guards the principle the idea of
enunciated in the first. It excludes, in the first and second
sub-seotions, various relations of two or more persons to
property held jointly or in common, and the returns
derived from such property, which at first sight may
appear to resemble partnership, but do not really satisfy
' See note ' on opposite page.
2 Pooley V. Driver (1876),- 5 Ch. D. 458.
' Ex parte Delhasse (1877-8), 7 Ch. Div. 511.
16 PARTNERSHIP ACT, 1890.
Part I. the fundamental condition of " carrying on a business in
Sect, 2. common with a view of profit." As a matter of history,
the conception of partnership has been worked out in our
Courts through the necessity of attending to distinctions
of this kind. It has therefore been thought convenient to
preserve the original arrangement of this work for purposes
of exposition, and give the authorities by which this dis-
tinction is established at the very outset of the subject, in
the commentary on sect. 1, though in the Act their effect
is stated in sect. 2.
Special pro- The third sub-section has a very different history,
sharing ^ Prom the latter part of the eighteenth till past the middle
profits. q£ ^Jjq present century the prevailing doctrine was that
anyone who shared in the profits of a business (at all
events profits in the correct sense, net profits as opposed to
gross returns, or gross profits as they were sometimes
improperly called) must be liable as a partner.^ The
decision of the House of Lords in Cox v. Sickman'^ showed
this doctrine to be erroneous. The true doctrine, as laid
down in recent authorities, and now declared by the Act,
is that sharing profits is evidence of partnership, but is not
conclusive. We have to look not merely at the fact that
profits are shared, but at the real intention and contract of
the parties as shown by the whole facts of the case.^
Where one term of a contract creates a right to share
profits, it is not correct to take that term as if it stood
alone and presume a partnership fi-om it, and then construe
the rest of the agreement under the influence of that pre-
sumption. Sharing profits, i£ unexplained, is evidence of
partnership : but where there is an express agreement the
' See the authorities epitomized, Lindley, 26—30.
2 P. 12, above.
3 Mollwo, March & Co. v. Court of Wards (1872), L. E. 4 P. C.
419, 435.
RULES AS TO PARTNERSHIP. 17
agreement must from the first be looked to as a wKole to Part I.
arrive at the true intention.^ Sect. 2.
It took several years, however, to work out the conse-
quences of Cox V. Hickman} For some time they were
stUl imperfectly understood, even by some of the noble
and learned persons who had taken part in the decision.
Various attempts were made by private persons to procure
Parliament to pass Bills for authorizing limited partner-
ships such as have long been allowed in the United States,
after the pattern of the Contuiental societi en commandite.
These attempts were so far effectual as to lead to the
Ministry of the day framing and passing, in 1865, an Act,
sometimes cited as BovUl's Act,' which was then supposed
by every one concerned to make a material change in the
law, but really added little or nothiag to the effect of Cox
v. Hickman. The provisions of this Act, repealed and
re-enacted by the principal Act, are exhibited in the
sub-section now before us in their proper connexion, as
rules for particular cases under a more general rule, which
are of special practical importance, but which do not
prevent or limit the application of the general rule to
other analogous cases. On the other hand, the Act is not
intended to protect, and wiU not protect, persons who
attempt to combine the powers of a partner with the
immunities of a creditor by means of nominal loans.
There must be not only an advance of money to the
business, but a loan to a real debtor who is personally
Hable.*
' Badehy v. GomoUdaied Bank (1888), 38 Ch. Div. 238.
» P. 12, above.
3 28 & 29 Vict. c. 86.
* See illustrations 7, 8, 9, above.
P.
18
PARTNERSHIP ACT, 1890.
Part I.
Sect. 2.
facie."
The proviso at the end of clause {d) is more explicit
than the corresponding words in Bovill's Act.^
It is to he regretted that the learning and scholarship of
both Houses of Parliament has not heen able to devise a
better English equivalent for the barbarous " prima facie "
which, though common and convenient in everyday profes-
sional usage, is hardly becoming in an Act of Parliament.
Postponement
of rights of
person lend-
ing or selling
in considera-
tion of share
of profits in
case of insol-
vency.
3. In the event of any person to wliom
money has been advanced by way of loan
upon such a contract as is mentioned in the
last foregoing section, or of any buyer of a
goodwill in consideration of a share of the
profits of the business, being adjudged a bank-
rupt, entering into an arrangement to pay his
creditors less than twenty shillings in the
pound, or dying in insolvent circumstances,
the lender of the loan shall not be entitled
to recover anything in respect of his loan, and
the seller of the goodwill shall not be entitled
to recover anything in respect of the share of
profits contracted for, until the claims of the
other creditors of the borrower or buyer for
valuable consideration in money or money's
worth have been satisfied.
This section corresponds to s. 6 of Bovill's Act, and the
decisions on that section will stni be applicable.
Exclusion of The creditor who has lent money in consideration of a
' As to -wliicli see Sy&rs v. Syers (1S76), 1 App. Ca. 174; Pooleyy.
Drii'cr (1876), 5 Oh. D. a.t p. 468.
EIGHTS OF PERSON LENDING, ETC. IN INSOLVENCY. 19
share of profits is excluded absolutely and according to Part I.
the literal terms of the Act from competing with other sect. 3.
creditors. It does not matter whether they were or were preditor shai"-
not creditors during the continuance of the loan, nor from compe-
whether they were creditors in the business or not. Nor ottersTs"''
can such a creditor prove his debt in the bankruptcy until ^■I'solute.
aU the other creditors are paid.^ But if, during the same
time, he has lent other sums at a fixed rate of interest, he
'may recover those sums like any other creditor.^ If it
were sought to evade this prohibition and make the Act
an instrument of fraud, by advancing a small snm in
consideration of a large share of profits, and a large sum
at fixed interest, the lender would probably be treated as
a partner.' The operation of this section is not excluded
by lending money for fixed interest and a sum equal to a
specified share of profits, and calling that additional sum
a salary.*
This express postponement of the creditor receiving a
share of profits has the effect of putting him approximately
in the position of a true limited partner, or commanditaire
in the French terminology. For some reason which I
have never been able to understand, people in this country
seem to find almost invincible difficulty in grasping the
conception of a partner with limited liability who, being a
true partner, is not a creditor of the firm at all, so that
there can be no question of his Competing with creditors
in respect of his capital. Yet the position of a shareholder
in a limited company (which is essentially the same thing)
is now quite familiar.
It is to be observed that this section " does not deprive
1 Ex parte Taylor (1879), 12 Ch. Div. 366, 379.
2 Ex parte Mills (1873), 8 Oh. 569.
' Ex parte Mills (1873), 8 Ch. at pp. 574-6.
* Re Stone (1886), 33 Ch. D. 541.
c2
20
PARTNERSHIP ACT, 1890.
Part I.
Sect. 3,
the lender of any security he may take for his money;" if
he has taken a mortgage, for instance, his rights as mort-
gagee are not affected,^ and he may enforce any such
security by way of foreclosure or sale.^
Meaning of
firm.
Finn not
recognized
as artificial
person in
England.
4. — (1.) Persons who have entered into
partnership with one another are for the
purposes of this Act called collectively a firm,'
and the name under which their business is
carried on is called the firm-name.
(2.) In Scotland a firm is a legal person
distinct from the partners of whom it is
composed, but an individual partner may be
charged on a decree or diligence directed
against the firm, and on payment of the debts
is entitled to relief pro rata from the firm and
its other members.
The law of England knows nothing of the firm as a
body or artificial person distinct from the members com-
posing it, though the firm is so treated by the universal
practice of merchants and by the law of Scotland. In
England the firm-name may be used in legal instruments
both by the partners themselves and by other persons as a
collective description of the persons who are partners in
the firm at the time to which the description refers : * and
under the Rules of the Supreme Court actions may now be
brought by and against partners in the name of their
• Lindley, 37 ; Ex parte Sheil (1877), 4 Ch. Div. 789.
2 Badeky v. Consolidated Bank (1888), 38 Ch. Div. 239 (affirming
on this point the decision below, 34 Oh. D. 536).
» Of. I. 0. A. s. 239.
* Lindloy, 112.
MEANINQ OF FIRM. 21
firm.^ An action between a partner and the firm, or Pan I.
between two firms having a common member, was im- sect. 3.
possible at common law, and it has not yet been decided
that it is possible since the Judicature Acts; but Lord
Justice lindley's opinion is in favour of such actions being
now maintainable, and, in the former case, probably in the
firm-name.2 Nevertheless the general doctrine that " there
is no such thing as a firm known to the law" ^ remains in
force. In Scotland, on the other hand, the firm is a Otherwise in
" separate person " ; not only can it sue and be sued in ''°*^^'^'^'
the " social name," but it may sue and be sued by its own
members, and firms having one or more members in
common may sue each other.*
The rules governing the use of firm or trade names
obviously belong, properly speaking, not to the law of
partnership, but to that sub-division of the general law of
ownership which has to do with copyright and other
analogous rights. Still it is thought that some short
remarks upon them may be useful in this place.
Grenerally speaking, every man is by the law of England What use of
free to call himself by what name he chooses, or by diffe- lawful,
rent names for different purposes,^ so long as he does not
use this liberty as the means of fraud or of interfering with
other substantive rights of his fellow-citizens. And this
[ ' Order ix. r. 6, etc. See Part II. below, p. 129, aqq.
2 Lindley, 265, 267.
' James, L.J., Ex parte Corleit (1880), 14 Cli. Div. at p. 126.
• Bell, Pr. of Lav of Scotland, § 357 ; Second Eeport of the
Mercantile Law Commission, 18, 141. Where the firm-name is
merely descriptive and impersonal, however, as ' ' The Carron Iron
Company," some of the members must be joined by name in the
action.
* See the note in 3 Dav. Conv. pt. i. 357 — 362. Strictly speak-
ing, this does not apply to names of baptism. The same or greater
freedom existed in the Eoman law, which allowed a change of
nomen, prcenomen, or cognomen alike. C. 9, 25, de mutat. noin. 1,
22 PARTNERSHIP ACT, 1890.
Part I. extends to commercial transactions as well as to the other
Sect. 4. affairs of Life : " Individuals may carry on husiness under
any name and style they may choose to adopt." ^ The
style of the firm need not and often does not express the
name of any actual member of it. It may contain, and
often does contain, other names, or no individual names at
aU. On the other hand, although no man is to be pre-
vented from carrying on any lawful business in his own
name by the mere fact of his name and business being
like another's,^ yet the mere fact of the name itself being
his own does not give him any right or licence to do so
with such additions or in such a manner as to deceive the
public, and make them believe they are dealing with some
one else.'
Assumption It is Said to be an offence against the prerogative of
name. the Orown for private persons to " assume to act as a cor-
poration." But it is by no means clear how it can be
punished (though possibly the Queen's Bench Division
may have jurisdiction to punish it by fine).* And at all
events the use of a description such as " Company," which
' Per Erie, C.J., Maughan v. Slmrpe (186-i), 17 C. B. N. S. at
p. 462 ; 34 L. J. 0. P. 19 ; and see remarks of Jessel, M.R., in
Merchant Banking Co. of London v. Merchants' Joint Stock Bank
(1878), 9 Ck D. 560; Levy v. Walker (1879), 10 Ch. Div. 436, 445.
' Burgess Y. Burgess (1853), 3 D. M. G. 896; Turfon v. Turton
(1889), 42 Oh. Div. 128; 58 L. J. Ch. 677.
8 Holloway v. Eolloway (1850), 13 Beav. 209; il/assam v. Thorley's
Cattle Food Co. (1880), 14 Ch.Div. 748; Tiissaudy. Tussaud {IS90),
44 Ok D. 678.
' The attempt to establish n guild or " communa" mthout war-
rant was formerly punisliable by fine. Madox, Hist. Ex. i. 562,
gives several instances from 26 H. 2. Many of these "adulterine
guilds," as they are called, in London and Middlesex; the burgesses
of Totnes and of Bodmin ; and Ailwin the mercer and other towns-
men of G-louoestor, were amerced in considerable sums on this
account. See Stubbs, Const. Hist. i. 418. It can hardly be said,
however, that these bodies " assumed to act as corporations" in the
modern technical sense,
MEANING OF FIRM. 23
by common usage is applicable to incorporated and unin- Part I.
corporated associations alike, does not amount to the offence sect. 4.
in question.^
The laws of Continental states are much more strict and Foreign laws
definite as to the use of trade names. In France the names,
style of a commercial firm {raison sociale) must contain no
other names than those of actual partners.^ In Germany
it must, upon the first constitution of the firm, contain the
name of at least one actual partner, and must not contain
the name of any one who is not a partner ; ' but when the
name of the firm is once established in conformity with
these rules, it may be continued notwithstanding an
assignment of the business, or changes in the persons
who are partners for the time being, subject to certain
consents being given.*
But although "in this country we do not recognize the Exclusive
absolute right of a person to a particular name to the names analo-
extent of entitling him to prevent the assumption of that |°T^ kL^tra'de
name by a stranger," yet " the right to the exclusive use mark,
of a name in connexion with a trade or business is familiar
to our law." ' This right is analogous to, but not identical
with, the right to a trade mark proper. The right of the
possessor of a trade mark in the strict sense (which is now
subject to statutory conditions under the Patents, Designs,
and Trade Marks Act, 1883, 46 & 47 Yict. c. 57), is
to prevent competitors from trading on his reputation, and
passing ofE their wares as his own by means of copies or
colourable imitations of the visible sign or device which he
1 Lindley, 93.
3 Code de Cominerce, 21. For tlie Frenoli law as to the use of
family names generally, see Bu Boulay v. Vu Boulay (1869), L. E.
2 P. 0. 430.
' Handelsgesetzbuch, 17.
* Handelsgesetzbucli, 23, 24.
5 Du, Boulay M. Du Boulay (1869), L. E. 2 P. 0. 430, 441.
24 PARTNERSHIP ACT, 1890.
Part I. has appropriated to his tusiness ; and the right of the
Sect. 4. possessor of a trade name stands on the like footing.
" The principle upon which the cases on this subject pro-
ceed is not that there is property in the word, but that it
is a fraud on a person who has established a trade, and
carries it on under a given name, that some other person
should assume the same name, or the same name with a
slight alteration, iu such a way as to induce persons to
deal with biTn in the belief that they are dealing with the
person who has given a reputation to the name." ^
May be The right to a particular name may likewise be infringed
mea™8^of ^ circuitously by means of a trade mark fitted to bring goods
trade ma^s {nto the market under a deceptive name. In such a case
infringement j^q first appropriator of the name has his remedy no less
as such. than if the name had been directly adopted by his rival,
and it is no answer to his complaint to say that there is no
such physical resemblance between the trade marks as
would deceive a customer of ordinary caution. The trade
mark complained of may be free from offence in its primary
character and ofiBee as a visible symbol ; but that will be
no excuse for a breach of the distinct duty to respect
the trade names as well as the trade marks of other
dealers.^ And it is immaterial whether there be any
fraudulent intention or not.*
> Giflard, L. J., in Lee v. Haley (1869), 5 CIi. atp. 161. The same
principle lias been acted on by the Courts of France : Sirey, Codes
Annotes, on Code de Commerce, IS, 19, no. 46 of note.
2 Seixo v. Provezi'iide (1865), 1 Oh. 192. The leading authorities
on this and the allied subject of trade marks are coUeoted in Cope v,
Evans (1874), 18 Eq. 138; see too the explanations and distinctions
given in Siiu/er Manufacturing Co. v. Wilson (1876), 2 Oh. Div. ai
pp. 441 seq., by Jessel, M.E., and S. C. in C. A. ib. 451 seq. ; and
further, on the subject generally, per Lord Blackburn, Singet
' Hendriks v. Montagu (1881), 17 Ch. Div. 638.
MEANING OF FIRM. 25
Where a name of incorporation is such as to be, if used Part I.
for trading purposes, an infringement of an existing trade sect. 4.
name, it is doubtful -whether an action can be maintained Whether
against the corporation for tradiag in its corporate name, against cor-
or whether the only remedy is not against those persons trT^g^i^Tts
individually who procured that name to be given.' But corporate
° name, where
such an action, it is submitted, may well lie. For though the name
it may be true that the corporation has no power to trade infringement
under any other name than its proper name of incorpora- tradTn^
tion, yet it is in no way bound to trade at all ; and if it
has a name under which it cannot trade without interfering
with other persons' rights, that is its misfortune, but can
surely make no difference to their rights.
There can be no trade name unless in connexion with No trade
an existing business. A man cannot appropriate a name out actual '
for this purpose by the mere announcement of his intention ^^^^^^as.
to trade under it.'
Relations of Partners to Persons dealing with them,
5. Every partner is an agent of the firm Power of
and his other partners for the purpose of the bind the firm.,
business of the partnership; and the acts of
every partner who does any act for carrying
on in the usual way business of the kind
carried on by the firm of which he is a member
bind the firm and his partners, unless the
Manufacturing Co. T. Loog (1882), 8 App. Oa. 29. Our Courts liave
often had great difficulty in drawing the line between legitimate
protection of one's business identity, if one may so speak, and
attempts to monopolize elements of commercial value at the expense
of other traders no less entitled to make use of them. See Eno v.
Dunn (1890), 15 App. Ca. 252.
1 Lawson v. Bank of London (1856), 18 0. B. N. S. 84; 25 L. J.
C. P. 188.
26 PARTNERSHIP ACT, 1890.
Pfti^t !■ partner so acting has in fact no authority to
Sect. 5. act for the firm in the particular matter, and
the person with whom he is dealing either
knows that he has' no authority, or does not
know or believe him to be a partner.
"G-enerally speaking, a partner has full authority to
deal with the partnership property for partnership pur-
poses." ^
" Ordinary partnerships are by the law assumed and
presumed to be based on the mutual trust and confidence
of each partner in the skill, knowledge, and integrity of
every other partner. As between the partners and the
outside world (whatever may be their private arrange-
ments between themselves), each partner is the unlimited
agent of every other in every matter connected with the
partnership business, or which he represents as partnership
business, and not being in its nature beyond the scope of
the partnership."^
Except where The exception in the event of the partner having no
he has neither ,1 •/ j i j. •in ■,
apparent nor autnonty, and also not appearmg to the other party to
realauthority. ^^^^^ jj. ^^^ ^^^^ t^^:^^ known not to have it, in which
case no difficulty can be felt), is not established by any
direct decision. But it was said in a modern case by
Cleasby, B., that partnership does not always, and
especially does not in these circumstances, imply mutual
agency.
" In the common case of a partnership, where by the
terms of the partnership all the capital is supplied by A.,
and the business is to be carried on by B. and C, in their
' Cp. I. 0. A. 251.
= Lord Westbuiy in Exparfe Darlington, &c. Banking Co. (1864),
4 D. J. S. 581, 585.
' James, L.J., in Baird's Case (1870), 5 Ch. at p. 733.
POWER OF PARTNER TO BIND THE FIRM. 27
own names, it being a stipulation in the contract that A. Part I.
shall not appear in the husiaess or interfere in its manage- sect. s.
ment; that he shall neither buy nor sell, nor draw nor
accept bUls ; no one would say that as among themselves
there was any agency of each one for the others. If,
indeed, a mere dormant partner were known to be a
partner, and the limitation of his authority were not
known, he might be able to draw bills and give orders for
goods which would bind his co-partners, but in the ordi-
nary case this would not be so, and he would not in the
slightest degree be in the position of an agent for them."^
The acts of a partner done in the name of a firm wiU. "What kind of
, . , acts in general
not bmd the nrm merely because they are convenient, or bind the firm.
prudent, or even necessary for the particular occasion.
The question is, what is necessary for the usual conduct of
the partnership business ; that is the limit of each partner's
general authority : he is the general agent of the firm, but
he is no more. " A power to do what is usual does not
include a power to do what is unusual, however urgent."^
Whether a particular act is "necessary to the trans-
action of a business in the way in which it is usually
carried on " is a question "to be determined by the nature
of the business, and by the practice of persons engaged in
it."' This must once have been a question of fact in all
cases, as it still would be in a new case. But as to a
certain number of frequent and important transactions,
there are well understood usages extending to all trading
partnerships, and now constantly recognized by the Court ;
these have become in effect rules of law, and it seems best
to give them as such, and this we proceed to do. In other
1 Oleasby, B., in Holme v. Hammond (1872), L. E. 7 Ex. at
p. 233.
^ Lindley, 126.
2 Lindley, 127.
28
PABTNEB8HIP ACT, 1890.
Part I.
Sect. 6.
ImpKed
authority of
partners in
trade as to
certain trans-
actions.
words, there are many kinds of business in -wMch it is so
notoriously needful or useful to issue negotiable instru-
ments, borrow money, and so following, m the ordinary
course of affairs, that the existence or validity of the usage
is no longer a question of fact. But there is no authori-
tative list or definition of the kinds of business which are
" trades " in this sense. Thus it is hardly possible to
frame a statement which shall be quite satisfactory in
form.
It seems however that, subject to the limitations which
will appear, every partner may biad the firm by any of
the following acts :
a. He may sell any goods or personal chattels of the
fii-m.
b. He may purchase on account of the firm any goods
of a kind necessary for or usually employed in the
business carried on by it.
c. He may receive payment of debts due to the firm,
and give receipts or releases for them.
d. He may engage servants for the partnership business.
And it seems that if the partnership is iu trade, every
partner may also bind the firm by any of the following
acts:
e. He may accept, make, and issue bills and other
negotiable iastruments in the name of the firm.^
/. He may borrow money on the credit of the firm.
I Cp. the Bills of Exchange Act, 1882, s. 23, and Chalmers'
Digest of the Law of Bills of Exchange, 3rd ed., p. 59 sqq. Where
the firm-name is also the name of an individual member of the firm
who does not carry on any separate business, a bill of exchange,
drawn, accepted, or indorsed in that name is presumed to be a
partnership bill, and if the other partners are sued on it the burthen
of proof is on them to show that the name was signed as that of the
individual partner and not as that of the firm: Yorkshire Banking
Co. Y. BtaUon (1880), 5 C. P. Div. 109, 121.
POWER OF PARTNER TO BIND THE FIRM. 29
g. He may for that purpose pledge any goods or per- Part I.
sonal chattels belonging to the firm. seot. 6.
h. He may [probably] for the like purpose make an
equitable mortgage by deposit of deeds or other-
wise of real estate or chattels real belonging to the
firm.
The general powers of partners as agents of the firm are
summed up by Story in a passage which has been adopted
by the Judicial Committee of the Privy Council : ^ —
" Every partner is in contemplation of law the general
and accredited agent of the partnership, or as it is some-
times expressed, each partner is prmpodtus negotiis societatis,
and may consequently bind all the other partners by his
acts in all matters which are within the scope and objects
of the partnership. Hence, if the partnership be of a
general commercial nature, he may pledge or sell the
partnership property; he may buy goods on account of the
partnership ; he may borrow money, contract debts, and
pay debts on accoimt of the partnership ; he may draw,
make, sign, indorse, accept, transfer, negotiate, and pro-
cure to be discounted promissory notes, bills of exchange,
cheques and other negotiable paper in the name and on
account of the partnership."
The particular transactions in which the power of a
partner to bind the firm has been called in question, and
either upheld or disallowed, are exhaustively considered by
Lord Justice Lindley (Partnership, 128 — 147). A certain
number of the leading heads may here be selected by way
of illustration. The distinction between the powers of
partners in trading and non-trading firms is perhaps not
quite clear on the authorities ; and Story, as we have just
^ Story on Agency, § 124 ; Bank of Australasia v. Breillat (1847),
6 Moo. P. C. at p. 193.
numeroiis
associations.
30 PARTNERSHIP ACT, 1890.
Part I. seen, did not venture on anything more definite thai
Sect. 6. general commercial nature" to explain what the difEei
hetween a trading and a non-trading business was ; h
is heHeved that the existing practice and understan
are correctly represented by the statement in the text.
Authority to hind the Firm implied.
Negotiable The power of binding the firm by negotiable instruir
instruments. . p., ,/. j.j' _xj-
is one 01 the most Jtrequent and important.
In trading partnerships every partner has this pi
unless specially restrained by agreement.^ In the cas
a non-trading partnership those who seek to hold the
bound must prove that such a course of dealing is neces
Exception as or usual in the particular business. In the case, agaii
an association " too numerous to act in the way thai
ordinary partnership does,"^ whose affairs are under
exclusive management of a small number of its membe
in other words, an unincorporated company — the presi]
tion of authority does not exist either for this purpos
in the other cases where partners have in general
implied authority ; for the ordinary authority of a par
is founded on the mutual confidence involved, in ordi
cases, in the contract of partnership ; and this confid
is excluded when the members of the association
personally unknown to one another.
In such a case those who ai-e mere shareholders hav
power at all to bind the rest, and the directors or ma:
ing members have no more than has been conferre
1 Lindley, 129 ; Banl- of Australasia v. Breillat (1847), 6
P. C. at p. 194 ; Ex parte Darlington, iCr. Banking Company (1
4 D. J. S. at p. 585. Brokers and commission agents are not tr
within tlio moaning of this rule, Yates v. Dalton (1858), 28
Ex. 69.
■- 3 \\ M. G. 477 (1854).
POWER OF PARTNER TO BIND THE FIRM. 31
tliem expressly or by necessary implication in the consti- Part I.
tution of the particular society.^ But since the Com- sect. 6.
panies Acts this rule is not likely to have much practical
application.
It seems indeed a not nntenahle suggestion that the
fixing of the number of twenty by the Companies Act,
1862, as the superior limit of an ordinary partnership
must be taken as a legislative declaration that no smaller
number can be considered "too numerous to act in the
way that an ordinary partnership does." The general
aim and policy of the Act, it might be urged, was to leave
no middle term between an ordinary partnership and a
company regularly formed under the Act. In point of
fact, however, associations of seven or more persons who
do not mean to act as partners in the ordiiiary sense will
almost always seek to be registered as limited companies ;
and the question here suggested is perhaps merely curious.
Every partner in a trading firm has an implied autho- Borrowing:
rity to borrow money for the purposes of the business on
the credit of the firm.^ The directors of a numerous
association, according to the rule above explained, have no
such authority beyond what may have been specially
committed to them.'
Every partner has implied authority to dispose, either by Sale and
way of sale or (where he has power to borrow on the credit partnership
of the firm) by way of pledge, of any part of the goods or Property,
personal property belonging to the partnership,* unless it
is known to the lender or purchaser that it is the intention
of the partner offering to dispose of partnership property
1 BicJcinson v. Valpy (1829), 10 B. & 0. 128, and other authorities
referred to in Lindley, 185 ; Principles of Contract, 128.
2 Banlc of Australasia v. Breillat (184Y), 6 Moo. P. 0. 152, 194.
' Burmeater v. Norris (1851), 6 Ex. 796; 21 L. J. Exch. 43.
* Lindley, 146.
32 PARTNERSHIP ACT, 1%QQ.
Part I. to apply the proceeds to his own use instead of accounting
Sect. 6. for them to the firm.^
A partner having power to borrow on the credit of th«
firm may probahly give a valid equitable security, bj
deposit of deeds or otherwise, over any real estate of the
partnership.^
But a legal conveyance, whether by way of mortgage oi
otherwise, of real estate or chattels real of the firm, cannol
be given except by all the partners, or with their express
authority given by deed.^
Purchase. A partner may buy on the credit of the firm any goods
of a kind used in its business, and the firm will be bound,
notwithstanding any subsequent misapplication of them by
that partner.' This power extends to non-trading partner-
ships.*
Payment to Payment to one partner is a good payment to the firm,'
and release by -n i j_^i_-jj.i_
one partner, and by parity of reason a release by one partner bmds the
firm, " because, as a debtor may lawfully pay his debt to
one of them, he ought also to be able to obtain a discharge
upon payment."^
Servants. " One partner has implied authority to hire servants to
perform the business of the partnership," and probably
also to discharge them if the other partners do not object.'
Authority to hind tlie Firm not implied.
Deeds. One partner cannot biad the others by deed withoul
express authority (which must itself be under seal),^ and
> Ex parte Bonhoniis (1803), 8 Ves. 540.
= Lindley, 136, 139, 140.
» Bond Y. Gihson (1808), 1 Camp. 185.
* Lindley, 144.
' Lindley, 135.
" Best, C.J., in Stead v. Salt (1825), 3 Bing. at p. 103.
' Lindley, 147.
8 Sti'iglilz V. Egginton (1815), Holt, N. P. 141.
POWER OF PARTNER TO BIND THE FIRM. 33
■where the partnership articles are under seal, the fact of Part I.
their being so does not of itself confer any authority for Sect. 6.
this purpose.^
One partner cannot bind the others by giving a guaranty Guaranties.
in the name of the firm, even if the act is in itself a reason-
able and convenient one for effecting the purposes of the
partnership business, unless such is the usage of that
particular firm, or the general usage of other firms en-
gaged in the like business:^ in other words, there is no
general implied authority for one partner to bind the firm
}ij guaranty, but agreement may confer such authority as
to a particular firm, or custom as to all firms engaged in
a particular business. In the latter case, however, the
force of the custom really depends on a presumed agree-
ment among the partners that the business shall be con-
ducted in the usual and customary manner.
It is not competent to one member of a partnership to Submission to
T- J ,i n -i I . . , , ., ,. , arbitration.
bmd the firm by a submission to arbitration.^
6. An act or instrument relating to the busi- Partners
v ,-i n 11 J 1 • 1 1 boxmd by acts
ness 01 the lirm and done or executed m the on behau of
firm-name, or in any other manner showing an
intention to bind the firm, by any person thereto
authorised, whether a partner or not, is binding
on the firm and all the partners.
Provided that this section shall not affect any
general rule of law relating to the execution of
deeds or negotiable instruments.
7. Where one partner pledges the credit of Partner using
1 Harrison v. Jackson (1797), 7 T. E. 207.
2 Brettel r. Williams (1849), 4 Ex. 623 ; 19 L. J. Ex. 121.
' Bfead v. Salt (1825), 3 Bing. 101.
P. D
purposes.
34 PARTNERSHIP ACT, 1890.
Part I. the firm for a purpose apparently not connected
Sect. 7. -^ith the firm's ordinary course of business, thf
for private firm is not bound, unless he is in fact specially
authorised by the other partners ; but this sec-
tion does not afEect any personal liability in-
curred by an individual partner.
Sect. 6 is too plain to need comment. The provisc
shows, perhaps with abundant caution, that the enacting
part does not dispense persons, merely because they happer
to be acting as partners or agents of a firm, from executing
formal iastruments with the forms required by law.
Sect. 7 sums up the effect of long-accepted authorities,
and seems purposely to leave an unsettled point where ii
was.
The passage already partly cited from Story (p. 29,
above) continues as follows :
" The restrictions of this imphed authority of partners
to biud the partnership are apparent from what has beei
aheady stated. Each partner is an agent only in and fo]
the business of the firm; and therefore his acts beyond thai
business will not brad the firm. Neither wiU his acts dont
in violation of his duty to the fitrm bind it when the othei
party to the transaction is cognizant of or co-operates h
such breach of duty." ^
Persons who " have notice or reason to beheve that th(
thing done in the partnership name is done for the privat(
purposes or on the separate accoimt of the partner doinj
it,"^ cannot say that they were misled by his apparen
general authority. For his authority presumably exist
" Story on Agency, § 12o ; Bmh of Australasia v. Breillat (1847]
6 Moo. P. 0. at p. 194.
" Ex parte Darlington, &c, Banking Co. (1864), 4 D. J. S. at j
68o.
USING CREDIT OF FIBM FOE PBTTATE PURPOSES. 35
for the ' IJenefit and for the purposes of the firin, not for Part I.
those of its mdividual members. The commonest case, Sect. 7,
indeed the only case at all common, to which this priaoiple
has to he applied, is that of one partner giving negotiable
instruments or other security in the name of the firm to
raise money (to the knowledge of the person advancing it)
for his private pmrposes or for the satisfaction of his private
debt.i
" 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 under the authority of the rest, or at least that he
himself had reason to believe so."^
"If a person lends money to a partner for purposes for
which he has no authority to borrow it on behalf of the
partnership, the lender having notice of that want of
authority cannot sue the firm." ^
" When a separate creditor of one partner knows he has
received money out of partnership funds, he must know at
the same time that the partner so paying him is exceeding
the authority implied in the partnership — that he is going
beyond the scope of his agency; and express authority
1 See tlie cases refe»red to in the next note, and Heilbut v. Nevill
(1869—70), L. E. 4 0. P. 354, in Ex. Ch. 5 C. P. 478.
- Smitli, Merc. Law, 43 (9tli ed.), adopted by Keating and
Byles, JJ., in Leviesm v. Lane (1862), 13 0. B. N. S. 278 ; 32 L. J.
C. P. 10 ; by Lord Westbury, in Ex parte Darlington, &c. Banking
Co, (1864), 4 D. J. S. at p. 585; and by Oookburn, O.J. (subject to
a doubt as to tbe last -words, see below), in Kendal t. Wood (1871);
(Ex. Oh.) L. E. 6 Ex. at p. 248.
= Bank of Australasia y. Breillat (1847), 6 Moo. P. 0. at p, 196.
d2
36
PARTNERSHIP ACT, 1890.
Part r.
Sect. 7.
Whether the
creditor may
be entitled as
against the
firm hy
reasonable
belief in the
partner's
authority.
Instances of
the general
rule.
therefore is necessary from the other partner to warraE
that payment." ^
It is doubtful whether a separate creditor thus takin
partnership securities or funds from one partner is justifie
even by having reasonable cause to believe in the existenc
of a special authority ; the opinion has been expressed b
Cockburn, C.J., that he deals with him altogether at hi
own peril.^ But it may happen that the other partne
whom the separate creditor seeks to bind has so conducte
himself as to give reasonable ground for supposing ther
is authority ; and where he has done so, he may be pei
sonalLy bound on the general principle of estoppel. Th
rule is stated with this qualification or warning by Blaci
burn, J., and Montague Smith, J.^ And this case appeal
to be contemplated by the final clause of the sectioi
which, however, it will be observed, does not positavel
impose or declare any liability.
