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as to the management of the partnership concern.3 Before such a partnership can act, a registry thereof must be made in the clerk's office of the county, with an accompanying certificate, signed by the parties, and duly acknowledged, and containing the title of the firm, the general nature of the business, the names of the partners, the amount of capital furnished by the special partners, and the period of the partnership. The capital advanced by the special partners must be in cash, and an affidavit filed stating the fact. Publication must likewise be made for at least six weeks of the terms of the partnership, and due publication for four weeks of the dissolution of the partnership by the act of the parties prior to the time specified in the certificate. No such partnership can make assignments or transfers, or create any lien, with the intent to give preference to creditors. The special partners may receive
3 By act of April 14th, 1857, ch. 414, § 3, amending $ 17, tit. 1, ch. 4, Rev. Statutes, it is provided that the special partner may loan money to, and advance and pay money for, the partnership, and may take and hold the notes, drafts, bonds, &c., of the firm as security for the repayment of such moneys and interest, and may use and lend his name and credit as security for the partnership in any business thereof, and shall have the same rights and remedies in respect thereof as any other creditor. He may also negotiate sales, purchases, &c., for the partnership, but no transaction so negotiated shall bind the firm until approved by a general partner. If he interferes with the partnership concerns in any other manner than is thus provided, he will be liable as general partner. By § 4 of same act, amending $ 23, tit. 1, ch. iv. Rev. Statutes, in case of the insolvency of the partnership, no special partner, except for claims contracted pursuant to § 17, as above amended, shall claim as creditor till the demands of the other partnership creditors shall be satisfied. By the act of April 16th, 1858, it is further provided that in case of the death of any partner, the partnership may be carried on by the survivors with the assent of the heirs or legal representatives of the deceased and under the same name, if the articles of copartnership shall have authorized the same; in which case, the heirs or legal representatives succeed to all the partnership rights of such deceased partner. Also, that one or more special partners may be added without a dissolution or alteration of the firm name, upon paying in such additional amount of capital as shall have been agreed upon, in cash, filing a new certificate thereof, and otherwise complying with the formal requirements of the law. Laws of 1858 (N. Y.) p. 449. In Pennsylvania, where the special partner stipulated that his son should, as clerk, be employed by the partnership, and should control tho use by the general partner of the funds of the partnership, this agreement was held to be a fraud on the law requiring the capital to be actually paid in, and the partnership was held to be general. Richardson v. Hogg, 38 Penn. 153.
• Tho partnership continues till the notice of dissolution has been published four weeks.
If the special partner sell out his interest to the general partner, for a sum exceeding his capital invested, this is a withdrawal of his capital, contrary to the law. Beers v. Reynolds, 12 Barb. (N. Y.) 288; S. C. 1 Kernan, 97.
• Neither this provision nor anything in the constitution of a limited partnership an annual interest on the capital invested, provided there be nc
reduction of the original capital ; but they cannot be permit* 36 ted * to claim as creditors, in case of the insolvency of the
partnership. (a)? It is easy to perceive, that the provisions of the act have been taken, in most of the essential points, from the French regulations in the commercial code; and it is the first instance in the history of the legislation of New York, that the statute law of any other country than that of Great Britain has been closely imitated and adopted. The provision for limited partnerships in the other states (and which were subsequent in po of time to that in New York) is essentially the same. (6)
It is a general and well-established principle, that when a per son joins a partnership as a member, he does not, without a spe cial promise, assume the previous debts of the firm, nor is he bound by them. To render persons jointly liable upon a contract as partners, they must have a joint interest contemporary with the formation of the contract. (c) If, however, goods are pur
(a) It has been ruled, in Hubbard v. Morgan, U. S. D. C. for N. Y., May, 1839, that the special partner must, at his peril, see that the law is complied with in all its essentials, or he will be liable as a general partner.
(6) If the partnership be a particular one, being formed for some business not of a commercial nature, such partnerships are called particular or ordinary partnerships in the Civil Code of Louisiana, art. 2806, 2807 ; and the partners are not bound in solido for the debts of the firm, unless such power be specially given; but each partner is bound for his share of the partnership debt. Id. art. 2843, 2844 ; 12 Rob. Louis. R. 247.
(c) Saville v. Robertson, 4 Term Rep. 720; Young 0. Hunter, 4 Taunt. 582 Poindexter o. Waddy, 6 Munf. 418; Gow on Partn. 150 – 152; Collyer on Partn. 735 – 743. Mr. Justice Story, in his Com. on Partnership, SS 147 – 153, has examined the cases replete with complex and refined discussions, as to the acts preliminary to
hinders a creditor in obtaining by legal diligence an advantage over other creditors in collecting his demand. · Greene v. Breck, 32 Barb. (N. Y.) 73; Artisans' Bank o. Treadwell, 34 Barb. (N. Y.) 553; Van Alstyne v. Cook, 25 N. Y. 489.
