Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/59

 CHAP. 1V.J RESEMBLANCES TO OTHER INSTITUTIONS. [§ 61. the partners are personally liable. Moreover, under the gen- eral enabling statutes, the importance of the " special sanction" has passed away, and a corporation usually requires no more special sanction than a limited partnership. No legal institu- tion exists save through the sanction or operation of the rules of law of which it is a manifestation. § 61. The differences which still exist, however, between a corporation and a partnership make the application to the one of rules of law regulating the other likely to lead to error. Two points of radical difference remaining to-day are these : (1) In a partnership, each partner is the agent of the other partners in respect of the partnership business, while this is not true of shareholders in a corporation. (2) The members of a corporation may transfer their shares at will, and thereby, with certain exceptions, relieve themselves from all liability in regard to the corporate enterprise, the transferee of the shares succeeding to all the rights and liabilities of the transferror. But a partner cannot thus relieve himself from his liability, and a transfer of his interest ordinarily necessitates a winding up of the partnership business. 1 x In many respects, an unincorpo- rated joint-stock association resem- bles an ordinary partnership. " The fundamental distinction between partnerships and unincorporated companies is, that a partnership consists of a few individuals known to each other, bound together by ties of friendship and mutual confi- dence, and who, therefore, are not at liberty without the consent of all to retire from the firm, and substi- tute other persons in their place; whilst a company consists of a larger number of individuals, not necessa- arily acquainted with each other at all, so that it is a matter of compara- tive indifference whether changes amongst them are effected or not. . . . Indeed it may be said that the law of unincorporated companies is composed of little else than the law of partnership modified and adapted to the needs of a large and fluctuat- ing number of members. 1 ' 1 Lind- ley on Part., 5. See, generally, for distinctions between partnerships, joint-stock associations, and corpo- rations, Lindley's introductory chapter ; also Gibb's Estate, 157 Pa. St. 59. " Commercial men and account- ants are apt to look upon a firm in the light in which lawyers look upon a corporation, i. e., as a body dis- tinct from the members composing it, and having rights and obligations distinct from those of its members. . . . But this is not the legal no- tion of a firm; . . . speaking generally, the firm, as such, has no legal recognition. This non-recog- nition of the firm, in the mercantile sense of the word, is one of the most marked differences between partnerships and incorporated com- 39