Cannot en gage in a concern adverse to the interest of partners. Must account for partner Parties bound to each other by express or implied contract to promote an undertaking for the common benefit are not allowed to engage in another concern which may give them a direct interest adverse to that undertaking (a). It is the duty of a partner the instant he receives partnership ship property. property either to apply it to partnership purposes, or to charge himself as debtor with it in the partnership's books (b). Must exercise care and Cannot claim an allowance agreement. Partners are bound to exercise the same care over the affairs watchfulness. of the partnership as they would exercise over their own. The managing partner of a concern is not entitled to an except under allowance for carrying on the partnership trade when there is neither a contract between the parties nor a custom of the place to authorise such allowance (c). So the surviving partner, being the executor of his deceased partner, is not entitled to an allowance for carrying on the business after his partner's decease for the benefit of the estate; nor is an executor and legatee of such surviving partner entitled to it (d). Executor of a deceased partner not entitled to allowance. Must keep proper accounts. It is the duty of the partners to keep proper accounts, ready at all times for the inspection of all the partners (e). A partner Each must do who complains that the other partners do not do their duty towards him must be still ready at all times and offer himself to do his duty towards them. his duty. Each partner is a general agent. SECTION XIII. AUTHORITY OF PARTNERS. BRITISH LAW. Every partner is constituted a general agent for all the other partners as to all matters within the scope of the partnership dealings, and is possessed as such of all authority necessary for carrying on the partnership, and all such as is usually exercised by partners in the business in which they are engaged (ƒ). (a) Glassington v. Thwaites, 1 Sim. (b) Ex parte Yonge, 3 Ves. & B. 36. (d) Stoken v. Dawson, 6 Beav. 371. (e) Goodman v. Whitcomb, 1 Jac. & W. 593. (f) Vere v. Ashby, 10 B. & C. 288. Any restriction which by agreement amongst the partners is attempted to be imposed upon the authority which each of them possesses as a general agent for the other is operative only as between the partners themselves, and does not limit their authority as to third persons (a). Where, however, a special notice of a want of authority has been given, should a person cognisant of this limitation still continue to deal with such a partner, the other partners would not be bound by such dealings (b). No restriction of power valid except as be tween the parties. Unless special notice be given. Partners' power to bind each other by bills. Bills drawn on the firm and signed by one partner. When there is nothing to connect with alone is Partners in trade may bind each other by drawing, accepting, or indorsing bills of exchange or promissory notes in the name of the firm (c). A partner may bind his copartners by signing a bill or note even in his own name, provided such bill or note be directed to the partnership (d). When, however, there is nothing on the face of the bill or note to connect it with the partnership, or that the drawing, acceptance, or indorsement was made on behalf of the partnership, then the partner only whose name is on the instrument can be sued thereon (e). A partner has no power to bind his copartners by using the name of the firm on a matter which is not in the usual course of the partnership (ƒ); and the authority of partners to bind each other by drawing, accepting, or endorsing bills of exchange or promissory notes, is limited to partnerships for trading purIn partnerships not for trading, a special authority to that effect would be requisite (g). So it is not extended to mining or farming, or other purposes where bills of exchange are neither usual nor necessary for carrying on the business (h). For the same reason attorneys or solicitors could not bind each other by bills and notes (i). So it being not incidental to the general power of a partner No authority to bind his copartners by a guarantee such an instrument would not bind his copartners, except where an implied or poses. (a) Hawken v. Bourne, 8 M. & W. 710. (b) Gallway v. Mathew, 10 East, 264. (c) Swan v. Steele, 7 East, 210; Maclae v. Sutherland, 3 E. & B. 1; Bank of Australasia v. Breillat, 6 Moore, P. C. 152. (d) Hall v. Smith, 1 B. & C. 407; Wilks v. Back, 2 East, 142; Mason v. Rumsey, 1 Camp. 385; Wells v. Masterman, 2 Esp. 731. (e) Siffkin v. Walker, 2 Camp. 308. (g) Ibid. Thickenness v. Bromilow, (h) Davidson v. Robertson, 3 Dow. 229. (i) Duncan v. Lowndes, 3 Camp. 478; Ex parte Nolte, 2 Glyn. & Jam. 306. Must be in a matter in the course of partnership. Authority limited to for trading. partnerships Partnerships for farming have no such authority. Nor between attorneys, &c. to bind by a guarantee when it has no reference to the business. When assurance has re express authority was given to that effect, or where the obligation had reference to business connected with the partnership (a). When, however, an act is done, or an assurance given with ference to part- reference to the business transacted by the partnership, although nership busiout of the regular course, it is still within the scope of the partners' authority, and will bind the firm (b). Even a promise or an admission by one partner, relative to a partnership transaction, would bind the firm (c). ness. Promise or admission of partner binding on the firm. So all con tracts of sale All contracts to be binding must be in the All contracts of sale or purchase by one partner on joint and purchase. account, and for purposes connected with the partnership, are binding against the firm, each partner having an unlimited authority to deal with the partnership effects (d). But a partner has no authority to bind the partnership in any other name than that held out to the world as the name of the firm (e). Where carried Where, however, the partnership is carried on in the name of one individual partner, all acts done by him on behalf of the bind all by his partnership, and in his name, will bind all the partners collectively (f). name of the firm. on in the name of one only, he will acts. May bind his copartners in breach of revenue law; A partner may render