Another special application of the rule, declared b;
sect. 7, was made in a case where two out of three pari
ners gave an acceptance in the name of the firm for a del
incurred before the third had entered the partnershij
This was held not to bind the new partner, for it was i
effect the same thing as an attempt by a single partner t
pledge the joint fund for his individual debts.*
Again, if a customer of a trading firm stipulates wit
one of the partners for a special advantage in the conduc
of their business with him, for a consideration which :
good as between himself and that partner, but of no valu
to the firm, the firm is not bound by this agreement, an
» Montague Smith, J., in Eendal v. Wood (1871), L. E. 6 Ex. i
p. 253.
"- L. E. 6 Ex. 248.
» L. E. 6 Ex. at pp. 251, 233.
• Shirreffy. Wilks (1800), 1 East, 48 ; see per Le Blanc, J.
USING CREDIT OF FIRM FOR PRIVATE PURPOSES. 37
incurs no obligation in respect of any business done in Parti,
pursuance of it.^ sect. 7.
The same principle applies to the rights of persons
taldng negotiable instruments indorsed in the name of the
firm. Where a partner authorized to indorse bills ia the
partnership name and for partnership purposes indorses a
bin in the name of the firm for his own private purposes,
a holder who takes the bill, not kaowing the indorsement
to be for a purpose foreign to the partnership, can still
recover against the other partners, notwithstanding the
unauthorized character of the indorsement as between the
partners ; ^ but if he knows that the indorsement is in fact
not for a partnership purpose he cannot recover.'
8. If it has been agreed between the part- Effect of
....-,, , notioethat
ners that any restriction shall be placed on tne firm will not
power of any one or more of them to bind alts X
the firm, no act done in contravention of the ^^^ ^^^'
agreement is binding on the firm with respect
to persons having notice of the agreement.
It is clear law that if partners agree between themselves Eestriotive
that the apparent authority of one or more of them shall ^Jperathre if
be restricted, such an agreement is inoperative against '^°* notified,
persons having no notice of it.
" Where two or more persons are engaged as partners in
an ordinary trade, each of them has an implied authority
from the others to bind all by contracts entered into accord-
ing to the usual course of business in that trade. . . .
T- BJgnold v. Waterh'ouse (1813), 1 M. & S. 255.
= Lewis V. Reilly (1841), 1 Q. B. 349.
3 Garland v. Jacomh (1873), (Ex. Oh.) L. E. 8 Ex. 216.
notice.
38; PARTNERSHIP ACT, 1890.
Part I. Partners may stipulate among themselves that some one
Sect. 8. of them only shall enter into particular contracts, or thai
as to certain of their contracts none shall he liahle excepi
those by whom they are actually made; hut with sue!
private arrangements third persons dealing with the finr
without notice have no concern."^
Effect of Further, there are dicta to the effect that a creditor whc
deals with a partner as agent of the firm, having notice oJ
a restrictive stipulation among the partners themselves
cannot hold the firm bound ; ^ and this view seems to be
implied in the language of the present section, which copies
almost word for word a similar provision of the Indiar
Contract Act (s. 251, Exception), namely : —
" If it has been agreed between the partners that anj
restriction shall be placed" upon the power of any one oJ
them, no act done in contravention of such agreemeni
shall bind the firm with respect to persons having notice
of such agreement."
If such is the effect, it is contrary to the opinion of Lore
Justice Lineiley, who points out that an agreement betweei
the partners that certain things shall not be done is quite
consistent with an intention that if they are done the firn
shall nevertheless be answerable. All that the agreemen
necessarily means is that the transgressing partner shal
indemnify the firm, not that the firm shall not be liable
There should be not merely a restriction of authority a
between the partners, but a distinct warning to third per
sons dealing with the firm that if the forbidden acts an
done the firm will not answer for them. If a partner tell
a third person that he has ceased to be a partner, but hi
1 Lord Cranworth, in Cox v. Hichman (1860), 8 H. L. C. at j
304.
2 Lord Gallway v. Matheiv (1808), 10 East, 264; Alderson v. Popi
1 Camp. 404, n.
LIABILITY OF PABTNER8. 39
B.aJne is to continue in the firm for a certain time, this is Part I.
not a disclaimer of responsibility, but means that he will sect. 8. ^
be responsible for the debts of the firm contracted during
the specified time ; 1 and the cases seem closely parallel.
The undoubted proposition that no agreement among part-
ners, whether known or not to third pei'sons, can avail to
limit the amount of their liability for the debts of the firm,
is also to some extent analogous.^ Perhaps it may be found
possible to construe the Act in a manner consistent with
this.
9. Every partner in a firm is liable jointly Liabmtyof
witli the other partners, and in Scotland seve- ^^^ ^^^'
rally also, for all debts and obligations of the
firm incurred while he is a partner ; and after
his death his estate is also severally liable in a
due course of administration for such debts and
obligations, so far as they remain unsatisfied,
but subject in England or Ireland to the prior
payment of his separate debts.
The individual partner's KabUity for the dealings of the
firm, whether he has himself taken an active part in them
or not, is of the same nature as the liability of a principal
for the acts of his agent, and is often treated as a species
of it.* " Each individual partner constitutes the others
his agents for the purpose of entering into all contracts
for him within the scope of the partnership concern, and
consequently is liable to the performance of all such con-
' Brown v. Leonard (1820), 2 Ohitty, 120.
' Lindley, 1Y4.
3 See Cox v. Hickman (1860), 8 H. L. 0. at pp. 304, 312.
40 PARTNERSHIP ACT, 1890.
Part I. tracts in the same maimer as ii entered into personally b;;
Sect. 9. Hmself." ^
The liability It used to be stated that by the English rule of equit]
several. partnership debts are joint and several ; but it was decidec
by the House of Lords in Kendall t. Hamilton^ that the;;
are joint only, except as to the estate of a deceased partner.
The facts of that ease were in substance these : A
and B., ostensibly trading in partnership, borrowed monej
of 0., for which C. sued them and obtained judgment, bu1
the judgment was not satisfied. Afterwards C. discovered
that D., a solvent person, had been an undisclosed partnei
with A. and B. at the time of the loan as to the adventure
in respect of which it was contracted. The law being
settled that a judgment recovered against some of divers
joint contractors is, even without satisfaction, a bar to an
action against another of them alone, C.'s action was
maintainable against D. only if D.'s liability for the loan
was several as well as joint. It was held that there was
no real authority for the supposed peculiarity of partner-
ship debts as regards living partners ; that the several
liability of a deceased partner's estate was not an effect ol
the supposed rule, but a special and somewhat anomalous
favour to creditors ; and that in this case the debt was nol
joint and several, and C.'s action was barred. Lord Justice
Liadley points out that the action was a pure common law
action, and therefore the point could not have arisen \l
such a case before the Judicature Acts.^
In the case of a deceased partner's estate it does nol
matter in what order the partnership creditor pursues his
concurrent remedies, provided the two following conditions
1 Per Tindal, C.J., in Pox v. Clifion (1830), 6 Bing. at p. 776.
2 4 App. Ca. 504 (1879).
' As to the importance of this exception, cp. Lindley, 194, 195,
* Lindley, 193.
LIABILITY OF PABTNERS. 4l
axe substantially satisfied : first, lie must not compete with Part i.
the deceased partner's separate creditors ; secondly, the sect. 9.
surviving partner must be before the Oourt.^
The rule in Kendall v. Hamilton does not affect the
position of a surety for a partner's debt, for he does not
merely stand in the creditor's place as against the principal
debtor, but has further distinct rights.^
And the rule of course does not affect such liabilities of
partners as are on the special facts both joint and several.
For example, where partners have joined in a breach of
trust there are separate causes of action as well as a joint
one, and a judgment against the partners jointly does not
of itself bar subsequent proceedings against their separate
Where judgment has been recovered against one partner,
sued in the firm-name, on bills given in the firm-name for
the price of goods sold, this judgment, though unsatisfied,
is a bar to a subsequent action against the other partner
for the price of the goods, the cause of action being
substantially the same.* This, however, has been thought
a considerable extension of the rule in Kendall v. Hamilton,^
and it remains to be seen whether it will be finally accepted
as law. The Act does not appear to affect the point.
The law of Scotland appears to be what the rule of
English equity was, before Kendall v. Hamilton, supposed
to be. So far as the result of that case is to establish a
difference between the laws of the two countries, for which
1 Bs Hodgson, Beclcdt v. Eamsdale (1885), 31 Ci. Div. 177.
2 Badeley v. Consolidated Bank (1886), 34 Cli. D. 536, 556. This
point was not dealt witli on appeal (1888), 38 Oh. Div. 238, as the
C. A. held that there was no partnership at all.
3 Be Davison, Ex parte Chandl&r (1884), 13 Q. B. D. 50.
« Camlefort & Co. v. Chapman (1887), 19 Q. B. D. 229.
* Lindley, Add. lix,
42
Part I.
Sect. 9.
Liability of
the firm for
Misapplica-
tion of
money or
property
reoexTed for
or in custody
of the firm.
Liability for
-wrongs joint
and several.
PARTNERSHIP ACT, 1890.
there seems to te no rational ground in any diffierenoe of
mercantile usage, it is perhaps to be regretted.
10. Where, by any wrongful act or omission
of any partner acting in the ordinary course of
the business of the firm, or with the authority
of his co-partners, loss or injury is caused to
any person not being a partner in the firm, or
any penalty is incurred, the firm is liable there-
for to the same extent as the partner so acting
or omitting to act.
11. In the following cases; namely —
(a.) Where one partner acting within the
scope of his apparent authority receives the
money or property of a third person and
misapplies it ; ^ and
(5.) Where a firm in the course of its business
receives money or property of a third
person, and the money or property so
received is misapplied by one or more of
the partners while it is in the custody of
the firm ;^
the firm is liable to make good the loss.
12. Every partner is liable jointly with his
co-partners and also severally " for everything
• Note tho different -wordiag of these clauses. Under clause (a
the receipt and misapplication of tlie money, &c., must be by thi
same partner. Under clause (6), the firm, having once becom(
responsible, is liable for misapplication by any of its members
See Blair v. Bromley (1847), 2 Ph. 354; St. Aulyn v. Smart (1868)
3 Oh. 646 ; and Phnnn t. Gregory (1874), 18 Eq. 621, 627.
" Pliwur V. (hegory, last note.
LIABILITY OF PARTNERS FOR WRONGS. 48
for whicli the firm while he is a partner therein Part i.
becomes liable under either of the two last sect. 12,
preceding sections.
Illustrations.
1. A., B. and C. are partners in a bank, 0. taking no active
part in tlie business. D., a customer of the bank, deposits
securities with, the firm for safe custody, and these securities
are sold by A. and B. without D.'s authority. The value of
the securities is a partnership debt for which the firm is liable
to D. ; and 0. or his estate is liable whether he knew of the
sale or not.^
2. A. and B. are solicitors in partnership. C, a client of
the firm, hands a sum of money to A. to be invested on a
specific security. A. never invests it, but applies it to his own
use. B. receives no part of the money, and knows nothing of
the transaction. B. is liable to make good the loss, since
receiving money to be invested on specified securities is part
of the ordinary business of solicitors.^
3. If, the other facts being as in the last illustration, 0.
had given the money to A. with general directions to invest
it for him, B. would not be liable, since it is no part of the
ordinary business of solicitors to receive money to be invested
at their discretion.'
4. J. and W. are in partnership as solicitors. P. pays
£1,300 to J. and W. to be invested on a mortgage of specified
real estate, and they jointly acknowledge the receipt of it for
that purpose. Afterwards P. hands over £1,700 to "W. on his
representation that it will be invested on a mortgage of some
real estate of P., another client of the firm, such estate not
being specifically described. J. dies, and afterwards both
these sums are fraudulently applied to his own use by W.
W. dies, having paid interest to P. on the two sums till within
a short time before his death, and his estate is insolvent. J.'s
estate is liable to make good to P. the £1,300, with interest
' Devaynes v. Noble, Clayton's Case, (1816), 1 Mer. at pp. 572^ 579,
' Blair v. Bromley (1847), 2 Ph. 354.
' Harman y. Johnson (1853), 2 E. & B. 61 ; 22 L. J. Q, B. 297.
fiect. 13.
44 PARTNERSHIP ACT, 1890.
Part r. from the date when interest was last paid by W., but not th(
• £1,700.'
5. A. and B., solicitors in partnership, have by the directioi
of C, a client, invested money for him on a mortgage, anc
have from time to time received the interest for him. A
receives the principal money without directions from C, and
without the knowledge of B., and misapplies it. B. is no1
liable, as it was no part of the firm's business to receive the
principal money ; but if the money when repaid had been
passed through the account of the firm, B. would probably be
Hable.2
6. A., one of the partners in a banking firm, advises B., a
customer, to seU certain securities of B.'s which are in the
custody of the bank, and to invest the proceeds in another
security to be provided by A. B. sells out by the agency of
the bank in the usual way, and gives A. a cheque for the
money, which he receives and misapplies without the know-
ledge of the other partners. The firm is not liable to make
good the loss to B., as it is not part of the ordinary business
of bankers to receive money generally for investment.'
7. A customer of a banking firm buys stock through the
agency of the firm, which is transferred to A., one of the
partners, in pursuance of an arrangement between the
partners, and with the customer's knowledge and assent, but
not at his request. A. sells out this stock without authority,
and the proceeds are received by the firm. The firm is liable
to make good the loss.*
8. A customer of a banking firm deposits with the firm a
box containing securities. He afterwards authorizes one of
the partners to take out some of these and replace them by
certain others. That partner not only makes the changes he
is authorized to make in the contents of the box, but makes
1 Plumer v. Gregory (1874), 18 Eq. 621.
2 Sims V. BruUon (1850), 5 Ex. 802; 20 L. J. Exch. 41, as cor-
rected by Lord Justice Lindley's criticism, Lindley, 157; cp. Cleather
V. Tivisdcn (]S83), 24 Oh. D. 731; Cooper v. Prichard (1883), 11
Q. B. Div. 351.
3 Hishop Y. Countess of Jersey (1854), 2 Drew. 143.
• Devaynes v. Nohle, Baring's Case (1816), 1 Mer. at pp, 611, 614.
LIABILITY OF PARTNERS FOR WRONGS. 45
other cliaiiges without authority, and converts the customer's Part I.
securities to his own use. The firm is not liable to make good _ . ,„
the loss, as the separate authority given to one partner by the
customer shows that he elected to deal with that partner alone
and not as agent of the firm.'
9. A., one of the partners in a bank under the firm of M.
and Co., forges a power of attorney from B., a customer of
the bank, to himself and the other partners, and thereby
procures a transfer of stock standing in B.'s name at the Bank
of England. The proceeds of the stock are credited to M. and
Co. in their pass-book with another bank, but there is no
entry of the transaction in M. and Co.'s own books. The
other partners in the firm of M. and Co. are liable to B.,
because it is withia the scope of the firm's business to sell
stock for its customers, and to receive the proceeds of the sale,
and the sale took place and the money was received in the
usual way [and because they might by the use of ordinary
diligence have known of the payment and from what source
it came].''
10. W. and J. are solicitors in partnership. A., B. and C,
clients of the firm, have left moneys representing a fund in
which they are interested in the hands of the firm for invest-
ment. After some delay a mortgage made to W. alone is,
with the consent of A., B. and C, appropriated as a security
for this fund. "W. realizes the security, and misapplies the
money without the knowledge of J. The firm is not liable,
as A., B. and C. dealt with "W. not as solicitor but as trustee,
' ExparteEyre{mi),iy'h..221 ; cp. the remark of James, V.-C,
7 Eq. 516 (1869).
2 Marsh v. Keating (1834), 2 CI. & F. 250, 289 ; cp. Lord Justice
Lindley's comments, Lindley, 155, and 160, note (6). If his coin-
ment is right, as it clearly is, one can hardly see what the know-
ledge or means of knowledge of the partners had to do with it ; they
were liable because money representiag their customer's property
had come, in an apparently regular course, though in truth by
wrong, into the custody of the firm; but the point is treated as
material ia the opinion of the judges. The truth is that the rule
as above given, by which the ordinary course of business is the
primary test of the firm's liability, was developed only by later
decisions.
46
PARTNERSHIP ACT, 1890.
Part I.
Sect. 12.
G-round of
KabiHty.
General test
on principle
of agency.
and the breach of duty did not happen while the money waf
in the hands of the firm.' But if there were facts showing
that A., B. and 0. dealt with W. as a member of the firm,
and the matter of the investment was treated as the business
of the firm, the firm would be Uable."
The general principle on which the firm is held to b(
liable in cases of this class may be expressed in more thai
one form. It may be put on the ground " that the firm
has in the ordinary course of its business obtained posses-
sion of the property of other people, and has then parted
with it without their authority ; "' or the analogy to othei
cases where the act of one partner binds the firm may be
brought out by saying that the firm is to make compensa-
tion for the wrong of the defaulting partner, because the
other members " held him out to the world as a person foi
whom they were responsible."*
The rules laid down in sects. 10 and 11 are reallj
derived from the wider rule to the same effect which is
one of the most familiar and important parts of the la-w
of agency. The question is always whether the wrong-
doer was acting as the agent of the fixm and within the
apparent scope of his agency. If the wrong is extraneous
to the course of the partnership busiaess, the other part-
ners are no more liable than any other principal would be
for the unauthorized act of his agent in a like case. Th(
proposition that a principal is not liable for the wilfu
trespass or wrong of his agent is for most purposes suffi
ciently correct; but a more exact statement of the rul(
' Coomer v. Bromhy (1852), 5 De G. & Sm. 532 ; and see a fuUe
aoooTAiit of the onso in Lindley, 159.
2 Chathcr v. Twhden (1883), 24 Oh. D. 731.
3 Lindley, lol.
« Per James, V.-C, in Earl of Bundonald v. Masterman (1869),
Eq. at p. 61".
LIABILITY OF PARTNERS FOR WRONGS. 47
■would he tliat the principal is not liable if the agent goes Part i.
but of his way to commit a wrong, whether with a wrong- sect. 12.
ful intention or not. On the one hand, the principal may
be liable for a manifest and wilful wrong if committed by
the agent in the course of his employment, and for the
purpose of serving the principal's interest in the matter in
hand;^ he is also liable for trespass committed by the
agent under a mistake of fact, such that, if the facts had
been as the agent supposed, the act done would have been
not only lawful in itself, but within the scope of his lawful
authority : ^ on the other hand, he is not Kable for acts
outside the agent's employment, though done in good
faith and with a view to serve the principal's interest.'
It is by no means easy to assign the true ground of an
employer's liability for his servant's unauthorized or even
forbidden acts and defaults. Perhaps the master's duty is
best understood if regarded not as arising from the rela-
tion of principal and agent, but as a general duty to see
that his business is conducted with reasonable care for the
safety of other people, analogous to the duty imposed on
owners of real property to keep it in a safe condition as
regards persons lawfully passing on the highway, or
coming on the property itself by the owner's invitation.
This view,- which I have endeavoured to develop more
fully in my work on the law of Torts, has more distinct
countenance from both English and American authority
than might be expected. But the subject is too large to
dwell upon here.
' Limpus V. General Omnibus Co. (Ex. Ch. 1862), 1 H. & 0. 526.
^ Bayley v. Mancliester, &c. Railway Co. (Ex. Oh. 1873), L, E. 8
C. P. 148.
= PouUonr. L. & 8. W. R. Co. (1867), L. E. 2 Q. B. 534; Allen .
T. L. & 8. W. R. Co. (1870), L. E. 6 Q. B. 65; Bolinglrohe v. Swin-
don Local Board (1874), L. E. 9 C. P. 575.
48
PARTNERSHIP ACT, 1890.
partner.
Part I. Oases to wHch it has been sougM, with or without
Sect. 12. success, to apply the principle stated in sect. 11 have
Special cases generally arisen in the following manner. Some client of
tion of client's a firm of Solicitors or bankers, reposing special confidence
partner.^""* in One member of the firm, has intrusted him with money
for investment : this has sometimes appeared in a regular
course in the accounts of the firm, sometimes not. Then
the money has been misapplied by the particular partner
in question. When it is sought to charge the firm with
making it good; it becomes important to determine whether
the original transaction with the defaulting partner was in
fact a partnership transaction, and if it was so, whether the
duty of the firm was not determined before the default.
The illustrations above given will show better than any
further comments of a general kind how these questions are
dealt with in practice.
Improper
employment
of trust-pro-
perty for
partnership
purposes.
13. If a partner, being a trustee, improperly
employs trust-property in the business or on
the account of the partnership, no other partner
is liable for the trust-property to the persons
beneficially interested therein :
Provided as follows : —
(1.) This section shall not affect any liability
incurred by any partner by reason of his
having notice of a breach of trust ; and
(2.) Nothing in this section shall prevent trust
money from being followed and recovered
from the firm if still in its possession or
under its control.
LiabiUtyof This seotion may be considered as inserted here for
partners for . tj. i , •■ ■, ,
breach of Convenience, it does not properly belong to the law
IMPROPER EMPLOYMENT OF TRUST PROPERTY. 49
of partnership. For only such persons can be liable for Part I. ,
a breach of trust as are personally implicated in it by sect. 13.
their own knowledge or culpable ignorance, besides the trust by one
active defaulter or defaulters. Hence it could never be partnership
correctly supposed that a firm as such is liable merely ^ ^ ^'
because a breach of trust has been committed by one of its
members, or that the individual partners are liable as
partners. They are only joint wrong-doers to whom the
fact of their being in partnership has furnished an occasion
of wrong-doing. The case is not reaUy analogous to that of
money being received in a usual course on the credit of the
partnership and misapplied : as may be seen by putting
the stronger case of all the partners robbing a customer in
the shop, or cheating him in some matter unconnected
with the business, and ereditiug the firm with the money
taken from him. Here it is obvious that the relation of part-
nership is not a material element in the resulting liability.
Something will be said in another place, however, of a
special kiud of claims against partners as trustees or
executors of a deceased partner which have often raised
difficult and complicated questions.
Compare the Indian Trusts Act, 1882, s. 67: "If a part-
ner, being a trustee, wrongfully employs trust-property in
the business or on account of the partnership, no other
partner is liable therefor in his personal capacity to the
beneficiaries, unless he had notice of the breach of trust."
By the interpretation clause, s. 3, " a person is said to have
notice, of a fact either when he actually knows that fact or
when, but for wilful abstention from inquiry or gross negli-
gence, he would have known it, or when information of the
fact is given to or obtained by his agent under the circum-
stances mentioned in the Indian Contract Act, 1872, s. 229"
(*. e., in the course of the business transacted by him for the
principal).
p. B
50
PARTNERSHIP ACT, 1890.
Part I.
Sect. 14,
Persons liable
by ' ' holding
out."
This rule a
branch of
estoppel.
14._(1.) Every one who by words spoken
or written or by conduct represents himself, or
who knowingly suffers himself to be represented,
as a partner in a particular firm, is liable as a
partner to any one who has on the faith of any
such representation given credit to the firm,
whether the representation has or has not been
made or communicated to the person so giving
credit by or with the knowledge of the apparent
partner making the representation or suffering
it to be made.^
(2.) Provided that where after a partner's
death the partnership business is continued in
the old firm-name, the continued use of that
name or of the deceased partner's name as part
thereof shall not of itself make his executors or
administrators estate or effects liable for any
partnership debts contracted after his death.
" Wbere a man holds himself out as a partner, or allows
others to do it, he is then properly estopped from denying
the character he has assumed, and upon the faith of which
creditors may be presumed to have acted. A man so
acting may be rightly held liable as a partner by
estoppel." ^ The rule is, in fact, nothing else than a
special application of the much wider principle of estoppel,
which is that if any man has induced another, whether by
assertion or by conduct, to beheve in and to act upon the
existence of a pajtioulax state of facts, he cannot be heard,
1 Op. I. C. A. 245, 246.
' For Cur., Mollwo, March & Co. v. Court of Wards (1872), L. E,
4 r. 0. at p. 435.
PEBSONS LIABLE BT "HOLDING OUT." Sl
as against that other, to deny the truth of those facts.^ It Part I.
is therefore immaterial whether there is or is not in fact, or Sect. 14.
to the knowledge of the creditor, any sharing of profits.
And it mates no difference even if the creditor knows of
the existence of an agreement between the apparent
partners that the party lending his name to the firm shall
not have the rights or incur the liabilities of a partner.
For his name, if lent upon a private indemnity as between
the lender and borrower, is still lent for the very purpose
of obtaining credit for the firm on the faith of his being
responsible ; and the duty of the other partners to indem-
nify him, so far from being inconsistent with his liability
to third persons, is founded on it and assumes it as un-
qualified.^
To constitute " holding out " there must be a real Wtat
, , amounts to
lending of the party's credit to the partnership. The use " holding
of a man's name without his knowledge cannot make him
a partner by estoppel.^ Also the use of his name must
have been made known to the person who seeks to make
him liable; otherwise there is no duty towards that
person.* There may be a " holding out " without any
direct communication by words or conduct between the
parties. One who makes an assertion intending it to be
repeated and acted upon, or even under such circumstances
that it is likely to be repeated and acted upon by third
persons, wiU be Kable to those who afterwards hear of it
and act upon it. " If the defendant informs A. B. that
' For fuller and more exact statements, see Garr v. London and
North Western Railway Company (ISYS), L. E. 10 0. P. at pp. 316,
317 ; Stephen's Digest of tlie Law of Evidence, Art. 102 ; Bigelow
on th.e Law of Estoppel (Boston, Mass. oti. ed. 1890).
2 Lindley, 40, 41.
3 Ih. 50 ; Fox v. Clifton (1830), 6 Bing. 776, 794.
* II. : Martyn v. Gray (1863), 14 C. B. N. S. 824.
e2
62
PARTNERSHIP ACT, 1890.
Part I.
Sect. 14.
Doctrine of
' ' holding
out" applies
to administra-
tion in bank-
ruptcy.
It does not
apply to bind
a deceased
partner's
estate.
Liability of
retired part-
ners.
he is a partner in a commercial establishment, and A. B.
informs the plaintifE, and the plaintiff believing the
defendant to be a member of the firm supplies goods to
them, the defendant is liable for the price." If the party
is not named, or even if his name is refused, but at the
same time such a description is given as sufficiently
identifies the person, the result is the same as if his name
had been given as a partner.^
The rule as to " holding out " extends to administration
in bankruptcy. If two persons trade as partners, and
buy goods on their credit as partners, and afterwards both
become bankrupt, then, whatever the nature of the real
agreement between themselves, the assets of the business
must be administered as joint estate for the benefit of the
creditors of the supposed firm.^
The doctrine of " holding out " does not extend to bind
the estate of a deceased partner where, after his death, the
business of the firm is continued in the old name ; and
whether creditors of the firm know of his death or not is
immaterial. " The executor of the deceased incurs no lia-
bility by the continued use of the old name." ' Sub-sect. 2
declares the settled law on this point.
A partner who has retired from the firm may be liable
on the principle of " holding out " for debts of the firm
contracted afterwards, if he has omitted to give notice of
his retirement to the creditors. But he cannot be thus
liable to a creditor of the firm who did not know him to
be a member whUe he was such in fact, and therefore
cannot be supposed to have dealt with the firm on the
1 Per Williams, J., ^rartyn v. Oratj (1863), 14 0. B. N. S. at
p. 841.
» Re Roii'laiid and Oninkahaw (1866), 1 Oh. 421 ; Sx parte Hayman
(1878), 8 Oh. Div. 11.
3 Lindley, 46, 605.
PERSONS LIABLE BY '•HOLDING OUT." 53
faith of having his credit to look to.^ This is the meaning Part I.
of the saying that " a dormant partner may retire from a seot. 14.
firm without giving notice to the world." ^
There is one reported case* in which a retired partner Principle of
was held liahle for damage done hy a cart belonging to out "not ap-
the firm, on which his name still remained. But to make uaMUty i^
a man liable in tort as an apparent partner seems to *°''*-
involve confusion of principles. Liability by "holding
out " rests on the presumption that credit was given to the
firm on the strength of the apparent partner's name.
This has no application to causes of action independent of
contract : when, as in the case referred to, a carriage is
run into by a cart, there can be no question of giving
credit to the man whose name is on the cart. The fact
that his name is there is evidence that the driver was in
fact his servant,* until otherwise explained; when ex-
plained, and if the explanation is believed, it is. no longer
even that.
15. An admission or representation made by Admissions
. and repre-
any partner concerning the partnership affairs, sentations of
and in the ordinary course of its business, is
evidence against the firm.®
An admission made by a partner, though relevant
' Carter y. WhalUy (1830), 1 B. & Ad. 11.
^ Heath v. Saiisom (1832), 4 B. & Ad. 172, 177, per Patteson, J.
On tlie subjects of this and of the preceding paragraph, see further
Art. 53 below.
' Stables v. Eley (1825), 1 C. & P. 614. For the true principle, see
Quarman v. Burnett (1840), 6 M. & W. at p. 508, where it is observed
that a representation by holding out " can only conclude the defen-
dants with respect to those who have altered their condition on the
faith of its being true."
« Cp. Lindley, 47.
5 Wickham v. Wichham (1855), 2 K. & J. 478, 491.
partners.
5-1
PARTNERHIIIP ACT, 1890.
Part I.
Sect. 15.
an
against the firm, is of course not conclusive ;i for
admission is not conclusive against the person actually
making it. A definition of the term admission, and refer-
ences to authorities on this subject, will he found in Mr.
Justice Stephen's Digest of the Law of Evidence, Art. 15.
Eepresentations, however, may he conclusive hy way of
estoppel, or under some of the rules of equity which are in
truth akin to the legal doctrine of estoppel, and rest on
the same principle.
The rule does not apply to a representation made by
one, partner as to the extent of his own authority to hind
the firm.^ The necessity of this qualification is ohvious,
for otherwise one partner could hind the firm to anything
whatever hy merely representing himself as authorized to
do so. The Legislature seems to have thought it too
ohvious for express mention.
Notice to
aoting
partners to be
notice to the
firm.
16. Notice to any partner wlio habitually
acts in the partnership business of any matter
relating to partnership afFairs operates as notice
to the firm, except in the case of a fraud on
the firm committed by or with the consent of
that partner.^
There does not seem, hef ore the Act, to have been any
clear authority for confijiing the rule to acting partners.
But it would ohviously be neither just nor convenient to
hold that notice to a dormant partner operated, without
more, as notice to the firm.
1 Stead V. Salt (1825), 3 Bing. at p. 103.
2 Ex parte Agace (17912), 2 Cox. 312.
3 Lindloy, 141, 112; Jessel, M.E., in WiUiamson v. Barhour
(1877), 9 Oh. D. at p. 535 ; cp. Lacexj t. Hill (1876), 4 Cli. Div. at
p. 549.
LIABILITY OF INCOMING AND OUTGOING PARTNERS. 55
It is doubtful whether a firm is to be deemed to have Part I.
notice of facts known to a partner before he became a geet. 16.
member of the firm.^ This doubt is not removed by the
Act.
17. — (1.) A person wto is admitted as a Liatrnties of
partner into an existing firm does not thereby Lnd" o^foin^
become liable to the creditors of the firm for p^'*''^'^-
anything done before he became a partner.^
(2.) A partner who retires from a firm does
not thereby cease to be liable for partnership
debts or obligations incurred before his retire-
ment.
(3.) A retiring partner may be discharged
from any existing liabilities by an agreement
to that efiect between himself and the members
of the firm as newly constituted and the credi-
tors, and this agreement may be either express
or inferred as a fact from the course of deaKng
between the creditors and the firm as newly
constituted.*
Illustrations.
1. A., B. and C. are partners. D. is a creditor of the firm.
A. retires from the firm, and B. and C, either alone or
together with a new partner, E., take upon themselves the
liahihties of the old firm. This alone does not afiect D.'s
right to obtain payment from A., B. and 0., or A.'s Hability
toD.
' Jessel, M.B., in Williamson v. Barhour (last note): — " It has
not, so far as I know, been held that notice to a man who after-
wards becomes a partner is notice to the firm. It might be so held."
' Op. I. 0. A. 249.
^ Lindley, 242, s^j.
56 PARTNERSHIP ACT, 1890.
Part I. 2. A partnersliip firm, consisting of A., B. and C, enters
S^^tTlT ^'^^^ ^ continuing contract witli D., which is to run over a
period of three years. After one year A. retires from the
firm, taking a covenant from B. and 0. to indemnify him
against all liabilities under the contract. D. knows of A.'s
retirement. A. remaias liable to D. under the contract, and
is bound by everything duly done under it by B. and 0. after
his retirement from the firm.'
3. A., B. and 0. are bankers in partnership. A. dies, and
B. and 0. continue the business. D., E. and P., customers of
the bank at the time of A.'s death, continue to deal with the
bank in the usual way after they know of A.'s death. The
firm afterwards becomes insolvent. A.'s estate remains liable
to D., E. and P. for the balances due to them respectively at
the time of A.'s death, less any sums subsequently drawn out.'
In the last case put, one customer, D., discovers that
securities held by the bank for him have been sold without
his authority in A.'s lifetime. Here A.'s estate is not dis-
charged from being liable to make good the loss, for the
additional reason that D. could not elect to discharge it
from this particular liability before he knew of the wrongful
sale.^
4. A. and B. are bankers in partnership. C. and D. are
admitted as new partners, of which notice is given by circular
to all the customers of the bank. A short time afterwards
A. dies. Two years later B. dies, and the business is still
continued under the same firm. The bank gets into difficul-
ties, and at last stops payment. Depositors in the bank
whose deposits were prior to A.'s death, and who knew of his
death, and continued to receive interest on their deposits from
the new partners, and have proved in the bankruptcy of C.
and D. for the amount of their deposits, cannot now claim
1 Oahford v. European and American Steam Shipping Company
(1863), 1 H. & M. 182, 191. See also Swire v. Redman (1876), 1
a B. D. 536.
