« ForrigeFortsett »
III. Of the dissolution of partnership.
If a partnership be formed for a single purpose or transaction, it ceases as soon as the business is completed ; and nothing can be moro natural and reasonable than the rule of the civil law, that
the partnership in any business should cease when there was * 53 an end put to the business itself. (d) If the * partnership be
for a definite period, it terminates of course when the period arrives. But in that case, and in the case in which the period of its duration is not fixed, it may terminate from various causes, which I shall now endeavor to explain, as well as trace the conse quences of the dissolution.
A partnership may be dissolved by the voluntary act of the pai ties, or of one of them, and by the death, insanity, or bankruptcy of either, and by judicial decree, or by such a change in the condition of one of the parties as disables him to perform his part of the duty. It may also be dissolved by operation of law, by reason of war between the governments to which the partners respectively belong, so as to render the business carried on by the association impracticable and unlawful. (a)
(1.) Dissolution by the voluntary act of either partner.
It is an established principle in the law of partnership, that if it be without any definite period, any partner may withdraw at a moment's notice, when he pleases, and dissolve the partnership. (b) The civil law contains the same rule on the subject. (c) The existence of engagements with third persons does not prevent the dissolution by the act of the parties, or either of them, though those engagements will not be affected, and the partnership will still continue as to all antecedent concerns, until they are duly adjusted and settled. (d) A reasonable notice of the dissolu
(d) Inst. 3, 26, 6. Extincto subjecto, tollitur adjunctum. Pothier, Traité du Con. de Soc. Nos. 140 – 143, illustrates this rule in his usual manner, by a namber of plain and familiar examples. 16 Johns. 491, S. P.
(a) Inst. 3, 26, sec. 7, 8; Vinnius, h. t. 3, 26, 4; Hub. in Inst. lib. 3, tit. 26, sec. 6; Pothier, Traité du Con. de Soc. Nos. 147, 148; 11 Vesey, 5; 1 Swanst. 480, 508 ; 16 Johns. 491.
(6) Peacock v. Peacock, 16 Vesey, 49; Featherstonhaugh v. Fenwick, 17 Vesey, 298; Lord Eldon, in 1 Swanst. 508.
(c) Inst. 3, 26, 4; Code, 4, 37, 5.
(d) Pothier, Traité du Con. de Soc. No. 150, says, that the dissolution by the act of a party ought to be done in good faith, and seasonably, — debet esse facta bona fide et tempestive. He states the case of an advantageous bargain for the partners being in
tion might be very * advantageous to the company, but it is * 54 not requisite; and a partner may, if he please, in a case free from fraud, choose a very unseasonable moment for the exercise of his right. A sense of common interest is deemed a sufficient security against the abuse of the discretion. (a) Though the partnership be constituted by deed, a notice in the gazette by one partner is evidence of a dissolution of the partnership as against the party to the notice, even if the partnership articles require a dissolution by deed. (6)
But if the partners have formed a partnership by articles for a definite period, in that case, it is said, that it cannot be dissolved without mutual consent before the period arrives. (C) This is the assumed principle of law by Lord Eldon, in Peacock v. Peacock, (d) and in Crawshay v. Maule, (e) and by Judge Washington, in Pearpont v. Graham ; (f) and yet, in Marquand v. New York Man. Company, (g) it was held that the voluntary assignment by one partner of all his interest in the concern dissolved the partnership, though it was stipulated in the articles that the partnership was to continue until two of the partners should demand a disso lution, and the other partners wished the business to be continued, notwithstanding the assignment. And in Skinner v. Dayton, (h) it was held, by one of the judges, (i) that there was no such thing as an indissoluble partnership. It was revocable in its own nature, and each party might, by giving * due notice, dis- * 55 solve the partnership as to all future capacity of the firm to bind him by contract; and he had the same legal power, even though the parties had covenanted with each other that the part
contemplation, and one of them, with a view to appropriate the bargain to himself, suddenly dissolves the partnership. A dissolution at such a moment, he justly concludes, would be unavailing. This general rule was also the doctrine of the civil law. Inst. 3, tit. 26 ; Dig. 17, 2, 65, 4; Domat, b. 1, tit. 8, sec. 5 ; Code Civil of France, art. 1869, 1870, 1871 ; Code of Louisiana, art. 2855 to 2859; 2 Bell's Com. 532, 533; United States v. Jarvis, Daveis, 274.
