partners. It must be observed that these remarks apply only to partners in Case of quasi the proper sense of the word. Persons who are liable to be sued as if they were partners, and who are generally though improperly termed quasi partners, or partners as regards the public, are not liable as such to contribute in a question inter socios (a). If they incur any such liability, it is not in consequence of their quasi partnership, but by reason of some other agreement between them and the socii. Partners or their representatives are liable to be made contributories for such debts or claims only as they could have been compelled to pay as at the date when they were contracted, unless liability has been incurred by subsequent conduct or adoption (b). Thus, where a partner who had retired, but did not advertise out, was called upon to pay a debt afterwards contracted by the company, it was held that he was not entitled to relief against others who had previously or at the same time retired, and had advertised out, but only against such as were de facto partners at the time the debt was contracted (c). If, again, a partner or his representatives have, by delegation or otherwise, been discharged inter socios, no claim for contribution can be maintained against them (d). But where, after debts had been contracted by a firm of two partners, four others were assumed, and the new firm had plainly adopted the debts of the old, the four new partners were found liable in contribution for the original debts (e). And where a partner sold his shares to a third party, whom, however, the company did not accept as obligant in his room, he was still found liable to be made a contributory for company debts in a question inter socios (ƒ). For what debts contribution is due. contribution. An action for contribution should be libelled as such; and it Action for has been found that an action for calls ex contractu cannot be afterwards insisted in as an action of Douglas, Heron, etc., 1800, 2 Bell's (a) Geddes v. Wallace, 1816, as revd. 1820, 6 Pat. App. 643. (b) Martin v. Hunter, 1835, 7 W. and S. 574. (c) Wright v. Gardner's Trs., 1831, 9 S. 721. (d) Lindesay v. Inglis' Trs., 1832, 11 S. 181. See also Hoskins v. Christie, contribution (g). 1845, 8 D. 167; Craig v. Douglas, (e) Mercer v. Peddie, 1832, 10 S. (f) Wilson v. Bruce, 1853, 16 D. 171. (g) Watson v. Ayrshire Iron Co., 1859, 22 D. 167. General rules. II. CASES IN WHICH A PARTNER'S CLAIMS AGAINST THE COMPANY As a partnership is a quasi person, it may become the debtor of one of its own partners. When this takes place, the question arises, whether the partner creditor is entitled to recover the whole of his debt against the company, or whether his claim must suffer an abatement proportioned to his own share in the concern. The decisions on this subject are few and unsatisfactory, but upon the whole the following rules would seem to be in accordance with equity and legal principle:-1. If, after extinction of all subsisting debts due to the public, the company possess capital or property, the partner creditor will be entitled to payment in full out of such assets before any division of profits can be made (a). But (2) if, in consequence of there being no company assets, or not a sufficient amount, after payment of the public creditors, to meet the partner's debt, he is obliged to proceed against the other partners as contributories, it would seem that he can only demand payment of his claim, or the balance thereof remaining due, under deduction of what (if the creditor had been a third party) he must have contributed as his own share (b). The reason of this becomes more apparent, if we consider the case of a partner purchasing up a debt owing by the concern to a public creditor. Here, if the concern possessed no funds to meet the demand of the public creditor, every one of the partners would have to contribute rateably towards its liquidation. Now, the fact that one of the partners purchases up the debt cannot relieve him of his liability to contribute with the rest; and therefore he can only demand payment from his fellows of the claim under deduction of such a proportion as, if it had still remained payable to a third party, he would have been bound to contribute. (a) 2 Bell's Com. 646. (b) Malcolm v. West Lothian Ra. Co., 1835, 13 S. 887. See Turner v. Mollison, 1833, 11 S. 669. III. OF THE RIGHT WHICH A PARTNER HAS TO BE INDEMNIFIED The nature of this right will be best understood, and the questions to which it gives rise will be most satisfactorily solved, by keeping steadily in view the principles of agency and guarantee, of which, as we have already seen, the law of partnership is in many respects only a special adaptation. According to the law of Scotland, partners are the agents and guarantees of the firm; according to the law of England, they are the agents and guarantees of each other. In so far as the present branch of the subject is concerned, this amounts to a mere difference of statement. The legal principles underlying the two formula are substantially the same, and yield apparently the same practical results; so that the English precedents and authorities seem entitled to the same weight as our own. This right the doctrines explained by of agency and guarantee. The principles of agency and guarantee, when applied to ques- General rules. tions arising inter socios, produce the following two general rules: 1. Every partner is entitled to be indemnified by the firm for all losses incurred by him while acting bona fide for the concern within the sphere of his agency. 