* Devaynes v. Nolle, Skech's Case (1816), 1 Mer. 539, 569 ; Clay-
to('s Case (1816), ■ih. 572, 604.
' Clayton's Case (1816), 1 Mer. 579.
LIABILITY OF INCOMING AND OUTGOING PARTNERS. 57
against A.'s estate, for their conduct amounts to an acceptance Part I.
of the liability of the new partners alone.' Sect~lY
5. A. and B. are partners. P. is a creditor of the firm.
A. and B. take C. into partnership. 0. brings in no capital.
The assets and liabilities of the old firm are, by the consent
of all the partners — but without any express provision in the
new deed of partnership — transferred to and assumed by the
new firm. The accounts are continued in the old books as if
no change had taken place, and existing liabilities, including
a portion of F.'s debt, are paid indiscriminately out of the
blended assets of the old and the new firm. F. continues his
dealings with the new firm on the same footing as with the
old, knowing of the change and treating the partners in the
new firm as his debtors. The new firm of A., B. and C. is
Uable to P.'
6. A. and B. are partners. A. retires, and B. takes 0. into
partnership, continuing the old firm-name. A customer who
deals with the firm after this change, and without notice
of it, may sue at his election A. and B., or B. and C. ; but he
cannot sue A., B. and C. jointly, nor sue A. after suing B.
and C.^
To determine whether an incoming partner Jbas become Test of lia-
liable to an existing creditor of the firm, two questions gimf ° ^^^
have to be considered : —
1st. Whether the new firm has assumed the liability to
pay the debt.
2nd. Whether the creditor has agreed to accept the new
firm as his debtors, and to discharge the old partnership
from its liability.*
Novation is the technical name for the contract of substi- Novation.
tuted UabiKty, which is, of course, not confined to cases of
partnership. As between the incoming partner and the
1 Bilborough v. Holmes (1876), 5 Ch. D. 255.
* Rolfe V. Flower (1865), L. E. 1 P. C. 27.
3 Scarf Y. Jardine (1882) (H. L.), 7 App. Oa. 345.
Rolfe V. Flower (1865), L. E. 1 P. 0. at p. 38.
58 PARTNERSHIP ACT, 1890.
Parti. creditor, the consideration for the undertaking of the
Sect. 17. liability is the change of the creditor's existing rights.
Mere agree- An agreement between the old partners and the incoming
partne'is'rar partner that he shaU be hable for existing debts will not of
not operate as -^ y ^^^ ^jjg Creditors of the firm any right against him ;
novation. ° ^ ,. , , ,,, , .,
for it is the rule of modem Enghsh law (though it was
formerly otherwise in England, and now is in several
American States) that not even the express intention of
the parties to a contract can enable a third person for
whose benefit it' was made to enforce it. An incoming
partner is liable, however, for new debts arising out of a
continuing contract made by the firm before he joined it ;
as where the old firm had given a continuing order for the
supply of a particular kind of goods.^
There is in law nothing to prevent a firm from stipula-
ting with any creditor from the beginning that he shall
look only to the members of the firm for the time being :
the term nomtion, however, is not properly applicable to
such a case.^
Revocation 18. A contimiing guaranty or cautionary
guarautybj? obligation given either to a firm or to a third
o^Mige in person in respect of the transactions of a firm is,
in the absence of agreement to the contrary, re-
voked as to future transactions by any change
in the constitution of the firm to which, or of
the firm in respect of the transactions of which,
the guaranty or obligation was given.
This section is a substantial re-enactment, much con-
1 Lindley, 207.
^ This is involved in Hort's Case and Grain's Case (1875), 1 Cli.
Div. 307, see per James, L.J., at p. 322, and cp. Lindley, 247,
note {x).
REVOCATION OF GUARANTY BY CHANOE IN FIRM. 59
densed and improved in expression, of provisions of the Part i,
Mercantile Law Amendment Act of 1856 for England seet. 18.
and Scotland respectively (see the repealing enactment,
B. 48 below, and the Schedule). The present form is
almost word for word from I. G. A. 260.
An intention that the promise shall continue to he Evidence of
1 • T i -J,! i_ T 1 • l_^ -L i? j_i intention that
binding, notwithstanding a change m the members oi the guaranty
firm, cannot be inferred from the mere fact that the shall oon-
' tinue.
primary liability is an indefinitely continuing one ; as, for
example, where the guaranty is for the sums to become
due on a current account.' Such intention may appear
" by necessary implication from the nature of the firm "
where the members of the firm are numerous and
frequently changing, and credit is not given to them
individually, as in the case of an unincorporated insurance
society.^
Relations of Partners to one another.
19. The mutual rights and duties of partners, Variation by
. 1.1 consent of
whether ascertained by agreement or denned terms of
by this Act, may be varied by the consent of
all the partners, and such consent may be either
express or inferred from a course of dealing.^
1 Backhouse v. Hall (1865), 6 B. & S. 507, 520; 34 L. J. Q. B.
141.
= See MetealfY. Bruin (1810), 12 Bast, 400.
= Op. I. C. A. 252 ; Const v. Harris (1824), Turn. & E. 496, 517.
" With, respect to apartnersMp agreement, it is to be observed, that,
all parties being competent to act as they please, they may put an
end to or vary it at any moment ; a partnership agreement is there-
fore open to variation from day to day, and the terms of such
variations may not only be evidenced by ■writing, but also by the
conduct of the parties in relation to the agreement and to their
mode of conducting their business: when, therefore, there is a
60 PARTNERSHIP ACT, 1890.
^*'^' I- Illustrations.
Sect. 19. I j^ jg agreed between partners that no one of them shall
draw or accept bills in his own name without the concurrence
of the others. Afterwards they habitually permit one of
them to draw and accept bills in the name of the firm without
such concurrence. This course of dealing shows a common
consent to vary the terms of the original contract in that
respect.'
2. Articles of partnership provide that a valuation of the
partnership property shall be made on the annual account
day for the purpose of settling the partnership accounts. The
valuation is constantly made in a particular way for the space
of many years, and acted upon by all the partners for the
time being. The mode of valuation thus adopted cannot after
this course of dealing be disputed by any partner or his
representatives, though no particular mode of valuation is
prescribed by the partnership articles, or even if the mode
adopted is inconsistent with the terms of the articles.'
3. It is the practice of a firm, when debts are discovered to
be bad, to debit them to the profit and loss account of the
current year, without regard to the year in which they may
have been reckoned as assets. A partner dies, and after the
accounts have been made up for the last year of his interest
in the firm, it is discovered that some of the supposed assets
of that year are bad. His executors are entitled to be paid
the amount appearing to stand to his credit on the last account
day, without any deduction for the subsequently discovered
loss.'
variation and alteration of the terms of a pai-tnersMp, it does not
follow that there was not a binding agreement at first. Partners,
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-
rence of aU the partners" : Lord Langdale, M.E., in England v.
Viirlivg (1844), 8 Beav. 129, 133.
' Lord Eldon in Const v. Harris (1824), Turn. & E. at p. 523.
■' Oovditri/ V. Barclay (1864), 3 D. J. 8. 320.
' Ex parte Barber (1870), 5 Oh. 687.
PARTNERSHIP PROPERTY. 61
It is an obvious corollajy of the rule here set forth that Part I.
persons claiming an interest in partnership property as Sect. 19.
representatives or assignees of any partner who has assented Variations
■^ _ . . . . when assented
expressly or tacitly to a variation of the original terms of to binding on
partnership are bound by his assent, and have no ground representa-
to complain of those terms having been departed from.^ *'^®®"
20. — (1.) AH property and riffhts and inte- Partnership
. :.,,,,. , property.
rests m property originally brought into the
partnership stock or acquired, whether by pur-
chase or otherwise, on account of the firm, or
for the purposes and in the course of the part-
nership business, are called in this Act partner-
ship property, and must be held and applied
by the partners exclusively for the purposes of
the partnership and in accordance with the
partnership agreement.
(2.) Provided that the legal estate or interest
in any land,^ or in Scotland the title to and
interest in any heritable estate, which belongs
to the partnership, shall devolve according to
the nature and tenure thereof, and the general
rules of law thereto applicable, but in trust,
so far as necessary, for the persons beneficially
interested in the land under this section.^
(3.) Where co-owners of an estate or interest
in any land,^ or in Scotland in any heritable
' Const V. Harris (1824), Turn. & E. at p. 524.
'' By the Interpretation Act, 1889, s. 3, " land" includes " mes-
suages, tenements, and hereditaments, houses, and buildings of any
tenure."
3 Op. Lindley, 341.
2 PARTNERSHIP ACT, 1890.
fart I. estate, not being itself partnersHp property,
Sect. 20. are partners as to profits made by the use of
that land or estate, and purchase other land or
estate out of the profits to be used in like
manner, the land or estate so purchased belongs
to them, in the absence of an agreenjent to the
contrary, not as partners, but as co-owners for
the same respective estates and interests as are
held by them in the land or estate first men-
tioned at the date of the pm-chase.^
Illustrations.
1 . Land bougM in the name of one partner, and paid for
by the firm or out of the profits of the partnership business,
is partnership property unless a contrary intention appears.^
2. One partner in a firm buys railway shares in his own
name, and without the authority of the other partners, but
with the money and on account of the firm. These shares
are partnership property.'
3. The goodwill of the business carried on by a firm, so far
as it has a saleable value, is partnership property, unless the
contrary can be shown.*
4. A. and B. take a lease of a coUiery for the purpose of
working it in partnership, and do so work it. The lease is
partnership property.*
5. A. and B., being tenants in common of a colliery, begin
to work it as partners. This does not make the colliery
partnership property.'
6. If, in the case last stated, A. and B. purchase another
' Op. Illustration 6.
= Nerot Y. Burnand (1827), 4 Euss. 247 ; 2 Bli. N. S. 215 ;
Wedilerhurn v. Wedderhimi (1856), 22 Beav. at p. 104.
» Ex parte Hinds (1863), 3 De G. & Sm. 603.
* Ijindley, 327. See more as to goodwill, p. 102, below.
" Lindloy, 333; Crawshay v. Miiide (1818), 1 Swanst. 495, 518,
623. A fortiori', where the colliery belongs to A. alone before the
partnership : Hiinloii v. Barkus (1862), 4 D. F. J. 42.
PARTNERSHIP PROPERTY. 63
colliery, and work it in partnership on the same terms as the Part I.
first, the purchased colliery is not partnership property, but g^^T^o
A. and B. are co-owners of it for the same shares and
interests as they had in the old colliery.'
7. W., a nurseryman, devises the land on which his busi-
ness is carried on and bequeaths the goodwill of the business
to his three sons as tenants in common in equal shares. After
his death the sons continue to carry on the business on the
land in partnership. The land so devised to them is partner-
ship property.^
8. A. is the owner of a cotton-mill. A., B. and 0. enter
into partnership as cotton- spinners, and it is agreed that the
business shall be carried on at this mill. A valuation of the
mill, fixed plant, and machinery is made, and the ascertained
value is entered in the partnership books as A.'s capital, and
he is credited with interest upon it as such in the accounts.
During the partnership the mill is enlarged and improved,
and other lands acquired and buUdings erected for the same
purposes, at the expense of the firm. The mill, plant, and
machinery, as well as the lands afterwards purchased and the
buildings thereon, are partnership property ; and if, on a sale
of the business, the purchase -money of the mUl, plant, and
machinery exceeds the value fixed at the commencement of
the partnership, the excess is divisible as profits of the part-
nership business.'
21. Unless the contrary intention appears, Property
property bought witli money belonging to the partnership
firm is deemed to have been bought on account ™™^^"
of the firm.
Illustrations.
1. L. and M. are partners. M., having contracted for the
purchase of lands called the T. estate, asks L. to share in it,
' Implied ia Sie«;ar(i V. Blaheway (1869), 4 Oh. 603; though in
that case it was treated as doubtful if there was a partnership
at all.
^ Waterer v. Waterer (1873), 15 Eq. 402.
' Rohinson v. AsJiton (1875), 20 Eq. 25.
64 PARTNERSHIP ACT, 1890.
Part I. whicli lie consents to do. The purohase-money and the
ggjj 2j amount of a subsisting mortgage debt on the land are paid
out of the partnership funds, and the land is conveyed to L.
and M. in undivided moieties. An account is opened in the
books of the firm, called " the T. estate account," in which the
estate is debited with all payments made by the firm on
account thereof, and credited with the receipts. The partners
build each a dwelling-house at his own expense on parts of
the land, but no agreement for a partition is entered into.
The whole of the estate is partnership property.'
2. Land is bought with partnership money on the account
of one partner, and for his sole benefit, he becoming a debtor
to the firm for the amount of the purchase-money. This land
is not partnership property.^
3. [One of two partners expends partnership moneys in
buying a ship, which is registered in his name alone. The
ship is not partnership property.^]
Description of It is not quite clear whether the interest of partners in
parTuers in the partnership property is more correctly described as a
partnership tenancy in common or a ioint tenancy without benefit of
property. •' f •>
survivorship, but the difference appears to be merely
verbal.*
It mil be observed that the acquisition of land for
partnership purposes need not be an acquisition by pur-
chase to make the land partnership property. Land
coming to partners by descent or devise v?ill equally be
partnership property, if, in the language of James, L.J.,
it is " substantially involved in the business." *
' Ex parte M'Kama {Baiil; of Engand Case) (1861), 3 D. F. J. 645.
2 3 D. F. J. 659 (1861); Smith y. Smith (1800), 5 Ves. 189.
s Walton V. Butler (1861), :29 Beav. 428. This case as reported
seems to go beyond the other authorities : but the facts are very
briefly given, and there may have been circumstances which do not
appear.
* Lindley, 339. It follows in theory that if one partner's interest
is forfeited to the Crown, the whole property of the firm is forfeited:
/ h. 3'10 ; Blackst. Comm. ii. 409, s. v. ; Lindley, 583, n. (<).
^ 15 Eq. 406; see Illustration 7 to sect, 20, above.
CONVERSION OF LAND. 65
22. Where land or any heritable interest Fart i.
therein has become partnership property, it s^"*- 22-
shall, unless the contrary intention appears, into personal
■i.,i T, ,1 , /'IT estate of laud
be treated as between the partners (including held as
the representatives of a deceased partner), and pTOperty. ^
also as between the heirs of a deceased partner
and his executors or administrators, as personal
or moveable and not real or heritable estate.^
The application of this rule does not afEect the character
of any property for the purposes of the Mortmaia and
Charitable Trusts Act, 1888.^ But a deceased partner's
share in land that has become partnership property is
liable to probate duty, even if that partner's will purports
to deal with it as realty.'
It is to be observed that partners may at any time by ConTersion of
agreement between themselves convert partnership pro- separate
perty.into the several property of any one or more of the verselY°bv°''"
partners, or the several property of any partner into agreement of
partnership property. And such conversion, if made in
good faith, is efFectual not only as between the partners,
but as against the creditors of the firm and of the several
partners.* But if the firm or the partner whose separate
1 Op. Lindley, 343, '346. The conclusion there arrived at on the
balance of authorities is now declared to be law. It is believed that
the rule was well settled, and may safely be accepted in other
common law juriadictions. Eindersley, V.-C, Darby v. Darby
(1856), 3 Drew. 495, 506; and see 4 Ch. 609 (1869).
' Aahworth v. Munn (1878-80), 15 Ch. Div. 363 (on the former
so-called Mortmain Act of Geo. II.).
3 Att.-Gen. v. Eubbuch (1883-4), 10 Q,. B. D. 488; 13 Q. B. Div.
275.
* Lindley, 334, 697; Campbell v. Mullett (1818-9), 2 Swanst. at
P. F
66 PARTNERSHIP ACT, 1890.
Part I. estate is concerned becomes bankrupt or is insolvent after
Sect. 22. any such agreement and before it is completely executed,
the property is not converted.^
Illustration.
A. and B. dissolve a partnership which has subsisted be-
tween them, and A. takes over the property and business of
the late firm. A. afterwards becomes bankrupt. The pro-
perty taken over by A. from the late partnership has become
his separate estate, and the creditors of the firm cannot treat
it as joint estate in the bankruptcy.*
What is a The share of a partner in the partnership property at
share. any given time may be defined as the proportion of the
then existing partnership assets to which he v^ould be
entitled if the whole were realized and converted into
money, and after all the then existing debts and liabilities
of the firm had been discharged.'
Illustration.
P. and L. are partners and joint tenants of offices used by
them for their business. P. dies, having made his wiU, con-
taining the following bequest: "I bequeath all my share of
the leasehold premises .... in which my business is carried
on .... to my partner, L." Here, since the tenancy is
joint at law, " my share " can mean only the interest in the
property which E. had as a partner at the date of his death —
namely, a right to a moiety, subject to the payment of the
pp. 575, 584. As to what will or may amount to conversion, see
the judgments in Att.-Gen. v. RuUuck, supra, especially that of
Bowen, L. J.
' Lindley, 337-8 ; Ex parte Kemptner (1869), 8 Eq. 286.
^ Ex parte Rnffiii (1801), 6 Ves. 119; see also the more complex
cases given at p. 137, below. The question whether partnership
property has been converted into separate property occurs in fact
chiefly, if not exclusively, in the administration of insolvent part-
ners' estates.
' Lindley, 339.
PROCEDURE AS TO SEPARATE JUDGMENT DEBTS. 67
debts of tlie firm ; and if the debts of tbe firm exceed tbe Part I,
assets, L. takes nothing by the bequest.' g^ 22!
23. — (1.) After the commencement of this Procedure
Act a "writ of execution shall not issue against neraWp
, . .J property for
any partnership property except on a judgment a partner's
, ,, ^ separate
agamst the firm. judgment
(2.) The High Court, or a judge thereof, or
the Chancery Court of the county palatine of
Lancaster, or a county court, may, on the
application by summons of any judgment
creditor of a partner, make an order charging
that partner's interest in the partnership pro-
perty and profits with payment of the amount
of the judgment debt and interest thereon, and
may by the same or a subsequent order appoint
a receiver of that partner's share of profits
(whether already declared or accruing), and of
any other money which may be coming to him
in respect of the partnership, and direct all
accounts and inquiries, and give all other
orders and directions which might have been
directed or given if the charge had been made
in favour of the judgment creditor by the part-
ner, or which the circumstances of the case may
require.
(3.) The other partner or partners shall be at
liberty at any time . to redeem the interest
Farquhar v. Hadden (1871), 7 Ch. 1.
f2
debt.
eg PARTNERSHIP ACT, 1890.
Part I. charged, or in case of a sale being directed,
Sect, 28. to purchase the same,
(4.) This section shall apply in the case of
a cost-book company as if the company were
a partnership within the meaning of this Act.
(6.) This section shall not apply to Scotland.
This enactment puts an end to an inconvenience which
had long heen felt hut never hitherto remedied. At com-
mon law partnership property was exposed to be taken in
execution for a separate deht of any partner, and it was
the sheriff's duty to sell the debtor's interest in the goods
seized, although it was generally impossible to ascertain
what that interest was, unless by taking the partnership
accounts. It is no secret that the present amendment of
the law is due to the counsels of Lord Justice Lindley.^
Where judgment has been given in an action in the
Chancery Division for the dissolution of a partnership,
and a receiver appointed, and afterwards a creditor re-
covers judgment against the firm ia an action in the
Queen's Bench Division, the judgment creditor can obtain,
by applying in the Chancery action, a charge for the debt
and costs on the partnership money in the hands of or
coming to the receiver, undertaking to deal with the
charge according to the order of the Court.^
Cost-book companies are not generally within this Act
(sect. 1, sub-sect. 2, cl. (c) ) ; but in the interest of justice
and convenience this section is, by sub-sect. 4, specially
made to include them.
' For tlie old law, see Lindley, 356 — 62 ; Whetham v. Davey
(1885), 30 Oh. D. at p. 579; HelmoreY. Smith (1887), 35 Ch. 436.
Cp. 8. 33, p. 86, below.
' Kewxnj v. Attrill (1886), 34 Ch. D. 345.
RULES AS TO DUTIES OF PARTNERS. 69
24. The interests of partners in the partner- Fart i.
ship property and their rights and duties in seet.24.
relation to the partnership shall be determined, interests and
, . , , , . T , duties of
subject to any agreement express or implied partners sub-
between the partners, by the following rules :^ a^eement'*
(1.) All the partners are entitled to share
equally in the capital and profits of the
business, and must contribute equally to-
wards the losses whether of capital or
otherwise sustained by the firm.
(2.)- The firm must indemnify every partner
in respect of payments made and personal
liabilities incurred by him —
(«.) In the ordinary and proper conduct
of the business of the firm ; or,
[b.) In or about anything necessarily
done for the preservation of the
business or property of the firm.^
(3.) A partner making, for the purpose of
the partnership, any actual payment or
advance beyond the amount of capital
which he' has agreed to subscribe, is en-
titled to interest at the rate of five per
cent, per annum from the date of the
payment or advance.^
(4.) A partner is not entitled, before the
' Cp. I. C. A. 253.
'' Ex parte Chippendale [Oerman Mining Company's Case) (1853),
4 D. M. G. 19 ; Burdon v. Barkus (1862), 4 D. F. J. 42, 51.
3 Ex parte Chippendale, last note; Sargood's Claim (1872), 15 Eq.
43 ; Lindley, 390.
PARTNERSHIP ACT, 1890.
Part I, ascertainment of profits, to interest on the
Sect, 24. capital subscribed by him.
(5.) Every partner may take part in the
management of the partnership business.
(6.) No partner shall be entitled to remunera-
tion for acting in the partnership business.
(7.) No person may be introduced as a part-
ner without the consent of all existing
partners.
(8.) Any difierence arising as to ordinary-
matters connected with the partnership
business may be decided by a majority of
the partners, but no change may be made
in the nature of the partnership business
without the consent of all existing partners.
(9.) The partnership books are to be kept at
the place of business of the partnership
(or the principal place, if there is more
than one), and every partner may, when
he thinks fit, have access to and inspect
and copy any of them.^
This seotion declajes the working rules implied by law
in every partnership, except so far as excluded or varied
\>j the consent of the parties in the particular case. It
"wiU be convenient to comment on the sub-sections sepa-
rately.
' Qreatirr v. Oreatrex (1847), 1 De G. Sm. 692, see the terms of
the order there ; nad op. Lindley, 420. Where a firm has more than
one place of business, it should always be expressly provided by the
partnership articles which shall be considered the principal place of
business and where the books are to bo kept.
RULES AS TO DUTIES OF PARTNERS. 71
Part I.
Seot. 24.
(1.) As to the presumed equality of shares.
Equality in sharing profit and loss, independent of the
shares of original capital contributed by the partners, is
the only rule applicable, in the absence of special agree-
ment. The value of a particular member to the firm,
derived from his skill, experience, or business connexion,
may be wholly out of proportion to the amount of capital
brought in by him. The Court, therefore, cannot under-
take to apportion profits where the partners have not done
so themselves. Equality is equity, not as being absolutely
just, but because it cannot be known that any particular
degree of inequality would be more just.
(2.) As to rights of Partners to indemnity and contribution.
Generally speaking, every partner is the agent of the This right is
firm for the conduct of its business (sect. 5), and as such of agency ?^
is entitled to indemnity on the ordinary priaciples of the
law of agency. But the rights of a partner to contribu-
tion go beyond this : he may charge the firm with moneys
necessarily expended by him for the preservation or con-
tinuance of the partnership concern. This right must be
carefully distinguished from the power of borrowing
money on the credit of the firm, of which it is altogether
independent.^ It arises only where a partner has incurred
expense which under the circumstances, and having regard
to the nature of the business, was absolutely necessary,
and the firm has had the benefit of such expense ; as where
the advances are made to meet immediate debts of the firm
(which is the most frequent case), or to pay the cost of
operations without which the business cannot go on, such
1 4 D. M. G. 35, 40 (1853).
72 PARTNERSHIP ACT, 1890.
Part I. as sinking a new shaft when the original workings of a
Sect. 24. mine are exhausted.'
The total amount recoverable is not necessarily limited
by the nominal capital of the partnership, for the expendi-
ture on existing undertakings cannot be measured by the
Limit of oon- extent of the capital.^ On the other hand, the limit of
tribution may ., . -, n -i ^ p ^ -i ^
be fixed by contribution may be fixed beforehand by express agree-
° ' ment among the members of a firm, and in that ease no
partner can call upon the others to exceed it, however
great may have been the amount of his own outlay on
behalf of the firm.' This has nothing to do with the
obKgations of the partners to third persons, who accord-
ingly remain entitled to hold every partner liable for the
whole amount of the debts of the partnership, imless they
have agreed to look only to some particular fund.
This duty imposed on the firm to indemnify any one of
its members against extraordinary outlays for necessary
purposes is one of a class of duties quasi ex contractu which
are recognized by the law of England only very sparingly
and under special circumstances. It is outside the rules of
agency,* and has still less to do with trust ; real analogies
are to be found in salvage and average.
(5.) As to the Right of Partmrs to takcpart in the Business.
Although it is the rule, in the absence of special agree-
ment, that " one partner caimot exclude another from an
equal management of the concern," ' yet it is "perfectly
1 Burdon v. Barhm (1862), 4 D. F. J. 42 ; Ex parte Williamson
(1869), 5 Ch. 309, 313 ; cp. Lindley, 191, note («/).
" Ex parte Chippetidale (1853), 4 D. M. G. at p. 42.
• it Worceder Corn Exchange Company (1853), 3 D. M. G. 180.
* The Lord Justice Tm-ner, however, seems to assume an implied
authority : 1 D. M. G. 40.
» Rowe V. Wood (1822), 2 Jaoi & W. at p. 558.
BULE8 AS TO DUTIES OF PARTNERS. 73
competent," and in practice very common, " for partners Part I.
to agree ttat the management of the partnership affairs Sect 24.
shall he confided to one or more of their numher exclusively
of the others ; " ^ and in that case the special agreement
must he ohserved.
(6.) Duty of gratuitous diligence in partnership business.
This rule, like the preceding, may he, and often is,
departed from by express agreement. The second branch
of it does not prevent a partner from recovering compensation
for the extra trouble thrown upon him by a co-partner who
has disregarded the first branch by wilful inattention to
business.^
(7.) Consent of all required for admission of new Partner.
This is given by Lord Justice Lindley ^ as " one of the
fundamental piinciples of partnership law." The reason
of it is that the contract of partnership is presumed to be
founded on personal confidence between the partners, and
therefore not to admit of its rights and duties being trans-
ferred as a matter of course to representatives or assignees.
A partner can indeed assign or mortgage to a stranger Assignment
his interest in the profits of the firm ; and the assignee or profits,
mortgagee will thereby acquire " a right to payment of
what, upon taking the accounts of the partnership, may be
due to the assignor or mortgagor."* It is now declared
by the Act (s. 31, below) that he cannot call on the other
partners to account with him (as before the Act he pro-
1 Lindley, 302.
2 Airey v. Borham (1861), 29 Beav. 620.
' Lindley, 363 ; cp. I. 0. A. 253, sub-s. 6.
• Lindley, 363, 364; sect. 31, below.
74
PABTNERBHIP ACT, 1890.
Part I.
Sect. 2i.
Shares trans-
ferable by
agreement.
bably, though not quite certainly, could not), and his
claim is subject to all their existing rights. ^
" If the partnership is at will, the assignment dissolves
it ; and if the partnership is not at will, the other members
are entitled to treat the assignment as a cause of dissolu-
tion. "^
An unauthorized attempt by one partner to admit a new
member into the firm, otherwise than by assignment of his
share, would have at most the effect of creating a suh-
pnrtnership between himself and the new person ; that is,
there would be as between themselves a partnership in his
shares of the profits of the original firm. But as against
the original firm itself the new-comer would have no rights
whatever.^ " Ciui admittitur soeius ei tantum socius est,
qui admisit ; et recte, cum enim societas consensu contra-
hatur, socius mihi esse non potest, quem ego socium esse
nolui. Quid ergo si socius mens eiim admisit ? ei soli
socius est. Nam socii mei socius meus socius non est."'*
On the other hand, the interest of all or any of the
partners may be made assignable or transmissible by
express agreement ; and such agreement may be embodied
once for all in the original constitution of the partnership.^
It is quite common in practice for a senior partner to
reserve the power of introducing one or more new partners
at any time, or after a certain time. The persons so
introduced are generally sons or kinsmen. Often, but
not always, they are named in the original articles.
' Kelly V. Hutton (1868), 3 Ch. 703 ; ep. Whetham v. Davey (1885)
30 Ch. D. 574.
' Lindley, 363, 364 ; sect. 31, below.
» Lindley, 54 ; Broxun v. -De Tastet (1821), Jao. 284.
« Ulpian, D. 12, 7,jpro socio, 19, 20.
s Lindley, 365.
P0WEB8 OF MAJORITY. 75
Part I.
(8.) Power of majority to decide differences.
There is a somewhat strange lack of positive judicial
authority on the power of a majority in matters occurring
in the ordinary conduct of business and not expressly pro-
vided for. Sir Gr. Jessel is believed to have iutimated in
one or more unreported cases an opinion that a majority
of the partners has not any power whatever implied by
law. But the rule that in such matters the mind of the
greater number must prevail is, as Lord Justice Lindley
says,^ "the rule applicable to companies whether incor-
porated or unincorporated ; it is the rule adopted in the
Indian Contract Act ; and it is practically reasonable and
convenient." And this is the view now adopted by the
principal Act. Whether the power of a majority be exer-
cised under this sub- section or under an express agreement
in the partnership articles, the decision must be arrived at
in good faith for the interest of the firm as a whole, and
every partner must have an opportunity of being heard.^
The rule that a change in the nature of the business can
be made only by consent of aU the partners' is one of the
rules of partnership law which applies equally to companies;
and in that application it is of great importance. " The
governing body of a corporation that is in fact a trading
partnership cannot in general use the fimds of the com-
munity for any purpose other than those for which they
1 Lindley, 314.
2 Comt r. Harris (1824), Turn. & E. 496, 518, 625; BUsset v.
Daniel (1853), 10 Ha. 493, 622, 527.
^ Natusch V. Irving, Lindley, 316 ; Const v. Harris (1824), Tuin.
& E. 517 ; I. 0. A. 253, sub-s. 5. As to place, Clements v. Norris
(1878), 8 Oh.. Div. 129, whicli stows that one partner cannot without
tlie ooneent of the others even renew an expired lease of premises
where partnership works have already been carried on,
Sect. 24.
76 PARTNERSHIP ACT, 1890.
Part I. were contributed."' But it would not be relevant here to
Sect. S4. pursue this subject farther.
Power to 25. No maiority of the partners can expel
expel partner. i
any partner unless a power to do so has been
conferred by express agreement between the
partners.
Under this section, which affirms the law as it stood, a
majority not only must not but can not expel any partner
without a power expressly conferred. An attempt to expel
a partner without such power, or without complying with
the conditions of good faith applicable to all powers of
majorities, as mentioned under sub-s. 8 of s. 24,^ is merely
void and of no effect. A partner so dealt with has, there-
fore, no cause of action for damages,' for he is still a partner,
and has suffered no more loss in contemplation of law than
if the majority had purported to pass a criminal sentence
on him, or to deprive him of his rights in any other obvi-
ously unauthorized way. His proper remedy is to claim
reinstatement in his rights as a partner.*
It is difficult to say how the Court would treat a clause
expressly giving power to expel a partner not only without
assigning specific reasons, but without hearing him. There
can be little doubt that at one time it would have been
held void. At the present day it seems more likely that
effect would be given to it, if such appeared to be the real
intention of the parties : but at any rate the clearest and
' Wickens, V.-C, in Pid-cring y. Stephenson (18Y2), 14 Eq. 322,
340.
= See also Steuart v. Gladstone (18Y9), 10 Ch. Div. 626, 650.
3 Wood v. Woad (1874), L. E. 9 Ex. 190. In tiis case the asso-
ciation in question was not really a partnership, though spoken of
as such : but for this purpose the principle is the same.
* Bliasct V. Dankl (1853), 10 Ha. 493.
POWER TO EXPEL PARTNER. 77
most express words would be required to show such an Part I
intention. Sect. 26.
In one recent case^ an attempt was made, but without
success, to extend this rule by analogy to the case of a
clause in partnership articles expressly empowering one of
the partners to ^Jetermine the partnership by notice if he
were dissatisfied with the conduct or results of the business.
It was held that this was not analogous to an expulsion,
and that, the partner in question being the sole judge of
his own dissatisfaction, the power could be exercised at his
absolute will and pleasure.
26. — (1.) Where no fixed term has been Eetirement
agreed upon for the duration of the partner- ship at will.
ship, any partner may determine the partner-
ship at any time on giving notice of his inten-
tion so to do to all the other partners.
(2.) Where the partnership has originally
been constituted by deed, a notice in writing,
signed by the partner giving it, shall be suffi-
cient for this purpose.
There was formerly some doubt whether, iu the case of
a partnership constituted by deed, and being or having
become by expiration of the term provided for (see next
section) a partnership at will, a notice of dissolution ought
not likewise to be under seal. By the present enactment
the better, and certainly more convenient, opinion^ is
established. On principle it would seem that no real
objection arises from the rule that covenants entered iato
by deed can be released only by deed. Por all the agree-
' Russell v. Russell (1880), 14 Oh. D. 471.
■' Lindley, 672.
78
PARTNEBSI-IIP ACT, 1890.
Part I.
Sect. 26.
ments in a partnership contract, whetlier by deed or with-
out deed, are conditional on the continuance of the relation
of partnership, save so far as they expressly or by necessary
implication have regard to things to he done after dissolu-
tion. By a dissolution, therefore, they are not released,
hut determiued. Similarly, a tenant at will might enter
into covenants without prejudice to the lessor's right to
determine the tenancy by parol.
"Where part-
nership for
term is con-
tinued over,
continuance
on old terms
presumed.
