PARTNERS, PARTNERSHIP

PARTNERS, contracts. Persons who have united together and formed a partnership. 2. Every person sui juris is competent to contract the relation of a partner. An infant may by law be a partner.
5 B & A. 159; but a feme covert, not being capable of contracting, cannot enter into partnership; and altbough married women are not unfrequently entitled to shares in banking houses, and other mercantile concerns, under positive covenants, yet when this happens, their hushands are entitled to such shares, and become partners in their steads. Whether a feme sole trader in Pennsylvania could enter into such contract, seems not settled. See 2 Serg. & Rawle, 189; see also, 2 Nott & McC. R. 242; 2 Bay, 162, 333; Code Civ. par Sirey, art. 220.

3. Partners are considered as ostensible, dormant, or nominal partners. 1. An actual ostensible partner is a party who not only participates, in the profits and contributes to the losses, but.who appears and exhibits himself to the world as a person connected with the partnership, and as forming a component member of a firm. He is clearly answerable for the debts and engagements of, the partnership; his right to a share of the, profits, or the permitted exhibition of his name as partner, would be sufficient to render him responsible. 6 Serg. & Rawle, 259, 337; Barnard. 343; 2 Blackst. R. 998; 17 Ves. 404;. 18 Ves. 301; 1 Rose, 297; 16 Johns. R. 40; 3 Hayw. R. 78.

4. - 2. A dormant partner is one who is a participant in the profile of the trade, but his name being suppressed and concealed from the firm, his interest is consequently not apparent. He is liable as a partner, because he receives and takes from the creditors a part of that fund which is the proper security to them for the satisfaction of debts, and upon which they rely for payment. 16 Johns. R. 40. Another reason assigned for subjecting a dormant partner to responsibility is, that if he were exempted he would receive usurious interest for his capital, without its being attended with any risk. 1 Dougl. 371; 4 East, R. 143; 10 Johns. R. 226; 4 B. & A. 663; 8 Man. Gr. & Scott, 641, 650. But in order to render one liable as a partner, he must receive the profits as such, and not merely his wages; to be paid out of the profits. Vide Profits.

5. - 3. A, nominal partner is one who has not any actual interest in the trade or its profits, but, by allowing his name to be used, he holds himself out to the world as having an apparent interest. He is liable as a partner, because of these false appearance he holds forth to the world in representing himself to be jointly concerned in interest with those with whom he is apparently associated. 2 H. Bl. 235; 1 Esp. N. P. O. 29; 6 Serg. & R. 338; Watts. Partn. 26.

6. A partner in a private commercial partnership cannot introduce a stranger into the firm as a partner without the consent of all the copartners. If he should attempt to do so, this may make such stranger a partner with the partner who has associated with such third person; this will be a partnership, distinct from the first, and limited to the share of that partner who has so joined himself with another. 2 Rose 255; Domat, de la Societe, tit. 8, s. 2, n. 5.

7. As between the members of a firm and the persons having claims upon it, each individual member is answerable in solido for the amount of the whole of the debts contracted by the partnership, without reference either to the extent of his own separate beneficial interest in the concern, or. to any private arrangement or agreement that may exist between himself and his copartners, stipulating for a restricted responsibility. 1 Ves. & Bea. 157; 9 East, 527; 5 Burr. 2611; 2 Bl. R. 947; 1 East, R. 20; 1 Ves. sen. 497; 2 Desaus. R. 148; 4 Serg. & Rawle, 356; 6 Serg. & Rawle, 333; Kirby, 53, 77, 147. In Louisiana, ordinary partners are not bound in solido for the debts of the partner- ship; Civ. Code of Lo. art. 2843; each partner is bound for his share of the partnership debts, calculating such share in proportion to the number of the partners, without any attention to the proportion of the stock or profits each is entitled to id. art. 2844.

