Commercial Law

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agent. The one which we shall take up now is the relationship of a partner to a partnership, and also to the outside world. We

very informality of the type of business conducted under the partnership arrangement. Whether, in a given case, a partnership exists, becomes a vital question. Two friends, A and B, in an informal way, go into a business venture. The enterprise fails and A and B owe many debts. A has some property of his own; B has nothing. You are a creditor, but all your

ications is the Uniform Partnership Act which has been adopted in a number of the States, and which will undoubtedly follow the same course as the other acts drawn by the same Commissioners. We shall make frequent reference to the Uniform Partnership Act in this chapter. Although some of the writers on the law of partnership state that no satisfactory definition of the

ur chapter on corporations, it is well, at the very outset, to understand the fundamen

osite in the case of a corporation. The death of a shareholder has no effect upon the corporation. In fact, if all of the shareholders of the United States Steel Corporation should die at once, the corporation would still

re the profits and losses equally. Theoretically, A has the right to contribution from his fellow partners, and should they later acquire property, he will be able to enforce this right in a court of equity. In a corporation, a shareholder is liable only for the value of his share. If he subscribes to a share of stock, par value $100, and has paid only $50 on his subscription, and the corporation goes into bankruptcy, its receiver can compel him to pay the balance of his subscription, $50, but that would be the ex

rporation. The position of a shareholder is very similar to that of a voter. The corporation is run by its board of directors. They are elected by the shareholders just as we elect a governor or president. If we are dissatisfied with

order to do business, must comply with the corporation laws of the State in which it is incorporated. A regular formality must be observed. A certificate of incorporation m

granted by the State. The sum total of the powers given in that charter gives the total of all of the activities the corporatio

ntity, the Green Corporation, if that is the name given the company. In the case of a partnership, the law does not, as a rule, consider the partnership as an entity distinct and separate from the members who make up the firm. Of course, the business man does, in a way, look upon the partnership as

a general way, these limited partnerships are a combination of the principles underlying ordinary partnerships and corporations. The members may limit their liability to a certain amount, and in that sense, the limited partnership is like a corporation. On the other hand, the general principles of pa

example, the Adams Express Company. The joint stock company, however, carries with it the individual liability of the shareholders for the debts of the company, which is technically a partnership attribute. The New York Court of Appeals in People ex rel. Winchester v. Coleman, 133 N. Y. 279

f constitute him a partner with the person operating the vessel. This point has been decided several times. Such questions as these arise and cause great difficulty in determining whether a partnership exists. At times it is very important, as in the case of the seamen, to know whether or not they can be made to assume the obligations pertaining to the partnership relations. While we cannot go into these relations in detail, the framers of the Uniform Partnership Act have laid down, with the utmost care, the rules which are to be used in determining whether a partnership exists or not. But, you say, why cannot the parties avoid all this diffic

rsons who are not partners as to each ot

ommon property, or part ownership does not of itself establish a partnership, whet

ership, whether or not the persons sharing them have a joint or commo

s prima facie evidence that he is a partner in the business, but no s

by installment

an employee or r

widow or representative

gh the amount of payment vary w

of the good-will of a business or othe

th one or more persons not actual partners, he is liable to any such person to whom such representation has been made, who has, on the faith of such representation, given credit to the actual or apparent partners

. This is one case where a partnership has an advantage over a corporation. A group of lawyers may form a partnership and do business under a partnership name. But a group of lawyers seldom or never form corporations to practice law. The reason for this is that the corporation is a separate entity, an

f money on hand, A and B may not be able to reap the profits of the venture. C has the money. The agreement was that all were to share equally, but C insists on keeping it all. The law will allow him to do so, because it is beneath the dignity of the court to order an accounting in a t

the same general principles as applied to ordinary infant's contracts. His entering the partnership agreement is not void, but voidable. When he becomes of age, if he affirms the contract of partnership, he will be liable the same as an adult. He has, however, the right to disaffirm his partnership agreement within a reasonable time after becoming of age, and if he does so, he will be absolved from all personal liability for the debts of

ip. Ordinarily the business cannot be conducted satisfactorily unless all of the partners have the confidence of each other. It is for this reason, that we have the rule, heretofore referred to, that the sale by a partner of his interest in the business works a dissolution of the partnership. John Jones, who purchased my rights in the firm, could not compel the other members to take him in, but the firm would have to be wound up and he would simply be able to recover what my share of the assets was. It is true that Section 27 of the Act does read that a sale by a partner of his interest does not of itself work a dissolution, but the doctrin

itled to receive his assignor's interest and may require an account

ll be contributed by each, what the share of each in the profits and losses shall be, what the powers of the partners as between themselves shall be, whether the business shall be continued after the death of one or more of the partners and how it shall be wound up. But the important thing to note is, that if provision be not made, the general law, and particularly that part governing the powers and duties of partners to each other and to third persons, applies. In other words, the partners may, by their contract, determine what their rights as between themselves shall be; but if they do not, the rules of law will

