Page:Harvard Law Review Volume 8.djvu/316

300 300 HARVARD LAW REVIEW. "The transaction in question was a purchase by the one com- pany of the good-will and the whole concern of the other. That would, ordinarily speaking, be a transaction in which no company would be justified in engaging, because it certainly cannot be said to be within the ordinary scope of the object of any company to purchase the good-will of another." "The principles of law upon which the liability of joint stock companies is to be decided, as far as is necessary for the decision of this case, are very clear and perfectly well settled, though not always in practice steadily kept in view. The law in ordinary partnerships, so far as relates to the power of one partner to bind the others, is a branch of the law of principal and agent. Each member of a complete partnership is liable for himself, and, as agent for the rest, binds them upon all contracts made in the course of the ordinary scope of the part- nership business. ... It is obvious that the law as to ordinary partnerships would be inapplicable to a company consisting of a great number of individuals contributing small sums to the com- mon stock, in which case, to allow each one to bind the other by any contract which he thought fit to enter into, even within the scope of the partnership business, would soon lead to the utter ruin of the contributories. , . . The Legislature, then, devised these companies, in a manner unknown to the common law, with special powers of management and liabilities, providing at the same time that all the world should have notice who were the persons authorized to bind all the shareholders, by requiring the copartner- ship deed to be registered, certified by the directors, and made accessible to all." ^ In an ordinary partnership, each member is an agent as well as a principal; his liability for the partnership debts is unlimited, and he cannot expose his associates to a new risk by transferring his agency to an assignee of his share. In this State any number of persons, however large, may form such a partnership ; and how- ever obvious the hazard arising from the number and character of the members, in each of whom an agency is vested, the law of or- dinary partnerships is applicable to the firm. They may diminish the risk by conferring the agency (not upon each member, but) only upon a concurring majority, or upon a board of directors chosen by major vote, or upon one manager chosen by themselves, or by directors. They may think this diminution of risk sufficient 1 Ernest v. Nichols, 6 H. L. C. 401, 414, 417, 418, 419.