8. Partners are bound by what is done by one in the course of the business of the partnership. Their liability under contracts is commensurate and coextensive with their rights. Although the general rule of law is, that no one is liable upon any contract except such as are privy to it; yet this is not contravened by the liability of partners, as they are imagined virtually present at and sanctioning the proceedings they singly enter. into in the course of trade; or as each is vested with a power enabling him to act, at once as principal and as the authorized agent of his copartners. Wats. Partn. 167; Gow. Partn. 53. It is doubtful, however, whether one can close the business by a general assignment of the partnership property for the benefit of creditors. Pierpont and Lord v. Graham. Cir. Court, April 1820, MS. Whart. Dig. 453, 1st ed.; 4 Wash. C. C. R. 232; see 1 Brock. R. 456; 3 Paige's R. 517; 5 Paige's R. 30; 1 Desaus. R. 537; 4 Day's. R. 425; 5 Cranch, 300; 1 Hoffm. R. 08, 511; Stor. Partn. §101; 2 Washb. R. 390.

9. One partner can, in simple contracts, bind his copartners in transactions relative to the partnership. 7 T. R. 207; 4 Dall. 286; 1 Dall. 269. But a security given by, one partner, in the partnership name, known to be for his individual debt, does not bind the firm. 2 Caines' R. 246; 4 Johns. R. 251; 4 Johns. R. 262, in note; 2 Johns. R. 300; 16 Johns. R. 34; 4 Serg. & Rawle, 397. Nor can one partner bind his copartners by deed; and this both for technical reason and the general policy of the law. Wats. Partn. 218; Gow on Partn. 83; 3 Murph. 321; 4 Sm. & Marsh. 261; 7 N. H. Rep. 549; 1 Pike, 206; 2 Harr. 147; 2 B. Monr. 267; 5 B. Monr. 47; 4 Miss. 417; 1 McMullen, 311; 3 Johns. Cas. 180; Taylor's R. 113; 2 Caines' R. 254; 2 Caines' Err. 1;. 2 Johns. R. 213; 19 Johns. R. 513; 1 Dall. 11,9. But see 6 Watts & Serg. 165, where it is said this rule admits of sorae qualifications. The rule does not however apply to cases where the object is to discharge a debt as due to it; as to give a general release by deed. 3 John. 68; 7 N. H. Rep. 550; 1 Wend. 326; 20 Wend. 251; 22 Wend. 324. It seems to be an admitted principle, that one partner has no power to submit to arbitration any matters whatsoever, concerning or arising out of the partnership business. Story, Partn. §114; Com. Dig. Arbitrament, D 2; 3 Bing. R. 101; 1 C. M. & R. 681; 1 Pet. R. 222; 19 John. R. 137; 3 Kent, Com. 49, 4th ed. But in Pennsylvania, 12 S. & R. 243, and Kentucky, 3 Mont. R. 433, one, partner may by an unsealed, instrument refer any partnership matter to arbitration, though he has no implied authority to consent to an order for a judgment in an action against himself and his copartner. 3 Mann. G. & Scott, 742. Nor has one partner the power to confess a judgment, or authorize the confession of a judgment against the firm, when no writ has been issued against both. 1 Wend. 311; 9 Wend. 437; 1 Blackf. 252; 1 Scamm. 428, 442. Such a judgment, however is binding on the one who confessed it. 2 Bl. R. 1133; 1 Dall. 119; 1 W. & S. 340, 519; 7 W. & S. 142; 2 Caines, 254; 20 Wend. 609; and see 7 Watts, 331; 1 W. & S. 519, 525; 2 Miles, 436; 1 Hoff. Ch. R. 525.