27. — (1.) Where a partnership entered into
for a fixed term is continued after the term
has expired, and without any express new
agreement, the rights and duties of the part-
ners remain the same as they were at the
expiration of the term, so far as is consistent
with the incidents of a partnership at will.'
(2.) A continuance of the business by the
partners or such of them as habitually acted
therein during the term, without any settlement
or liquidation of the partnership affairs, is
presumed to be a continuance of the partner-
ship.^
Illustrations.
1. A clause in partnership articles entered into between
A. and B. for a fixed term provides that, " in case either of
the said partners shall depart this life during the said co-
partnership term," the surviving partner shall purchase his
share at a fixed value. A. and B. continue their business in
partnership after the expiration of the term. This clause is
still applicable on the death of either of them.'
Cp. I. 0. A. 256.
Parsons v. Hayward (1862), 4 D. F. J. 474.
Kaaex v. Essex (1805), 20 Beav. 442 ; Co.r v.
Wilhiiglihy (1880),
CONTINUANCE AFTER EXPIRATION OF TERM. 79
2. Articles for a partnersliip for one year contain an arbi- Part I.
tration clause, and tke partnership is continued beyond the sect. 27.
year. The arbitration clause is stiU binding.'
3. A. and B. are partners for seven years, A. taking no
active part in the business. After the end of the seven years
B. continues the business in the name, on the premises, and
■with the property of the firm, and without coming to an
account. The partnership is not dissolved, and A. is entitled
to participate on the terms of the original agreement in the
profits thus made by B.^
4. Partnership articles provide that a partner wishing to
retire shall give notice of his intention a certain time before-
hand. If the partnership is continued beyond the original
term, this provision does not hold good, as not being consistent
with a partnership at will.'
5. A. and B. enter into partnersliip for seven years, under
articles which empower either partner, if the other neglects
the business, to dissolve the partnership by notice, and pur-
chase his share at a valuation. They continue in partnership
after the seven years. This power of dissolution on special
terms can no longer be exercised, as either party may now
dissolve the partnership at wiU.^
The same rule has been substantially acted upon in the Where
„,. ,. .. 11,1 .. , business oon-
case 01 a business being continued by the surviving part- tinued by
ners after the death of a member of the original firm ; ^ parfner^^
the Court inferred as a fact from their conduct that the
13 Oh. D. 863. Cookson v. Goohson (1837), 8 Sim. 529, must be
considered as not being law on this point. In Yates v. Finn (1880),
13 Oh. D. 839, it incidentally appears that HaL., V.-C, took a
different view of some similar clause, but, the case being reported
mainly for other points, the terms of the clause and the judge's
reasons are not given.
1 Oillttt v. Thornton (1875), 19 Eq. 599.
2 Parsons v. Eayward (1,862), 4 D. P. J. 474.
2 Featherstonhaugh v. Fenwick (1810), 17 Ves. at p. 307.
« Clarh V. Leach (1862), 32 Beav. 14; 1 D. J. S. 409; seethe
M. E.'s judgment, 32 Beav. 21.
5 King v. Chuck (1853), 17 Beav. 325.
80 PARTNERSHIP ACT, 1890.
Part I. business was continued on the old terms ; but it is probably
Sect 27. safe to assume that here also, if there were nothing more
than a want of evidence to the contrary, a continuance on
the old terms would be presumed.
In the Scottish appeal of Neihon v. Mossend Iron Co}
the House of Lords held that a clause providing for the
optional retirement of any partner on special terms
"three months before the termination of this contract,"
was not applicable to the partnership as continued after
the expiration of the original term. But this decision was
on the construction of " a strangely and singularly worded
article" (per Lord Selborne, at p. 304). Lord Watson
affirmed the general rule that " when the members of a
mercantile firm continue to trade as partners after the
expiry of their original contract without making any new
agreement, that contract is held in law to be prolonged or
renewed by tacit consent, or, as it is termed in the law of
Scotland, by 'tacit relocation.' The rule obtains in the
case of many contracts besides that of partnership ; and its
legal effect is that all the stipulations and conditions of
the original contract remain in force, in so far as these are
not inconsistent with any implied term of the renewed
contract." In this case, however, time was of the essence
of the condition (pp. 308, 311).
Duty of 28. Partners are bound to render true ac-
render coiints and fuU information of all things affect-
ing the partnership to any partner or his legal
representatives.^
Where written pai'tnership articles are entered into, a
I 11 App.Ca. 298(1886).
= Op. I. 0. A. 257, whicli reads "to carrj- on the 1)08111688 of the
partnership for the greatest common advantage, to be just and
faithful to each other, and to render,'' &c.
BUTY OF PARTNERS TO RENDER ACCOUNTS, ETC. 81
clause to this effect is almost always inserted. There is no Part I.
douht, however, that the obligation of uberrima fides is Sect. 28.
incidental to the nature of the partnership contract, and
the only object of expressing it on these occasions is to
remind the partners of the duties imposed on them by the
general law. The same remark applies to several other
things which are usually expressed in such instruments.
The practice is not altogether consistent with the general
principles of conveyanciug, but appears in this ease to be
reasonable and useful.
29. — (1.) Every partner must account to the Aooount-
^ ' , . . ability of
firm for any benefit derived by Hm without the partners
for private
consent of the other partners from any trans- profits.
action concerning the partnership, or from any
use by him of the partnership property name or
business connexion.^
(2.) This section appKes also to transactions
undertaken after a partnership has been dis-
solved by the death of a partner, and before the
affairs thereof have been completely wound up,
either by any surviving partner or by the re-
presentatives of the deceased partner.
Illustrations.
1. A., B. and C. are partners in trade. 0., without the
knowledge of A. and B., obtains for his sole benefit a renewal
of the lease of the house iu which the partnership business is
carried on. A. and B. may at their own option treat the
renewed lease as partnership property.^
* Op. I. 0. A. 258.
' Featherstmhaugh v. Fenwick (1810), 17 Ves. 298 ; I. 0. A. 258,
niust. a.
r. Q
82 PARTNERSHIP ACT, 1890.
Part I, It would [probably] make no difference if C. had given
■ Sect. 89. notice to A. and B. ttat lie intended to apply for a renewal
of the lease for his own exclusive benefit.^
2. A., B., 0. and D. are partners in the business of sugar
refiners. 0. is the managing partner, and also does business
separately, with the consent of the others, as a sugar-dealer.
He buys sugar in his separate business, and sells it to the
firm at a profit at the fair market price of the day, but
without letting the other partners know that the sugar is
his. The firm is entitled to the profit made on every such
sale.'
3. A., B. and 0. acquire the lease of certain works for the
purposes of a business carried on by them iu partnership, A.
conducting the transaction with the former lessees on behalf
of the firm. The former lessees, beiug anxious to find a
responsible assignee and get the works off their hands, pay a
premium to A. A. must account to his partners for the money
thus received.^
4. One of two partners in a firm which held leaseholds for
the purposes of the business dies. The lease expires before the
affairs of the firm are completely wound up, and the surviving
partner renews it. The renewed lease is partnership pro-
perty.''
5. A member of a firm agrees to take a lease in his own
name, but in fact for partnership purposes, and dies before
the lease is executed. His representatives cannot deal with
the lease without the consent of the surviving partners.'
Parallel rule The general principle is one of those which the law of
in agency. partnership takes from agency, consideriag each partner as
' aUgg V. Edmondson (1857), 8 D. M. G. 787, 807.
2 Bentley v. Craven (1853), 18 Beav. 75.
3 Fawcett v. Whitehoim (1829), 1 Euss. & M. 132.
* Clements v. Hall (1857), 2 De G. & J. 173, 186. The surviving
partner is sometimes called a trustee or quasi trustee of the part-
nership property. But this use of the term is at least doubtful ;
see Lord Westbury's remarks in Knox v. Oye (1871-2), L. E. 5 H.
L. 675.
» A Ider v. Fouracre (1818), 3 Swanst. 489.
BUTT OF PARTNERS TO RENDER ACCOUNTS, ETC. 83
agent for the firm ; or it is perhaps better to say that it is Part I.
established in both these branches of the law on similar Sect. 29.
grounds. The rule that an agent must not deal on his
own account or make any undisclosed profit for himself in
the business of his agency is a stringent and universal
one.'
30. If a partner, without the consent of the Duty of
. parimer not
other partners, carries on any business of the to compete
• 11 PI ^th firm.
same nature as and competing with that oi the
firm, he must account for and pay over to the
firm all profits made by him in that business.^
This is an elementary rule analogous to the last. It
follows that no partner can, without the consent of the
rest, be a member of another firm carrying on the like
busiaess in the same field of competition; and if that
consent is given, he is limited by its terms. And if special
knowledge is acquired by him as a member of the one
firm, he must not use it for the benefit of the other and to
the prejudice of the first. And this equally holds if
several members, or even all the members but one, are
common to both firms.
If A., B., C and D. are the proprietors of a morning
newspaper, and A., B. and C. the proprietors of an
evening newspaper for which the types and plant of the
morning paper are used by agreement, D. may restrain
A., B. and C. from first publishing in A., B. and C.'s
evening paper intelligence obtained by the agency of the
morning paper, and at the expense of the firm of A., B.,
C. and D.3
' Story on Agency, §§ 210, 211.
' Cp. I. C. A. 259.
' Qlaasington v. Thwaites (1822-3), 1 Sim. & St. 124.
g2
g4 PARTNERSHIP ACT, 1890.
Parti. An express covenant 'in partnership articles not to
geot, 30. " engage in any trade or business except upon the account
and for the benefit of the partnership," has been held to
add nothing to the duty abeady imposed by law. It does
not entitle the firm to an account of profits against a
partner who has engaged in an independent trade not
within the scope of the partnership business, and who
derives no advantage in it from his position as a partner
or by the use of any property of the firm.^
Eights of 31— (1.) An assignment by any partner of
rS °* his share in the partnership, either absolute or
partnership. ^^ ^^^ ^^ mortgage or redeemable charge,
does not, as against the other partners, entitle
the assignee, during the continuance of the
partnership, to interfere in the management or
administration of the partnership business or
afiairs, or to require any accounts of the
partnership transactions, or to inspect the
partnership books, but entitles the assignee
only to receive the share of profits to "which
the assigning partner would otherwise be en-
titled, and the assignee must accept the account
of profits agreed to by the partners.
(2.) In case of a dissolution of the partner-
ship, whether as respects all the partners or as
respects the assigning partner, the assignee is
entitled to receive the share of the partnership
assets to which the assigning partner is entitled
' Bean v. MacDowell (1877-8), 8 Ch. D. 345.
DISSOLUTION OF PABTNEBSEIP. 85
as between himself and the other partners, and, fa^t i.
for the purpose of ascertaining that share, to ^*''*' ^^■
an account as from the date of the dissolution.
This section may be said to declare existing law, though
one or two details were perhaps not covered by authority.
See the commentary on s. 24, sub-s. 7, above.
Dissolution of Partnership audits Consequences.
32. Subject to any agreement between the Dissolution
, i_ !_• • J- 1 J by expiration
partners, a partnership is dissolved — or notice.
{a.) If entered into for a fixed term, by the
expiration of that term :
(5.) If entered into for a single adventure or
undertaking, by the termination of that
adventure or undertaking :
(c.) If entered into for an undefined time,
by any partner giving notice to the other
or others of his intention to dissolve the
partnership.
In the last-mentioned case the partnership is
dissolved as from the date mentioned in the
notice as the date of dissolution, or, if no date
is so mentioned, as from the date of the com-
munication of the notice.
" Where no term is expressly limited for its duration,
and there is nothing in the contract to fix it, the partner-
ship may be terminated at a moment's notice by either
party. By that notice the partnership is dissolved to this
extent, that the Court wUl compel the parties to act as
86 PABTNEBBIHP ACT, 1890.
Part I, partners in a partnership existing only for the purpose of
Sect. 32. winding up the affairs." ^
The dissolution takes place as from the date of ^ the
notice, and without regard to the state of mind of the
partner to whom the notice is given. Insanity on his part
does not make it less effectual.^ Of insanity as a special
ground of dissolution when the partnership is not at wUl
we shall speak presently. A valid notice of dissolution
once given cannot be withdrawn except by consent of all
the partners.'
Where a partnership has been entered into for a fixed
term, the partnership is at the end of that term dissolved
" by effluxion of time " without any further act or notice,
except in the cases provided for in s. 27, above.
Bissoiutionby 33. — (1.) Subject to any agreement between
deatCor"^' tbe partners, every partnership is dissolved as
arge. regards all tbe partners by the death or bank-
ruptcy of any partner.*
(2.) A partnership may, at the option of the
other partners, be dissolved if any partner
' Crawshay v. Maule (1818), 1 Swanst. at p. 508.
= Mellersh v. Keen (1859), 27 Beav. 236; Jones \. Lloyd {18U),
18 Eq. 265.
2 Jones v. Lloyd (1874), 18 Eq. at p. 271.
* Before January 1, 1883, il a female partner married witliout
settling her share in the partnership to her separate use, the part-
nership was dissolved (but see Ashworth v. Outram (1877), 5 Ch.
Div. 923). Re ChiJds (1874), 9 Ch. 508, shows that, for adminis-
trative purposes at least, a wife entitled for her separate use to a
share of the profits of her husband's business may be considered as
his partner. The Married Women's Property Act, 1882 (45 & 46
Vict. c. 75), ss. 1, 2, seems to make it clear that the marriage of a
female partner would not now dissolve the partnership. The case
of outlawry appears to be piu-posely passed over by the present Act
as haying no practical importance.
DISSOLUTION BY BANKRUPTCY, DEATH, ETC. 87
suffers his share of the partnership property to Part i.
he charged under this Act for his separate sect. 33.
debt.^
34. A partnership is in every case dissolved Dissoiutionby
■^ , ^ •' _ _ illegality of I
by the happening of any event which makes it partnership.
unlawful for the business of the firm to be
carried on or for the members of the firm to
carry it on in partnership.^
Illustrations.
1. A. and B. charter a sliip to go to a foreign port and
receive a cargo on their joint adventure. War breaks out
between England and the country where the port is situated
before the ship arrives at the port, and continues until after
the time appointed for loading. The partnership between A.
and B. is dissolved.'
2. A. is a partner with ten other persons in a certain
business. An Act is passed which makes it unlawful for more
than ten persons to carry on that business in partnership.
The partnership of which A. was a member is dissolved.
3. A., an Enghshman, and domiciled in England, is a
partner with B., a domiciled foreigner. "War breaks out
between England and the country of B.'s domicil. The
partnership between A. and B. is dissolved.'
35. On application by a partner the Court Dissoiutionby
may decree a dissolution of the partnership in
any of the following cases :
{a.) When a partner is found lunatic by
1 See s. 23, p. 67, above.
2 Op. I. 0. A. 255.
3 See Eaposito v. Bowden (1857), 7 E. & B. 763; 27 L. J.
Q. B. 17.
* Oriswold v. Waddington (1818) (Supreme Court, New York),
15 Johns. 57 ; 16 ih. 438.
88 PARTNERSHIP ACT, 1890.
Parti. inquisition/ or in Scotland by cognition,
Sect. 3d. or is shown to the satisfaction of the Court
to be of permanently unsound mind, in
either of which cases the application may
be made as well on behalf of that partner
by his committee or next friend or person
having title to intervene as by any other
partner : ^
{b.) When a partner, other than the partner
suing, becomes in any other way perma-
nently incapable of performing his part of
the partnership contract : *
(c.) When a partner, other than the partner
suing, has been guilty of such conduct as,
in the opinion of the Court, regard being
had to the nature of the business, is calcu-
lated to prejudicially affect the carrying
on of the business : *
1 By s. 119 of tlie Lunacy Act, 1890 (53 Vict. c. 5), -whici from
May 1, 1890 (see s. 3), repeals and supersedes the Lunacy Eegu-
lation Act, 1853, "where a person being a memter of a partnership
becomes lunatic, the judge may, by order, dissolve the partner-
ship " (for the jurisdiction of a judge in lunacy, see s. 108 : it is
exerciseable by any one or more of the Lord Chancellor and such
judges of the Supreme Court as may be appointed by sign manual).
The committee of the estate can be authorized and required,
under the general powers of ss. 120, 124, to do or concur in aU acts
rendered necessary. The powers of this part of the Act are not
confined to lunatics so found by inquisition : for the other cate-
gories, see s. 116.
2 Lindley, 577-580; Jones v. Noy (1833), 2 M. & E. 125; Anon.
(1855-6), 2 K. & J. 441 ; Leaf v. Coles (1851), 1 D. M. a. 171. It
is well settled that lunacy does not of itself work a dissolution.
» Whitwell V. Arthur (1865), 35 Beav. 140.
• Esscl V. Hayward (1860), 30 Beav. 158.
GROUNDS OF DISSOLUTION. 89
(d.) WTien a partner, other than the partner fart i.
suing, wilfully or persistently commits a ^'''*' ^®-
breach of the partnership agreement, or
otherwise so conducts himself in matters
relating to the partnership business that it
is not reasonably practicable for the other
partner or partners to carry on the busi-
ness in partnership with him : ^
(e.) When the business of the partnership
can only be carried on at a loss :^
(/.) Whenever in any case circumstances
have arisen which, in the opinion of the
Court, render it just and equitable that
the partnership be dissolved.
It might he difficult to find a reported decision precisely
in point on every part of this section. There is no douht,
however, that the enactment correctly represents the modem
practice of the Chancery Division.
It is to be observed that the right of having the partner- Dissolution at
ship dissolved in the case of one partner becoming insane oiMiascfund ^'
is not confined to his feUow-partners. A dissolution may ™"'^-
be sought and obtained on behaK of the lunatic partner
himself ; and this may be done either by his committee in
lunacy under the Lunacy Act, or, where he has not been
found lunatic by inquisition, by an action brought in his
name in the Chancery Division by another person as his
next friend. In the latter case, the Court may, if it thinks
fit, direct an application to be made in Lunacy before
finally disposing of the cause.' But the enlarged powers
1 Harrison v. Tennant (1856), 21 Beav, 482.
' Jennings v. Baddeley (1856), 3 K. & J. 78; and see per Cotton,
Ii.J., 13 Ch. Div. at p. 65.
3 Jmes V. Lloyd (1874), 18 Eq. 265.
90 PARTNERSHIP ACT, 1890.
Part I. given to the judge in Lunacy by s. 116 of the Lunacy
Sect. 35. Act, 1890, may now make it unnecessary and undesirahle
to resort to the Chancery Division.
What conduct It is rather difficult to fix the point at which acts of a
ground for partner tending to shake the credit of the firm and the
dissolution, other partners' confidence in him become sufiicient ground
for demanding a dissolution. The fact that a particular
partner's continuance in the firm is injurious to its credit
and custom is not of itself ground for a dissolution where
it cannot be imputed to that partner's own wDful miscon-
duct. In a case where one partner had been insane for a
time, and while insane had attempted suicide, this was
held not to be a cause for dissolution, although it was
strongly urged that the credit of the firm could not be pre-
served if he remained in it.'^ On the other hand, conduct
of a partner in the business carried on by the firm and its
predecessors, though not in the actual business of the
existing fijm, which was calculated to destroy mutual con-
fidence among the partners, has been held sufficient ground
for a dissolution.^
Actual malversation of one partner in the partnership
affairs, such as failing to account for sums received,' is
ground for a dissolution ; so is a state of hostility between
the partners which has become chronic and renders mutual
confidence impossible, as where they have habitually
charged one another,* or one partner has habitually
charged another,* with gross misconduct ia the partnership
affairs.
1 Anon. (1855-6), 2 K & J. 4-11, 452. Qu. is this now the law ?
■■' Harrison v. Temtant (1856), 21 Beav. 482.
3 Gheesman v. Price (1865), 35 Beav. 142.
* Baxter v. West (1860), 1 Dr. & Sm. 173.
' Wotney v. Wells (1861), 30 Beav. 56; Lcary v. Shout (1864), 33
Beav. 582.
DISSOLUTION BY THE COURT. 91
In Atwood T. Maude''- Lord Cairns said : — Part I.
" It is evident . . . that in every partnership . . . such Sect. 38.
a state of feeling may arise and exist between the partners
as to render it impossible that the partnership can continue
■with advantage to either ; " and he added that, when it is
admitted that this state of feeling does in fact exist, it
becomes immaterial by whom a judicial dissolution of the
partnership is sought. If this dictum had been accepted to
its full extent, in the absence of positive authority, clause (d.)
of the section now under consideration might, perhaps, have
assumed a broader and simpler form.
The Act, however, is clearly intended to confirm the
existing practice of the Court, and wider language might
have been taken to confer some new power.
Dissolution by order of the Court tabes effect as from
the date of the judgment, unless ordered on the ground of
a specific breach of duty giving the other member or mem-
bers a right to dissolve the partnership, in which case
alone it may relate back to that event .^
36, — (1.) Where a person deals with, a firm Eights of
•• , •> J- 1 ■ ;'iii persons deal-
after a change m its constitution he is entitled ing -with firm
to treat all apparent members of the old firm parent mam-
as still being members of the firm until he has .
notice of the change.^
(2.) An advertisement in the London Grazette
as to a firm whose principal place of business is
in England or Wales, in the Edinburgh Gazette
as to a firm whose principal place of business is
1 3 Oh. at p. 373 (1868).
' Lyon v. Tweddell (1881), 17 Cli. Div. 529.
3 Op. I. C. A. 264.
92 PARTNERSHIP ACT, 1890.
Part I. in Scotland, and in the Dublin Gazette as to a
Sect. 36. firni whose principal place of business is in
Ireland, shall be notice as to persons who had
not dealings with the firm before the date of the
dissolution or change so advertised.
(3.) The estate of a partner who dies, or who
becomes bankrupt, or of a partner who, not
having been known to the person dealing with
the firm to be a partner, retires from the firm,
is not liable for partnership debts contracted
after the date of the death, bankruptcy, or re-
tirement respectively.
Illustrations.
1. A. and B., partners in trade, agree to dissolve the part-
nership, and execute a deed for that purpose, declaring the
partnership dissolved as from the 1st of January ; hut they
do not discontinue the business of the firm or give notice of
the dissolution. On the 1st of February A. indorses a bill in
the partnership name to C, who is not aware of the dissolu-
tion. The firm is liable on the bill.'
2. A bill is drawn on a firm in its usual name of the M.
Company, and accepted by an authorized agent. A. was
formerly a partner in the firm, but not to the knowledge of
B., the holder of the bUl, and ceased to be so before the date
of the bill. B. cannot sue A. upon the bUl.'
3. A. is a partner with other persons in a bank. A. dies,
and the survivors continue the business under the same firm.
Afterwards the firm becomes insolvent. A.'s estate is liable
to customers of the bank for the balances due to them at A.'s
death, so far as they still remain due, and for other partner-
1 Ex, parte Robinson (1833), 3 D. & Oh. at p. 388.
■ Carter v. WhaUexj (1830), 1 B. & Ad. 11.
LIABILITIES AFTER DISSOLUTION. 93
ship liabilities incurred before A.'s death ; ^ hut not for any Part I.
debts contracted or liabilities incurred by the firm towards sect~36
customers after A.'s death.'*
In the case of liabilities of the firm which have arisen after
A.'s death, it makes no difference that at the time when the
partnership liability arose the customer believed A. to be still
living and a member of the firm.'
Sub-s. 2 does not, of course, exclude the efEect of notice
in fact by any other means. Even as regards old cus-
tomers, notice in fact, once proved, is suflB.cient, and " it
matters not by what means, for it has never been held
that any particular formality must be observed,"* or, if
observed, has any special virtue.
37. On the dissolution of a partnership or Right of
„ , partners to
retirement ol a partner anj partner may pub- notify disso-
licly notify the same, and may require the
other pai-tner or partners to concur for that
pm^pose in all necessary or proper acts, if any,
which cannot be done without his or their
concurrence.
In Troughton v. Suiiter^ it appeared to be the practice
of the London Gazette Office not to insert a notice of dis-
solution unless signed by all the partners ; and the defen-
dant, who had refused to sign a notice, was decreed to do
all things necessary for procuring notice of the dissolution
• Devaynes v. NobU (1816), 1 Mer. 529; Sleech's Case (1816), at
p. 539 ; Clayton's Case (1816), at p. 572.
2 Brice's Case (1816), lb. 622.
3 Eoulton's Case (1816), Ih. 616. The judgment itself in this
case is not reported ; but it appears by the marginal note and the
context that it followed Brice's Case.
» Lindley, 223.
« 18 Beav. 470 (1854).
94
PAETNEBSHIP ACT, 1890.
Part I.
Sect. 87.
Continuing
authority of
partners for
purposes of
winding up.
to be inserted in the Gazette. A retiring partner may be
ordered to sign a notice of dissolution for insertion in the
Gazette, even if no other specific relief is claimed.^
38. After the dissolution of a partnersMp
the authority of each partner to bind the firm,
and the other rights and obligations of the
partners, continue notwithstanding the disso-
lution so far as may be necessary to wind
up the affairs of the partnership, and to
complete transactions begun but unfinished at
the time of the dissolution,^ but not other-
wise.
Provided that the firm is in no case bound
by the acts of a partner who has become
bankrupt,^ but this proviso does not affect the
liability of any person who has after the bank-
ruptcy represented himself or knowingly suf-
fered himself to be represented as a partner of
the bankrupt.
Illustrations,
1. A. and B. are partners. A. becomes bankrupt. B.
gives acceptances of the firm as a security for an existing
partnership debt to C, who knows of A.'s bankruptcy. C.
indorses the bills for value to D., who does not know of the
bankruptcy. D. is entitled to rank as a creditor of the firm
for the amount of the bills.*
1 Hendry v. Turner (1886), 32 Oh. D. 355.
^ Lyon V. Haynes (1843), 5 M. & Gr. 504, 541.
' Bankruptcy relates hack to the completion of the act of bank-
ruptcy on which a receiving order is made : Bankruptcy Act, 1883,
s. 43.
* Kx parte Bohinson (1833), 3 Dea. & Ch. 376, and 1 Mont. &
A. 18.
RIGHTS AFTER DISSOLUTION. 95
2. A. and B. are partners. A. becomes bankrupt. B. Parti,
continues to carry on tbe trade of tbe firm, and pays partner- g^^t^s!
ship moneys into a bank to meet current bills of the firm.
Tbe bank is entitled to tbis money as against A.'s trustee in
bankruptcy.'
3. A. and B. are partners in trade. A becomes bankrupt.
Tke solyent partner, B., but not other persons claiming
through him by representation or assignment, may, notwith-
standing the dissolution of the partnership wrought by A.'s
bankruptcy, sell any of the partnership goods to pay the
debts of the firm,' and the purchaser will be entitled to the
entire property in such goods as against A.'s trustee in
bankruptcy.'
4. A. and B., sharebrokers in partnership, buy certain
railway shares. Before the shares are paid for they dissolve
partnership. Either of them may pledge the shares to the
bankers of the firm to raise the purchase-money, and may
authorize the bankers to sell the shares to indemnify them-
5. A. and B., having been partners in a business, dissolve
partnership, and A. takes over the business and property of
the firm. If A. gives negotiable instruments in the name of
the old firm, then (subject to the rights of creditors of the
firm stated in Art. 53) B. is not bound thereby,* unless he
has specially authorized the continued use of the name for
that purpose.*
6. Partnership articles provide that, before each division
of profits, interest shall be credited to both partners on the
amount of capital standing to the credit of their respective
accounts. This alone does not authorize the allowance of
interest, in the event of a dissolution, for the interval between
' Woodbridge v. Swann (1833), 4 B. & Ad. 633.
^ Fraser v. Kershaw (1856), 2 K. & J. 496. The authority to sell
is " personal to him in his capacity as partner : " p. 501.
3 Fox V. Eanhury {1116), Cowp. 445.
* Butchart v. Dresser (1853), 4 D. M. Gr. 542.
5 Heath v. Sanson (1832), 4 B. & Ad. 172.
^ Smith V. Winter (1838), 4 M. & W. 454.
Sect. 38,
; PABTNERSHIP ACT, 1890.
Part I. the dissolution and the final settlement of the partnership
accounts.'
7. A., B. and C. are partners. A. and B. commit acts of
bankruptcy, and afterwards indorse in the name of the firm
a bill belonging to the partnership. The indorsee acquires
no property in the bill.^
8. A. and B. are partners. C. is a creditor of the firm;
A., having committed an act of bankruptcy to the knowledge
of 0.,' pays O.'s debt. This is an unauthorized payment as
against the firm, and if the firm afterwards becomes bank-
rupt, C. must repay the money to the trustee of the joint
estate.*
9. A. and B. are partners. A. commits an act of bank-
ruptcy, and afterwards accepts a bill in the name of the firm
for his own private purposes, which comes into the hands of
a holder in good faith and for value. B. is liable on the bill,
as A. and B. -were ostensibly partners "with the assent of B.
when the acceptance was given.'
10. [A. and B. being partners, draw a bill payable to the
order of the firm. They dissolve partnership, and A. indorses
the bill in the name of the firm, but for his own purposes and
without B.'s knowledge, to C, who knows of the dissolution
of the firm, but does not know that A.'s indorsement is not
for a partnership purpose. B. is liable on the indorsement."]
11. [A., B. and 0. are partners in a woollen mill. A. dies,
1 BarfieU v. Loughborough (1872), 8 Ch. 1.
2 Thomason v. Frere (1808), 10 East, 418.
3 If 0. had not notice of the act of bankinptcy, he would be pro-
tected by s. 49 (a) of the Bankruptcy Act, 1883.
4 Graven v. Edmondson (1830), 6 Bing. 734.
<■ Lacy V. WoolcoU (1823), 2 D. & E. 458.
6 Lewis V. Beilly (1841), 1 Q. B. 349: "It is perhaps doing no
violence to language to say that the partnership could not be dis-
solved as to this bill, so as to prevent it from being indorsed by
either defendant in the name of the firm," Lord Denman, C.J., at
p. 351. But it is difficult to admit the correctness of the decision :
see Liadley, 216. The earlier case of Smith v. Winter (1838), 4
M. & W. 454 (not cited in Lewis v. Reilly), assumes that authority
in fact must be shown for such a use of the partnership name even
for the purpose of liquidating the affairs of the firm.
Sect. 38.
RiaHTS AFTER DISSOLUTION. 97
and B. and C. continue the business. D., the owner of the Part I.
mill, distrains for arrears of rent which were partly due in '
the lifetime of A. B. and 0. agree with D. that he shall take
the partnership fixtures and machinery in satisfaction of the
rent, and re-let them to B. and C, the transaction being in
fact a mortgage. This does not affect A.'s interest in the
fixtures and goods comprised in the conveyance, and D. is not
entitled to the entire property in them as against A.'s exe-
cutors.']
12. A. and B. are partners. A. files a liquidation petition,
and a receiver of his property is appointed. B. is still
entitled to get in the partnership assets, and to use for that
purpose the name of the trustee in A.'s bankruptcy, on
giving him an indemnity.^
On this subject the language of the Indian Contract
Act (s. 263) is more general. It says :
" After a dissolution of partnership, the rights and obli-
gations of the partners continue in all things necessary for
winding up the business of the partnership."
And Lord Eldon spoke more than once of a partnership
after dissolution as being in one sense not dissolved until
the affairs of the firm are wound up.^
But Lord Justice Lindley has shown* that a more
guarded statement is desirable. He points out that the
strongest case on the subject is (with the doubtful excep-
tion of Lewis V. Reilly, Illust. 10, above) Butchart v.
Dresser (Illust. 4) ; and this decided at most " that in the
event of a dissolution it is competent for one partner to
1 Buckley v. Barter (1851), 6 Ex. 164; 20 L. J. Exch. 114. This
decision is not consistent with the general current of authorities,
and is probably wrong. It is expressly dissented from by Lord
Justice Lindley (p. 342), who further states that is was disapproved
in an unreported case by James, L.J.
^ Exparte Owen (1884), 13 Q. B. Div. 113.
3 Swanst. 508 (1818) ; 2 Euss. 337, 342.
* Lindley, 217—219.
P. H
98 PARTNERSHIP ACT, 1890.
Part I. dispose of the partnership assets for partnership purposes."
Sect. 88. Paulus incidentally mentions the rule as existing in some
such limited form in the Roman law : —
"Si vivo Titio negotia eius administrare coepi, inter-
mittere mortuo eo non debeo ; nova tamen inchoare necesse
mihi non est, vetera explicare ac conservare neeessarium
est ; ut ascidit, cum alter ex sociis mortuus est."^
The present section puts an end to any doubt on the
matter in England by declaring the law in the form
approved by Lord Justice Lindley.
Eights of 39. On the dissolution of a partnership
partners aa to . • i i • i i
application of every partner is entitled, as against the other
property. partners in the firm, and all persons claiming,
through them in respect of their interests as
partners, to have the property of the partner-
ship applied in payment of the debts and
liabilities of the firm, and to have the surplus
assets after such payment applied in payment
of what may be due to the partners respec-
tively after deducting what may be due from
them as partners to the firm; and for that
purpose any partner or his representatives may
on the termination of the partnership apply to
the Court to wind up the business and affairs
of the firm.^
lUustrations.
1. One of the partners in a firm becomes bankrupt. All
debts due from him to the firm must be satisfied out of his
' D. 3, 5, de negof. gest 21, § 2.
" Compare I. C, A. 265.
PARTNER'S LIEN. 99
share of the partnership property before recourse is had to Parti,
such share for payment of debts due either to any of the SeotTsi!
partners on his private account or to any other person.^
2. A creditor of one partner in a firm on a separate account
unconnected with the partnership takes his share in the part-
nership property in execution. He is entitled at most to the
amount of that partner's interest after deducting everything
then due from him to the other partners on the partnership
account ; '' but in such deduction debts due to all or any of the
other partners otherwise than on the partnership account are
not to be included.^
3. A. and B. are partners, having equal shares in their
business. A. dies, and B. continues to employ his share of
the partnership capital in the business without authority,
thereby becoming liable to A.'s estate for a moiety of the
profits.* A.'s estate is entitled not only to a moiety of the
partnership's property, but to a lien upon the other moiety for
the share of profits due to the estate.'