1 Argall v. Smith, 3 Denio's R. 435. In this case, it was held, that a mistake of the printers of one of the papers in which the terms of partnership were published, in inserting 5,000 instead of 2,000, the true sum contributed by the special partner, was an essential failure to comply with the statute, and made the special partner liable as a general partner. Where the special partner of an insolvent limited partnership is gencral partner in another firm, the latter is not prevented from claiming as creditor of the limited partnership. Hayes o. Bement, 3 Sandf. (N. Y.) 394. Sec, also, Mills v. Argall, 24 Wendell, 579, and 6 Paige, 577 ; Bowen v. Argall, 24 Wendell, 577, and White v. Hackett, 20 N. Y. 178. In this last case it was finally settled that a special partner could not become a creditor so as to compete with other creditors, prior to the act of 1857.
chased in pursuance of a previous agreement between two or more persons, that one of them should purchase the goods on joint account, in a foreign adventure, they are all answerable to the seller for the price, as partners, even though their names were not announced to the seller; for the previous agreement made the partnership precede the purchase, and a joint interest attached in the goods at the instant of the purchase. (d)
II. Of the rights and duties of partners in their relation to each other, and to the public.
(1.) Of the interest of partners in their stock in trade.
Partners are joint tenants of their stock in trade, but without the jus accrescendi, or right of survivorship; and this, according to Lord Coke, (e) was part of the law-merchant, for the advancement and continuance of commerce and trade. It would seem, however, to have been a point of some doubt as late as the middle of the seventeenth century, whether the doctrine of survivorship did not apply; for the Lord Keeper, * in Jeffereys * 37 V. Small, (a) observed, that it was common, at that time, for traders, in articles of copartnership, to provide against survivorship, though he declared that the provision was clearly unnecessary. On the death of one partner, his representatives become tenants in common with the survivor; and with respect to choses in action, survivorship so far exists at law, that the remedy to reduce them into possession vests exclusively in the survivor, for the benefit of all the parties in interest. (6) But no partner has an exclusive right to any part of the joint stock, until a balance of accounts be struck between him and his copartners, and the amount of his interest accurately ascertained. The interest of each partner in the partnership property is his share in the sur
the formation of a partnership, which do or do not bind the partnership when consummated. The general doctrine, as the learned judge observes, is well summed up by Mr. Collyer.
(d) Gouthwaite v. Duckworth, 12 East, 421 ; Collyer on Partn. 357 – 360 ; Story on Partn. § 148.
(e) Co. Litt. 182 a. . (a) i Vern. 217.
(6) Martin v. Crompe, 1 Lord Raym. 340; Daniel J., in Jarvis v. Hyer, 4 Dev. (N. C.) 369.
1 See Buckley v. Barber, 1 Eng. L. & Eq. 506.
plus, after the partnership accounts are settled and all just claims satisfied ; and it follows, that no suit at law can be maintained by one partner against his copartner, until a final settlement has been made, and the balance ascertained, and a promise contracted to pay it. (c)2
(2.) Of stock in land.
If partnership capital be invested in land for the benefit of the company, though it may be a joint tenancy in law, yet equity will hold it to be a tenancy in common, and as forming part of the partnership fund ; and the better opinion would seem to be, that equity will consider the person in whom the legal estate is vested as trustee for the whole concern, and the property will be en titled to be distributed as personal estate. (d): The point has
(c) Nicoll v. Mumford, 4 Johns. Ch. 522; Fox 0. Hanbury, Cowp. 445; Taylor v. Fields, 4 Vesey, 396 ; 15 Vesey, 559, note, S. C.; Parsons C. J., in Pierce v. Jackson, 6 Mass. 242; Holmes v. Higgins, 1 Barn. & Cress. 74; Killam o. Preston, 4 Watts & Serg. 14; Foster v. Allanson, 2 Term Rep. 479; Fromont v. Coupland, 2 Bing. 170. One partner having only his separate interest in the surplus, cannot, of course, sell or mortgage an undivided interest in a specific part. Morrison v. Blodgett, 8 N. Hamp. 238; Lovejoy v. Bowers, 11 Id. 406. Though each partner is bound to bestow his services and labor with due diligence and skill, he is not entitled to any reward or compensation, unless there be an express stipulation between the partners for that purpose. The law does not undertake to measure between the partners the relative value of their services bestowed on the joint business. Thornton v. Proctor, 1 Anst. 94 ; Caldwell v. Leiber, 7 Paige, 483; Anderson v. Taylor, 2 Iredell (N. C.) Eq. 420; Burden v. Burden, 1 Ves. & Bea. 170; Story on Partn. § 182; Franklin v. Robinson, 1 Johns. Ch. 157, 165; Bradford v. Kimberly, 3 Johns. Ch. 433; Whittle v. McFarlane, 1 Knapp, 311.