10. With regard to the tight of the majority of, the partners, when there is a dissent among them, it may be laid down, 1. That when there are stipulations on this subject, they must govern. Tum. & Russ. 496, 517. 2. In the absence of all agreement on the subject, each partner has an equal voice, though their interests be different, and a majority have a right to conduct the business. 3 John. Ch. R . 400; 3 Chit. Com. Law, 236; Colly. Partn. B. 2, c. 2, s. 1; Id. B. 3, c. 1, s. 262 - Story, Partn. 123. 3. When there are only two partners, and they dissent, neither can bind the partnership, when the person with whom they deal has notice of such disagreement. 1 Stark. R. 164. See 1 Camp. R. 403; 10 East, R. 264; 7 Price, Rep. 193; 6 Ves. 777; 16 Vin. Ab. 244. But this right of the majority is confined to transactions in the usual scope of the business, and not to a change of the articles of the partnership, for in such case all the partners must consent, 4 John. Ch. R. 573.

11. The stock used in a joint undertaking by way of partnership in trade, is always considered in common and not as joint property, and consequently there is no survivorship therein; jus accrescendi inter mercatores, pro beneficio commercii, locum non habet. On the death of one partner, therefore, his representatives become tenants in common with the survivor, of all the partnership effects in possession. But with respect to choses in action, survivorship so far exists at law, as that the remedy or right to reduce them into possession vests exclusively in the survivor; although when they are recovered, the representatives of the deceased partner have, in equity, the same right of sharing and participating in them which their testator or intestate would have possessed had he been living. 1 Ld. Raym. 340. See 2 Dall. 65, 66, in note; 1 Dall. 248; 4 Dall. 354; 2 Serg. & Rawle, 494.

12. When real estate is owned by a partnership, it is held by the partners subject in all respects to the ordinary incident's of land held in common. 1 Sumn. R. 174; 7 Conn. 11; 5 Hill, (N. Y.) Rep. 118; 4 Mete. 537. But in equity the partners may by agreement, express or implied, affect real estate with a trust as, a partnership property, and, by that means, render it in, equity subject to the rules applicable to partnership property as between the partners themselves and all claiming under them. 2 Edw. R. 28; 2 Rand. R. 183; 7, S. & R. 438, 441; Conn. 11; 5 Metc. 582; 6 Yerg. 20. See, generally, as to partners, 5 Com. Dig. Merchant, D; Bac. Abr. Merchant, C; Wats. on Partn. passim; Gow on Partn. passim; Supp. to Ves. jr. vol. 1, p. 36, 279 281, 312, 389, 449, 503; Id. vol. 2, p. 40, 314, 315, 317, 362, 364, 377, 384, 456; 1 Salk. 291, 392; 1 Swanst. R. 506, 9; 10 East R. 265; 4 Ves. 396; 1 Hare & Wall. Sel. Dec. 292, 304; Civ. Code of Lo. B. 3, t. 11; Code Civ. L. 3, t. 9; Code de Proc. Civ. L. 1, t. 3; Chit. Contr. 66 to 82; Poth. Contrat de Soeiete; Bouv. Inst. Index, h. t. Vide Articles of Partnership; Death of. a partner; Dissolution; Firm; Partnership.

PARTNERSHIP, contracts. An agreement between two or more persons, for joining together their money, goods, labor and skill, or either or all of them, for the purpose of advancing fair trade, and of dividing the profits and losses arising from it, proportionably or otherwise, between them. 2 Bouv. Inst. n. 1435; Watson on Partn. 1; Gow on Partn. 2; see Civ. Code of Lo. art. 2772; Code Civ. art. 1832; Forbes. Inst. of Scotch Law, part 2, B. 3, s. 3, p. 184; edit. Edin. 1722, 12mo.; Dolmat, Civ. Law, vol. 1, p. 85; 9. John. R. 488; Puffend. B. 5, c. 8; 2 H. Bl. 246; 1 H. Bl. 37; Ersk. Inst. B. 3, t. 3, §18; Tapia, Elemontos de Jurisp. Mercantil, p. 86; 5 Duv. Dr. Civ. Fr. tit. 9, c. 1, n, 17; 4 Pard. Dr. Com. n. 966; 2 Bell's Com. 611, 5th ed.; Aso & Mann. Inst. B. 2, tit.