4. A. and B. are partners. The partnership is dissolved by
agreement, and the agreement provides that B. shall take
over the business and property of the firm and pay its debts.
B. takes possession of the property and continues the business,
but does not pay aU the debts, and some time afterwards
mortgages a policy of assurance, part of the assets of the late
partnership, to 0., who knows the facts above mentioned, and
also knows that the poHcy mortgaged to him is part of the
partnership assets. A. or his representatives may require
any part of the partnership property remaining in the hands
of B. to be applied in payment of the unpaid debts of the
firm, but they have no such right as to the policy mortgaged
to 0. Here C. claims through B. not as partner but as sole
' Cro/iv. Pife(1733), 3P. Wms. 180. See below, pp. 137 sgg., as
to the administration of partnership estates.
2 West V. Ship (1749), IVes. Sen. 239, 242 ; per Lord Mansfield,
Fox V. Haiibury (1776), Cowp. at p. 449.
' Skipp V. Harwood (1747), 2 Swanst. 586.
* See s. 42, below.
5 Stochen v. Daivson (1845), 9 Beav. 239.
h2
100 FARTNERSHTP ACT, 1890.
Parti. owner, and is not bound to see to the application of his
Sect. 39.~ money.'
Nature of the The general rule has been thus stated : that " on the
or^quaTi-^fen. dissolution of the partnership all the property belonging
to the partnership shall be sold, and the proceeds of the
sale, after discharging aU the partnership debts and lia-
bilities, shall be divided among the partners according to
their respective shares in the capital."^
The right of each partner to control within certain limits
the^ disposition of the partnership property is a rather
peculiar one. It exists during the partnership, and when
accounts are taken and the partners' shares ascertained
from time to time, its existence is assumed, but it comes
into fuU play only in the event of a dissolution. It belongs
to a class of rights known as equitable liens, which have
nothing to do with possession, and must therefore be care-
fully distinguished from the possessory liens which are
familiar in several heads of the Common Law. The
possessory lien of an unpaid vendor, factor, or the like, is
a mere right to hold the goods of another man until he
makes a certain payment; it does not, as a rule, carry
with it the right of dealing with the goods in any way.*
Equitable lien, on the other hand, is nothing else than the
right to have a specific portion of property dealt with in a
particular way for the satisfaction of specific claims.
Against The lien, or quasi-lien,* as it is sometimes called, of each
able. partner on the partnership property is available against
the other partners, and against aU persons claiming an
interest in a partner's shai-e as such. We have already
1 Re Langmead's Trusts (1855), 20 Boav. 20 ; 7 D. M. G. 353.
2 Barhj v. Darby (1856), 3 Bie^: at p. 503.
3 On the still unsettled question of aa unpaid vendor's rights in
this respect, see Page v. Cowasjee Eduljee (1866), L. E. 1 P. C. 145.
^ 25 Beav. 286(1858).
PARTNER'S LIEN. 101
seen that an assignee of a partner's share takes it subject Part I,
to all claims of the other partners (sect. 31). But a pur- sect. 39.
chaser or pledgee of partnership property from a partner,
unless he has notice of an actual want of authority to dis-
pose of it, is entitled to assume that his money will he
properly appHed for partnership purposes, and may rely
on the disposing partner's receipt as a complete discharge.^
Likewise the individual partners cannot require a judg-
ment creditor of the firm to pursue his remedy against the
partnership property before having recourse to the separate
property of the partners ; ^ for, as we have seen above
(pp. 39, 40), English law does not recognize the firm as
having rights or liabilities distinct from those of the
individual partners, and a judgment against a firm of
partners is nothing else than a judgment against the
partners as joint debtors, and is treated like any other
judgment of that nature. There seems to be nothing to
alter this in the Rule of Court now in force as to judg-
ments against partners in the name of the firm.^ Credi-
tors, on the other hand, have no specific rights against any
property of the firm except such as they may acquire by
actually taking it in execution.*
During a partnership the lien in question attaches to aU Applies only
partnership property for the time being. Upon a dissolu- property at
tionit extends only to the partnership property existing as lotion ^'^^°'
such at the date of dissolution. Therefore, if one of two
partners dies, and the executors of the deceased partner
allow the survivor to continue the business of the firm,
there wiU. be no lien in their favour on property acquired
' Zangmead's Trusts, seelllust. 4, ahoye.
^Lindley, i. 541, 700.
3 Eules of the Supreme Court, Order XLII. r. 10 (No. 588);
pp. 127, 130, below".
* Stocken v. Baiuson (1845), 9 Beav. 239.
102
Part I.
Sect. 39.
PABTNEBSHIP ACT, 1890.
by Mm in this course of business in addition to or in sub-
stitution for partnership property ; and in the event of the
surviving partner's bankruptcy, goods brought into the
business by him will belong to his creditors in the new-
business, not to the creditors of the former partnership.^
It is probable, however, that a surviving partner who
insisted on carrying on the business against the will of
the deceased partner's representatives would be estopped
from showing that property iu his hands and employed
in the business was not part of the actual partnership
assets.^
General power The presence in partnership articles of a clause pro-
exdXa by viding for division of the assets on a dissolution does not
clause a^s to exclude the general power of the Court to direct a sale of
the business as a going concern and appoint a receiver and
manager.^
Disposal of
goodwill on
dissolution.
Rules as to the disposal of Goodwill.
The Act does not make any express provision for dis-
posing of the goodwill on the dissolution of a firm.
Probably this is due to the consideration that the rules
of law relating to goodwill are not confined to cases where
a business has been carried on in partnership, and there-
fore do not belong to the law of partnership in any exact
1 Payne v. Ilornhy (1858), 25 Beav. 280, 286-'7.
- This is given as the general rule in Dixon on PaitnersMp, 493,
and the rule in Piv/ne v. Hornhy as the excej^tion; and a dictum of
Lord Hardwicke's is there cited (TTVsi v. Ship (1749), 1 Ves. Sen. at
p. 244), that the Hen extends to stock brought in after the determi-
nation of the partnership. But this tlictum relies on an old case of
Buel-mill V. Roiston (1709), Pre. Oh. 285, which was a case not of
partnership at nil, but of a continuing pledge of stock in trade:
from which the partner's lion is expressly distinguished in Payne
V. Ilornhy.
» Tayior v. Ncafe (1888), 39 Ch. D. 538 ; 57 L. J. Ch. 1044.
DISPOSAL OF GOODWILL ON DISSOLUTION. 108
sense. Nevertheless the rules have been settled chiefly Part I.
by decisions in partnership cases, and the question of Sect. 39.
goodwill is one of those which ought always to be con-
sidered and provided for in the formation of a partnership,
and constantly has to be considered on its dissolution,
whether provided for or not. Hence it seems proper to
retain here the attempt to formulate these rules which was
made in this work in its previous form of an experimental
digest. The following statement is believed to be sub-
stantially correct : —
On the dissolution of a partnership every partner has Eiglits of
a right, in the absence of any agreement to the contrary, goodwill,
to have the goodwill of the business sold for the common
benefit of all the partners.^
Where the goodwUl of a biisiness, whether carried on in Eights and
partnership or not, is sold, the rights and duties of the vendor; and
vendor and purchaser are determined by the following P^'chaserof
rules in the absence of any special agreement excluding or
varying their effect : —
(a.) The purchaser alone may represent himself as con-
tiuuing or succeeding to the business of the vendor.^
(b.) The vendor may nevertheless carry on a similar
business in competition with the purchaser, but not under
the name of the former firm, nor so as to represent himself
as continuing or succeeding to the same business.^
(c.) The vendor may publicly advertise his business,
and solicit the customers of the former firm.'
' Lindley, 443. In other words, the goodwill, and therefore also
the firm-name, is part of the partnership assets ; Levy v. Walker
(1879), 10 Oh. Div. 436, 446.
' Ohurton v. Douglas (1859), Johns. 174.
3 Labouchere v. Dawson (1872), 13 Eq. 322, laid down a contrary
rule ; but this, after being materially qualified in Leggott v. Barrett
(1880), 15 Ch. Div. 306 (overruling Ginesj v. Cooper & Co. (1880),
14 Ch. D. 596), was disapproved by a majority of the 0. A. in
104 PARTNERSHIP ACT, 1890.
Parti. {d.) The sale probably carries the exclusive right to
Sect. 39. use the name of the former firm.^ It is doubtful whether
the purchaser may use it without qualification if it consists
only of the name of the vendor or of any other person who
by such use would be exposed to be sued as an apparent
partner iq the business.^
Illustrations.
1. A., B. and 0. have earned on business in partnership
under the firm of A. and Co. A. retires from the firm on the
terms of the other partners purchasing from him his interest
in the business and goodwill, and D. is taken in as a new
partner. B., C. and D. continue the business under the firm
of " B., C. and D., late A. and Co." A. may set up a similar
business of his own next door to them, but not under the firm
of A. and Co.^
2. One of several persons carrying on business in partner-
ship having died, the affairs of the partnership are wound up
by the Court, and a sale of the partnership assets, includiug
the goodwill, is directed. The goodwill must not be valued
on the supposition that any surviving partner, if he does not
himself become the purchaser, can be restrained from setting
up the same kind of business on his owti account;* for "no
Court can prevent the late partners from engaging in the
Pearson v. Pearson (1884), 27 Ch. Dir. Ho; and Stirling, J., in
Vernon v. Hdllam (1886), 3-1 Ch. D. 748, treated Lahouchere v.
Dawson as overruled. See also Walker t. Mottram (1881), 19 Ch.
Div. 355. A partner who has heen expelled under a provision in
the articles is not restrained from oaiTying on the same business on
his own account, or soliciting customers of the old firm : Dawson v.
Beeson (1882), 22 Ch. Div. 504.
' Levy V. Walker (1870), 10 Ch. Div. 436.
■ VhurtouY. ?)o«(7^a^ (1859), Johns, at p. 190. But the tendency
of what was said in Levii v. Walker is decidedly towards leaving it
for the vendor in such a case to protect himself against this incon-
venience by special conditions.
' Ohurton v. Douglas (1859), Johns. 174.
* JMl V. ParroH's (1863), 4 D. J. S. at p. 159.
INCIDENTS OF GOODWILL. 105
same business, and therefore the sale cannot proceed upon Part I.
the same principles as if a Court could prevent their so s^^t~39
engaging."^
The term goodwill is a oominercial rather than a legal Nature and
one, nor is its use confined to the affairs of partnership "o-oodwill."
firms. It is well understood in business, but not easy to
define. It has been described as " the benefit arising from
connexion and reputation,"^ "the probability of the old
customers going to the new firm " which has acquired the
business.' That which the purchaser of a goodwill actually
acquires, as between himself and his vendor, is the right
to carry on the same business under the old name (perhaps
with such addition or qualification, if any, as may be
necessary for the protection of the vendor from liability or
exposure to litigation under the doctrine of " holding
out"), and to represent himself to former customers as the
successor to that business. Unless there is an express
agreement to the contrary, the vendor remains free to
compete with the purchaser in the same line of business;^
he may publish to the world, by advertisements or other-
wise, the fact that he carries on such business; and it
seems to bg now settled, though for some years it was held
otherwise, that he may even specially solicit the customers
of the old firm to transfer their custom to him.^ But he
' Lord Eldon's decree in Cook v. Collingridge (1825), given in 27
Beav. 456, 459. The declarations and directions there inserted
contain an exposition of the nature and legal incidents of goodwill
to which there is still little to add in substance.
2 Lindley, 439.
' Lord Eomilly, M.E., Lahouchere v. Dawson (1872), 13 Eq. at
p. 324; and see Llewellyn y. Rutherford (1875), L. E. 10 C. P. 456;
WedderluruY. Wedderburn {lfi55-6), 22 Beav. at p. 104.
* Churton v. Dovglas (1859), Johns. 174.
' Pearson v. Pearson, 27 Oh. Div. 145 ; Vernon v. Hallam, 34 Oh,
D. 748 ; see pp. 103, 104, ahove.
106 PARTNERSHIP ACT, 1890.
Part I. must not use the name of the old firm so as to represent
Sect. 39. that he is continuing, not merely a similar business, but
the mme business. " Tou are not to say, I am the owner
of that which I have sold.''^ Probably, the purchasers of
the business might successfully object even to his carrying
on a competing business in his own name alone, if that
name had been used as the name of the late firm and had
become part of its goodwill.^
Goodwill does It was formerly supposed that on the death of a partner
vive." in a firm the goodwill survived — that is, that the surviving
partners were entitled to the whole benefit of it without
any express agreement to that effect. But it is now
perfectly settled that this is not so.^ Surviving or con-
tinuing partners may in "various ways have the benefit of
the goodwill, and an intention to let them have it may be
shown by conduct as well as words. " When a partner
retires from a firm, assenting to or acquiescing in the reten-
tion by the other partners of possession of the old place of
business and the future conduct of the business by them
under the old name, the goodwill remains with the latter
as of course."* But this really amounts to saying that in
such a case the goodwill ceases to have any separate value.
The retiring partner has nothiag left that he could give
except an undertaking not to compete with the firm ; and
this, as we have seen, is not implied even in an express
assignment of goodwill.^
It seems that in the business of solicitors goodwill in the
1 Churton t. Douglas (18of)), Johns, at p. 193.
"■ Chinion v. Douglas (1859), Johns, at pp. 197, 198. As to the
right to the exolusivo use of a trade name, see pp. 22, 23, above.
3 The notion of the goodwill sui'viving is expressly contradicted,
for instance, in Smith v. Ecu-ttt (1859), 27 Beav. 446.
* Mimndez v. Holt (1888), 128 IT. S. 514, 522.
» Cp. Lindloy, 444.
USE OF FIBM-NAME AFTER DISSOLUTION. 107
ordinary sense does not exist.^ The same reasons might Part I.
apply to any other business depending on personal and sect. 39.
confidential relations, and wholly or mainly independent
of local connexion or the resorting of customers to a
particular place.''
It also seems that after a dissolution each of the partners Right of
in the dissolved firm or his representatives may, in the restrain use of
absence of any agreement to the contrary, restrain any ^^me^" '^
other partner or his representatives from carrying on the
same business under the partnership name until the affairs
of the firm have been wound up and the partnership
property disposed of.'
This is maintained by Lord Justice Lindley, notwith-
standing a certain amount of apparent authority to the
contrary,* as a necessary consequence of the principles
above stated. If any partner who may require it has a
right to have the goodwill sold for the common benefit,_it
cannot be that each partner is also entitled to do that which
would deprive the goodwill of all saleable value. There is
express authority to show that while a liquidation of part-
nership afEairs is pending one partner must not use the
name or property of the partnership to carry on business
1 See Austen Y. Soys (1858), 2 De G. & J. 626, 635 ; ArundeU v.
■Bell (C. A. 1883), 31 W. E. 477.
^ As in the case of commission merchants : Steuart v. Gladstone
(1879), 10 Ch. Div. 626, 657.
' Lindley, 445.
* Banks v. Gibson (1865), 34 Beav. 566, looks at first sight like a
direct authority contra. But there it appears that the assets of the
firm had heen divided by agreement between the late partners and
the affairs of the firm wound up before the suit was brought. The
goodwiU, in fact, had ceased to exist, the partners having practically
waived the right of having its value realized. Thus the decision is
not inconsistent with Lord Justice Lindley's reasoning or with the
proposition given in the text.
.108
PARTNERSHIP ACT, 1890.
Part I. on his own sole account, since it is the duty of every
Sect. 39. partner to do nothing to prejudice the saleable value of the
partnership property until the sale.^ This question does
not in any case affect the independent right of a late
partner who is living and not bankrupt to restrain the
successor to the business from continuing the use of his
name therein so as to expose him to the risk of being sued
as an apparent partner.^
After the affairs of a dissolved firm are wound up every
partner is free to use the firm-name in the absence of
agreement to the contrary.^
Apportion-
ment of
premium
■where part-
nership pre-
maturely dis-
solyed.
40. Where one partner has paid a premium
to another on entering into a partnership for a
fixed term, and the partnership is dissolved
before the expiration of that term otherwise
than by the death of a partner/ the Comi: may
order the repayment of the premium, or of
such part thereof as it thinks just, having
regard to the terms of the partnership contract
and to the length of time during which the
partnership has continued ; unless
(«.) the dissolution is, in the judgment of the
Court, wholly or chiefly due to the mis-
conduct of the partner who paid the pre-
mium, or
{b.) the partnership has been dissolved by
1 Tii,rner v. Major (1862), 3 Gifl. 412.
^ Scott v. Rowland (1872), 20 W. E. 508 ; see, however, note
p. 101, above.
3 Per James, L.J., Levy v. Walker, 10 Ch. Div. 445 (1879).
" Lindley, 67 ; Wliincup v. Huglies (1871), L. E. 6 0. P. 78.
REPAYMENT OF PREMIUM. 109
an agreement containing no provision for Part i.
a return of any part of the premium. Sect. 40.
Illustrations,
1. A. and B. enter into a partnership for five years, on the
terms of A. paying a premium of £1,050 to B., £500 imme-
diately, and the rest hy instalments. In the second year of
the partnership term, and before the whole of the premium
has heen paid, A. is adjudicated a bankrupt on the petition of
B. B. is not entitled to any further payments on account of
the premium, the partnership having been determined by his
own act, and he may retain only so much of the part already
paid to him as the Court thinks just.'
2. A. and B. enter into a partnership for a term of years,
A. paying a premium to B. Long before the expiration of
the term B. becomes bankrupt.
It has been held that B.'s estate is entitled to the whole
premium, because A. bought the right of becoming his part-
ner subject to the chance of the partnership being prematurely
determined by ordinary contingencies, such as death or bank-
ruptcy.^
And also that B.'s estate must return or give credit for a
proportionate part of the premium, as the bankruptcy which
determined the partnership was B.'s own act.''
3. A. and B. enter into partnership for fourteen years, B.
paying a premium to A. In the course of the same year
differences arise, there is a quarrel in which, in the opinion of
the Court, A. and B. are both to blame, A. excludes B. from
the business and premises of the partnership and B. sues A.
for a dissolution of partnership and return of the premium.
' Hamil v. Stohes (1817), 4 Pri. 161,' and better in Dan. 20.
^ Akhurst v. Jackson (1818), 1 Swanst. 85. No stress is laid on
the fact that at the commencement of the partnership A. knew that
B. was in embarrassed circumstances, which is the only point on
which the case can be distinguished from Freeland v. Stansfeld; see
Atwood V. Maude (1868), 3 Ch. at p. 372.
•i Freeland v. Stansfeld (1852-4), 2 Sm. & G. 479. Thisis probably
the correct view.
Sect. 40.
110 PARTNERSHIP ACT, 1890.
Part I. A. is entitled to retain only so mucli of the premiiun as tears
the same proportion to its whole amount as the time for which
the partnership has actually lasted bears to the whole term
first agreed upon.'
4. A. and B. are partners for a term of fourteen years, B.
having paid a premium of £600 to A. At the end of seven
years of the term B. gives notice of dissolution to A., under a
power contained in the partnership articles, on the ground of
A.'s neglect of the business ; and B. claims to have the pre-
mium apportioned on the principle of the last illustration.
B. is not entitled to the return of half the premium, but only
to such allowance as the Court thinks proper on a general
estimate of the case.'
6. A. and B. enter into partnership for fourteen years, A.
paying a premium calculated on two years' purchase of the
net profits of the business. The partnership is dissolved
within two years in consequence of mutual disagreements.
No part of the premium is repayable.'
6. A. takes B. into partnership for seven years, knowing
him to be inexperienced in the business, and requires him on
that account to pay a premium. After two years A. calls on
B. to dissolve the partnership on the ground of B.'s incom-
petence, and B. sues A. for a dissolution and the return of an
apportioned part of the premium. B. is entitled to the
return of such a part of the premium as bears the same
proportion to the whole sum which the unexpired period of
the term of seven years bears to the whole term.*
7. A. and B. enter into partnership for fourteen years, A.
' BuryY. Allen {184.'i:-o),lGdU.. 589; the proportion to be returned
or allowed for was calculated on the same principle in Asth v. WrigJit
(1856), 23 Beav. 77 ; Pease v. HewiU (1862), 31 Beav. 22 ; WiUoiiy.
Johnstone (1873), 16 Eq. 606.
2 Bullock V. Crocl-ett (1862), 3 Giff. 507. There not quite seven
years of the term had in fact elapsed, but the Court allowed only
£100 to the partner who had paid £600 premium. The same rule
of unlimited discretion as to the amount to be returned was acted
upon in Freeland v. Staxsfeld, supra.
3 A In;/ V. Borham (1861), 29 Beav. 620.
■■ Jlwooil Y, Maude (1868), 3 Ch. 369.
REPAYMENT OF PREMIUM. Ill
paying a premium. In the fourth year disputes arise, and a Part I.
dissolution of the partnership by consent is gazetted. No g^^j ^q
agreement is made at the time of dissolution, for the return of
any part of the premium. A. cannot afterwards claim to have
any part of it returned.^
The terms of the Act leave a wide discretion to the Rule as given
Court, and the earlier decisions cannot be safely treated as Maude.
obsolete. At the same time its language appears to be
founded on the judgment in Ativood v. Maude,^ still the
latest case on the subject in a Court of Appeal. And it
may perhaps be concluded that now, in accordance with
that case, the proportionate part to be returned is, in the
absence of special reasons to the contrary, a sum bearing
the same proportion to the whole premium as the unexpired
part of the partnership term originally contracted for bears
to the whole term. Conversely, where the premium pay-
able by a partner in fault is still unpaid, payment of it
may be ordered.^ It is now understood that the terms of
dissolution are a matter of judicial discretion for the judge
who hears the cause, and that his decision will not be
interfered with by the Court of Appeal except for strong
reasons.*
This kind of relief must be sought at the same time
with the dissolution of partnership itself. After decree,
such an application is admissible only on special grounds.^
41. Where a partnership contract is re- Eigtts wtere ,
scinded on the ground of the fraud or mis- dissolved for
' Lee r. Page (1861), 30 L. J. Oh. 857.
2 3 Oh. 369 (1868). In Wilson v. Johnstone (1873), 16 Eq.
606, Wickens, V.-C, proposed a somewhat different rule, which it is
now imneoeasary to consider.
3 Bluck V. Capstick (1879), 12 Oh. D. 863.
* Lyon V. Tweddell (1881), 17 Oh. Div. 529.
= Edmonds v. Robinson (1885), 29 Oh. D. 170.
imsrepreseii'
tation.
112 PARTNERSHIP ACT, 1890.
Parti. representation of one of the parties thereto,
Sect. 41. the party entitled to rescind is, without pre-
judice to any other right, entitled —
(a) to a lien on, or right of retention of, the
surplus of the partnership assets, after
satisfying the partnership liabilities, for
any sum of money paid by him for the
purchase of a share in the partnership
and for any capital contributed by him,
and is ^
(b) to stand in the place of the creditors of
the firm for any payments made by him
in respect of the partnership liabilities,
and
(c) to be indemnified by the person guilty of
the fraud or making the representation
against all the debts and liabilities of the
firm. 2
This enactment hardly needs explanation. The prin-
ciples on which contracts may be set aside for fraud or
misrepresentation belong to the general law of contract,
and can be adequately considered only in that connexion.
It is proper to bear in mind that the contract of partner-
ship is one of those which are said to be uberrimw fidci.
Eefraining from active falsehood ia word or deed is not
enough; the utmost good faith is required. And this
' Somo such words as " also entitled" appear to have dropped
out at the end of this clause.
''■ On this section generally, op. Lindley, 482 ; Mycock v. Beatson
(ISTO), 13 Oh. D. 384 ; as to clause (c), Newh'gging v. Adam (1886),
34 Ch. Div. o82.
PROFITS AFTER DISSOLUTION. 113
duty " extends to persons negotiating for a partnership, Part I.
but between -whom no partnersHp as yet exists."^ The Sect. 41.
most extensive applications of the principle, however, have
been in the questions arising out of the formation of
companies. The wholesome development of the law in
this direction has been, as I venture to think, most
unhappily checked by the recent decision of the House of
Lords in Derry v. Peek (1889, 14 App. Ca. 337), and the
remedy since provided by the Directors' Liability Act,
1890 (53 & 54 Yict. c. 64), is far from being satisfactory.
42. — (1.) Where any member of a firm has Rigbt of out-
died or otherwise ceased to be a partner, and in certain
. , . . . . oases to
the surviving or continuing partners carry on stare profits
the business of the firm with its capital or dissolution,
assets without any final settlement of accounts
as between the firm and the outgoing partner or
his estate, then,^ in the absence of any agree-
ment to the contrary, the outgoing partner or
his estate is entitled at the option of himself or
his representatives to such share of the profits
made since the dissolution as the Court may
find to be attributable to the use of his share
of the partnership assets, or to interest at the
rate of five per cent, per annum on the amount
of his share of the partnership assets.^
' Lindley, 303, and see the present writer's "Principles of Con-
tract," 5th ed. p. 529.
^ Perhaps a clerical error for_ "there;" but the sense is un-
affected.
' Per Lord Cairns, Vyse v. Foster (1874), L. E. 7 H. L. at p. 329 ;
Tate.s Y. Finn (1880), 13 Ch. D. 839. How far the profits made
P. I
114 PARTNERSHIP ACT, 1890.
Fart I. (2.) Provided that where by the partnership
Sect. 42. contract an option is given to surviving or con-
tinuing partners to purchase the interest of a
deceased or outgoing partner, and that option
is duly exercised, the estate of the deceased
partner, or the outgoing partner or his estate,
as the case may be, is not entitled to any
further or other share of profits; but if any
partner assuming to act in exercise of the
option does not in all material respects comply
■with the terms thereof, he is liable to account
under the foregoing provisions of this section.
Illustrations to suh-s. (1).
1. A., B. and 0. are partners in a manufacture of machinery.
A. is entitled to three-eightlis of the partnership property and
profits. A. heoomes bankrupt, and B. and C. continue the
business without paying out A.'s share of the partnership
assets or settling accounts with his estate. A.'s estate is
entitled to three-eighths of the profits made in the business
from the date of his bankruptcy until the final liquidation of
the partnership affairs.'
since the dissolution are attributable to the outgoing partners'
canital is a question to be determined •with regard to the nature of
the business, the amount of capital from time to time employed
in it, the skill and industry of each partner taking part in it, and the
conduct of the parties generally. See per Turner, L.J., in Simpson
V. Chapman (1853), 4 D. M. O. at pp. 171, 172, foUowing and approv-
ing Wigram, V.-C.'s exposition in WiUeH v. BJanford (1841), 1 Ha.
253, 266, 272. There is no fixed rule that the profits are divisible
in the same manner as if the partnership had not ceased. Brown v.
De Tastet (1821), Jac. at p. 296. Indeed, the presumption appears
to be in favour of apportioning profits to capital without regard
to the proportions in which they were divisible during the partner-
ship, Yaics V. /'""'" (1880), 13 Oh. D. at p. 843.
' Crnwshay v. Collins (1826), 2 Euss. 325, 342—345, 347.
PROFITS AFTER DISSOLUTION. 115
2. A. and B. are partners. The partnership is dissolved Part I.
by consent, and it is agreed that the assets and Ibusiness of s^^t~42!
the firm shall be sold by auction. A. nevertheless continues
to carry on the busiaess on the partnership premises, and
■with the partnership property and capital, and upon his own
account. He must account to B. for the profits thus made.^
3. A. and B. trade in partnership as merchants. A. dies,
and B. continues the business with A.'s capital. B. must
account to A.'s estate for the profits made since A.'s death,
but the Court wiU make in B.'s favour such allowance as
it thinks just for his skill and trouble in managing the
business.^
4. A., B. and C. are merchants trading in partnership
under articles which provide that upon the death of any
partner the goodwill of the busiaess shall belong exclusively
to the survivors. A. dies, and B. and C. pay or account for
interest to his legatees, upon the estimated value of his share
at the time of his death, but do not pay out the capital
amount thereof. The firm afterwards make large profits, but
the nature of the business and the circumstances at the time
of A.'s death were such that at that time any attempt to
realise the assets of the firm or the amount of A.'s share
would have been highly imprudent, and would have en-
dangered the solvency of the firm, so that A.'s share in the
partnership assets if then ascertained by a forced winding-up
would have been of no value whatever. Under these circum-
stances the profits made in the business after A.'s (Jeath are
chiefiy attributable, not to A.'s share of capital, but to the
goodwill and reputation of the business and the skill of the
surviving partners, and A.'s legatees have no claim to parti-
cipate in such profits to any greater extent than the amounts
already paid or accounted for to them in respect of interest
on the estimated value of A.'s share.'
1 Turner Y. Major (1862), 3 Griff. 442. '
'^ BrowriY. Be Tastet (1821), Jac. 284, 299; cp. TafesY.Finn{l880),
13 Ch. D. 839. '
2 WedderhurnY Wedderburn (1835-6), 22 Beav. 84, 123, 124.
i2
116 PARTNERSHIP ACT, 1890.
Part I. 5. The facts are as in the last illustration, except that the
ggjf 42_ articles do not provide that the goodwill shall belong to
surviving partners. The deceased partner's estate is entitled
to share in the profits made since his death and attributable
to goodwill in a proportion corresponding to his interest in
the value of the goodwill itself as a partnership asset. The
evidence of experts in the particular business will be admitted,
if necessary, to ascertain how much of the profits was attribu-
table to goodwill.'
6. A. and B. are partners, sharing profits equally, in a
business in which A. finds the capital and B. the skill. B.
dies before there has been time for his skiU. in the business
to create a goodwill of appreciable value for the firm. A.
continues the business of the firm with the assistance of other
skilled persons. B.'s estate is [probably] not entitled to any
share of the profits made after B.'s death.
7. The other facts being as in the last illustration, B. dies
after his skill in the business has created a connexion and
goodwill for the firm. B.'s estate is [probably] entitled to a
share of the profits made after B.'s death.^
Illustrations to sub-s. (2).
1. A., B. and C. ai-e partners, under articles which provide
that on the death of A., B. and C, or the survivor of them,
may continue the business in partnership with A.'s represen-
tatives or nominees, taking at the same time an increased
share in the profits ; and that, in that case, B. and C. or
the survivor of them shall enter into new articles of partner-
ship, pay out in a specified manner the value of the part of
A.'s interest taken over, and give certain secm-ity to A.'s
representatives. B. dies, then A. dies. C. carries on the
business without pursuing the provisions of the articles as to
entering into new articles, or paying out the value of the
part of A.'s interest which he is entitled to acquire, or giving
' See 22 Beav. at pp. 104, 112, 122 (1855-6).
'' These last two cases are given by Wigi-am, V.-C, in his judg-
ment in WilMt V. Blanford (1841), 1 Ha. at p. 271.
PROFITS AFTER DISSOLUTION. 117
security. C. must account to A.'s estate for subsequent Part I.
P^°fits.^ .geet.43.
2. A., B. and 0. are partners under articles ■which provide
that in case of the death of any partner the value of his share
shall be ascertained as thereia provided, with an allowance
in Heu of profits at the rate of 5 per cent, per annum upon his
share of the capital, and that the moneys found to be due to
his executors shall be taken in full for the purchase of his
share, and shall be paid out in a certain manner by instal-
ments extending over two years. A. dies. B. and C. ascer-
tain the amount of his share, and pay interest thereon to his
representatives, but, acting in good faith for the benefit of
the persons interested, they do not pay out the capital within
the two years. This delay in making the complete payment
out is not a material non-compliance with the terms of the
option of purchase, and B. and C. cannot be called upon to
account to A.'s estate for profits subsequent to A.'s death.^
The reader who is already acquainted with the eases Claims
now cited by way of illustration will perceive that several sur ™4iig or
of them have been designedly simplified in statement. It ''°°*"'™"g'
° •' _ ^ _ partners as
often happens that a partner in a firm disposing of his executors or
interest in it by will, and not desiring the affairs of the
firm to be exposed to the interference of strangers, makes
his fellow partners or some of them his executors or trus-
tees, or includes one or more of them among the persons
appointed to those offices. If, having done this, he dies
■while the partnership is subsisting, there may arise at the
same time, and either wholly or in part in the same
persons, two kinds of duties in respect of the testator's
interest which are in many ways alike in their nature and
incidents, but must be nevertheless kept distinct. There
is the duty of the surviving partners as partners towards
the deceased partner's estate; and of this we have just
• Willett V. Blanford (1841), 1 Ha. 253, 264.
' Vyse V. Foster (1874), L. E. 7 H. L. 318,
trations.
118 PARTNEBBHIP ACT, 1890.
Part I. spoken. There is also the duty of the same persons, or
Sect. 42. some of them, as executors or trustees towards the persons
beneficially interested in that estate; and this is deter-
mined by principles which are really independent of the
law of partnership.
These dis- The nature of these complications and the distinctions
tinguisned by n i -n i
further illus- to be observed may be exhibited by some further illustra-
tions.
(a.) A. and B. are partners. A. dies, having appointed B.
Ms sole executor, and B. carries on the trade ■with A.'s
capital. Here B. is answerable to A.'s estate as partner,
and A.'s executor, if lie were a person other than B. himself,
would be the proper person to enforce that liability. B. is
also answerable as executor to the persons beneficially inter-
ested in A.'s estate for the improper employment of his testa-
tor's assets.
(5.) A., a trader, appoints B. his executor and dies. B.
enters into partnership with C. and D. in the same trade,
and employs the testator's assets in the partnership business.
B. gives an indemnity to C. and D. against the claim of A.'s
residuary legatees. Here C. and D. are jointly Hable with B.
to A.'s residuary legatees, not as partners, but as having
knowingly made themselves parties to the breach of trust
committed by B.'