(d) Thornton o. Dixon, 3 Bro. C. C. 199; Lord Loughborough, in Smith v. Smith, 5 Vesey, 189; Ripley v. Waterworth, 7 Vesey, 425; Featherstonhaugh v. Fenwick, 17
* See Roberts v. Fitler, 13 Penn. 265 ; Gridley o. Dole, 4 Comst. 486.
8 Ludlow v. Cooper, 4 Ohio (N. S.) 1; Duhring v. Duhring, 20 Mis. 174; Moreau v. Saffarans, 3 Sneed, 595; Galbraith o. Gedge, 16 B. Mon. 631 ; Crooker v. Crooker, 46 Maine, 250. In Coder v. Huling, 27 Penn. 84, it is held that land bought with partnership funds, but not needed for the joint business, is not partnership property, but is held by the partners as tenants in common. And, in Jackson o. Stanford, 19 Geo. 14, it is held that members of a copartnership are tenants in common of land owned by the firm. In Clagett o. Kilbourne, 1 Black, 346, it is held, that dealing in lands is a proper subject of a partnership, and that in such a partnership a purchaser from one partner gets only a right in equity to an account. Seo, also, in further sup port of the doctrine in the text, Dupney o. Leavenworth, 17 Cal. 262; Whitman v.. Bost. & Me. R. R. 3 Allen, 133; Collumb v. Read, 24 N. Y. 505.
• Lyman v. Lyman, 2 Paine C. C. 11; Roach v. Perry, 16 Dl. 37 ; Ante, p. 25,
been extensively discussed and * considered in this coun- * 38 try, and the cases are not inconsistent with this principle, when they admit, upon grounds of reason and policy, that real estate, acquired with partnership funds, and held by partners in common, may be conveyed or charged by one partner, on his private account, to the extent of his legal title, whether that legal title covers the whole or a part of the estate ; provided the purchaser or mortgagee dealt with him bona fide, and without notice of the partnership rights, and there was nothing in the transaction from which notice might reasonably be inferred. (a)? In Tennessee, an estate so held in joint tenancy by partners for the purposes of trade, descends and vests in the heirs at law of a deceased partner as real estate. (b) In New York, the Supreme
Vesey, 298; Lord Eldon, in Townsend o. Devaynes, cited in Gow on Partn. 54, edit. Phil. 1825; in Selkrig o. Davis, 2 Dow, 242, and in Crawshay v. Maule, 1 Swanst. 521 ; Sigourney v. Munn, 7 Conn. 11; Hoxie o. Carr, 1 Sumner, 182 – 186; Ex parte Banks, Newfoundland Rep. 396. Contra, Sir William Grant, in Bell o. Phyn, 7 Vesey, 453, and Balmain v. Shore, 9 Vesey, 500 ; Gow on Partn. 54, 55. In Sigourney o. Munn, the English and American authorities were fully examined, and the subject discussed ; and the doctrine declared, that real estate acquired with partnership funds, for partnership purposes, would be regarded in equity as partnership stock, and liable to all the incidents of partnership property. It might, also, by agreement of the parties, be regarded as personal stock of the company. The English vice-chancellor, in Randall v. Randall, 7 Sim. 271, reviewed, among others, the cases of Thornton v. Dixon, Ripley v. Waterworth, Bell v. Phyn, Balmain v. Shore, and Crawshay v. Maule, above mentioned, together with the cases of Phillips v. Phillips, 1 My. & Keen, 649, and Broom v. Broom, 3 Ibid. 443, and came to the conclusion declared in Sigourney o. Munn, that the English chancery doctrine, considering real estate as personal property, was applicable only to lands purchased with partnership capital, for the purposes of a partnership trade.
(a) Forde v. Herron, 4 Munf. 316; M'Dermot v. Laurence, 7 Serg. & Rawle, 438. In Hoxie v. Carr, 1 Sumner, 173, it was held, that where a purchaser of real estate has actual, or is chargeable with constructive notice, that it was partnership property, the estate is chargeable in his hands with the payment of the partnership debts, even though he had no notice of the partnership debts.
(6) M'Allister v. Montgomery, 3 Heyw. 96. In Yeatman o. Woods, 6 Yerger, 20, real estate held by partners, for partnership purposes, was held to descend and vest, upon the death of one of the partners, in his heirs at law, as real estate. This was upon the strength of the case in 3 Heywood, but with an evident reluctance in the court to depart from the English rule in equity, which now holds such estate to be personal stock, and distributable as such. In South Carolina one party cannot transfer the real estate of the firm, and used for its business, by deed, unless it be in a case in which the buying and selling of real estate is the object of the partnership. Robinson v. Crowder, 4 M'Cord, 519. The deed can convey only his individual share or title.
1 Buck v. Winn, 11 B. Mon. 320; Coder v. Huling, 27 Penn. 84.