15. Sometimes partnership signifies a moral being composed of the reunion of all the partners. 4 Pard. n. 966. As a partnership has a separate existence as a person, it becomes liable to fulfil all its engagements, and the partners are individually bound and responsible only on its default, as sureties. 2 Bell's Comm. B. 6, c. 1, n. 4, p. 619, 5th ed.

2. Partnerships will be considered, 1st. In respect to their character and extent, as they regard property. 2d. With relation to the number and character of parties. 3d. As they are divided by the French code. 4th. As to their creation. 5th. As to their object. 6th. As to their duration. 7th. As to their dissolution. 8th. As to partnerships in Louisiana.

3. - §1. In respect to their character and extent, as they regard property, partnerships maybe divided into three classes, namely: universal partnerships; general partnerships; and limited or special partnerships. 1. A universal partnership is one where the parties agree to bring into thefir m all their property, real, personal and mixed, and to employ all their skill, labor, and services, in the trade, or business, for their common benefit. This, kind of partnership is perhaps unknown in the United States. 5 Mason, R. 176.

4. - 2. General partnerships are properly such, where the parties carry on all their trade and business for their joint benefit and profit; and it is not material whether the capital stock be limited or not, or the contributions of the partners be equal or unequal. Cowp. 814. The game appellation is given to a partnership where the parties are engaged in one branch of trade only.

5. - 3. Special partnerships, are those formed for a special or particular branch of business, as contradistinguished from the general business or employment of the parties, or of one of them. When they extend to a single transaction or adventure only, such as the purchase and sale of a particular parcel of goods, they are more commonly called limited partnerships. The appellation is however given to both classes of cases indiscriminately. Story, Partn. §75

6. - §2. When considered in relation to the number and character of the parties, partnerships are divided into private partnerships and public companies. 1. Private partnerships are those which consist of two or more partners for some private undertaking, trade, or business.

7. §2. Public companies are those where a greater number of persons are concerned, and the stock is divided into a considerable number of shares, the object embracing generally public as well as private interests. This term is, however, perhaps loosely applied, as these companies have for the most part the character of private associations. They are either incorporated or not. The incorporated are to be governed by the rules established in their respective charters. See Corporation. The unincorporated are in general subject, to all the regulations of a common private partnership.

8. - §3. In the French law, partnerships are divided into three kinds, namely: 1. Partnerships under a collective name, that is, where the name of the firm contains the names of all or some of the partners.

9. - 2. Partnerships en commandite or in commendam; these are limited partnerships, where one or more persons are general partners, and are jointly and severally responsible with all their estates, and one or, more other persons who furnish a part or the whole of the capital, who are liable only to the extent of the capital they have furnished. The business is carried on in, the name of the general partners. This species of partnership, with some modifica- tions, has been adopted in several of the states of the American union. 3 Kent, Com. 34, 4th ed.; 2 Bouv. Inst. n. 1473, et seq.

10. - 3. Anonymous partnerships are those in which all the partners are engaged in the business, there is no social name or firm, but a name designating the object of the association. The business is managed by syndics or directors. Vide Poth. de Societe, h. t.; 5, Duv. Dr. Civ., Fr. h. t.; Pardes. Dr: Com. h. t.; Code de Com. h. t.; Merl. Repert. h. t. In Louisiana a similar division has been made. Civ. Code of Lo. h. t.

11. - §4. Partnerships are created by mere act of the parties; and in this they differ from, corporations which require the sanction of public authority, either express or implied. Aug. & Ames on Corp. 23. The consent of the parties may be testified, either in express terms, as by articles of partnership, or positive agreement; or the assent may be tacit, and to be implied solely from the act of the parties. An implied or presumptive assent has equal operation with one that is express and determined. And it may be laid down as a general and undeniable proposition, that persons having a mutual interest in the profits and loss of any business, or particular branch of business, carried on by them, or persons appearing ostensibly to the world as joint traders, are to be recognized and treated as partners, whatever may be the nature of the agreement under which they act, or whatever motive or inducement may prompt them to such an exhibition. 1 Dall. 269. 12. A community of property does not of itself create a partnership, however that property may be acquired, whether by purchase, donation, accession, inheritance or prescription. Civ. Code of Louis. art. 2777. Hence joint tenants or tenants in common of lands, goods, or chattels, under devises or bequests in last wills or testaments, and doeds or donations inter vivos, and inheritances or successions, are not partners. Story, Partn. §3.

