Page:The American Cyclopædia (1879) Volume XIII.djvu/149

 PARTNERSHIP 139 and especially if a separate promise is made about this, a common action at law is main- tainable for the balance. If, as is not unfre- quently the case, a man is a member of two firms, one of those firms cannot sue the oth- er at law, because the same person cannot be plaintiff and defendant. But if one of the firms holds the negotiable paper of the other, it may indorse it to a third person, who may sue the other firm. Partners are of various kinds. They may be open or secret, active or dormant, retiring or new-coming. A secret partner is just as liable for the debts of the firm, when he is dis- covered, as an open and declared partner ; so a dormant partner who only lends his capital or his name, and takes his profits, is just as liable as an active partner ; for the one rule, which lies at the foundation of the whole law of part- nership, is, that each partner, and the whole of his property, is liable for the whole of the partnership debts. This rule was until recent- ly universal, and would be so. now but for the special partnership recently introduced into this country from Europe. (See PAKTNEESHIP, LIMITED.) A retiring partner who continues to receive a share of the profits continues to be liable for the debts of the firm, but is not made liable by receiving a certain definite sum, annually or otherwise, independently of the profits. He should give notice of his retire- ment ; for those who deal with the firm in ig- norance of his retirement, without their fault, may deal with it on his credit, and are author- ized to hold him "responsible. But a new cus- tomer, who had no dealings with the firm be- fore the retirement of this partner, cannot hold the partner after retirement without notice, unless it can be shown that he came to the firm on the credit of this partner, and that he was justified in trusting to this credit. So if a creditor of a firm, knowing of such retirement, receives for his debt the negotiable paper of the firm, the presumption of law is that he in- tended to discharge the retiring partner ; which presumption can be refuted only by evidence of an honest and actual intention to the con- trary. A nominal partner, who lends his name to a firm without any interest whatever, is, in general, just as liable as if he were actually in- terested. If one purchases goods separately, and owes for them, those who become subsequently interested in the goods jointly with the first purchaser are not thereby made liable for the debt, unless the purchase was made originally by their joint authority, and for the purpose of bringing it into the partnership ; for then the partnership existed at the beginning. Throughout the commercial world, it is a uni- versal rule, that each partner has full power and authority to act for the others and repre- sent the whole firm in all matters appertaining to the partnership. There is perhaps no ex- ception or limitation to this rule, other than by the principle that either partner's powers may be restrained by agreement, and all per-, sons to whom this agreement is communicated are bound by it. Hence, on the continent of Europe, it is very common for the circulars or cards announcing a firm to specify which of the members is authorized to make purchases in one place or in another, or to draw or accept bills, and the like. Where there is not this agreed and declared limitation, each partner may make purchases, sales, loans, assignments, pledges, or mortgages of the partnership prop- erty, and give or receive notes or bills or money therefor; and any such transaction, done in reference to and within the scope of the partnership business, and with honest in- tent on the part of the person dealing with the firm, binds the firm and all the partners in regard to that person, however fraudulent the transaction may be in reference to the other partners. But if a partner, who has borrowed money in his own name, brings that money into the partnership, the partners are not there- by made liable for the debt ; the firm owes the borrowing partner, and he alone owes the lend- er ; and one who lends money to a partner, for the very purpose of enabling him to contribute the same to their capital, cannot hold the oth- er partners without their assent. Some part- nerships are carried on in the name of an indi- vidual, who may also use his own name in his own business. In that case, paper bearing his name will be supposed to relate to his private and individual business, unless direct evidence or circumstances show it to have been on the firm's account. A release by or to one partner is a release by or to the firm, if there be no fraud ; so a notice by or to one is notice by or to all. The question sometimes arises, how far a new-coming member is responsible for a for- mer and existing debt. The general answer is, that he is not so liable without his adoption of the debt ; but this adoption may be shown by his express agreement, either with the firm or with the creditor, or it may be inferred from circumstances which distinctly indicate it ; and it has been held that a payment by the firm, after he enters it, of the interest on an old debt with his knowledge and without objection by him, implies his adoption of the debt as due from his firm. But the liability of a new-com- ing partner for the existing debts of the firm cannot be presumed from the mere fact of his entering into the firm. Whether a majority of the partners can bind a minority, and conduct the business of the firm at their pleasure, may not be quite settled ; but the later authorities seem to confine this power of a majority to what may be called the domestic affairs of the firm, as the hiring a room or store, keeping clerks or books, and the like. At the same time it seems to be now well established that a partner who dissents from an inchoate and incomplete transaction, and distinctly expresses his dissent to the outside parties concerned in the transaction, giving them notice that he shall not be bound by the action of the firm, may in this way protect himself from liability. It should be added, however, that the recu-