(c.) A. being in partnership with B. and C. appoints B. his
executor and dies. B. and C. continue to employ A.'s capital
in the business. B. is liable as executor to account for the
profits received by himself fi-om the use of A.'s capital, but
not for the whole profits received therefrom by the firm.'* It
is not certain to what extent B. would be liable if B. and C.
were sued together.'
{d.) A. and B. are partners in trade. A. dies, having
appointed C. and D. his executors, and authorized them to
' Flochton V. Ihmuiiig (1868), 8 Ch. 323, n.
' Ter Lord Caii-ns, L. E. 7 li. L. 33-i: (1874).
' Lindley, 523, J3o ; op. L. Q. E. iii. 211.
CLAIMS AGAINST PARTNERS AS TRUSTEES. 119
continue his capital in the trade for a limited time. On the Part I.
expiration of that time C. and D. do not -withdraw their sect~42
testator's capital, but leave it as a loan to the firm, B. and E.,
th.e then members of the firm, knowing the limit of the
authority given by A.'s wiU, and knowing the fund to belong
to A.'s estate. B. and E. are not liable to render to the
persons interested under A.'s will an account of profits since
the time when A.'s capital ought to have been finally with-
drawn, inasmuch, as 0. and D. themselves are liable to A.'s
legatees only to make good the amount of the capital with
interest.'
(e.) If the other facts are as in the last illustration, but B.,
one of A.'s executors, is himself a member of the firm, 0. and
D., the other executors, are still not accountable for any share
of profits.^ B. cannot be charged as executor with a greater
share of profits in respect of his testator's capital than he has
actually received,^ and it is doubtful whether he can be
charged with profits at all.^
(/.) A., B. and 0. are partners in a bank which is carried
on upon the known private credit of the partners, and with
little or no capital. A. dies, having appointed C. and D. his
executors. At the time of A.'s death his debt to the bank on
his private account exceeds his share in the assets. B. and 0.
take D. into partnership, and continue the business without
paying out A.'s share. 0. and D. are not accountable as
executors for any share of the profits since A.'s death, as A.
really left no capital in the business to which such profits
could be attributed, and D. entered the partnership and
shared the profits not as executor, but on his own private
account. In like manner B., 0. and D. are [probably] not
accountable to A.'s estate as partners.*
' Stroud V. Owyer (1860), 28 Beav. 130.
2 Vyse V. Foster (18Y4), L. E. 7 H. L. 318; see per Lord Selbome,
at p. 346.
3 Jones V. Foxall (1852), 15 Beav. 388; per James, L. J.,
Foster (1872), 8 Oh. at pp. 333, 334.
* Simfson v. Chapman (1853), 4 D. M, Gr. 134,
120 PARTNERSHIP ACT, 1890.
Part I. In these " mixed and difacult " cases, as Lord Justice
Sect. 42. Lindley calls them,' it is important for persons seeking to
Claims must assert their right to an account of profits to make up their
and against minds distinctly in what capacity and on the score of what
LTroper"^'^^ duty they will charge the surviving partners or any of
capacity ; them. If they proceed against executors as such for what
is really a partnership liability, if any, and without bringing
all the members of the firm before the Court, failure will
be the inevitable result.^ In a single case where one
surviving partner out of several was held solely liable for
the profits made by the employment of a deceased partner's
capital by the firm, there was in fact only a sub-partnership
between this survivor and the deceased : and it was there-
fore held that the other members of the principal firm were
under no duty to the estate of one who was not t/ieir part-
ner at all, and were not necessary or proper parties to be
sued.'
and must be Again, the right, where it exists, is an alternative right
alone, or for to interest on the capital improperly retained in the busi-
mterest alone, j^^gg ^j. ^^ ^^ account of the profits made by its use ; and
one or other of these alternatives must be distinctly chosen.
A double claim for both profits and interest is of course in-
admissible, and it has been laid down that a mixed claim
is equally so. " If relief can be obtained on the footing
of an account of profits, it mu^t be an account of profits
and nothing else ; " a claim for profits as to part of the
time over which the dealing extends, and interest as to
other part, or for profits against some or one of the
' Lindley, 523.
'See Simpsvii v. Chapumn (1S53), 4 D. M. G. 154; Vyse \.
Foster (1874), L. R. 7 H. L. 318; Travis v. Milne (1851), 9 Ha. at
p. 149.
•' Jlroini Y. Dc Tttstet (ISL'l), Jac. 2.S4 ; see p. 74, above.
POSITION OF SURVIVING PARTNERS. 121
surviving partners, and interest agaiast others, cannot be Part I.
allowed.' sect. 42.
It is a question, however, whether success in asserting Account of
claims of this kind is not in practice little more profitable dia°8olution'^
than failure : for an account of profits after dissolution has "^^l^^^^ '"^
'- practice.
seldom or never been known to produce any real benefit to
the parties who obtained it.^
Where interest is given, it is generally simple interest at What interest
5 per cent. It does not appear that a partner as such is
ever charged with compound interest in these cases. A
trustee-partner may in his quality of trustee be charged
with compound interest at 6 per cent., if the retention of
the fund in the hands of the firm, even as a loan, was a
distract and specific breach of trust.'
43. Subject to any agreement between the Eetirmgor
Q.6C63iSGd
partners, the amount due from surviving or partner's
... , . . . , share to be
contmumg partners to an outgoing partner or a debt.
the representatives of a deceased partner in
respect of the outgoing or deceased partner's
share is a debt accruing at the date of the dis-
solution or death.
A surviviag partner has sometimes been said to be a Survi-ving
trustee for the deceased partner's representatives in respect ^l^^l. ^° *
of his interest in the partnership; but this is a metaphorical
and inaccurate expression. The claim of the representatives
against the surviving partner is in the nature of a simple
' Per Lord Oaims, Vyae v. Foster (1874), L. E. 7 H. L. at p. 336.
^ Lindley, 536, note (o) : " The writer is not aware of any instance
in wMch. such a judgment has been worked out and has resulted
beneficially to the person in whose favour it was made."
' As in Jones v. Foxall (1852), 15 Beav._388.
122
PARTNERSHIP ACT, 1890.
Part I.
Sect. 43.
Statute of
Limitations.
contract debt, and is subject to the Statute of Limitations,
which runs from the deceased partner's death. The receipt
of a particular debt due to the firm after six years have
elapsed from that date does not revive the right to demand
a general account.^ Such is the practical effect of the law,
now settled for nearly twenty years, which is declared by
this section.
Eule for dis-
tribution of
assets on final
settlement
of accounts.
44. In settling accounts between the partners
after a dissolution of partnership, the following
rules shall, subject to any agreement, be ob-
served :
(a.) Losses, including losses and deficiencies
of capital,^ shall be paid first out of profits,
next out of capital, and lastly, if necessary,
by the partners individually in the propor-
tion in which they were entitled to share
profits :
(b.) The assets of the firm including the sums,
if any, contributed by the partners to make
up losses or deficiencies of capital, shall
be applied in the following manner and
order :
L In paying the debts and liabilities of
» Knox V. Gye (1871-2), L. E. 5 H. L. 656, see per Lord West-
bury.
2 Nowell V. Xim'fll (1869), T Eq. 538; Whitcomb v. Converse {\.&15),
119 Mass. 38. In otlier words , money due from the firm, to a partner
in respect of capital contributed, not being a distinct advance, is
differently treated from money due for advances only in the one
jjoint of ranking after it. In itself it is a partnership debt, to be
made up by contribution, if the assets are insufScient, in the same
■way as other partnership losses.
DI8TRIBUTI0N OF ASSETS. 123
the firm to persons who are not FaJ^t i.
partners therein : sect. 44.
2. In paying to each partner rateably
what is due from the firm to him for
advances as distinguished from capital:
3. In paying to each partner rateably
what is due from the firm to him in
respect of capital :
4. The ultimate residue, if any, shall
be divided among the partners in the
proportion in which profits are divi-
sible.^
Partners cannot, of course, escape by any agreement
among themselves from the necessity of paying the external
debts of the firm in full before they divide profits or even
repay advances as between themselves. But they may
make any agreement they please as to the proportions in
which, as between themselves, partners shall be bound to
contribute and entitled to be recouped. The rules given
in this section are only rules of administration founded on
the usual course of business, and expressing what is fairly
presumed to be the intention of the partners, but if any
different intention is shown in a particular case by the
terms of the partnership articles or otherwise, that inten-
tion so shown must prevail.
1 Sub-s. (J) is almost verbally from Lindley, 402. Compare tlie
form of order fully stated in the judgment of the Judicial Committee,
Binney v. Mutrie (1886), 12 App. Ca. 160, 165. Where partnership
assets are administered by the Court in an action, debts from the firm,
to a partner are payable out of the assets before the costs of the action :
PoUer v. Jadimn (1880), 13 Ch. D. 845.
124
Part I.
Sect. 45.
Definitions
of "court"
and " busi-
ness."
Saving for
rules of
equity and
common law.
PARTNERSHIP ACT, 1890.
Supplemental.
45. In this Act, unless the contrary inten-
tion appears, —
The expression "Court" includes every Court
and judge having jurisdiction in the case.
The expression " business " includes every
trade, occupation, or profession.
46. The rules of equity and of common law
applicable to partnership shall continue in force
except so far as they are inconsistent with the
express provisions of this Act.
As to this section, see the Introduction, p. vii, above.
Provision as
to bankruptcy
in Scotland.
Commence-
ment of Act.
47. — (1.) In the application of this Act to
Scotland the banki'uptcy of a firm or of an
individual shall mean sequestration under the
Bankruptcy (Scotland) Acts, and also in the
case of an individual the issue against him of a
decree of cessio bonorum.
(2.) Nothing in this Act shall alter the rules
of the law of Scotland relating to the bank-
ruptcy of a firm or of the individual partners
thereof.
48. The Acts mentioned in the schedule to
this Act are hereby repealed to the extent men-
tioned in the third colunm of that schedule.
49. This Act shall come into operation on
COMMENGEMENT OF ACT.
125
the first day of January one thousand eight Parti.
hundred and ninety-one. seot. 49.
50. This Act may be cited as the Partner- Short title.
ship Act, 1890.
SCHEDULE.
Enactments Eepealed.
Section 48.
Session and
Chapter.
Title or Short Title.
Extent of Eepeal.
19 & 20 Vict.
0. 60.
19 & 20 Vict.
c. 97.
28 & 29 Vict.
c. 86.
The Mercantile Lair Amendment
(Scotland) Act, 1856.
The Mercantile Law Amendment
Act, 1856.
An Act to amend the law of part-
nership.
Section seven.'
Section four.'
The whole Act.'
' Superseded by s. 18, above.
' Superseded by s. 2, above.
127
PART II.
PROCEDURE AND ADMINISTRATION.
CHAPTER I.
Procedure in Actions by and against Partners.
The Eules of Coiirt, and the rules establislied by de- Part II.
cisions in bankruptcy, and now partly declared in the
Bankruptcy Act, deal with various points exclusively or ^alWittibv
specially relating to partnership affairs, and therefore the Act.
important for persons concerned therein, either as parties
or as legal advisers, to have some knowledge of. These
are not touched by the present Act, and it will still be
convenient to give some account of them.
1. "Any two or more persons claiming or Partners may
i.-i>-ii . 1 1 sue and be
bemg liable as co-partners may sue or be siied. sued in name
in the name of the respective firms, if any, of
which such persons were co-partners at the time
of the accruing of the cause of action ; and any
party to an action may in such case apply by
summons to a Judge for a statement of the
names of the persons who were, at the time of
the accruing of the cause of action, co-partners
in any such firm, to be furnished in such
manner, and verified on oath or otherwise, as
the Judge may direct. Provided that, in the
128
PROCEDURE AND ADMINISTRATION.
Part II.
Chap. I.
Sole trader
under firm
name.
case of a co-partnership which has been dis-
solved to the knowledge of the plaintiff before
the commencement of the action, the writ of
summons shall be served upon every person
sought to be made liable." ^
The Eules also provide for the case of " any person
carrying on business in the name of a firm apparently con-
sisting of more than one person" being sued in the firm-
name. The writ may be served at the principal place of
business in the same way as under Order IX. r. 6 (par. 3,
below : Order IX. r. 7) . The person sued is to appear in
his own name, but subsequent proceedings contiaue in the
name of the firm : Order XII. r. 16.
Discovery of
individual
partners in
actions by
firm.
2. "When a writ is sued out by partners
in the name of their firm, the plaintiffs or
their solicitors shall, on demand in writing by
or on behalf of any defendant, forthwith
declare in writing the names and places of
residence of all the persons constituting the
firm on whose behalf the action is brought.
And if the plaintiffs or their solicitors shall
fail to comply with such demand, all proceed-
ings in the action may, upon an application
' Eules of the Supreme Court, Ord. XVI. r. 14 (No. 136). Tlie
■words " of which, such persons ■were co-partners at the time of the
accruing of the cause of action," introduced on the re'vision of the
Eules of Court in 1883, remoye a troublesome doubt which had
arisen on the former language of the Eule. See Ex parte Toung
(1881), 19 Ch. Div. 124 ; Manster v. Railton (1883), 11 Q. B. Div.
435, in H, L. nom. Munster v. Cox (1885), 10 App. Ca. 680.
AGTIONS AGAINST FIRMS. 129
for that purpose, be stayed upon such terms as Part ii.
the Court or a Judge may direct. And when
the names of the partners are so declared, the
action shall proceed in the same manner and
the same consequences in all respects shall
follow as if they had been named as the
plaintiffs in the writ. But all proceedings
shall nevertheless continue in the name of
the firm." 1
3. "Where persons are sued as partners in Service of
PT.« 1 • -\ -|^ ^ -I ^^^ ™ action
the name of their firm, the writs shall be served against firm,
either upon any one or more of the partners, or
at the principal place within the jurisdiction of
the business of the partnership upon any person
having at the time of service the control or
management of the partnership business there."
Subject to compliance in other respects with
the Rules of Court, such service is good service
upon the firm.^
Order YII. r. 2 does not apply to a case where the
memhers of the firm are all foreigners resident ahroad ; for
this would have the effect of enlarging the jurisdiction
over foreigners in a manner which cannot have been
intended by the rule.'
4. "Where persons are sued as partners Appearance
■"- _ in "^ partners
in the name of their firm, they shall appear individuaUy.
' Order Vn. r. 2 (No. 43).
2 Order IX. r. 6 (No. 53).
3 Russell V. Camhefort (1889), 23 Q. B. Div. 626 ; 58 L. J. Q. B. 498.
P. K
the firm.
130 PROCEDURE AND ADMINISTRATION.
Part II. individually iu their own names : but all sub-
Chap. I. -I ^ i.'
sequent proceedings shall nevertheless continue
in the name of the firm."*
Execution 5. "Where a judgment or order is against
mZ iSst a firm,^ execution may issue :
"a. Against any property of the partnership:
^'■i. Against any person who has appeared
in his own name under Order XII.
Eule 15, or who has admitted on the
pleadings that he is, or who has been
adjudged to be, a partner :
"c. Against any person who has been served
as a partner* with the writ of summons
and has failed to appear.
" If the party who has obtained judgment or
an order claims to be entitled to issue execution
against any other person as being a member of
the firm, he may apply to the Court or a Judge
for leave so to do : and the Court or Judge may
give such leave if the liability be not disputed,
or if such liability be disputed, may order that
the liability of such person be tried and deter-
mined in any manner in which any issue or
^ Order XII. r. 15 (No. 85). "Wliere only one member of the
firm enters an appeaiance, judgment cannot be signed against tbe
firm for default of appearance: Adam v. Townend (1884), 14 Q,. B.
D. 103.
* It must be in this form if the writ in the action was issued
against the partnership in the firm name : Jackson v. Litchfield
(1882), 8 Q. B. Div. 474.
" This means actual service on that person : Ex parte Ide (1886),
17 a B. Div. 755, 768.
ACTIONS AGAINST FIRMS. 131
question in an action may be tried and deter- Part ii.
^ . "^ Chap. I.
mined ." ^
These rules, it mil he observed, do not introduce any- The new pro-
thing that amounts to the recognition of the firm as an not recognize
artificial person distinct from its members.^ They allow * ^isti^t^^
the name of the firm to be used for the purpose of making person.
procedure quicker and easier ; and creditors of a firm have
now the great practical convenience of being able to pursue
their claims even to judgment without first ascertaiuing
who all the partners are. The substantive results, however,
are the same as under the former practice; and a Judgment
against the firm has precisely the same effect that a judg-
ment against all the partners had formerly. An action
may be brought on the judgment against an individual
member of the firm who is not admitted on th£ pleadings
to be a partner.^ Nor is it quite clear that actions between
a firm and one of its own members, or between two firms
having a common member, are now maintainable in the
firm-name or names in England, as they always have been
in Scotland :* Lord Justice Lindley, however, is of opinion
1 Order XLH. r. 10 (No. 588).
^ ' ' We have not yet introduced into our law the notion that a
firm is a, persona." James, L.J., Ex parte Blain, 12 Ch. Div. at
p. 533 (1879). The changes in language in the Eules of 1883
rather tend to make it plainer than before that such was not the
intention of the Judicature Acts.
^ OlarJc Y. Cullen (1882), 9 Q. B. D. 355. But where an action
commenced against the firm is prosecuted against one partner only,
and judgment taken against him by consent, the plaintiS is not
allowed to turn his judgment, by amendment, into a, judgment
against the firm in order to issue execution against another alleged
partner : Munster t. Cox (1885), 10 App. Ca. 680.
* See Second Report of Mercantile Law Commission, p. 18, and
Appendix B thereto, p. 141 ; Bell, Principles of Law of Scotland,
§357.
k2
132 PROOEDUBE AND ADMINISTRATION.
Part II. that the allowance of them is involyed in the new pro-
Chap. I. . ,
cedure.
Garnishee Order XLY. does not enable a garnishee order to be
°^^''^^- made for the attachment of a debt due from a firm de-
scribed by its firm-name, as no means of serving or enforcing
such an order are provided.^
Adjudication In bankruptcy an order of adjudication cannot be made
b^^ptey™ against a firm in the firm-name. It must be made against
the partners individually.' A creditor who has obtained
judgment against the firm, but has not got leave to issue
individual execution under this order, cannot issue a bank-
ruptcy notice under the Act of 1883 against individual
members of the firm.*
1 See p. 21 above.
^■Walker v. Boohe (1881), 6 Q. B. Div. 631.
3 General Eules of 1884, 197.
* Ex parte Ide (1886), 17 Q. B. Div. 755.
BANKRTJPTOY PBOOEDUBE. 133
CHAPTEE IL
Procedure in Bankruptcy against Partners.
1. "Where two or more bankruptcy peti- Partii.
, Chap. II.
tions are presented against the same debtor or
. . ^ rt T 1 Consolidation
against joint debtors, the Court may consoudate of proceedings
the proceedings, or any of them, on such terms and separate
as the Court thinks fit." ^ ^^ ^°^'
Illustration.
A. and B. are partners in trade, A. teing the sole managing
partner. C, a creditor of the firm, presents a bankruptcy
petition against A. alone. Before the hearing of this petition
C. presents another petition against A. and B. jointly. The
Coiu-t will consolidate the proceedings under the separate
petition with those under the joint petition.'
2. "Any creditor whose debt is sufficient Creditor of
,--, 11 .. firrY) may
to entitle him to present a bankruptcy petition present peti-
• j_ n J.1 J. J! il J. ^°^ against
against ail the partners oi a nrm may present a one partner.
petition against any one or more partners of
• the firm without including the others."^
3. "Where there are more respondents Court may
,.,. 11/-N. T- dismiss peti-
than one to a petition, the Court may dismiss tion as to
some respon-
dents only.
1 Bankruptcy Act, 1883 (46 & 47 Vict. c. 52), s. 106.
' Ex parte Mackenzie (1875), 20 Eq. 758.
' Bankruptcy Act, 1883 (46 & 47 Vict. c. 52), s. 110.
134
Part II.
Chap. II.
One trustee
for property
of partners in
one firm
separately
bankrupt.
Creditor of
firm may
prove in
separate
bankruptcy
for purpose of
voting.
Dividends of
joint and
separate
properties.
PBOOEBUBE AND ADMINISTRATION.
the petition as to one or more of them without
prejudice to the effect of the petition as against
the other or others of them." ^
4. '' Where a receiving order has been made
on a bankruptcy petition against or by one
member of a partnership, any other bankruptcy
petition against or by a member of the same
partnership shall be filed in or transferred to
the Court in which the first-mentioned petition
is in com-se of prosecution, and unless the Court
otherwise directs, the same trustee or receiver
shall be appointed as may have been appointed
in respect of the property of the first-mentioned
member of the partnership, and the Court may
give such directions for consolidating the pro-
ceedings under the petitions as it thinks just."^
5. " If a receiving order is made against
one partner of a firm, any creditor to whom
that partner is indebted jointly with the other
partners of the firm, or any of them, may prove
his debt for the pm-pose of voting at any
meeting of creditors, and shall be entitled to
vote thereat."*
6. " (1-) Where one partner of a firm is
1 Banki-uptoy Act, 1883 (-16 &- 47 Vict. c. 52), s. 111.
- II. s. 112. "Wlen a trustee of the joint estate is duly appointed,
tlie separate estates also vest in him at once : Ex parte Philps (1874),
19 Eq. 256 ; Re WaddcWs Oontraet (1876), 2 Oh. D. 172 ; and see
Ebb3 V. Boulnois (1875), 10 Ch. 479.
* lb. sched. 1, rule 13. As to the distribution of the estates, see
further, Ohap, 3, pars. 1 — 4, below.
BANKRUPT07 PROCEDURE. 135
adjudged bankrupt, a creditor to whom the Partii.
dLQrP. Ill
bankrupt is indebted jointly with the other —
partners of the firm, or any of them, shall not
receive any dividend out of the separate pro-
perty of the bankrupt until aU the separate
creditors have received the full amount of their
respective debts.
" (2.) Where joint and separate properties
are being administered, dividends of the joint
and separate properties shall, subject to any
order to the contrary that may be made by the
Court on the application of any person in-
terested,^ be declared together ; and the ex-
penses of and incident to such dividends shall
be fairly apportioned by the trustee between
the joint and separate properties, regard being
had to the work done for, and the benefit re-
ceived by each property." ^
7. "Where a member of a partnership is Actions by
adjudged bankrupt, the Court may authorize solvent
the trustee to commence and prosecute any
action in the names of the trusted and of the
bankrupt's partner; and any release by such
partner of the debt or demand to which the
action relates shall be void ; but notice of the
application for authority to commence the action
shall be given to him, and he may show cause
against it, and on his application the Court
' See Ex parte Diekin (1875), 20 Eq. 767.
' Baakruptey Act, 1883, s. 59.
136 PROCEDURE AND ADMINISTRATION.
Part II. may, if it thinks fit, direct that he shall receive
his proper share of the proceeds of the action,
and if he does not claim any benefit therefrom
he shall be indemnified against costs in respect
thereof as the Court directs." ^
' Bankruptcy Act, 1883, s. 113.
ADMINISTRA TION OF EST A TES. 137
OHAPTBIi in.
Administration of Partnership Estates.
1. In the administration by the High Court part ii.
of Justice of the estates of deceased partners *^'
and of bankrupt and insolvent partners, the ofTdmlnistra-
foUowing rules are observed, subject to the ex- IndsepS*
ceptions mentioned in the two following para- ®®***®'
graphs : —
The partnership property is applied as, joint
estate in payment of the debts of the firm,^
and the separate property of each partner is
applied as separate estate in payment of his
separate debts.
After such payment the surplus, if any, of
the joint estate is applied in payment of the
separate debts of the partners, or the surplus,
if any, of the separate estate is applied in
payment of the debts of the firm.
Illustrations.
1. A. and B. are in partnership. A. dies, and tis estate
is administered liy the Court. Both A.'s estate and B. are
solvent. Here A.'s separate creditors and the creditors of A.
^ That is, to persons other than partners : see par. 4, p. 148, below.
138 PBOOEDUBE AND ADMINISTRATION.
Part II. and B.'s firm may prove their debts against A.'s estate and be
Chap. Ill, pg^j^ pjj^ q£ jj£g assets pari passu and in the same manner.
The payments thus made to creditors of the firm must then
be allowed by B. in account with A.'s estate as payments
made on behalf of the firm, and A.'s estate will be credited
accordingly in ascertaining what is A.'s share of the partner-
ship property.'
2. The facts being otherwise as in the last illustration, A.'s
estate is insolvent, and the creditors of the fiim proceed to
recover the full amount of their debts from the solvent partner,
B. Here B. will become a creditor of A.'s separate estate for
the amount of the partnership debts paid by B. beyond the
proportion which he ought to have paid under the partnership
contract.'*
3. If B. is also insolvent, the creditors of the firm must
resort in the first instance to the partnership property, and
can only come against so much of the separate property of the
partners as remains after paying their separate creditors re-
spectively : and the same rule applies if both A. and B. have
died before the administration takes place.'
4. A. and B. are partners. A. dies, and B. afterwards
becomes bankrupt. M., a creditor of the firm, proves his
debt in B.'s bankruptcy, and receives some dividends which
satisfy it only in part. A.'s estate is administered by the
Court, and M. proves in that administration for the residue of
his debt. Separate creditors of A. also prove their debts. M.
has no claim upon A.'s estate until all the separate creditors
of A. have been paid.*
5. A. and B. are partners under articles which provide that
in the event of A.'s death during the partnership, B.'s interest
in the profits shall thenceforth belong to A.'s representatives,
B. receiving a sum equivalent to his share of profits for six
months, to be ascertained as therein provided, and the amount
of his capital. A. dies, having appointed B. his executor. B.
carries on the business for some time, and then becomes a
' Bidgway v. Clare (1854), 19 Beav. at p. 116.
= Ihid.
' it. at pp. 116, 117.
* Lodge v. Prichard (1863), 1 D. J. S. 610.
JOINT AND SEPARATE ESTATES. 139
liquidating debtor. The partnership property existing at the Part II,
date of A.'s death is not converted iato A.'s separate property Chap. III,
by the provisions of the partnership articles, and such pro-
perty, so far as it is still found in B.'s hands at the time of
liquidation, is applicable in the first instance as joint estate
to pay the creditors of the firm.'
6. A. andB. are partners for a term, A. not having brought
in any capital, but receiving a share of the profits as a working
partner. The partnership deed provides that, if A. dies
during the term, his representatives shall receive only an ap-
portioned part of his estimated share in the profits for the
current half-year. A. dies during the term, andB. afterwards
becomes bankrupt. Here B. takes the partnership property
subject to the right of A.'s estate to be indemnified against
the partnership debts, and the property of the firm of A. and
B., so far as it is found still existing in B.'s hands, must be
first applied to pay the creditors of the firm.^
7. A., B., C. and D. are partners for a term under articles
which provide that the death of any one of them shall not
dissolve the partnership, but the survivors or survivor shall
carry on the business, and the share of the deceased partner
shall be ascertained and paid out as therein provided. A.
and B. die during the term, and afterwards 0. and D. become
liquidating debtors. Here, as the interest of a deceased
partner wholly passes to the survivors on his death under the
special and exceptional provisions of the partnership articles,
the creditors of the original firm of A., B., C. and D. have no
right to have the property of that firm, so far as it is found
still existing in the hands of C. and D., applied in payment
of their debts lq preference to the creditors of the new firm of
C. and D.^
This rule has been repeatedly laid down in its general Di^ta laying
form as a well-established one. down the rule.
' Ex parte Morley (1873), 8 Oh. 1026. Compare Ex parte Butcher
(1880), 13 Oh. Div- 465, a similax case, in which this decision
was followed.
2 Ex parte Dear (1876), 1 Ch. Div. 514.
' Be Simpson (1874), 9 Oh. 572. This was a peculiar case.
140 PROCEDURE AND ADMINISTRATION.
Part II. " Upon a joint bankruptcy or insolvency, the joint estate
"''^P' "^- is the fund primarily liable, and the separate estate is only
brought in in case of a surplus remaining after the separate
creditors have been satisfied out of it,"^
" The joint estate is to be applied in payment of the
joiat debts, and the separate estate in payment of the
separate debts, any surplus there may be of either estate
being carried over to the other ; " and this applies to the
administration of estates in Eqiiity as weU as in Bank-
ruptcy.^
" The joint estate must be applied first in payment of
joint creditors, and the separate estate in payment of
separate creditors, and only the surplus of each estate is to
be applied in satisfaction of the other class of creditors."'
And now it is declared by statute in the Bankruptcy
Act, 1883, s. 40, sub-s. 3 :
" In the case of partners the joiat estate shall be applic-
able in the first instance in payment of their joiat debts,
and the separate estate of each partner shall be applicable
in the first instance in payment of his separate debts. If
there is a surplus of the separate estates it shall be dealt
■with as part of the joiat estate. If there is a surplus of
the joint estate it shall be dealt with as part of the respec-
tive separate estates in proportion to the right and interest
of each partner in the joint estate."
1 Rolfe V. Flower (1866), L. E. 1 P. C. at p. 48.
2 Lodge v. Prichard (1863), 1 D. J. S. at pp. 613, 614, per
Turner, L.J. The Supreme Couit of Judicature Act, 1875, s. 10,
assimilates the rules of administration of deceased persons' estates
to those " in force for the time being under the Law of Bankruptcy
with respect to the estates of persons adjudged bankrupt :" apart
from this enactment, however, the practice was already so settled
on the point now in question.
' Ex parte Dear (1876), 1 Oh. Div. at p. 519, per James, L.J. ;
Ex parte Morley (1873), 8 Oh. at p. 1032.
JOINT AND SEPARATE ESTATES. 141
The suLiect was also carefully considered by Lord iPart ii.
nVi TTT
Eomilly in Bidgway v. Clare} The rules there laid down _; '. — '. —
by him for the various cases which may occur have been
given above in the form of illustrations.
The Indian Contract Act (s. 262) gives the rule as Euleof Indian
» „ Contract Act.
follows : —
" Where there are joint debts due from the partnership,
and also separate debts due from any partner, the partner-
ship property must be applied in the first instance in pay-
ment of the debts of the firm ; and if there is any surplus,
then the share of each partner must be applied in payment
of his separate debts or paid to him. The separate pro-
perty of any partner must be applied first in the payment
of his separate debts, and the surplus (if any) in the pay-
ment of the debts of the firm." This section is general in
its terms, and not confined to the administration of part-
ners' estates by the Court. It seems intended to cover the
doctrine of partners^ lien, which is separately dealt with by
the Partnership Act, s. 39, p. 98, above.
The rules of administration as between the creditors of The rule
the firm and the separate creditors of the partners have doubtful in
been settled, and adhered to after much hesitation in the P'™'''?!^-
earlier cases, as "a sort of rough code of justice,"'' and as
an empirical way of deahng with a pressing necessity,
rather than as being reasonable in themselves.' They
1 19 Beav. HI (1854).
* Per James, L.J., Lacey v. Eill (1872), 8 Oh. at p. 444.,
' " It is extremely difBcult to say upon what tlie rule in bank-
ruptcy is founded : '' per Lord BIdon, Qray v. Ohiswell (1803), 9
Ves. at p. 126 ; to the like eflect in DuUon v. Morrison (1810—1),
17 Ves. at p. 211 ; see, too, Lodge v. Prichard (1863), 1 D. J. S.
613, per Turner, L.J. Story (on PartnersMp, §§ 377, 382) says
that it " rests on a foundation as questionable and unsatisfactory
as any rule in the whole system of our jurisprudence : " Kent, on
the other hand (Gomm. iii. 65), thinks it on the whole a reasonable
142
PROCEDURE AND ADMINISTRATION.
Part II.
Chap. III.
Mercantile
plan of admi-
nistration.
Law of
Scotland.
give, in fact, results altogether at variance with the mer-
cantile system of settling the accounts of a firm, which
proceeds upon the mercantile conception of the firm as a
person distinct from its partners. On the mercantile plan
the debts of the partners to the firm, as ascertained on the
ordinary partnership accounts, are payable on the same
footing as their other debts ; and if this rule were applied
by the Court, the joint estate might prove against the
separate estate of any partner in competition with the
separate creditors for the balance due from him to the firm.
The creditors of the firm would thus be in a far better
position than they are at present. As it is, the partners
may have considerable separate property, and be largely
indebted to the firm, and yet their separate creditors may
be paid in full, while the creditors of the firm get hardly
anything.^
The law of Scotland does treat the firm as a separate
person, and so far agrees with the usage of merchants;
but on the point now before us it differs from the mer-
cantile scheme of accounts as well as from the law of
England. The rule is, that "upon the sequestration of
co-partners their separate estates are applicable to the pay-
ment pari passu of their respective separate debts, and of
so much of the partnership debts as the partnership estate
one. Lord Blackburn has all but said that it was invented merely
to save trouble. " The reason was, I take it, not upon the ground
that there was a right in the private creditors to be paid out of the
separate estate, or a right in the joint creditors to be paid out of the
joint estate, for I do not think that there -^as any such rule ; but
it was said the rule was to be adopted, partly, at least, on the ground
of convenience in admiaistering the bankruptcy law. It was
thought that the administration of the bankruptcy law could not
be conveniently carried out if the estates were to be mixed. Whether
that was a right notion or not I do not know : " Read v. Bailey
(1877), 3 App. Ca. at p. 102.
' See the extract from Cory on Accounts given in Lindley, 696.
Chap. III.
JOINT AND SEPARATE ESTATES. 143
is insufficient to satisfy. The creditor in a company [i. e. Part II.
partnership] debt, in claiming upon the sequestrated estate
of a banirupt partner, must deduct from the amount of
his claim the value of his right to draw payment from the
company's funds, and he is ranked as a creditor only for
the balance."^ This is less favourable to partnership^cre-
ditors than the mercantile rule, though more so than the
EngHsh rule, and it is more complicated in working than
either. The English rule was preferred to the Scottish by
most of the persons and bodies who returned answers to
the Mercantile Law Commission; whereas, on the other
matters of difference between the partnership law of the
two countries, the opinions given were almost imanimous
in favour of the law of Scotland.
