PARTNER'S SIGNATURE. the company, up to the time of retirement or death, until these are actually paid, or, in regard to him, discharged.1 Company-debts, when claimed from a partner or his representatives, require to be duly constituted against the company. When they are so, as, for example, by the company's bond or bill, the representative of any partner can be sued for payment without calling the company. But the debt, if not so constituted, must, in the first place, be duly constituted against the company. It is, however, only for debts in the ordinary and proper course of the company's business that one partner can bind the company by signing the company name. Thus, where the managing partner of a company subscribed with the company name a guarantee for behoof of a relative of his own, for the price of goods of a class in which the company did not deal,-the party furnishing such goods was found not entitled to presume that they were to be applied for behoof of the company, and was not in bona fide to assume that the guarantee was binding on the other partners. Neither can an individual partner effectually bind the company, by merely signing the name of the firm, for payment of his private debt. And individual partners cannot of themselves perform acts of extraordinary administration so as to bind the company, because it is not to be presumed that power to do such acts is conferred on each of the partners. Thus, as already stated, a partner cannot bind the company to submit a claim to arbitration, that being an extraordinary act.5 In England, it is settled that a power of attorney cannot be granted by a company without the consent of all the partners; and, on principle, it appears probable that the same rule would be held applicable in Scotland; because a power of attorney on behalf of a company is a delegation to another, of the company's powers in the matter in question, which is an extraordinary act. As a general rule, the partners of a company will be liable for obligations undertaken by each other for work, which, when executed, is to be company property. But this rule is subject to exceptions. The question for consideration of the Court is, whether the contract, made by the individual partner, is entered into by the other party with him as acting for himself and for his own behoof, and on his own responsibility; or for the company and on its responsibility. In the latter case only is the company liable." I may here notice a case, which may at first sight appear an exception from the rule of a partner's liability for loss in consequence of having joint interest in profits. A party contracted with a company of publishers for the publication of a book, of which he had the copyright; the company being to undertake the whole expense, responsibility, and 1 Ramsay's Executors, 18th Jan. 1814, 3 M Nair & Co., 19th June 1803, Hume, 4 Clarke, 30th Nov. 1821, 1 Sh. 179. 5 Lumsden, Nov. 1728, M. 14,567. 6 Crum & Co., 5th March 1858, 20 D. 751. 7 Venables, 8th March 1839, 1 D. 659. trouble; and he to have a share of the profits, and to bear no loss. The publishers failed, and the person who had sold them the paper for the book claimed payment of his account from the proprietor of the copyright, as interested in the profits, and a partner. But the Court held that he was not a partner; and that, although the price payable for the right of publication was dependent on the amount of the profits, the transac tion between him and the publishers was merely a sale of such right of publication by him to the publishers. An important point may here be also noticed, which was recently TRUST FUNds. settled, viz., that when trust-funds, under the administration of the partner of a company, are employed for the ordinary business purposes of the company, the beneficiaries are entitled, in their option, to take either five per cent. interest thereon, or the profits realized from the use of the money. But, unless all the partners of the company are trustees of the party to whom the funds belonged, the claim of the beneficiaries to profits extends only to the proportion realized by the partner, who is a trustee himself, out of the trust-money,--not to the whole profits arising to the copartnery from such money.2 1 CREDITORS. In case of the bankruptcy of a company, the creditors of the com- RANKING OF pany are entitled to claim and be ranked for drawing dividends on the estates both of the company and of the partners as individuals. In claiming on the company-estate, such creditors are not required to deduct the value of their claim or ranking on the individual partners' estates. But in claiming on the estates of the partners, such creditors must deduct the value of their claim on the company-estate.3 The same rule holds when the creditors of the company claim for the purpose of voting on the estates of the company and the partners thereof, -with this addition, that the claim on the estate of each of the partners as individuals is to be stated, under deduction of the value not only of the creditor's claim upon the estate of the company, but also of his claim upon the estate of each of the other partners of the company.