13. Joint owners of ships are not, in consequence of such ownership, to be considered as partners. Abbot on Ship. 68; 3. Kent, Com. 25, 4th ed.; 15 Wend. 187; and see Poth. De Societe, n. 2; 4 Pard. Dr. Com. n. 969; 17 Dur. Dr. Fr. n. 320; 5 Duv. Dr. Civ. Fr. n. 33.

14.- The free and personal choice of the contracting parties is so essentially necessary to the constituting of a partnership, that even executors and representatives of deceased partners do not, in their representative capacity, succeed to the state and condition of partners; 2 Ves. sen. 34; Wats. on Partn. 6; although a community of interest necessarily exists between them and the surviving partners, until the affairs of the partnership are wound up. 11 Ves. 3. When there is a positive agreement at the commencement of the partnership, that the personaI representative or heir of a partner shall succeed him in the partnership, the obligation will be considered valid. Coll. on part. B. 1; ch. 1, §11; Story, Partn. §5.

15. - §5. The object of the partnership must be legal. All partnerships, therefore, which are formed for any purpose forbidden by law or good morals, are null and void. But all the partners in such a partnership are jointly liable to third persons who may contract with them without a knowledge of the illegal or immoral object of the partnership. Civ. Code of Lo. art.- 2775; 5 B. & A. 341 2 B. & P. 371; 3 T. R. 454; Poth. Oblig. by Evaans, vol. 2, page 3; Gow on Partn. 8; Wats. Partn. 131. Partnerships are not confined to mere commercial trade or business; but generally extend to, manufactures and, to all other lawful occupations and employments, or to professional or other business. They may extend to all the business of the parties; to a single branch of such business; to a single adventure; or to a single thing. But there cannot lawfully be a partnership in a mere, personal office, especially when it is of a public nature, requiring the personal confidence in the skill and integrity of the officer. Story, Partn. §81; Colly. Partn. 31.

16. - §6. Partnerships may be formed to last for life, or for a specific period of time; they may be conditional or indefinite in their duration, or for a single adventure or dealing; this depends altogether on the will of the parties. The period of duration is either expressed or implied, but the law will not presume that it shall last beyond life. 1 Swanst. 521; 1 J. Wils. R., 181. When a particular term is fixed, it is presumed to endure until the period has elapsed; when no term is fixed, it is presumed to endure for the life of the parties, unless previously dissolved, by the acts of one of them, by mutual consent, or by operation of law. Story, Partn. §84. When no time is limited for the duration of a general trading partnership, it is a partnership at will, and may be dissolved at any time at the pleasure of any one or more of the partners.

17. - §7. A partnership may be dissolved in several ways: when the partnership is formed for a single dealing or transaction, it follows that it is at an end so soon as the dealing or transaction in which the partners jointly engaged is completed. Gow on Partn. 268; Inst. Lib. 3, tit., 26, s. 6.

18. Where a general partnership is formed, either for a definite, or an indefinite period of time, the causes which may operate a destruction of it, are various. In the case of a partnership limited as to its duration, it may, in the intermediate time, before the restricted period of its termination arrives, be dissolved either by the death, the confirmed insanity, the bankruptcy of all or one of the partners, or it may endure the stipulated period, and expire with the effluxion of time; but where the partnership is unlimited as to its existence, although in the instances of death or bankruptcy, it is determined, yet if they do not intervene, any partner may withdraw himself from it whenever he thinks proper. Code, lib. 4, t. 37, 1, 5.