In France no express directions on this point are given
by the Civil or Commercial Code. The prevailing opinion
seems to be that the creditors of the firm have a prior
claim on the partnership property, and may also eome
upon the separate property in competition with the sepa-
rate creditors :^ and this is the rule expressly adopted by
the. Swiss Federal Code of Obligations, Arts. 566 and
568.
The Grerman Commercial Code (Art. 122) makes the
joint estate (Gesellschaftsvermogen) applicable in the first
instance to pay the debts of the firm : the rights of joint
and separate creditors respectively against the separate
estates are left to be dealt with by the municipal laws
(Landesgesetzen) of the several Grerman States.
' Second Eeport of Mercantile Law Commission, Appendix A,
p. 99. It must be remembered that in Scotland the firm can be
bankrupt without the partners being bankrupt.
^ Troplong, Droit Civ. Expl., Contrat de la Sooiete, torn. 2, nos.
857—863 ; Sirey, Codes Annotes, on Code Civ. 1864, nos. 10—12.
144
Part II.
Chap. III.
Exceptional
rights of
proof in
certain oases.
When credi-
tors of firm
may prove
against sepa-
rate estate.
Where no
joint estate.
PROCEDVRE AND ADMINISTRATION.
2. A creditor of the firai may nevertheless
prove his debt in the first instance against the
separate estate of a partner if the debt has been
incurred by means of a fraud practised on the
creditor by the partners or any of them/ and
(perhaps) if there is no joint estate.
Illustration.
A. and B., trading in partnership, induce 0. to accept bills
of exchange to a large amount by representing them as
drawn to meet purchases of cotton on the joint account of A.
and B.'s fii-m and 0. The cotton has never been really
bought. A. and B. become bankrupt. C. is entitled to
prove at his election against the joint estate or the separate
estates.^
It was formerly held tliat joint creditors might also
prove in the first instance against a partner's separate
estate in cases where there was no joint estate. But this
operated as a most capricious exception to the general rule,
for the existence of joint estate of any pecuniary value,
however small, such as office furniture worth a few shillings,
was enough to save that rule from it. And it has been
thought by many that the exception is tacitly abrogated
by sect. 40 of the Bankruptcy Act, 1883, which makes no
' Ex parte AdaTnson (1878), 8 Ch. Div. 807, diss. Bramwell, L.J.
The principle seems to be this : the creditor may proceed at Ms
election against the joint estate for the partnership debt, or against
the separate estates for the equitable liability to restore the money
obtained by fraud. This liability constitutes a provable debt, being
treated apparently as a liquidated duty quasi ex contractu. And the
right seems to be the same against the separate estate of a partner
personally innocent of the fraud : Ex parte Salting (1883), 25 Ch.
Div. 148, where the point was not decided, as the partner had
given a separate guaranty.
» Ex parte Adamson (1878), 8 Ch. Div. 807.
ADMINISTRATION OF ESTATES. 145
mention of it. Lord Justice Lindley, however, treats it as Part li.
still in existence.^ " L
3. The trustee of the joint estate of a bank- Where joint
rupt firm may prove ^ against the separate estate prove against
of any partner, or the joint estate of any distinct estates or
firm composed of or including any of the part- minor firm,
ners in the principal firm, debts arising out of
either of the following states of fact : —
1. Where that partner or distinct firm has
dealt with the principal firm in a business
carried on by such partner or distinct firm
as a separate and distinct trade, and the
principal firm has become a creditor of such
partner or distinct firm in the ordinary way
of such dealing : ^
2. Where that partner has fraudulently
converted partnership property to his own
use* without the consent or subsequent ratifi-
cation of the other partner or partners.®
> Lindley, 731.
'^ That is, on behalf of the creditors of the firm.
' Lindley, 736.
* lb. 733.
' The comparison of Expa/rfe Harris (1813), 2 V. & B. 210, and
1 Eose, 437, -with Ex parte Tonge (1814), 3 V. & B. 31 ; 2 Eose, 40,
and the judgment of Jessel, M.E., in Lacey v. Hill (1876), 4 Oh. D.
637, afiBrmed in the House of Lords, nom. Bead v. Bailey (1877),
3 App. Oa. 94, seems to give this^s the true form of the rule. For
further remarks see par. 4 below. Lord Eldon's own terms, several
times repeated in Ex parte Harris, are "knowledge, consent,
privity or subsequent approbation." I have ventured to act on
Sir Gr. Jessel's intimation in Lacey v. Hill that fewer words would
probably have done as well.
P. ■ L
146 PBOGEDVRE AND ADMINISTRATION.
Part II. Illustrations.
'^^^^' "^- 1 . A., B., C, D. and E. are banters in partnership at York,
and A., B., 0. and D. are bankers in partnership at Wake-
field. A balance is due to tbe York firm from the Wakefield
firm on account of dealings between the two banks in the
ordinary course of banking business. The York firm, and
therefore also the Wakefield firm, becomes bankrupt. The
trustee of the York firm may prove against the estate of the
Wakefield firm for this balance.'
2. A. and B. become partners from the Ist of January. Under
the articles all partnership moneys are to be paid into their
joint names at a particular bank, and each partner may draw
out £50 a month for his own use. An account is opened at
the bank in the joint names of A. and B., and partnership
moneys are paid into it. On the 1st of February A. draws
out £550 instead of £50 without the knowledge of B., and the
firm shortly afterwards becomes bankrupt. The trustee of the
joint estate may prove against A.'s separate estate for £500.'
3. A. and B. are partners under articles which provide that
money received by either of them on the partnership account
shall be paid monthly into a certain bank, and that each
partner may draw out £50 per month for his own use. A. is
the acting partner, and with the knowledge of B. pays the
moneys received by him on the partnership account into his
private account at his own banker's, and B. himself pays some
partnership moneys into A.'s account. A. draws on the
partnership funds so standing to liis own account beyond
the amount permitted by the articles, and also retains other
partnership funds in his hands, and applies them to his own
use without ever paying them in. The firm becomes bank-
rupt. The trustee of the joint estate cannot prove against the
separate estate of A. for the moneys drawn out in excess or not
paid in, as B. has by his conduct allowed A. to have the sole
dominion over the partnership funds, and must be taken to
have consented to the unlimited exercise of that dominion.'
> Ex parte Oastell (1826), 2 Gl. & J. 124.
= Per LordEldon, Ex parte Harris (1813), 2 V. & B. at p. 214.
s Ex parte Harris (1813), 2 V. & B. 210, and less fuUy in 1 Eose,
437. "The nscossary efiect of the transaction being to give the
■ ADMINISTRATION OF E8XATE3, . _ l,i^,
4. [A. and B. are partners, A. teing the sole acting partner. Part II..,
A. pays out of the partnership property private debts of Ms P'
own and other debts for -which, under the provisions of the
partnership articles, not the firm but A. separately is liable.
The firm afterwards becomes bankrupt. The trustee of the
joint -estate cannot prove for the amount of these debts against
the separate estate of A., since A.'s conduct does not amount
to a, fraudulent conversion of partnership property to his own
use.']
5. A., B. and 0. are partners in a bank, A. being the sole
managing partner. The articles contain clauses against over-
drawing. A. draws large sums from the funds of the bank
by means of fictitious credits and forged acceptances, and
thereby conceals from B. and C. (who trust A.'s statements
without making further inquiry) the fact that he has over-
drawn his private account in contravention of the partnership
articles. A. dies, and shortly afterwards B. and C. become
bankrupt. The trustee of B. and C.'s joint estate may prove
dominion over the whole fund to one . . . the other must be taken
to have consented to that dominion : " 2 V. & B. at p. 215. ^ >
1 Ex parte Lodge and Feudal (1790), 1 Ves. Jr. 166, and see
2 V. & B. 211, n., and Cooke's Bankrupt Laws, 530, 8th ed. The
opinion of the Court was at first the other way, and the case has
been considered one of great hardship ; see the judgment in Ex
parte Yonge (1814), 3 V. & B. 31, 34 ; 2 Eose, 40. It is difficult to
understand the real grounds of the decision from the report itself ;
hut it must now he taken that the case was one of the same class
as Ex parte Harris (1813). See the commeats on it in the judgment
there, 2 V. & B. at p. 913, and Ex parte Hinds (1849), 3 De Gr. &
Sm. at p. 615, and by Eofd BlabEburn in' 'Bead y. Bailey (ISTV);
3 App. Ca. at p. 103, who deals with it thus : " I collect that in
that case the dormant partner had, by deed, given the acting
partner who carried on the business the amplest authority to invest
the money in any way he pleased, and he pleased to invest it by
lending it to himself, to pay his private debts. That was a very
wrong thing indeed ; it was, as Lord Eldon afterwards expressed
it, an abuse of his authority — a most improper use of his authority
— but he did act upon the authority."
l2
148
PROCEDURE AND ADMINISTRATION.
Part II. against A.'s estate for the amount ol tlie partnership moneys
°'^^P- "^- misappHed by him.'
Bule against
proof by
partners in
competition
■with creditors.
4. Where the joint estate of a firm or the
separate estate of any partner is being adminis-
tered, no partner in the firm may prove in com-
petition with the creditors of the firm either
against the joint estate of the firm^ or against
the separate estate of any other partner^ until
all the debts of the firm have been paid.
Explanation. — This rule applies to a person
who, not being in fact a partner, has, by hold-
ing himself or allowing himself to be held out
as a partner, become liable as such to the
creditors of the firm generally,* but not to one
who has so become liable to some only of the
creditors.*
A married woman who lends money out of her separate
property to a firm of which her husband is a member can
(if the loan is really and not colourably a loan to the firm
as distinct from the husband in person) prove against the
joint estate like any other creditor. Sect. 3 of the Married
• Lacey v. Hill (1876), -1 Ch. Div. 537, affirmed in the House of
Lords, nom. Read v. Bailey (1877), 3 App. Ca. 94.
■^ Lindley, 721.
» 75. 737.
* Ex parte Hayman (1878), 8 Ch. Div. 11.
' Ex parte f^hceii (1877), 6 Ch. Div. 235. In the one case there
is an ostensible partnership apparent to the puhlic, in the other
only oiroumstances creating at most a liability towards particular
persons.
ADMINISTRATION OF ESTATES. 149
Women's Property Aot, 1882, cannot be extended so as to Part ii.
put her in the position of a partner, and bring her within '. — !_
this or an equivalent rule.^
Exceptions. — Partners may nevertheless prove Exceptions
. . (> 1 r> 1 ™ special cir-
agamst the ]omt estate of the lirm or the sepa- oumstances.
rate estate of a partner, as the case may be, for
debts which have arisen under any of the fol-
lowing states of fact : —
1. Where two firms having one or more
members in common, or a firm and one of its
members, have carried on business in separate
and distinct trades and dealt with one another
therein, and the one firm or trader has become
a creditor of the other in the ordinary way
of such dealing:^
2. Where the separate property of a partner
has been fraudulently converted to the use of
the firm,^ or property of the firm has been
fraudulently converted to the use of any
partner,* without the consent or subsequent
ratification of the partner or partners not
concerned in such conversion : ^
3. Where, having been bankrupt, a partner -
has been discharged, and has afterwards
1 Be Tuff, Ex parte Nottingham (1887), 19 Q,. B. D. 88.
' Lindley, 725, 738.
3 Per Lord Bldon, Ex parte Silliioe (1824), 1 Gl. & J. at p. 382.
« Lindley, 738.
^ See Note 5, p. 145, above.
15a PROCEDURE AND ADMINISTRATION.
Part ir. become a creditor of the firm^ [or of anotlier
^Chap. III. ^
partner^J-
Illustrations.
1. A., B. and C. are partners under articles wHch provide
that, if any partner dies, his share shall he taken by the
surviving partners at its value according to the last sto'et-
taMng, with interest at 5 per cent, on its amount in lieu of
profits up to the day of his death, and shall be paid out by
instalments. A. dies, and after his death, and before the
ascertained value of his share has been paid to his executors,
B. and 0. become bankrupt. A.'s executors cannot prove
against the joint estate of the firm for the amount due to
them in respect of A.'s share till aU other debts of the firm
contracted during A.'s lifetime are paid.^
2. If, the other facts being as in the last illustration, all
debts of the firm contracted in A.'s bietime have been paid
before the bankruptcy, A.'s executors may prove for the full
amount ; for here they are not competing with any creditor
of A.*
3. A. and B. are partners. The partnership is dissolved
by agreement, A. giving B. a bond for £10,000 and interest,
and B. transferring to A. all his interest in the partnership.
A. and a third person, C, also covenant to pay the debts of
the firm. A. becomes bankrupt. B. assigns his separate
property to trustees for the benefit of the creditors of the
fijm. The trustees under this assignment cannot prove the
bond debt against A.'s estate until all the debts of the firm
are paid, or unless the creditors of the firm accept the assign-
ment of B.'s property as payment in full and release the joint
liability of A. and B.=
^ See niust. 10.
° This case would presumably foUow the analogy of the other.
3 Nansoii v. Gordon (1876), 1 App. Ca. 195, aflfirming s. c. nom.
Ex parte Gordon (1874), 10 Ch. 160.
• * Ex parte Edmonds (1862), 4 D. F. J. 488. The fact that the
joint debts had been paid appears by the head-note.
5 Ex parte C'ollinge (1863), 4 D. J. S. 533.
ADMINISTRATION OF ESTATES. 151
4. A. and B. are partners. The firm becomes bankrupt. Part II.
Before the bankruptcy A. is indebted to B. upon a contract Chap. III.
independent of the partnership. It is known that there will be
no surplus of A.'s separate estate after satisfying his separate
debts, whether B.'s debt is admitted to proof or not. B. may
prove his debt against A.'s separate estate, as he does not
thereby compete with any creditor of the firm.^ It is doubt-
ful whether he might so prove it if A.'s separate estate were
solvent.^
5. A. and B. are traders in partnership, A. being a dormant
partner. They dissolve the partnership by agreement, and
B. takes over the business of the firm, and is treated by its
creditors as their sole debtor. On the dissolution an account
is stated between A. and B. which shows a balance due to A.
Afterwards A. sues B. for the amount, the action is unde-
fended, and A. signs judgment for the debt and costs. Some
time after this B. becomes bankrupt. A. can prove this debt
in B.'s bankruptcy, because the partnership debts have been
converted into the separate debts of B., and B.'s debt to A. on
the account stated is a purely separate debt.'
6. A. and B. are partners. A. also carries on a separate
trade on his own account, and in that trade sells goods to the
firm of A. and B. The firm of A. and B. becomes bankrupt.
A. may prove against the joint estate for the balance due on
the dealings between A. in his separate business and the firm
of A. and B.*
7. A., B., C. and D. are bankers in partnership under the
firm of 0. & Co. A. and B. are ironmongers imder the firm
of A. & Co. A. and B. indorse in the name of A. & Co. bills
remitted to them by 0. & Co., and procure them to be dis-
counted on the credit of this indorsement ; they also draw biUs
in the name of A. & Co. for the use of 0. & Co. The firm of
C. & Co. becomes bankrupt. A. and B. cannot prove against
1 Ex parte Topping (1865), 4 D. J. S. 551.
2 Lacey v. Hill (1872), 8 Oh. 441, 445.
' Ex parte Grazehrook (1832), 2 D. & Oh. 187 ; see the explanation
in Liadley, 741.
* Ex parte Cook (1831), Mont. 228.
152 PROCEDURE AND ADMINISTRATION.
Part II. the joint estate for the balance due to them on these transac-
Chap. Ill, ^io^s, as their dealings with C. & Co. were not in the course
of their separate trade, but only "for the convenience of the
general partnership.'" The same rule applies even if A. &
Co. are bankers.'*
8. A., B. and C. are bankers in partnership. C, the
managing partner, becomes bankrupt. A balance is due
from him to the firm on the partnership account, and he has
also obtained large sums of money on bills drawn and in-
dorsed by him in the name of the firm, and applied the money
to his own use, and A. and B. have been compelled to take
up the bills. A. and B., having paid aU. the debts of the ficrm
existing at the date of the bankruptcy, may prove in C.'s
bankruptcy for the amount thus received and misapplied by
him.^
9. A. and B. are partners under articles which provide that,
if A. dies during the partnership, B.'s share in the business
shall belong to A.'s representatives. A., dies during the
partnership, having appointed B. and others his executors.
B. is the sole acting executor, and continues the business.
He receives income of the separate property of A., and em-
ploys it in the business without authority. A.'s estate is
insolvent, and is administered by the Court. B. becomes
bankrupt, and the joint estate of the late firm is administered
in the bankruptcy. The receiver of A.'s estate may prove in
the bankruptcy of B. for the moneys misapplied by B. as A.'s
executor.*
10. A firm becomes bankrupt. One of the partners obtains
his discharge, and afterwards takes up notes of the firm. He
may prove for their amount against the joint estate.'
11. C. and K. are partners under the firm of C. & Co. C,
without K.'s knowledge, procures G. and W. to establish a
business under the firm of W. & Co., W. being the manager
' Ex parte ftillitoe (1824), 1 Gl. & J. 374,
'^ Ex parte Maude (1867), 2 Oh. 550.
3 Ex parte Yomje (1814), 3 V. & B. 31, and 2 Eose, 40.
* Ex parte Westcott (1874), 9 Oh. 626.
Ex parte Atkins (1820), Buck, 479.
ADMINISTRATION OF ESTATES. 153
md holding himself out as a principal, and G. a trustee for Part II.
}., who is the only real principal. Dealings take place he- Chap. II .
ween the firms of 0. & Co. and W. & Co., and the firm of "W.
fc Co. becomes indebted to the firm of C. & Co. for goods sold
md money lent in the ordinary course of business. These
lealings are not known to K. Both C. & Co. and W. become
jankrupt. Here C. & Co. cannot prove against W.'s estate,
nasmuch as there is not any real debt.'
The exceptional right of proof in cases where there has Principles of
jeen a wrongful conversion of partnership property to the right of proof
ise of one partner or vice versa is established by compara- r'grty^asb'een
ively early authorities which settle the principle, but are wrongiaUy
lot very clear in their language, and leave sundry questions the use of the
)pen as to the limits of the rule. It is somewhat unfortu- partner.
late that Ex parte Lodge and Feudal ^ acquired the reputa-
tion of being a leading case on the subject; for the facts
ire not stated in sufficient detail, and the ultimate decision
IS nowhere fuUy reported. The real leading case appears
rather to be Ex parte Harris,^ which was in fact so treated
n Lacey v. Mill.^
In this last case the whole question is dealt with, and
3specially the judgment of Sir Gr. Jessel, then Master of
}he EoUs, greatly lessens the difficulty of giving a com-
plete and exact statement of the law.
1 Be Wakeham, Ex parte Gliddon (1884), 13 Q. B. D. 43. This is
I singular case. As between 0. and W. there was no real contract
naking W. liable to pay, since 0. knew aU the facts ; as between
5!. and W. there might have been a contract by holding out if K.
lad known of the transactions at the time, but he did not ; neither
!onld K. get the benefit of O.'s ostensible contract by ratification,
'or there was nothing to ratify. The only real debt was from 0. to
3. & Oo. Op. Lindley, 737.
2 1 Ves. Jr. 166 (1790) ; see Note 1, p. 147, above.
' 2 V. & B. 210 (1813).
* See Note 5, p. 145, above ; 4 Oh. Div. 537 ; nom. Bead y. Bailey
\B11), 3 App. Ca. 94.
154
PROCEDURE AND ADMINISTRATION.
Part II.
Chap. III.
Fraud in
strict sense
need not be
proved.
The points specially considered were the following : —
First, what is a fraudulent conversion of partnership
property to a partner's separate use ^ within the meaning
of the rule ? A wilfully dishonest intention, or conduct,
which, in the language of Lord Eldon, adopted by
Jessel, M.E., amounts to stealing the partnership property,
is generally found to be present in these cases, but it need
not be proved in every ease.
" It is not," said Sir Gr. Jessel,^ " necessary for the joint
estate^ to prove more than, in the words of Lord Eldon,^
that this overdrawing was for private purposes, and without
the knowledge, consent, privity, or subsequent approbation
of the other partners. If that is shown, it \s prima facie a
fraudulent appropriation within the rule." Hence it
would appear that the term fraud is used for the purposes
of this rule in the wide sense formerly given to it by
Courts of Equity. Lord Blackburn puts the question in a
slightly different way: " Was this debt in respect of which
the claim is sought to be made upon the separate estate
contracted by the authority, expressed or implied, of the
firm, though that authority might have been abused in
contracting it, or was it done by fi-aud, without any
authority, by an absolute fraudulent conversion of the
property of the firm?"* It is said, again, that a mere
excess in degree of an act authorized in kind, such as an
overdraft entered in the books without concealment, is not
fraud within the meaning of the rule.' These remarks do
1 EverytHng liore said is equiilly applicable, of course, to the
converse case, wliioh, however, is in practice very rare, if indeed it
occurs at all.
2 4 Oh. D. at p. 543.
3 Ex parte Harris (1813), 2 V, & B. at p. 214.
* 3 App. Cii. 104 (1877).
' Lord Cairns, 3 App. Ca. 99 (1877), and James, L.J., 4 Ch. Div.
553 (1876).
EFFECT OF FRAUDULENT OONVEBSION. 155
not seem to agree with the proposition laid down by Part II.
Sir G-. Jessel in its full extent ; it was not necessary to ^^^'^' ^ '
define the point, as in the case hefore the Court the fraud
was gross and elaborately concealed.
Next, what will amoimt to implied authority ? It must Consent or
be admitted that one partner may give assent by conduct may btby
as well as by words to the uncontrolled and unlimited conduct:
. . question of
exercise oi dommion over the partnership funds by the constructive
other, and that a general assent so given may have the
same effect as regards the other partner's dealings with
the funds as if those dealings had been severally and
specially authorized. So much is established by the
decision ia JEx parte Harris} But a distinct question
remains, whether the doctrine of constructive notice applies
to these cases ; in other words, whether means of know-
ledge on the part of the partner defrauded are equivalent
to actual knowledge. If he might have discovered the
misappropriation of partnership funds by using ordinary
dihgence in the partnership affairs, can he be deemed to
have assented to the misappropriation ? or (which seems a
better way of putting it) is he estopped from saying that
the misappropriation was not consented to or ratified by
him ? There is some show of authority in favour of an
affirmative answer. Lord Eldon said, in Ex parte Yonge^
" If his partners could have known that he [the acting
partner] had applied it to his own purposes from their
immediate or subsequent knowledge upon subsequent
dealing, their consent would be implied :" a dictum which,
though far from lucid, seems in its most natural reading
to lay down the doctrine that constructive notice or means
of-knowlfidge-wilL have tha same effect .as_actual consent
' 2 V. & B. 210 (1813).
'' 3 V. & B. at p. 36 (1814).
156
PMOOEDVBE AND ADMINIBTRATION.
Part II.
Chap. III.
Decision in
Lacey y. Sill
that doctrine
of conetruc-
tive notice is
not here
applicable ;
nor that of
estoppel by
negfigenoe.
or a ratifioation by words or conduct founded on actual
knowledge. And in the mucli later case of & parte
Hinds, ^ the judgment of the Commissioner, from which
Knight Bruce, Y.-C, did not dissent, proceeds without
hesitation on this doctrine. The case was finally disposed
of, however, on the ground that there was ia fact no con-
version at all, the investment in question, though unautho-
rized, having been made on the partnership account.
The contrary doctrine, on the other hand, was distinctly
and positively laid down by Sir Gr. Jessel in Lacey v. Sill,^
and does not appear to have been contested on the appeal
to the House of Lords, the result of which was to affirm
the decisions below in all points.' There must be, he said
in effect, a real consent or acquiescence ; and acquiescence
means, not the existence of facts which may be said to
amount to constructive notice, but standing by vpith know-
ledge — actual knowledge — of one's rights, both in fact
and law. Neither can the result aimed at by the theory
of constructive notice be obtained in another way by
putting it on the ground of estoppel by negligence. A
person who has committed gross fraud — or his creditors
who stand in his place — cannot be heard to complain of
the negligence of the person defrauded in not finding out
the fraud sooner. The language of the judgment leaves
room for the suggestion that this does not apply to a case
where there is not actual fraud in the strict sense, b. stealing
of the partnership funds ; so that in such a case it may
still be arguable that means of knowledge will do. But
there is hardly room for a distinction of this kind when
the misappropriation such as to give a right of proof is
3 De a. & Sm. 613, 616— V (1849).
4 Ch. D. 537 (1876).
Bead v. Bailey (1877), 3 App. Ca. 94.
EFFECT OF FRAUDULENT CONVERSION. 157
once established. Absence of concealment and facilities Part ii.
for discovery by the other partners are material, i£ at all, ^^^^' "^'
rather on the preliminary point whether the dealing was
indeed fraudulent, as in the case put in the Court of Appeal
of overdrafts being truly entered in the books in the usual
way.
It was further argued in Lacey v. Hill that, in order to
establish the right of proof against the separate estate, it
was necessary to show that the separate estate (that is, the
fund available for the separate creditors) had been actually
increased by the sums misappropriated. This argument,
apparently a novel one, found no favour with the Court.
A man's separate estate is increased by any increase of his
private means ; increasing his own means out of the part-
nership estate, whatever he does with the funds so taken,
is in fact increasing his separate estate. " Whether the
separate estate has in the result been increased or not —
whether at the time of the proof it is larger than it other-
wise would have been or not — is a matter which does not
concern the application of the rule, and it is sufficient that
at one time the separate estate was increased when the
property was thus fraudulently converted and taken for
the purpose of one partner." ' The Court has nothing to
do with tracing the subsequent fate of the sums misappro-
priated : i£ in any particular case they could be traced and
identified in a specific investment, the right of the joint
estate would be of a different kind ; there would be a case,
not for proof, but for restitution.^
It will be remembered that apart from these special rules Ordinary
a partnership creditor is always entitled to a remedy against tors against '
the estate of a deceased partner concurrently with his right ner^g estetr*"
1 Lord Cairns, 3 App. Oa, 100 (1877J.
* 4 Oh. Div. 545.
158 PROCEDURE AND ADMINISTRATION.
Part II. of action against any surviving partner, but subject to the
Chap, III.
prior claim of the deceased partner's separate creditors;
and that it is immaterial in what order these remedies are
pursued if the substantial conditions of not competing with
separate creditors, and of the surviving partner being
before the Court, are satisfied in the proceedings against
the deceased partner's estate.^
Double proof It will also be observed that where a joint liability and
where distinct ,.,.,.. , . ,.„,
causes of one Or more separate liabilities are created in dinerent
rights in the course of the same transaction, there is no
rule against the concurrent enforcement of both. Trustees
of a settlement paid money for the purpose of a specific
investment to a firm of solicitors in which one of the
trustees was a partner; that firm misapplied the money
and became bankrupt ; the new trustees were admitted to
prove both against the separate estate of the defaulting
trustee in respect of his breach of trust, and against the
joint estate of the firm in respect of their contract to
invest or restore the money (these being distinct and
independent obligations), without deciding whether the
contract of the firm was not of itself joint and several.^
Eights of 5. Any creditor of a firm holding a security
ioint creditors c i • i i ^ i_ , p
holding tor his debt upon separate property oi any
seour%, or partner may prove against the joint estate of
conversely. ^^ firm, and any separate creditor of a partner
holding a security for his debt upon the pro-
perty of the firm may prove against that part-
ner's separate estate, without giving up his
' Re Hodgson, Bcchdt v. Ramsdale (1885), 31 Cii. Div. 177, and
see s. 9 of tlio Partnersliip Act, p. 39, above.
= Re Parker, Ex parte S/ifjipnrcZ (1887), 19 Q. B. D. 84.
ADMINmTBATION OF ESTATESa \ \ 1 ' ]59
security : provided that the creditor must in Part ii.
• • 1 Chap. III.
no case receive m the whole more than the full .
amount of his debt.^
Explanation. — Representations made to a cre-
ditor by the partner or partners giving him
a security that the property on which the
security is given is separate, or is the property
of the firm, as the case may be, do not affect or
extend the application of this rule.^
Illustrations.
1. A., B. and 0. are partners, and open a banking account
with. D. Tlie bank makes advances to the firm, on the security
of the joint and several promissory note of A., B. and 0.
Afterwards A. gives the bank a mortgage of separate property
of his own to secure the balance then due and future advances
to a limited extent. The firm becomes bankrupt, being at the
time indebted to the bank beyond the amount covered by the
promissory note and mortgage respectively. After realizing
the mortgage security, D. may prove against the joint estate
upon the promissory' note for the balance of the debt.''
2. A. is in partnership with his son, B. They execute to a
partnership creditor, 0., a joint and several bond for his debt,
and A. also gives 0. an equitable mortgage on land which is
his separate property. The partnership is afterwards dis-
solved. A. dies intestate, and B. becomes bankrupt. The
partnership debts and A.'s other debts are of such an amount
that, apart from this mortgage debt, A.'s estate would be
1 RePlummer (1841), 1 Ph. 56, 60; Eolfer. Flower (1866), L. E.
1 P. 0. at p. 46; Lindley, 716, 749. Per the general rule as to
the treatment of secured debts in bankruptcy, see lb. 709 sqg^., and
Schedule 2 to the Bankruptcy Act, 1883 ; also Couldery v. Bartrum
(1880 — 1), 19 Oh. Div. 394; SocUtS OSnerale de Paris v. Geen
(1883), 8 App. Ca. 606.
■^ See Illustration 4.
= Ex parte Bate (1838), 3 Deac. 338.
160 PROCEDURE AND ADMINISTRATION.
Part II. insolvent. Here 0. may prove his debt in B.'s baniruptey
Chap. III. -without giving up his security, as B. has no beneficial interest
in the mortgaged estate, and C.'s security is therefore not on
B.'s estate.'
3. A. and B. are partners. The firm keeps a banMng
account with 0. & Co., with whom A. likewise keeps a separate
account. A. deposits with the bank the title-deeds of separate
property of his own, to secure the balance of account due or
to become due from him, either alone or together with any
one in partnership with him. The firm of A. and B. becomes
bankrupt. Both the account of the firm and A.'s separate
account are overdrawn. C. & Co. may prove against the joint
estate for the whole balance due from the firm to the bank,
and apportion the proceeds of the security on A.'s property
between the balance due from the firm and that due from A.
as they think fit, allowing for what comes to them under the
proof against the joint estate.- C. & Co. may also prove
against A.'s separate estate for the residue of A.'s separate
debt due to them, after deducting the apportioned part of the
proceeds of the security.'
4. A. and B. are partners. A. is a shareholder in a bank
incorporated under the Companies Acts, which by the articles
of association has a lien on the shares of every shareholder
for debts due to the bank from him either alone or jointly
with any other person. A.'s shares are in fact, but not to the
knowledge of the bank, partnership property. The firm of A.
and B. becomes bankrupt. The bank cannot treat these shares
as A.'s separate property for the purpose of its lien, and cannot
prove against the joint estate for the balance due from the firm
of A. and B. without deducting the value of the shares.*
» Expartc Turney (1844), 3 M. D. .S: D. 576.
" For this pui-pose thoy may apply to the Court to have a dividend
declared first on the joint estate under s. 59 of the Bankruptcy Act,
1883 : see p. 135, above.
' Kx, parte Dkkiii (1875), 20 Eq. 767.
* Ex parte Manchester and County Bank (1876), 3 Oh. Div. 481.
The reason is, according to MelHsh, L.J. (at p. 487), that the
question is not between the partners and the secured creditor but
between the seoiu-ed creditor and the other creditors of the firm so
ADMINISTRATION OF ESTATES. '■ 161
6. "If a debtor was at the date of the Partii.
1 . T 1 . „ 1 . . ciiap- Ill-
receiving order hable in respect of distinct
. Double proof
contracts as a member of two or more distinct allowed on
„ -, , distinct oon-
tirms, or as a sole contractor and also as mem- tracts.
ber of a firm, the circumstance that the firms
are in whole or in part composed of the same
individuals, or that the sole contractor is also
one of the joint contractors, shall not prevent
proofs in respect of the contracts against
the properties respectively liable on the con-
tracts." ^
In cases not included in the foregoing rule a
creditor to whom a firm is liable, and to whom
its members are also severally liable for the
same debt, must elect whether he will proceed
as a creditor of the firm or as a separate
creditor of the partners.®
Illustrations.
1. A., B., and others are partners in a firm of A. & Co.
A joint and several promissory note is made and signed by
that the principle of estoppel does not apply. James, L.J., doubted
as to the principle, and Baggallay, J. A., preferred to rest the
decision on the provisions of the Bankruptcy Act as to secured
creditors.
' The statutory right to prove carries the right to receive divi-
dends, and is in no case merely formal : see Ex parte Honey (1871),
7 Ch. 178.
=> Bankruptcy Act, 1883 (46 & 47 Vict. c. 52), Sched. 2, Art. 18,
re-enacting s. 37 of the Bankruptcy Act, 1869. Op. Lindley, 747 — 8.
^ This was the old general rule, which is now practically reduced
to an exception of no great importance ; Lindley, 748 — 9. The
cases cited as illustrations wiU show that the Court is inclined to
give a liberal application to the modem enactment.
P. M
162 PROCEDURE AND ADMINISTRATION.
Part II. A. & Co., by A. and B. separately, and by otber persons.
Chap. III. Afterwards the firm of A. & Co. becomes bankrupt. Here the
contract of the firm and the separate contracts of A. and B.
contained in the same note are distinct contracts -within the
above rule, and the holder of the note may prove against and
receive dividends from both the joint estate of the firm and
the separate estates of A. and B.^
2. A. and B. are partners. They borrow a sum of money
for partnership purposes from C, and C. settles the debt upon
certain trusts by a deed in which A. and B. jointly and
severally covenant with D. to pay the sum. The deed does
not show that A. and B. are partners or that the debt is a
partnership debt. The firm becomes bankrupt. Here it may
be shown by external evidence that the joint contract of A.
and B. in the deed is in fact the contract of their firm, and D.
may prove against the joint estate of the firm in respect of the
joint covenant, and against the separate estates of A. and B.
in respect of their several covenants.-
EfEeotof 7. Where the discharge of any member of
chMge of '" ^ partnership firm is granted to him in his
partner. separate bankruptcy, he is thereby released
from the debts of the firm as well as from his
separate debts.^
' Ex parte Honey (1871), 7 Ch. 178.
