Page:The American Cyclopædia (1879) Volume XIII.djvu/150

 140 PARTNERSHIP sant partner, after such denial and notice, may waive it, and will be considered as doing so if he permits the proceeds or avails of the trans- action to be brought into the common account and the common fund for the common benefit. The dissolution of a partnership, however caused, has no effect upon its existing debts, or upon the liability of the partners for them; but it entirely prevents the contracting of any new debt by the firm, because that has ceased to exist. Hence the former partners can in no way bind one another by any new contracts. Thus, no partner can indorse a note ^ of the firm, either with the firm's name or his own, even if it be to pay a debt of the firm ; and even authority given by the firm to one part- ner to settle the affairs of the firm would not, generally, carry with it the power to make such indorsement. Dissolution may take place in many ways. 1. By the expiration of the time when it is to terminate by the articles ; but if it goes on as before, although nothing be said, the law will presume an agreement to continue it on the former terms. 2. It may certainly be dissolved at the pleasure of any partner, if there be no limited term in the articles ; and if there be, and even if there be a mutual covenant not to dissolve, we should say that any partner might dissolve the copart- nership at his pleasure, always being liable to respond in damages for any injury he may in- flict by his breach of contract. But a court of equity would probably interfere to prevent a causeless or fraudulent dissolution, especially if it were obvious that injury would be done which could not be adequately compensated by damages. So a court of equity would always decree a dissolution at the prayer of any part- ner, if he could show good cause, of sufficient magnitude; and in any such case the court would appoint a receiver if that were necessary, and do or order all other things which the in- terests and equities of the parties required. 3. An assignment by a partner of his whole share and interest in the copartnership property and business would of itself work a dissolution; and it would be so even if one partner assigned his whole share to another partner, because this would be equivalent to this partner's going out of the firm. 4. Any departure from a firm or 'copartnership by any partner dissolves that firm, however it be caused. The firm may go on as before, taking in or not new partners, but it is in law a new firm, for the simple rea- son that a partnership is in no sense or measure a corporation. Hence, the death of any mem- ber of a firm dissolves that firm. Even if the articles provide for that casualty, and it is agreed that the firm shall go on with unchanged name, and that no account shall be taken, but the share of the deceased be paid to his repre- sentatives by cash or notes to a certain amount, still in law the old firm ceased when the part- ner died, and a new one began. 5. Bank- ruptcy of the firm, or perhaps of any part- ner, dissolves the firm at once. Whether the insanity of a partner has that effect may not be certain, but we should say that insanity which would probably be permanent would unquestionably be a good ground for disso- lution by the court or by the parties, but that it would not of itself, and by its own force, effect a dissolution. If a partnership is dissolved by the death of a partner, the whole property and business pass to the survi- vor or survivors, but only for the purpose of settling up the business and closing the con- cerns of the partnership as soon as this can be done in a proper way. The surviving partners and the representatives of the deceased may come to some agreement about this, or the articles may provide for such an event. But in the absence of any such agreement or pro- vision, the survivors takfe everything, with the powers necessary for the speediest and best settlement, and no more; nor can they, even for the purpose of settlement, make new con- tracts binding the estate or representatives of the deceased. "When the settlement is finally and fully made, the survivors must pay over to the representatives of the deceased the share due to the estate ; but until then the represen- tatives cannot interfere with the management of the property, although a court of equity will interfere, on their petition, to prevent waste, delay, or other injurious conduct by the survi- vors. The rules of law in regard to the rights of creditors over the funds of the partnership, and the property of the partners, are very im- portant, but in some particulars they are not quite settled. It is certain that the joint funds of the partnership are, in the first place, to be applied and appropriated to pay the joint debts, that is, to pay the partnership creditors; and the private creditors of the individual partners cannot touch the partnership funds in any way until these have paid in full all the part- nership debts. It is also certain that the pri- vate creditors of an individual partner may reach by any proper process of law the private and separate property of the partner who is their debtor. So, too, it is certain that the creditors of the firm may, at some time, re- sort to the private property of the partners. The uncertainty is involved in this question : While the creditors of the firm have an ex- clusive right to the property of the firm, have the private creditors of the partners an equally exclusive right to the private property of the indebted partners ? Upon this it can only be said that the rulings of courts are greatly at variance. What right a creditor of a partner in a solvent firm has, and how he may effectu- ate his right, is a matter of much uncertainty. The prevailing principle may be stated in this way. The creditor can take only what his debtor has. This is not a several and distinct right to or property in any part of- the part- nership funds ; for it is only an ownership of the whole in common with the other partners,, and thence a right to have the accounts set- tled, and the debts of the firm paid, and then