19. Besides the causes above stated for a dissolution, a partnership, limited or unlimited as to its duration, may be dissolved by the decree of a court of equity, where the conduct of some or all of the partners has been such as not to carry on the trade or undertaking on the terms stipulated; Gow on Partn. 269; or by the involuntary or compulsory, sale or transfer of the partnership interest of any one of the partners. 17 John. R. 525.

20. In New York, it has been held that there is no such thing as an indissoluble partnership, and that, therefore, any partner may withdraw at any time; and by that act the partnership will be solved; the other party having his action against the withdrawing partner upon his covenant to continue the partnership; 19 Johns. R. 538. This doctrine is not in accordance with the English law. Indeed it is even doubtful in New York. Story, Eq. Jur. §668; Story, Partn. §275; 3 Kent Com. 61, 4th ed.; 1 Hoffm. Ch. R. 534. See Gow on Partn. 803, 305, and 4 Wash. C. C. R. 232.

21. It may also be dissolved by the extinction of the thing or object of the partnership; or by the agreement of the parties. See Civ. Code of Louis. art. 2847 Code Civ. B. 3, fit. 9, c 4 art. 1865 to 1872; 2 Bell's Com. 631 to 6414, 6th ed. See Dissolution.

22. The effect of the dissolution of the partnership is to disable any one of the partners from contracting new obligations or engagements on account of the firm. 1 Pet., R. 351; 3 McCord, 378; 4 Munf. 215; 2 John., 300; 5 Mason, 56; Harper, R. 470; 4 John. 224; 1 McCord, 338; 6 Cowen, 701. But notwithstanding the dissolution there remain, with each of the partners, certain powers, rights, duties, authorities, and relations between them, which are indispensable to the complete arrangement and final settlement of the affairs of the firm. The partnership must, therefore, subsist for many purposes, notwithstanding the dissolution. Among these are, 1st. The completion of an the unperformed engagements of the partnership. 2d. The conversion of all the property, means and assets of the partnership, existing at the time of the dissolution, for the benefit of those who, were partners, according to their respective shares. 3d. The application of the partnership funds, to, the liquidation of the partnership debts. Story, Partn. §324.

23. - §3. By the laws of Louisiana, partnerships are divided, as to their object, into commercial partnerships and ordinary partnerships Commercial partnerships are such as are formed, 1. For the purchase of any personal property, and the sale thereof, either in the same state or changed by manufacture. 2. For buying and selling any personal property whatsoever, as factors or brokers. 3. For carrying personal property for hire, in ships or other vessels. Civ. Code of Lo. art., 2796.

24. Ordinary partnerships are, such as are not commercial; they are divided into universal or particular partnerships. Id. art. 2797.

25. Universal partnership is a contract by which the parties agree to make a common stock of all the property they respectively possess; they may extend it to all the property real and personal, or restrict it to personal only; they may, as, in other partnerships, agree that the property itself shall be common stock, or that the fruits only shall be such; but prop erty which may accrue to one of the parties, after entering into the partnership, by donation, succession, or legacy, does not become common stock, and any stipulation to that effect, previous to the obtaining the property aforesaid, is void. Code Civ. of Lo.art. 2800.

26. Particular partnerships are such as are formed for any business not of a commercial nature. Id. art. 2806. The business of thispartnership must be conducted in the name of all the persons concerned, unless a firm is adopted by the articles of partnership reduced to writing, and recorded as is prescribed with respect to partnerships in commendam. Id. art 2808.

27. There is also a species of partnership which may be incorporated with either of the other kinds, called partnership in commendam, or limited partnership. Id. art. 799. Partnership in commendam is formed by a contract, by which one person or partnership agrees to furnish another person or partnership a certain amount, either in property or money, to be employed by the person or partnership whom it is furnished, in his or their own name or firm, on condition of receiving a share in the profits, in the proportion determined by the contract, and of being liable to losses and expenses to the amount furnished, and no more. Id. art. 2810.

28. Every species of partnership may receive such partners. It is therefore a modification of which the several kinds of partnerships are susceptible, rather than a separate division of partnerships. Vide Bouv. Inst. Index, h. t.: Firm.