' Ex parte Stone (1873), 8 Ch. 914.
' Ex parte Hammond (1873), 16 Eq. 614.
INDEX.
The figures in thick type refer to the Sections of the Partnership
Act, 1890.
ACCOTOTTS
duty of partners to render, 28, 80
Actions
by and against partners in name of firm, 127
by firm, discovery of partners' names in, 128
against firm, service of writ in, 129
appearance of partners in, 129
between a partner and a firm since Judicature Act, 131
by trustee and solvent partners, 135
Admotisteation
of partnership estates, 137 seq.
Admissions
of partners, when binding on the firm, 15, 53
Athvkscss
by partner to partnership, his right to interest on, S4, 69
ADTEirnmE
joint, 6
Agency
of partner for the firm, 5, 25
right of partner to contribution independent of, 71
principle of, applied to liability of firm for -wrongful acts of
partners, 46
A&ENT
remuneration of, by share of profits, 2, 11
Ageeembnt
restrictive, between partners, inoperative if not notified, 8, 37
Anntjitt
receipt of, from profits of business, does not create partnership,
2,11
M 2
164 INDEX.
Aebitration
one partner cannot bind firm by submission to, 33
Assets
of partnership, final distribution of, 44, 122
Assignee
not entitled to interfere in management of partnership, 31, 84
Assignment
of share of profits, dissolves partnership, 31, 84, 33, 86
Bank
number of partners in, may not exceed ten, 8
Bajskeitptcy
creditor who has lent money for share of profits postponed in,
3, 18
doctrine of holding out applies to administration in, 52
of firm or partner, effect of, on agreement for conversion of
property, 65
of partner dissolves partnership, 33, 86
bankrupt partner's estate not liable for subsequent debts of
firm, 36, 92
bankrupt partner has no authority to bind the firm, 38, 94
Scots law of, when applicable, 47, 124
adjudication and process against firm in, 132
Procedure against Partners in :
consoMation of proceedings under joint and separate
petitions, 133
petition against one partner by creditor of firm, 133
petition may be dismissed as to some respondents only,
133
one trustee to be appoiated of estates of partners in same
firm, 134
of one partner, creditor of firm may prove in, for purpose
of voting, 134
dividends of joint and sepai-ate properties to be declared
together, 134
actions by trustee of bankrupt partner together with
solvent pai'tners, 135
Bankruptcy Act of 1883 as to administration of partnership
estates, 140 : see Joint and Sepaeate Estates.
t'H'oet of separate discharge of partner in, 162
INDEX. 165
Bills of Exchaiige Act, 1882 . . 28
Books
partnersliip, custody of and access to, 24, 70
BoEEOwiNG Monet
authority of partners in trading firm, 31
Bovill's Act, 17, 18
Business
definition of, 7, 45, 124
partnersMp, right of partner to take part in, 24, 70, 72
Chaeging Oedee
against share of partner in partnership property for his separate
debt, 23, 67
Commandite
partnership in, 17.
Companies
distinguished from ordinary partnerships, 7
Companies Act, 1862.. 31
partnerships unlawful under, 8
Company
membership of, is not partnership, 1, 1, 7
Competition
of partner with firm, 30, 83
CONTEACTS
partnership, specific performance of, not generally granted, 6
CONTEESION
of real estate being partnership property, 22, 65
of partnership property into separate property, and vice versa,
65
fraudulent, of partnership property, 145, 149, 153, 154
COEPOEATION
assumption of corporate name, whether punishable, 22
whether corporation may trade in its corporate name where the
name infringes a trade mark, 25
166 INDEX.
Cost -Book Company
procedure against share of member in, for his separate debt, 68
OOTTET
power of, upon dissolution, not excluded by clause in articles,
102
definition of, 45, 124
may dismiss petition against some respondents only, 133
Oeeditor
receiving share of profits, postponed till claims of other creditors
for value satisfied, 3, 18
Ceeditoes
of partner exceeding Ms authority, 18, 45
notice of dissolution to, 93
of firm, may present petition against one partner, 133
may prove in separate bankruptcy for purpose of
voting, 134
joint and separate, 137, 144, 158
partners may not prove in competition with, 148
rights of, against estate of deceased partner, 157
Customers
dealing with old, by vendor of business, 105
Death
dissolution of partnership by, 33, 86, 36, 92
Debt
receipt of, by instalments does not create partnership, 2, 10
share of retiring or deceased partner is a, 43, 121
Debts
due to firm, partner's power to give receipts for, 28
partnership not joint and several, 40: see Joint and Separate
Estates.
liability of partners for, 9, 39
Deed
partner cannot bind firm by, without express authority, 32
Directors
of numerous partnerships, limited authority of, 30
Discovery
of individual partners in action by firm, 128
INDEX. 167
DiSSOLUTIOSr OF Paetnership
by retirement of partner, 32, 85
by bankruptcy, &c., 33, 86
by death, 33, 86
by assignment of sbare, 33, 86
by tbe partnership business becoming unlawful, 34, 87
by the Court for lunacy, misconduct, &c., of a partner, 35, 87
at suit of partner of unsound mind, 89
what misconduct is ground for, 90
rights of creditors against ostensible partners not afiected by,
36, 91
notification of, in Gazette, sufficient, 36, 91
right of partners to notify, 37, 93
authority of partners after, 38, 94
application of partnership property upon, 39, 98
sale of goodwill upon, 102
use of partnership name after, whether it can be restrained,
107
premature, apportionment of premium on, 40, 108
on what principle apportionment to be made, qumre, 111
on ground of fraud, efiect of, 41, 111
profits after, right to account of, when capital improperly re-
tained in business, 43, 113
final distribution of assets upon, 44, 122
Estate
of deceased partner, nature of its liability, 40
Estoppel
liability by " holding out " depends on principle of, 50
by negligence, doctrine of, not applicable in case of fraud of
partner, 156
Execution
issuable only upon a judgment against the firm, 67
against partnership property for partner's separate debt abo-
Ushed, 23, 67.
on judgment against partners in name of firm, 130
EXECTJTOES
of deceased partner, duties of surriving partners who are, 117
EXPUISION
of partner, 25, 76
168 INDEX.
FlEM
definition of, and use of firm name, 4, 20—25
is not a person in law, 20
exclusive right of, to trade name, 23
actions by and against partners in name of, 25
authority of partners as agents of, 5, 25 aeq.
guaranties given for or to, 33
cases where acts of one partner do not bind, 33
partners bound by acts on behalf of, 6, 33
not bound by attempts of partner to use partnership credit for
private purposes, 7, 33
effect of notice that acts of partner do not bind the, 8, 37
liability of partners for debts of, 9, 39
liability of, for wrongs, 10, 42
liability of, for fraud, &c. of partner in course of partnership
business, 10, 11, 42
liability of, for money or property of third persons misapplied
by partners, 11, 42
grounds of the liability in such cases, 46
how far bound by admissions of partners, 15, 53
assumption of debts by new, 17, 55, 57
change in, does not affect rights of creditors without notice,
36, 91.
not bound by acts of bankrupt partner, 38, 94
judgment creditor of, not bound to resort first to partnership
property, 101
Rules of Court as to partners suing and being sued in name of,
127 sej.
service of writ in action against, 129
judgment against partners in name of, 130
not recognized as distinct person by Eules of Court, 130, 131
creditor of, may present petition against one partner only, 133
creditors of, their limited right to prove in separate bank-
ruptcy of partners, 134
creditors of, their exceptional right to prove against separate
estate in certain cases, 144
creditors of, double proof by, against joint and separate estates
in case of distinct contracts, 158, 161
FiBM Name
sole trader under, 128
Feanoe
law of, as to name of firm, 23
— as to administration of partnership estates, 143
INDEX. 169
Featid
in conduct of partnersHp business, liability of firm for, 10, 11,
42
conyersion of partnersliip property to partner's separate use by,
11, 42, 48, 145, 149, 153, 154
defrauded partner's lien when partnership dissolved for, 41,
111
Gaenishee Oedee
debt due from firm cannot be attached by, if firm described by
firm name only, 132
Gazette, London
effect of notice of dissolution in, 36, 91, 93
Geemany
law of, as to name of firm, 23
as to administration of partnership estates, 143
Goods
implied authority of partner to buy, in usual course of busi-
ness, 28, 32
Goodwill
as to seller of, receiving share of profits, 2, 11
sale of, on dissolution of partnership, 102
right of partner to order for sale of, 103
nature and incidents of, 105
does not " survive," 106
does not exist in solicitor's business, 106
" Geoss Eetuens"
the sharing of, does not necessarily create a partnership, S, 10
Gttaeanty
one partner cannot generally bind firm by, 33
continuing, to or for firm, revoked by change in firm, 18, 58
" Holding Out "
liability as partner by, 14, 50
what amounts to, 51
the rule applies to administration in bankruptcy, 52
does not bind deceased partner's estate, 52
does not apply to wrongs independent of contract, 53
liability of retired partner by, 52
170 INDEX.
Illegality
of partnersMp business dissolves the partnership, 34, 87
Indemnity
right of partners to, 24, 69, 71
Indian Oontbaot Act
definition of partnership in, 3
as to companies not suhjeot to ordinary law of partnership, 7
effect of notice imder, that firm, will not be bound by acts of
partner, 38
as to presumed equality of shares, 69
on authority of partners after dissolution, 97
as to joiut and separate debts of partner, 141
Indian Trusts Act, 49
Interest
allowed at option instead of profits on capital improperly
retained in business, 48, 113
mixed claims for profits and interest not allowed, 120
what percentage allowed, 121
" Joint Adventtjre." 6
Joint and Separate Estates
distribution of dividends of, 134
rules for administration of, 137 seq.
general rule: the jgint estate primarily liable for debts of firm,
the separate estates for separate debts, 137, 140
principle of thisiro Times.
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" A -work indispensable to every bookcase ia linooln's Tun."— Law Quarterli/ Seview,
January, 1890.
** The practitioner can hardly afford to do ■without such a ■weapon as Mr. Hirst
supplies, because if he does not use it probably his opponent ■will." — Law Journal.
** On the whole the ■work is thoroughly ■well done. The laborious care bestowed
upon the fourth edition of ' Chitty ' deserves all praise."— I/aw Quarterly Eeview.
*' We think that we o^we it to Mr. Hirst to say that on each occasion "when a volume
of his book comes before us we exert some diligence to try and tind an omission in it,
and we apply tests which are generally successful with ordinary text-^writers, but not so
■with Mr. Hirst. At present we have not been able to find a flaw in his armour. We
conclude, therefore, that heisanunusually accurate and diligent compiler." — Law Times.
" Mx. Hirst has done his work "with conspicuous ability and industry, and it is
almost unnecessary to add that the modem cases are digested with the perspicuity and
conciseness which have always been f eatui'es of Chitty's Equity Index." — Law Journal.
Dale and Lehmann's Digest of Cases, Overruled, Not Followed,
Disapproved, Approved, Distinguished, Comnnented on and
specially considered in the English Courts from the Year
1756 to1886 inclusive, arranged according to alphahetical order of
their subjects ; together "with Extracts from the Judgments delivered
thereon, and a complete Index of the Cases, in which are included
all Cases reversed from the year 1856. By Chas. Wm. Mitoaefb DiiE,
and EuBOLi' Ohambebs LEHM^Nif, assisted by Chas. H. L. Neish, and
Heebeet H. Child, Barristers-at-Law. Eoyal 8vo. 1887. 21. 10s.
{Forms a Supplement to Chitty's Equity Index and Fisher's Common Law Big.)
'* One of the best works of reference to be found in any library." — Law Times.
" The work has been carefully executed, and is likely to be of much service to the
practitioner." — Solicitors' Journal.
"So far as we have tested the work, it seems very well done, and the mechanical
execution is excellent. As for the utility of euch a book as this, it is too obvious to be
enlarged upon. One could ■wish that there had been a ' Dale & Lehmann' some years
sooner." — Law Quarterly Jteview.
" The book is divided into two parts, the first consisting of an alphabetical index of
the cases contained in the Digest presented in a tabular form, sho^wlng at a glance how,
where, and by what judges they have been considered. The second portion of the book
comprises the Digest itself, and bears marks of the great labour and research bestowed
upon it by the compilers." — Law Journal.
Fisher's Digest of the Reported Decisions of the Courts of
Common Law, Bankruptcy, Probate, Admiralty, and Divorce,
togetherwith a Selection from those of the Court of Chancery
and Irish Courts from 1756 to 1883inclusive. Founded on Fisher's
Digest. By J. Mews, assisted by C. M. Chapmak, H. H. W. Spaehah,
andA. H.Todd, Barristers-at-Law. 7 vols. Eoy. 8vo. 1884. 12Z. 12s.
" To the common lawyer it is, in our opinion, the most useful work he can possess.
— Law Times. -.,. .^ .. ,,,■ ^ »
Mews' Consolidated Digest of all the Reports in all the Courts.
for the Years 1 884-88 inclusive.— By John Mews, Barrister-at-
Law. Eoyal 8vo. 1889. . , ^.}i,"*: ^'',-
"This work is an indispensable companion to the new edition of Chitty's Digest,
which ends with 1883, and also Fisher' s Digest ending with the same year. . . . . The
work appears to us to be exceedingly well ione."— Solicitors' Journal, Nov. 2, 1889.
The Annual Digest for 1889. By John Mews. 15»-
*,* The above Works bring Fisher's Common Law and Chitty's Equity
Digests down to end of 1889.
*»* All standard Zaw Works are kept in Stock, in law calf and other bindings.
* b2
12 STEVENS AND SONS, LIMITED,
DIG ESTS — continued.
Notanda Digest in Law, Equity, Bankruptcy, Admiralty, Divorce,
and Probate Cases. — By E. W. D. Mamson, Esq., Barriater-at-
La-w. Sixth Series, for 1885, 1886, 1887 and 1888, with Index.
Saeh, net, 11. Is.
DISCOVERY.— Hare's Treatise on the Discovery of Evidence. —
Second Edition. By Sheblook Habx, Barrister-at-Law. Post Svo.
1877. 12».
Sichel and Chance's Discovery.— The Law relating to Interroga-
tories, Production, Inspection of Documents, and Discovery, as well
in the Superior as in the Inferior Courts, together with an Appendix
of the Acts, Forms and Orders. ByWiiflsiB S. Sichel, and Wn.T . TA w
Chakce, Esqrs., Barristers-at-Law. Demy 8vo. 1883. 12s.
DISTRESS.— Oldham and Foster on the Law of Distress.- A
Treatise on the Law of Distress, with an Appendix of Forms, Table
of Statutes, &o. Second Edition. By Ajbthtje Oldham and A. Li.
TecbeFobtee, Esqrs., Barristers-at-Law. Demy 8vo. 1889. 18«.
" This is a useful book, because it embraces the whole range of the remedy by dis-
tress, not merely distress for rent, but also for damage feasant, tithes, poor and highway
rates and taxes, and many other mattera." — Solicitors* Journal.
DISTRICT REGISTRIES.— Archibald.— Fi(fe " Chamber Practice."
DIVORCE. — Browne and Powles' Law and Practice in Divorce
and Matrimonial Causes. Fifth Edition. By L. D. Powles, Esq.,
Barrister-at-Law. Demy Svo. 1889. 11. 6s.
" The practitioner*s standard work on divorce practice." — Law Quarterly Review.
" Mr. Powles' edition cites all the necessary information for bringing the book down
to date, supplies an excellent index, on which he has spent much pains, and maintains
the position which Browne's Divorce Treatise has held for many years." — Law Journal.
Winter's Manual of the Law and Practice of Divorce. — By
Duncan Cleek Wintee, Solicitor. (Reprinted from " The Jurist.")
Crown 8to. 1889. Net, Is. %d.
DOGS. — Lupton's Law relating to Dogs. — By Feedeeick LirpTON,
Solicitor. Eoyal 12mo. 1888. 5j-
" "Within the pages of this work the reader will find every subject connected with the
law relating to dogs touched upon, and the information given appears to be both
exhaustive and correct." — Law Times,
DOMICIL,— Dicey's Le Statut Personnel anglais ou la Lol du
Domicile. — Ouvrage traduit et complete d'apres les demiers arrets
des Cours de Justice de Londres, et par la comparaisou aveo le Code
Napoleon et les Diverses Legislations du Continent. Pax Ewtt.t;
Stooottaet, Avocat a la Cour d'Appel de BruxeUes. 2 Tomes.
Demy 8to. 1887-88. i;. is.
EASEMENTS.— Goddard's Treatise on the Law of Easements. —
By John Letbotjen Goddaed, Esq., Barrister-at-Law. Fourth
Edition. Demy 8to. 1891. (marly ready.)
" An indispensable part of the lawyer's library."— SoJici/ors" Journal.
" The book is invaluable : where the cases are silent the author has taien pains to
ascertain what the law would be if brought into question." — Law Journal.
"Nowhere has the subject been treated so exhaustively, and, we may add, so
soientiiically, as by Mr. Goddaxd. We recommend it to the 'most careful study of the
law student, as well as to the hbrary of tlie practitioner."— iaw TmiM
Innes' Digest of the English Law of Easements. Third Edition.
By Mr. Justice Innes, lately one of the Judges of Her Maje.sty'9
High Court of Judicature, Madras. Royal 12mo. 1884. 6j.
ECCLESIASTICAL LAW.-Phillimore's Ecclesiastical Law of the
Church of England, With Supplement. By the Right. Hon. Sir
Rohert Phillimoee, D.C.L. 2 vols. 8vo. 1873-76. (Published
at 3;. 7.S. 6d.) Seduced to net, U. 10s.
•»* All standard Law ITorlcs are kept in Stock, in law calf and other bindings.
119 & 120, C HAyCEBY liAWE, LONDON, W.O. 13
ELECTIONS.— Loader's The Candidate's and Election Agent's
Guide; for Parliamentary and Municipal Elections, -with an Ap-
pendix of Eorms and Statutes. By John Loader, Esq., Barrister-
at-La-w. Demy 12mo. 1885. 7s. 6d.
" The book is a thoroughly practical ono."— Solicitors' Journal.
Rogers on Elections. — In two parts.
Part I. Eeqisiration, including the Practice in Registration Appeals ;
Parliamentary, Municipal, and Local Government ; with Appendices
of Statutes, Orders in Council, and Forms. Fifteenth Edition. By
Maueioe Powell, of the Inner Temple, Esq., Barrister-at-Law.
Eoyal 12mo. 1890. \l. Is.
" The practitioner Tvill find "within these covers everything ■which he can be expected
to know, weU arranged and carefully stated." — Law Times^ July 12, 1890.
Part II. Elections and Petitions. Parliamentary and Municipal,
with an Appendix of Statutes and Eorms. Fifteenth Edition. In-
corporating all the Decisions of the Election Judges, with Statutes to
June, 1886, and a new and exhaustive Index. By John Cokete
Caetee, and J. S. Sandabs, Esqrs., Barristers-at-Law. Koyal 12mo.
1886. 11. Is.
" An admirable storehouse of information." — Law Journal.
" A very satisfactory treatise on election law .... his chapters on election
-expenses and illegal practices are well arranged, and tersely expressed. The com-
pleteness and general character of the book as regards the old law are too well known
to need description." — Solicitors* Journal.
ELECTRIC LIGHTING. — Bazalgette and Humphreys.— Fi*
" Local and Municipal Government."
Cunynghame's Treatise on the Law of Electric Lighting, with
the Acts of Parliament, and Rules and Orders of the Board of Trade,
a Model Provisional Order, and a set of Forms, to which is added a
Description of the Principal Apparatus used in Electric Lighting,
with Illustrations. By Heney Guntnohame, Barrister-at-Law.
Eoyal 8vo. 1883. 12«. 6rf.
EQUITY, a«-e kept in Stock, in law calf andother tindings.
14 STEVENS AN D SONS, LIMITED,
E Q U I T Y — continued.
Smith's Practical Exposition of the Principles of Equity, iUus-
trated by the Leading Decisions thereon. For the nee of Stndents
and Praotitionere. Second Edition. By H. Abthtje Smith, M.A.,
LL.B., Esq., Barrister-at-Lan'. Demy 8to. 1888. 21s.
" This excellent practical exposition of the principles of equity is a wort one can
■well recompiend to students either for the har or the examinations of the Incorporated
Law Society. It will also he found equally valuahle to the husy practitioner. It con-
tains a mass of information well arranged, and is illustrated hy all the leading deci-
sions. All the legislative changes that have occurred since the publication of the first
edition have been duly incorporated in the present issue." — Law Tiynes.
ESTOPPEL.— Everest and Strode's Law of Estoppel. By Lancelot
FiELDiNQ EvEEEST, and Edmund Steode, Esqrs., Barristers-at-Law.
Demy 8vo. 1884. 18s.
" A useful repository of the case law on the subject." — Law Journal,
EXAMINATION GUIDES.— Bedford's Digest of the Preliminary
Examination Questions in Latin Grammar, Arithmetic, French
Grammar, History and Geography, with the Answers. Second
Edition. Demy 8vo. 1882. 18s.
Bedford's Student's Guide to the Ninth Edition of Stephen's
New Commentaries on the Laws of England. — Third Edition.
Demy 8to. 1884. 7s. 6rf.
Haynes and Nelham's Honours Examination Digest, comprising
all the Questions in Conveyancing, Equity, Common Law, Bank-
', ruptcy, Prohate, Divorce, Admiralty, and Ecclesiastical Law and
' Practice asked at the Solicitors' Honours Examinations, with Answers
thereto. By John E. Hatnes, LL.D., and Thomas A. Nkt.ham,
SoUoitor (Honours). Demy 8to. 1883. 15s.
*' Students going in for honours will find this one to their advantage." — Law Times.
Napier's Modern Digest of the Final Examinations; a Modem
. Digest of the Law necessary to be known for the Einal Examination
; of the Incorporated Law Society, done into Questions and Answers ;
' and a Guide to a Course of Study for that Examination. By T.
! Bateman Napiee, LL.D., Loudon, of the Inner Temple, Bfirrister-
at-Law. Demy 8vo. 1887. 18j.
" Aa far as we have tested them we have found the questions very well framed,
and the answers to them clear, concise and accxu-ate. If used in the manner that
Dr. Napier recommends that it should he used, that is, together with the text-books,
there can be little doubt that it will prove of considerable value to students." — The
Jurist.
Napier & Stephenson's Digest of the Subjects of Probate,
Divorce, Bankruptcy, Admiralty, Ecclesiastical and Criminal
Law necessary to be kiiown for the Eiual Exumination, done into
Questions and Answers. With a PreUminary Chapter on a Course of
Study for the above Subjects. By T. Bateman Napiee and Sichaed
M. Stephenson, Esqrs., Barristers-at-Law. Demy 8vo. 1888. 12s.
••It is concise and clear in its answers, and the questions are based on points, for the
xaost part, material to be known." — Pump Court.
Napier & Stephenson's Digest of the Leading Points in the Sub-
ject of Criminal Law necessary to be known for Bar and University
Law Examinations. Done into Questions and Answers. By T.
Bateman Napiee and Kichaed M. Stephenson, Esqrs., Baxristers-
at-Law. Demy 8vo. 1888. 5s.
^ " "We commend the book to candidates for the Bar and University Legal Examina-
tions." — Pump Court.
Shearwood's Guide for Candidates for the Professions of
Barrister and Solicitor. -Second Edition. By Joseph A. Sheae-
WOOD, Esq., Barrister-at-Law. Demy 8vo. 1887. 6*.
** A practical little book for students." — Law Quarterly Jieview.
*»• All standard Law Works are kepi in Stock, in law calf and other bindings.
119 & 120, CHANCER Y LAME, LONDON, W.C. 15
EXECUTIONS.— Edwards' Law of Execution upon Judgments
and Orders of the Chancery and Queen's Bench Divisions
of the High Court of Justice.— By C.Johnston Edwabds, of Lin-
coln's Inn, Esq., Barrister-at-Law. Demy 8vo. 1888. 16s.
" Will be found Tery useful, especially to solicitors. ... In addition to the other
good points in this book, it contains a copious collection of forms and a good index." —
Solicitors' Joumol.
** Mx. Edwards "writes briefly and pointedly, and has the merit of beginning in each
case at the beginning, -without assuming that the reader knows anything. He explains
who the sberi£? is ; what the, Queen, in a wiit Elegit, for example, orders him to do ;
how he does it ; and what consequences ensue. The result is to make the whole treatise
satisfactorily dear and easy to apprehend. If the index is good — as it appears to be —
practitioners will probably find the book a thoroughly useful one." — Law Quarterly
Semeio.
EXECUTORS. — Macaskie's Treatise on the Law of Executors
and Administrators, and of the Administration of the Estates of
Deceased Persons. With an Appendix of Statutes and Forms. By
S. C. Maoaskje, Esq., Bariister-at-Law. 8vo. 1881. 10s. 6d.
Williams' Law of Executors and Administrators. — Ninth Edition.
By the Hon. Sir Eolanb Vatjohau WrLLiAjis, a Justice of the High
Court. 2 vols. Eoy. 8to. [Inpreparation.)
EXTRADITION.— Kirchner's L' Extradition. — Reoueil Renf ermant in
Extenso tons les Traites conclus jusqu'au ler Janvier, 1883, entre les
Nations civilisees, et donnant la solution precise des difiioultea qui
peuvent surgir dans leur application. Avec une Preface de Me
Geoeqes Laohatid, Avocat a la Cour d'Appel de Paris. Putlie sous
les auspices de M. C. E. Howabd Vincent, Direoteur des Affaires
Criminelles de la Police Metropolitaine de Londres. Par E. J.
Ktbcenee, Attache a la Direction des Affaires Criminelles. In 1
vol. (1150 pp.). Royal 8vo. 1883. 21. 2s.
FACTORS ACTS,— Boyd and Pearsons Factors Acts (1823 to
1877). With an Introduction and Explanatory Notes. B.y Htjgh
Een\7ick Boyd and Aethub Beilbt Peabson, Barristers-at-Law.
Royal 12mo. 1884. 6».'
Neish & Carter's Factors Act, 1889; with Commentary and
Notes ; designed particularly for the use and guidance of Mercantile
Men. By Chaeles H. L. Neish and A. T. Caetee, Esqrs., Barris-
ters-at-Law. Royal 12mo. 1890. 4s.
FACTORY ACTS.— Notcutt's Law relating to Factories andWork-
shops. Second Edition. 12mo. 1879. 9s.
FARM, LAW OF.— Dixon's Law of the Farm,— A Digest of Cases
connected with the Law of the Earm, and including the Agricultural
Customs of England and Wales. Fourth Edition. By Henet
Peeeins, Esq., Barrister-at-Law. 8vo. 1S79. V. 6s.
" It is impossible not to be struck with the extraordinary research that must have
been used in the compilation of such a book as this." — Law Journal.
FIXTU RES.— Amos and Ferard on the Law of Fixtures and other
Property partaking both of a Real and Personal Nature. Third
Edition. By C. A. Feeaeb and W. Howiaitd Robeets, Esqrs., Bar-
risters-at-Law. Demy 8vo. 1883. 18s.
** An accurate and well written work." — Saturday Bevieuj.
FORMS.— Allen,— F»em.j 8vo. 1889. 4s.
PROBATE. — Browne's Probate Practice: A Treatise on the Pidn-
ciples and Practice of the Court of Probate, in Contentious and Non-
Contentious Business. By L. D. Powles, Barrister-at-Law. In-
cluding Practical Directions to Solicitors for Proceedings in the
Registry. By T. W. H. Oaklet, of the Principal Registry, Somerset
House. Svo. 1881. i;. 10s.
PUBLIC HEALTH.— Bazalgette and Humphreys.— Fi ^ > ^^ ^^^
SHERIFF LAW.— Churohill's Law of the Office and Duties of the
Sheriff, -with the Writs and Forms relating to the Office. Second
Edition. By Cameeon Chtjeohili,, Esq., Barrister-at-Law. Demy
8to. 1882. ^' mi
" A very complete treatise." — Solicitors' Journal,
" Under-sheriffs, aad lawyers generally, will find this a useful }mok."—Law Mag.
SHIPPING.— Boyd's Merchant Shipping Laws | being a Consolida-
tion of all the Merchant Shipping and Passenger Acts from 1854 to
1876, inclusive , with Notes of all the leading English and American
Cases, and an Appendix. By A. 0. BoTi>, LL.B., Esq., Barrister-
at-Law. 8vo. 1876. u. 5s.
Foard's Treatise on the Law of Merchant Shipping and Freight.
— By J. T. EoAED, Barrister-at-Law. Roy. 8vo. 1880. S/.ef.Xl.U.
SLAN DER.— Odgers,— F«fe " Lihel and Slander."
SOLICITORS.— Cordery's Law relating to Solicitors of the
Supreme Court of Judicature. With an Appendix of Statutes
and Rules, and Notes on Appointments open to Solicitors, and the
jSight to Admission to the Colonies. Second Edition. By A. Coedeet,
Esq., Barrister-at-Law. Demy 8vo. 1888. 16s.
"-The book is very clear, accurate, and practical, and will be found of mucb value.
"Without being bulky, it contains in a concise and intelligible form all the matters
usually occurring in a solicitor's practice." — Solicitors* Journal^ July 28, 1888.
'* This is a very valuable work, and being the only one on the subject, the appearance
of its second edition will be welcomed by the profession." — Law Journal^ Jan. 21, 1888.
Turner. — Vide "Conveyancing" and "Vendors and Purchasers."
Whiteway's Hints to Solicitors. — Being a Treatise on the Law re-
lating to their Duties as Officers of the High Court of Justice ; with
Notes on the Recent Changes afieoting the Profession. By A. R.
Whitewat, M.A., of the Equity Bar and Midland Circuit. Royal
12mo. 1883. 6«.
SPECIFIC PERFORMANCE.— Fry's Treatise on the Specific
Performance of Contracts. By the Hon. ' Sir Edwaed Pet, a
Lord Justice of Appeal. Second Edition. By the Author and W.
DoNAiDSON Rawlins, of Lincoln's Inn, Esq., Barrister-at-Law.
Royal 8vo. 1881. 11- 16«.
STAMP DUTY,— Gosset's Practical Guide to Account Stamp
Duty, Customs, and Inland Revenue Act, 1881 (44 Vict, c, 12,
s. 38). By J. A. Cosset, of the Legacy and Succession Duty
Office. PostSvo. 1887. 5«.
•*The author, by reason of his official position and the experience of six years'
working of this section of the Act of 1881 (which imposed an entirely new duty), has
been enabled to produce an exceptionally valuable guide."— iaio Times.
STATUTE LAW,— Wiiberforce on Statute Law. The Principles
which govern the Construction and Operation of Statutes. By E.
WiLBEBFOBOE, Esq., Barrister-at-Law. 1881. 18s.
*.* All standard Law Woris are kept in Stock, in law calf and other iindmgs.
28 STEVENS AND SONS, LIMITED,
49 & SO Vict.
1886.
60 & 51 Vict.
1887.
61 & 82 Vict.
1888.
61 & 62 Vict.
1888.
(Second Session.
62 & 63 Vict.
1889.
63 & 54 Vict.
1890.
STATUTES, and vide " Acts of Parliament."
Chitty's Collection of Statutes from Magna Chartato 1886.— A
CoUection of Statutes of Practical TJtiUty, arranged in Alphabetical
and Ciironological order, -with Notes thereon. The Eourth Edition.
By J. M. Lelt, Esq., Barrister-at-Law. In 6 vols., Supplement,
1 vol., and part for 1886. Royal 8to. 1880-6. Published at 15/.,
Or may be had separately- '^^'"'^ *° ^'^ ^^- l"*-
6 Tols. To end of the year 1880. Jfet 61. 6s.
1 Tol. Supplement. 1881 to 1885 incluflive. iV«< 21. 2».
rr g^ g^_
10«. 6d.
12». 6d.
Net Is. 6d.
Ids.
15*.
''It is needless to cnlaxge on the value of 'Chitty's Statutes 'to hoth the Bar and
to Solicitors, for it is attested by the experience of many years." — The Times.
" A very satisfactory edition of a time-honoured and most valuable work, the trusty
guide of present, as of former, judges, jurists, and of all others connected with the
administration or practice of the law." — Justice of the Peace,
" * Chitty * is pre-eminently a friend in need. Those who do not possess a complete
set of the Statutes turn to its chronological index when they wish to consult a
particular Act of Parliament. Those who wish to know what Acts are in force with
reference to a particular subject turn to that head in ' Chitty,' and at once find all the
material of whidi they are in quest. Moreover, they are, at the same time, referred
to tiie most important cases which throw light on the subject." — Law Journal.
SUCCESSION.— Potts' Principles of the Law of Succession to
Deceased f'ersons. — By T. Ridfoed Potts, B.C.L., M.A., Bar-
rister-at-Law. Demy 8vo. 1888. 7». 6d.
" "We should have no hesitation in recommending it to a student who was to have a
paper set on Succession generally." — Saturday EevieWj June 16th, 1889.
SUMMARY CONVICTIONS.— Paley's Law and Practice of Sum-
mary Convictions under the Summary Jurisdiction Acts,
1848 and 1879; including Proceedings preBminEiry and subsequent
to Convictions, and the responsibility of Convicting Magistrates and
their Officers, with Forms. Sixth Edition. By "W. H. Macnamaea,
Esq., Barrister-at-Law. Demy 8vo. 1879. 11. 4s.
Wigram. — Vide " Justice of the Peace."
SUMMONSES & ORDERS.— Archibald,— Ft:;,/i4f'nmw^m