* The explanation of these rules appears to be as follows:-The company and partners are jointly and severally liable, in solidum, to the creditor; but, in company-debts, the company is the proper debtor or principal; the partners are cautioners for the company, and each of the partners is cautioner for his copartners. In claiming on the estate of the proper debtor (the company), there is no deduction of the value of the claim upon the cautioners; because the proper debtor is bound to pay in full, irrespective of the cautioners. But the same principle does not apply in claiming upon the estate of the cautioners. Their obligation is only subsidiary. Accordingly, in claiming on the cautioners' estate for a dividend, the value of the claim on the principal debtor's 1 Cochrane, 1st Feb. 1855, 17 D. 321; Laird, 26th June 1855, 17 D. 984. 2 Continuation of case of Laird, 28th May 1858, 20 D. 972. 3 Bankrupt Act of 1856, 19 & 20 Vict. c. 79, s. 66. 4 Same Act, s. 61. estate is to be deducted, and the dividend from the cautioners' estates is payable only on the balance; and, in claiming for voting on the estate of each of the partners, the value of the claim on the estates of the other partners is likewise to be deducted. This appears to arise, in part at least, from the general rule applicable to cautionary obligations, that the cautioner on paying the debt is entitled to be ranked for the amount, and to draw the value from the proper debtor. But that rule does not hold in reference to the liability of the partners of a company, individually, for payment of the proper debts of the company, unless the partners pay the whole debts of the company in full. Except in such case, no partner, though only a cautioner for the company, can claim on the estate of the company. PUBLIC OR JOINT STOCK CHAPTER IV. WE shall now consider, as shortly as possible, the constitutions of Public or Joint-Stock Companies; that is, associations of a numerous body of persons in partnership for carrying on a particular business, such as banking or life insurance; observing, that these constitutions have, for their object, the same general purposes as those of the contract of copartnery of a private company. They point out who are to be the partners or shareholders, the name of the company, the nature of its business, the place where it is to be carried on, or at least its head-quarters or domicile, the amount of the capital stock, the number of the shares into which it is to be divided, and the manner in which the stock is to be raised or called up. So far, there is not much difference between the two classes of contracts. The rules, regarding the conduct of the business, differ as to details, in the two cases. In private companies, the management is usually undertaken by the partners; and the contracts set forth their respective duties on that point. Joint-stock companies generally place their affairs under the charge of a committee of management, chosen from among the partners, and called the directors of the company. These directors, again, appoint managers, secretaries, auditors, or others, who may, or may not, be shareholders, to transact (under their orders) with the public; to keep books and cash; carry on correspondence, and generally attend to all necessary details. The constitutions of joint-stock companies contain the necessary provisions on these points; likewise, as to the mode of electing future directors, whilst the company subsists; the right of shareholders to transfer their shares of the company-stock; the division of profits or loss among the shareholders; and the winding up of the company, either upon its term of endurance coming to an end, or when, by losses in the business, it shall be necessary or plainly expedient to wind it up. These provisions are, in principle, very much akin to those of the private contract of copartnery. The writings, by which joint-stock companies are constituted, are CONSTITUTION various; consisting of--sometimes Statute alone; sometimes a contract OF JOINT-STOCK of copartnery, or deed of constitution alone; sometimes both Statute and contract or deed of constitution. COMPANIES. SOLIDATION Those of the first class, constituted by Statute alone, have their general provisions that is, such as are usual in all ordinary joint-stock companies-laid down in the Act 8 & 9 Vict. cap. 17, called the 'Com- THE COMPANIES panies Clauses Consolidation (Scotland) Act 1845;' which is applicable CLAUSES CONto the constitution and management of all joint-stock companies formed (SCOTLAND) by Statute, in Scotland, after its date. These provisions have reference ACT 1845. to the distribution of the capital of the company into shares or stock; the evidence of proprietorship of shares, by means of a register of share or stock holders; the transmission of shares to purchasers, heirs, and others; the calling