(a) 17 Vescy, 308, 309.
(6) Doc dem. Waithman v. Miles, 1 Starkie N. P. 181 ; Collyer on Partn. 151; Story on Partn. § 271.
(c) Gow on Partn. 303, 305, edit. Phil. 1825.
1 Swanst. 495.
(h) 19 Johns. 538.
nėrship should continue for such a period of time. The only consequence of such a rovocation of the partnership power in the intermediate time would be, that the partner would subject him. self to a claim of damages for a breach of the covenant. (a) 1 Such a power would seem to be implied in the capacity of a partner to interfere and dissent from a purchase or contract about to be made by his associates; and the commentators on the Institutes lay down the principle as drawn from the civil law, that each partner has a power to dissolve the connection at any time, notwithstanding any convention to the contrary, and that the power results from the nature of the association. They hold every such convention null, and that it is for the public interest that no partner should be obliged to continue in such a partnership against his will, inasmuch as the community of goods in such a case en. genders discord and litigation. (6)
The marriage of a feme sole partner would likewise operate as a dissolution of the partnership; because her capacity to act ceases, and she becomes subject to the control of her husband ; and it is not in the power of any one partner to introduce, by his own act, the agency of a new partner into the firm. (c)
(2.) By the death of a partner.
The death of either party is, ipso facto, from the time of the death, a dissolution of the partnership, however numerous the association may be. The personal qualities of each partner enter
(a) In Bishop v. Breckles, 1 Hoff. Ch. 534, it was considered to be rather doubtful whether either party might dissolve the partnership at pleasure, upon due notice, and yet the rule of the civil law was decmed the most reasonable. But Mr. Justice Story, in his Commentaries on Partnership, $ 275, considers it quite unreasonable to allow a partner to dissolve the partnership sua sponte from mere caprice, and to the great injury of the concern, and that it ought not to be done, except under reasonable circum
See infra, p. 61. (6) Adeo autem visum est ex natura esse societatis unius dissensu totam dissolvi, ut quamvis ab initio convenerit, ut societas perpetuo duraret, aut ne liceret ab ea resilire invitis cæteris , tamen tale pactum, tanquam factum contra naturam societatis, cujus in æternum nulla coitie est, contemnere licet. Vinnius, in Inst. 3, 26, 4, pl. 1; Ferriere, Ibid. tom. v. 156 ; Dig 17, 2, 14; Domat, b. 1, tit. 8, sec. 5, and art. 1 to 8, by Strahan.
(c) Nerot v. Burnand, 4 Russ. 260.
1 Beaver v. Lewis, 14 Ark. 138.
2 The death of a special partner dissolves the partnership. Anes v. Downing, I Bradf. (N. Y.) 321.
into the consideration * of the contract, and the survivors * 56 ought not to be held bound without a new assent, when, perhaps, the abilities and skill, or character and credit of the deceased partner, were the inducements to the formation of the connection. (a) Pothier says, that the representatives of the deceased partner are bound by new contracts made in the name of the partnership by the survivor, until notice be given of the death, or it be presumed to have been received. (6) But Lord Eldon was of opinion that the death of the partner did, of itself, work the dissolution
; and he was not prepared to say, notwithstanding all he had read on the subject, that a deceased partner's estate became liable to the debts of the continuing partners, for want of notice of such dissolution. (c) In the Roman law, and in the commentaries of the civilians, every subject connected with the doctrine of partnership is considered with admirable sagacity and precision ; but, in this instance, the rule was carried so far, that even a stipulation that, in the case of the death of either partner, the heir of the deceased should be admitted into the partnership, was declared void. (d) The provision in the Roman law was followed by Argou, in his Institutes of the old French law. (e) Pothier was of opinion, however, that the civil law abounded in too much refinement on this point; and that if there be a provision in the original articles of partnership for the continuance of the rights of partnership in the representatives of the deceased, it would be valid. (f) His opinion has been followed in the Code Napoleon ;(9) and in the English law, such a provision in the articles of partnership for * the benefit of the representatives of a deceased partner, *57
(a) Pothier, Traité du Con. de Soc. No. 146; Inst. 3, 26, 5; Vinnius, h. t. Pearce v. Chamberlain, 2 Vesey, Sen. 33; Lord Eldon, Vulliamy v. Noble, 3 Meriv. 614; Crawshay v. Maule, 1 Swanst. 509, and note, Ibid.