authority from the others. Conveyances of real property should be made to or by the individual partners "doing business as," etc., for the law does not generally recognize the firm as a separate person or entity sufficiently to enable it as such to take or give a conveyance. If the deed ran to "John Doe & Co.," the title would be in John Doe only, though he would be said to hold it in trust for the firm, for if the partnership name is given as the grantee, the title goes only to those whose names appear, and if the partnership were doing business under a fictitious name, the deed would convey to no one. Whether land, the title to which is in the

partnership form of doing business unless all the members of the firm have the utmost confidence in each other. These powers of the partners are so general that it is i

instrument, for apparently carrying on in the usual way the business of the partnership of which he is a member, binds the partnership, unless the partner so acting has

g on of the business of the partnership in the usual way, does n

ess they have abandoned the business, one or more

ust for creditors or on the assignee's pr

the good-will o

ke it impossible to carry on the or

fess a

claim or liability to a

triction on his authority shall bind the partners

tnership may recover such property unless the partner's act binds the partnership under the provisions of paragraph (1) of Section 9, or unless such property has been conve

partner, in his own name, passes the equitable interest of the partnership, provided the act

he partners in whose name the title stands may convey title to such property, but the partnership may recover such property if the partners' act does not

partnership, a conveyance executed by a partner in the partnership name, or in his own name, passes the equitable interest of

of all the partners, a conveyance executed by all t

rning partnership affairs within the scope of his authority

a partner or then present to his mind, and the knowledge of any other partner who reasonably could and should have communicated it to the acting partner

or with the authority of his co-partners, loss or injury is caused to any person, not being a partner in the partnership, or

ip is bound to ma

of his apparent authority receives money or pr

or property of a third person and the money or property so received is

artners a

erything chargeable to the partn

the partnership; but any partner may enter into a s

any such person to whom such representation has been made, who has, on the faith of such representation, given credit to the actual or apparent partnership, and if he has made such representation or consented to its being made in a public m

ults, he is liable as though he were

y with the other persons, if any, so consenting to the contrac

n to bind them to the same extent and in the same manner as though he were a partner in fact, with respect to persons who rely upon the representation. Where all the members of the existing partnersh

of the partnership arising before his admission as though he had been a partner when such obligati

the power of a majority. They can only carry on the business of the firm, and any vote of the majority, or action of the majority, to change the chara

he rights and duties of partners in relation to the partners

n to the partnership shall be determined, subject to

e equally in the profits and surplus remaining after all liabilities, including those to partners, are satisfied; and must con

nd personal liabilities reasonably incurred by him in the ordinary and proper

advance beyond the amount of capital which he agreed to contribut

the capital contributed by him only from

hts in the management and condu

hip business, except that a surviving partner is entitled to reasonab

ber of a partnership without t

ss may be decided by a majority of the partners; but no act in contravention of any agr

partners, at the principal place of business of the partnership, and every p

l things affecting the partnership to any partner or the legal repr

y profits derived by him without the consent of the other partners from any transaction connected wi

partner engaged in the liquidation of the affairs of the partners

the right to a formal accou

the partnership business or possessi

ists under the term

vided by S

rcumstances renders i

during which the partnership was to exist, or by mutual consent of all parties concerned. Under the head of termination by operation of law, we have such topics as the death of a partner, the insanity of a partner, or the bankruptcy of a partner, and a dissolution by a court, as for examp

such share of the assets as belong to him when all debts due from him to the firm and all liabilities to the outside world are settled. Consequently, a creditor of an individual partner cannot seize or attach or levy on firm property, because that firm property does n

of assets comes up, and the Uniform Partnership Act gives us the general

dissolution, the following rules shall be obs

ts of the pa

rtnership

sary for the payment of all the liabilities

partnership shall rank in o

o creditors othe

rtners other than for

to partners in re

to partners in r

of their declaration in clause (a) of this pa

of the partners are insolvent, or, not being subject to process, refuse to contribute, the other partners shall contribute their share of

appointed by the court shall have the right to enforce th

e the contributions specified in clause (d) of this paragraph, to the exte

artner shall be liable for the contribution

a court for distribution, partnership creditors shall have priority on partnership property, and se

estate is insolvent, the claims against his sep

ng to separa

ng to partner

to partners by wa

ce, the surviving partners have a right to be liquidating partners and liquidate the business. That means they may carry on existing contracts; they may dispose of the stock on hand to the best advantage. If this requires incidental purchases of new

ept such as he may be able to get from the insolvent estates of his two partners. Now, in a limited partnership a limited partner does not stand to lose any more than the amount of money he actually puts in the firm. In order to create a limited partnership it is necessary to sign a certificate prepared for the purpose and stating the facts, file it in the office of the Secretary of State or other official, and also publish it so that the public may be informed of the circumstances and credit may not be given by the world at large to the firm on the assumption that the limited partner is a general partner. He puts a specified amount of money in the firm and that money may be reached by creditors of the firm, but they cannot hol

limited partnership can never be a secret partner, since the terms of a limited partnership must be published. A member of a limited partnership should take no part in the management of the business, or he may render himself liable as a gener

tes, but such companies are rather analogous to corporations than to limited partnerships. The liability in such companies is limited altogether to the assets in the company's hands. There are no general partners.