his copartner liable even for his fraud even for fraud; and misconduct, provided it have a sufficient relation to the business of the firm (g). So if a partner is guilty of a breach of the revenue law, all the partners would be liable to answer for misappro- for the partnership (). So if a partner misapplies money belonging to other persons, left in custody with the firm, all the partners are liable to restore the same (i). If, however, a partner commit a fraud whilst trading on his own account, the firm is not liable (k). priation of money; not if com mitted whilst dealing on his own account. Copartner may bind for money or for goods he appropriates to himself. A partner may also bind his copartners by a loan contracted for his own private expenses while engaged in partnership business, or by a purchase of goods such as the firm trades in, but which he uses for his own benefit, provided there be no collu (a) Duncan v. Lowndes, 3 Camp. 478; Ex parte Nolte, 2 Glyn. & Jam. 306. 623. (c) Pritchard v. Draper, 1 Russ. & M. 199. (d) Bond v. Gibson, 1 Camp. 185; Barton v. William, 5 B. & A. 405. (e) Kirk v. Blurton, 9 M. & W. 284. (f) South Carolina Bank v. Case, 8 B. & C. 427. (g) Ropp v. Latham, 2 B. & A. 795; Blair v. Bromley, 2 Ph. 354. (h) Lindley on Partnerships, p. 239. (i) Devaynes v. Noble, 1 Meriv. 529; Bourdillon v. Roche, 27 L. J. Ch. 681; Harman v. Johnson, 3 C. & K. 272 ; Sims v. Brutton, 5 Exch. 802. (k) Bishop v. The Countess of Jersey, 2 Drew. 143. sion between him and the lender of money or the seller of goods (a). transaction Not if the ship. But the partnership will not be bound by a joint security given by one of its partners for a transaction not relating to the partnership, except where its express or implied sanction can be shown, or where the giving of such guarantee is necessary for the carrying on of the ordinary business (b). A partner Partners may would be bound by his copartner's misapplication or misappro- partner for priation of trust property (c). bind co misapplication of trust Cannot bind by deed unless under special powers. But the partner him bound. The partnership agreement, though under seal, does not property. authorise partners to bind each other by deed, unless a particular power be given for the purpose. A deed, therefore, executed by a person on behalf of himself, and his partners will be binding on him but void as to them (d). If, however, he executes it as an individual partner only, and not professedly on behalf of the others, he would not be bound unless the others execute, the execution of each being presumed upon the faith that the other partners are to be equally bound (e). Nor can a partner, without special authority, bind the other partner by a submission to arbitration, even of matters arising out of the business of the firm, though he himself would be bound by the award (f). Notice by or to one partner would be notice by or to the firm (g). So payment to one partner is also payment to all, and a receipt by one partner for a joint debt is valid as against all partners (h). Each partner has authority to act for the firm in bankruptcy, proving debts, voting for assignees, and signing certificates (i). One partner has not, however, implied authority to consent to an order for a judgment in an action against himself and his (a) Bond v. Gibson, 1 Camp. 185; La Marquise De Ribeyre v. Barclay, 23 Beav. 107; Hope v. Cust, 1 East, 53. (b) Crawford v. Stirling, 4 Esp. 207. (c) La Marquise de Ribeyre v. Barclay, 23 Beav. 107. (d) Ball v. Dunsterville, 4 T. R. 313; Harrison v. Jackson, 7 T. R. 210; Elliot r. Davis, 2 B. & P. 338; Hawkshaw r. Parkins, 2 Swanst. 543. (e) Elliot v. Davis, 2 B. & P. 338; Hawkshaw v. Parkins, 2 Swanst. 543. (f) Stead v. Salt, 3 Bing. 101; Strangford v. Green, 2 Mod. 228; Hilton v. Royle, 3 H. & N. 500. (g) Mayhew v. Eames, 1 C. & P. 550; Alderson v. Pope, 1 Camp. 404. (h) Bristow v. Taylor, 2 Stark. N. P. C. 50. (i) Ex parte Hodgkinson, 19 Ves. 293; Ex parte Mitchell, 14 Ves. 597; Ex parte Hall, 17 Ves. 62. Not by a subbitration. mission to ar Notice by or notice by or Payment to to one is to all. one is payment to all. Each partner may act in bankruptcy. But cannot order for judg consent to an ment. Service of a notice to one is not service to all. copartners (a). Service of a notice on one of two joint defendants who are partners, or at the partnership place of business, is not a sufficient service upon the other (b). INTRODUC With reference to third persons. Bills on partnership liability. SECTION XIV. PARTNERSHIP LIABILITY. The law imposes a partnership liability upon every one who participates in the profits and loss of a concern, although there may not have been any intention to contract partnership, and nothing was done to lead others to believe that there existed a contract of partnership. This law is founded on the principle that inasmuch as he who takes a portion of all profits really takes from the creditors a part of that fund which is the proper security to them for the payment of their debts, it is but right that he should become liable to third persons to losses, if losses arise. But what difference does it make to third persons whether the money is withdrawn in the shape of interest for money lent, or as a portion of realised profits, provided there be no interference in the management of the partnership? Third persons will rather be the gainers where the money is invested at a contingent rate of profit rather than lent at interest, because whilst the lender at interest will withdraw the interest, whether there be loss or gain in the business, the participator in the profit and loss will withdraw his profits only when there has been actual gain; and whilst the lender at interest will rank with creditors for the amount lent, and for interest, no matter at what an exorbitant rate the money was lent, the participator in the profits must wait til all the creditors are satisfied before he can claim any part of the investment, or any interest or profit thereon. To amend the law on the subject, a bill was introduced in the House of Commons, in 1855, providing that the lending of money on condition to receive a portion of the profit, or a sum varying according to the amount of such profits, either in lieu of, or in addition to, any interest for or on account of such loan, (a) Hambridge v. De la Crouée, 3 C. B. 742. (b) Mosedon v. Wyer, 6 Scott, N. R. 945. |