(6) Pothier, Traité du Con. de Soc. Nos. 156, 157. The Roman law also required notice to the surviving partners of the death of any partner, before that event dissolved the partnership. Dig. 17, 2, 65, 10.
(c) Crawshay v. Collins, 15 Vesey, 228 ; Kinder v. Taylor, cited in Gow on Partnership, 250; Vulliamy v. Noble, 3 Meriv. 614. The laws of Louisiana do not recognize any authority in a surviving partner, and he cannot administer the effects of the partnership until duly appointed administrator. Notrebe v. McKinney, 6 Rob. (Louis.) 13.
(d) Dig. 17, 2, 35, 52, 59.
is not questioned; and it was expressly sustained by Lord Talbot. (a)
A community of interest still exists between the survivor and the representatives of the deceased partner; and those representatives have a right to insist on the application of the joint property to the payment of the joint debts, and a due distribution of the surplus. So long as those objects remain to be accomplished, the partnership may be considered as having a limited continuance. If the survivor does not account in a reasonable time, a court of chancery will grant an injunction to restrain him from acting, and appoint a receiver, and direct the accounts to be taken. (6)?
(a) Wrexham v. Huddleston, 1 Swanst. 514, note; Crawshay v. Maule, 1 Swanst. 521 ; Collyer on Partn. 5, 6. See, also, Pearce v. Chamberlain, 2 Vesey sen. 33 ; Balmain v. Shore, 9 Vesey, 500; Warner v. Cunningham, 3 Dow, 76; Gratz v. Bayard, 11 Serg. & Rawle, 41; Scholefield v. Eichelberger, 7 Peters U. S. 586. If one partner, by will, continues his share of stock in a partnership for a definite period, and the partnership be continued after his death, and becomes insolvent, the partnership creditors have no claim over the general creditors to the assets in the hands of the representatives of the deceased, except as to the assets vested in the partnership funds. Ex parte Garland, 10 Vesey, 110; Pitkin v. Pitkin, 7 Conn. 307; Thompson v. Andrews, 1 My. & Keen, 116. In the case of the Louisiana Bank v. Kenner's succession, I Louis. 384, after an extensive examination of the commercial laws and usages of Europe and the United States, it was considered to be a doubtful point, whether stipulations in contracts of partnership, that they may be continued after the death of one of the partners for the benefit of the heirs, were binding on the latter without their consent. They were not so binding in Louisiana at the time of the adoption of the code of 1808. The better opinion is, that they are not anywhere absolutely binding. It is at the option of the representatives; and if they do not consent, the death of the party puts an end to the partnership. If no notice or dissent bo given, it is said that a continuation of the partnership will be presumed. Pigott v. Bagley, M'Clel. & Y. 569; Kershaw v. Matthews, 2 Russ. 62 ; Collyer on Partn. 120 – 122. If the survivor carries on the business without the assent of the representatives of the deceased partner, they have their election to take a share of the profits or interest on the amount of their share. Millard v. Ramsdell, Harr. (Mich.) Ch. 373. The general principlo is, that the assets of a deceased partner are not liable for debts contracted after the testator's death, except under the direction of his will, authorizing such continuance of the trade; and new creditors are confined to the funds embarked in such trade, and to the personal responsibility of the party who continues the trade, whether as executor, trustee, or partner, unless the testator had, by will, bound his general assets. Burwell v. Mandeville, 2 How. U. S. 560.
(6) Ex parte Ruffin, Vesey, 126; Hartz v. Schrader, 8 Vesey, 317; Ex parte
1 The fiduciary relation of trustees to cestui que trusts subsists between surviving partners and the representatives of the deceased, so far as regards the partnership accounts. Ogden v. Astor, 4 Sandf. 311.
2 Walker v. House, 4 Md. Ch. 39. 8 Bernie v. Vandever, 16 Ark. 616.