Page:Encyclopædia Britannica, Ninth Edition, v. 18.djvu/352

 330 P A 11 TNERSHIP the question of agency. They are not as a rule in the position of partners as against third persons. No partner ship can exist in an office depending upon personal confidence, as the office of executor or trustee. Joint tenants or tenants in common are not necessarily partners. If A and B agree to contribute a sum for the purchase of goods to be divided between them, they are joint owners after purchase and before division. But if they resell the goods and divide the profits, they then become partners (Smith s Mercantile Law, bk. i. ch. ii.). A valid contract of partnership can be entered into by any person not under the disability of minority or unsoundness of mind, or of being a convict within the Felony Act, 1870 (33 & 34 Viet. c. 23), or an alien enemy. It is presumed that the disability of coverture no longer exists since the Married Women s Property Act, 1882. An infant may nominally be a partner, but he incurs no liability, and may disaffirm past transactions when he comes of age. A clergyman becoming a partner for pur poses of trade is (with certain exceptions) liable to ecclesiastical penalties, but the contracts of the partnership are not void, 1 & 2 Viet. c. 106, 31. At common law there is no limit to the number of partners, but by the Companies Act, 1862 (25 & 26 Viet. c. 89, 4), not more than ten persons can carry on the business of bankers, and not more than twenty any other business, unless (with some exceptions) they conform to the provisions of the Apt. (See COMPANY.) A partnership may be constituted by deed or other writing, or it may be implied from acts. It is usually, though not of necessity, evidenced by deed. The usual clauses in a partnership deed provide for the nature of the business, the time of the commencement of the partnership and its duration, the premium, the capital and property, the interest and allowances, the conduct and powers of the partners, the custody of the books, the taking of the accounts, retirement, dissolution, and expulsion, the valua tion and transmission of shares, annuities to widows of deceased partners, prohibition against carrying on business in opposition after retirement, sale of goodwill, getting in debts, indemnity to outgoing partners, and arbitration clauses. Though a deed may serve to adjust the rights of the partners inter se, their liabilities to third persons cannot be affected by provisions in a deed of which the latter are ignorant. Whether a partnership exists in a particular case is a mixed question of law and fact. The partnership may last for any time agreed upon by the partners. It is determinable at will unless it has been agreed that it shall endure for a specified period, or unless it is dissolved by some of the circumstances which will be hereafter mentioned. A partnership may be general or special, e.g., the ownership of a single race-horse, or the conduct of a single case by a firm of solicitors. The rights and liabilities of partners may be considered as they affect the partners (1) inter se, and (2) in their relation to third persons. 1. The shares of partners are prima facie equal. Inequality must be proved by evidence. Each member of a partnership is entitled to take a share in its management, unless, as is frequently the case, one member is appointed managing partner. A partner is in a fiduciary position. It is therefore his duty to use reasonable diligence, to keep within the limits of his authority, and to observe good faith, e.g., not to compete with the partnership. He may be a partner in another firm, and the fact of his being a partner in firms A and B does not make A and B partners, for socius mei socii non est meus socius. In matters which are within the ordinary course of the business of the partnership, such as the period of division of profits, if the partnership articles be silent on the subject, the minority must yield to the majority. In matters beyond the scope of the partnership business, such as a change in the character of the business, one dissentient can forbid a change, and can obtain an injunction to prevent the change from being carried out. A partner is entitled to have accounts kept, and to inspect them at proper times. Where a partner has as agent for the firm paid more than his share, he is entitled to contribution from the rest. One partner cannot be expelled by the others unless there is a special power of expulsion given by the articles. A partner has no right to assign his share without the express or implied consent of the other partners. If the partner ship be one at will, the assignment ipso facto dissolves it; if not at will, the others are entitled to treat the assign ment as a ground of dissolution. The assignee takes the share subject to the claims of the other partners. Each partner has an equitable lien upon the partnership property, enabling him within certain limits to control the disposi tion of it. On the death of a partner his share goes to his representatives, not, as in joint-tenancy, by accretion to the survivors. It is an ancient maxim of law that jus accrescendi inter mercatores non halet locum (Coke upon Littleton, 182 a). 2. A more important and difficult question is the rela tion of partners to those not members of the partnership. From this point of view partnership is to a great extent a branch of the law of agency (see AGENT). As far as contracts are concerned, it is the rule that one partner is its general agent for the transaction of its business in the ordinary way, and the firm is responsible for whatever is done by any of the partners when acting for the firm within the limits of the authority conferred by the nature of the business which it carries on (1 Lindley, bk. ii. ch. i.). The authority is defined by the business, not by any private understanding between the partners. Thus a merchant can bind his partners by accepting a bill of exchange for the firm, but a solicitor or medical man cannot. A partner cannot execute a deed, except a simple release of a debt, so as to bind the firm. In many cases an act not warranted by authority, such as a submission to arbitration, may be adopted by ratification so as to bind the firm. And in other cases the rights of a lona fide claimant will prevail, even though the authority has been exceeded and there has been no ratification, e.y., where a bill given by a partner on his private account passes into the hands of a lona fide holder for value. Where the partner contracts on behalf of the partnership, it is the latter and not the individual who is primarily liable. If the name of a firm and an individual is the same, a bill drawn in that name for partnership purposes is prima facie a bill of the firm (Yorkshire Banking Co. v. Beatson, Laiu Rep., 5 C. P. D., 109). But a partner may hold himself out as the sole partner, and so make himself separately liable. Every member of a partnership is at common law liable in solido for the debts of the firm, a liability co-extensive with his power to transfer the whole property of the firm. This liability cannot be restricted except by statute (as the Companies Act) or by express contract with the creditors. A dormant partner is liable, like an ostensible partner, for debts contracted during his partnership ; if, however, the ostensible partners have been sued to judgment, an action cannot be brought to charge the dormant partner (Kendall v. Hamilton, Law Rep., 4 App. Cas., 504). The liability of a dormant and an ostensible partner terminates in a different manner, in the former case by his simple retirement without notice, in the latter only after notice, a general notice in the Gazette being the usual means of informing the public of the change, while special notice is given to known customers. It is a question of fact whether the liability of the new