2. Every partner is entitled to indemnity against the firm for such payments as he has been compelled to make to third parties in consequence of company obligations. These general rules will require some consideration. To entitle a partner to indemnity against the company for obligations, debts, or losses incurred, and for advances or outlays made by him on its behalf, it is necessary to show that he acted in bona fide and within the sphere of his agency; for this is necessary to entitle an agent to indemnity from his principal (a). Hence probable advantage, or even the apparent necessity of doing certain things to save the concern from ruin, will not always be sufficient (a) Story on Agency, s. 335; Smith's Merc. Law 130; Gleadow v. Hull Glass Co., 13 E. Jur. 1020, V. C. E. ; Sedgwick's case, 2 E. Jur. N. S. 919, V. C. W.; Brown v. Gibbins, 5 Bro. only claimable Indemnity losses, etc., bona fide and of agency. to entitle a partner to indemnity (a); for a principal cannot be compelled to pay for advantages which his agent has chosen to secure for him without his authority (b). But it must be observed that the agency of a partner is implied as well as specific; and therefore while a partner will not be entitled to relief in relation to such acts as he was prohibited from doing, however advantageous or necessary they might seem (c), his implied agency will receive a liberal construction when it has been exercised with ordinary discretion and in perfect good faith. Thus, if a partner contract for goods on behalf of the firm, but make the contract so that he alone can be sued upon it, he will be entitled to indemnity against the firm if the contract were within his agency (d). And he will also be entitled to indemnity for the expenses of defending an action brought against him on such contract, if he defended with the knowledge and consent of the firm (e). But if a partner act as for the company plainly beyond the limits of his agency, the case becomes very different. Here, as we have already seen (ƒ), if the party with whom he transacted knew that the transaction exceeded the agency, it does not bind the company at all. But if the company is bound in consequence of the party with whom the transaction took place being ignorant of its exceeding the bounds of the partner's agency, the latter is himself liable to relieve the company. This is a consequence of the principles of agency (9). Of course, if the company homologate the partner's conduct, as by taking the benefit of his unauthorized acts, they will be bound to indemnify him (h). All such questions must be solved by having regard to the whole circumstances of the particular case; and, therefore, when a partner makes a claim for reimbursement or indemnity against the company, he ought to make his averments very specifically and in detail (¿). E. Jur. 1020, V. C. E.; Sedgwick's case, 2 E. Jur. N. S. 949, V. C. W. (e) Brown v. Gibbins, 5 Bro. P. C. 491; Croxton's case, 5 De G. and S. 432. (f) See p. 245 et seq. (g) Child v. Morley, 8 T. R. 610; Stokes v. Lewis, 1 T. R. 20. See Lindley 629, and Edmiston v. Wright, 1 Camp. 88. (h) See Story on Agency, s. 250. sometimes entitled to when partners indemnity, would not be so. The same rules are generally applicable where managers or Directors directors seek indemnity from the company for losses sustained or obligations undertaken on its account. But it must be observed, that in some cases these officials will be entitled to indemnity from the company where a partner would have no such claim against the firm. The reason of this difference, and the cases in which it is likely to have place, will appear from the following considerations. A partner, as such, is not charged with the entire responsibility of management, except in very peculiar circumstances. This he shares with his copartners, with whom he ought to consult in all matters of importance. If, therefore, he undertakes personal obligations on account of the firm, without the knowledge and approval of his copartners, his right to relief from them will, in a great measure, depend on their having subsequently adopted the transaction. To the board of directors, on the other hand, the whole management of the company is entrusted; and their only mode of taking the instructions of the shareholders is by calling a general meeting,-a proceeding necessarily involving a considerable elapse of time. Yet such are the exigencies to which all mercantile companies are liable, that prompt and decisive action is often the only means of averting serious losses or absolute ruin; and unless the board of directors. were entrusted with a discretionary power of action greatly more extensive than that confided to a partner, the whole concern might be involved in irretrievable disaster before a general meeting could be even assembled (a). It is for this very reason, indeed, among others, that companies with a large and fluctuating membership are managed, not by the partners, but by managers or boards of direcThese considerations seem therefore to lead to the conclusion, that whenever directors or other managers make advances or incur obligations for the company for purposes within its sphere of action, they are entitled to indemnity, though they have done so without special authority, and even in violation of regulations intended to be observed in ordinary circumstances, provided they can justify their conduct by what seemed to be the exigencies of tors. Beav. 346; East India Co. v. Blake, 935; Maxton v. Muir, 1845, 7 D. |