up, from shareholders, of the amount of the shares for which they have subscribed their names; the powers conferred on the company of borrowing money, and the granting of relative deeds. Then follow the regulations as to the management of the company; general meetings of shareholders; their votes; the election of directors; the powers of the directors, and their general mode of proceeding; the appointment of auditors, and their duties; the security to be taken from officers intrusted with company-money; the keeping of accounts, balancing of books, and ascertaining profits or loss; making dividends of profit, which are never to be made so as to reduce the capital stock; power to make bye-laws; appointment of arbitrators to settle differences directed to be settled by arbitration; the service of summonses or notices upon the company; and the mode of recovering penalties affecting either the company, or others, under their Acts. Each company, of the class now before us, has a special Act, with SPECIAL ACT. which the provisions of the above general Act are incorporated, so far as applicable, and so far as not varied or altered. The object of the special Act is to fix the name of the company; to describe its business; to declare its domicile; to name its first directors; and, in general, to put in active operation a company, intended to execute a specified undertaking, or to carry on a particular business, in accordance with the provisions of the general Act. COMPANIES CON COPARTNERY. Joint-stock companies of the second class (those constituted by con- JOINT STOCK tract of copartnery or deed of constitution alone) have, in their contract, STITUTED BY or other deed, very much the same provisions as those of the incorpor- CONTRACT OF rated companies, as contained in the special and general Acts; with this addition, that they will often, particularly in the case of insurance companies, have to define the nature of the securities, or investments, on which company-funds are to be employed; and they will always con JOINT-STOCK of 1856, 1857, AND 1858. tain provisions for accomplishing the dissolution of the company, and for winding up its affairs, in case of the loss of a certain proportion of their capital. By the Joint-Stock Companies Acts of 1856, 1857, and 1858,1 jointCOMPANIES ACTS stock companies then future, consisting of more than twenty partners, other than companies for the purposes of banking and insurance, were required to be constituted and regulated according to the provisions of these Acts, unless they were constituted by special Act of Parliament, or Royal Charter, or Letters Patent. And future banking companies, con-sisting of more than ten partners, were required to be constituted and regulated according to the provisions of these Acts, along with the JointStock Banking Companies Act of 1857,2 if not on the principle of limited liability; and with the last-mentioned Act, and the Act of 1858,3 if on the principle of limited liability. But there is one very important privilege of a statutory corporation, which is excepted and declared not to be conferred by the Acts in favour of our more modern banks. I mean limitation of liability consequent on incorporation. A proper company, whether for banking or other purposes, has a separate persona for particular purposes. But the partners or shareholders are not sunk. On the contrary, they are jointly and severally liable for the company-debts, and any one of them can be sued for such debts because they are partners. The members of a corporation, however, appear to be in a different position. They have no existence separate from the corporation, or corporate persona. They are not partners of a company, but members of a corporation; and persons dealing with the corporation do not deal with its members, who accordingly cannot be sued for the corporation debts. In the recent Acts I refer to, however, it is expressly declared that the shareholders are to remain liable after incorporation for the debts of the corporate body, in the same way as they previously were for those of the company. The Joint-Stock Companies Acts were imperative not only as to then future companies, as above, but likewise as to all companies (other than those for banking and insurance) existing at the time of their being passed, and which were then registered under the Registration Incorporation and Regulation Act of 1844, which applies only to such jointstock companies, established in Scotland, as have an office or place of business in another part of the United Kingdom, and under the Limited Liability Act of 1855,5-which last Act does not apply to Scotland at all. The Joint-Stock Banking Companies Act of 1857 was imperative, not only as to then future banking companies as above, but likewise as to all then existing banking companies consisting of more than seven 1 19 & 20 Vict. c. 47; 20 & 21 Vict. c. 14; and 21 & 22 Vict. c. 60. 2 20 & 21 Vict. c. 49. 3 21 & 22 Vict. c. 91. 47 & 8 Vict. cap. 110. 5 18 & 19 Vict. cap. 133. |