relation as from that date, depends on whether the partner is resident in the enemy's country, and whether the contract requires him to take a more active part in the concern than is compatible with such residence. These are submitted as the general results of the authorities on this subject in English and Scottish law. But it must be admitted that the decisions are not always very clear, nor always easy to reconcile with each other. The tendency of the older jurists was to the rigorous exclusion of all commercial intercourse between the subjects of states at war with each other; the milder views of later times are, it is to be hoped, inaugurating a wiser policy. As the subject is of considerable consequence, a list of the more important English cases and authorities is appended (a). Not only may individuals become members of partnerships or companies, but artificial persons, viz. corporations, common law companies, and even private partnerships. This sometimes raises difficult questions with creditors, which will be afterwards noticed (b). In England, corporations alone can become partners; common law companies and private firms being excluded, by reason of the English law not recognising a quasi persona in such associations (c). (a) Collyer, p. 9; Lindley, p. 79; Addison on Contracts, 934; Evans v. Richardson, 3 Mer. 469; Griswold v. Waddington, 15 John. 57, and 16 John. 438; O'Mealy v. Wilson, 1 Camp. 482; ex parte Baglehole, 18 Ves. 525; Willison v. Pattison, 7 (b) 2 Bell's Com. 625. (c) Grant on Corporations, p. 5; Lindley 78. CHAPTER III. OF PARTNERSHIPS AND CORPORATIONS, AND THEIR association. THE principle of society or association for the purposes of gain assumes in Scotland, as already mentioned, various forms. But among these, two types can be plainly distinguished, to which all Types of the others stand in the relation of intermediate or improved varieties, specialized or adapted for particular purposes. These are the mere private partnership on the one hand, and the proper corporation on the other. It is very probable, indeed, that the former is the original type, of which the latter is only a highly improved species. Yet the differential characteristics of both, though less broadly marked in this country than in England, have never been confounded from the remotest period at which we have any traces of the Scottish law of society. A mere firm has always been one thing, and a true corporation another; and notwithstanding the existence of numerous intermediate varieties, none have ever been permitted to assume the characters of the corporation without the sanction of public authority. distinction The importance of obtaining clear conceptions of these two Importance of primary types of commercial associations, not only as they are in between partnership and themselves, but as they differ from each other, will become more corporation. apparent as the work advances; but it may be sufficient at the outset to instance the following considerations. Questions of difficulty as to the management of companies, and the powers and liabilities of the members, whether inter sese or in questions with the public, often admit of an easy solution, when it is once settled whether the radical type of the society is a partnership or a corporation. But as the superficial appearance of the former often presents in Scotland a delusive similarity to the realities of the latter, it becomes all the more necessary to have the fundamental characteristics sharply defined. There is also reason to believe that the want of clear notions on this subject has deprived the Scottish lawyer of much valuable light which English law would have cast on his own system, or has even converted that light into a source of confusion and error. The remainder of the present chapter will accordingly be occupied with an examination of the leading characteristics of these two types of association. General description of partnership. PRIVATE PARTNERSHIP. It is always difficult, and often dangerous, to give rigid definitions of legal terms; and even when the definition is open to no other objection, it is generally found to be of little practical utility. Numerous definitions have been given of partnership, many of which are remarkable for their elegance and apparent simplicity; few or none for elucidating the nature and effects of the contract. Without attempting to define, we shall endeavour to describe as briefly as possible the nature of the relation as it is understood in the law of Scotland. Partnership is a voluntary association of two (a) or more persons to carry on some lawful business or undertaking for purposes of mercantile gain. All the members are bound to further the interests of the association to the best of their ability, and all of them are in the general case required to contribute goods, money, skill, or industry. The partnership itself forms a quasi persona in law, so that it may contract the relations of debtor and creditor, not only with the world, but with its own members. Within the sphere of its line of business its members are its implied agents, and they stand to the public as sureties for its debts; so that as soon as these have been duly constituted, the members may be proceeded against singuli in solidum to the utmost of their means and estate. Among themselves they are always entitled to some share of the profit, and are liable for some part of the loss; but the proportions are regulated by the terms of the agreement. (a) Nairn v. Sir Will. Forbes and Co., 1795, 2 Bell's Com. 625, n. 1; Reid v. Chalmers, 1828, 6 S. 1120. The distinctive or central feature of the Scottish partnership is Scottish theory of partnership. that it constitutes a quasi persona, of which the members are agents and sureties, a principle which exactly realizes the notion of a firm entertained by mercantile men both in this country and in England. This principle has everything to recommend it on the score of simplicity and convenience; and it has accordingly been adopted by the Legislature in the English and British Registration Acts, of which it forms the basis and theory. While this is the Scottish theory of a partnership, that adopted in the law of England is entirely different. According to that system, the firm has no existence separate from the units of which it is at any given time composed. Hence it can neither possess rights nor incur obligations distinct from those of its members; nor can the relations of debtor and creditor subsist between it and them. In suits by or against the firm, all the partners must be made plaintiffs or defendants; and as this requirement cannot be complied with in actions between the firm and its members, it has often been found that justice could only be obtained by dissolution. English theory of partnership. These consequences of the non-recognition of the quasi person Consequences of English of the firm have, it is true, been somewhat modified in later times theory. by courts of equity and bankruptcy; but they have always been rigidly enforced at common law, and so pervade the English system as to render the Scottish lawyer justly suspicious of any decision in which it is possible they may have formed an element. But while the law of Scotland recognises a distinct quasi person in a private copartnery, it is careful not to confound this legal abstraction with the proper person of a corporation. Hence a private copartnery, however large, is no more entitled by the law of Scotland than by that of England to hold property, to act or transact, or to sue or be sued in a corporate name; but in these and similar cases, the names of some, though not generally all, of the partners must appear in conjunction with, or as forming part of, the name of the quasi person, thus exhibiting the individuality of the partners as well as the aggregation of the firm. Difference between part nerships and corporations. As partnerships are created by the mere will of their members, Dissolution of they are dependent on that will for their continued existence, and partnerships. do not, like corporations, possess the element of endless duration. General obser vations. Similarity of CORPORATIONS. These associations, being the creations not of private will but of public authority, fall to be regulated rather by the constitutional laws of the empire than by the systems of private or municipal law. When they are the creatures of statute, they possess any privileges amounting to aggression or monopoly which the Legislature, in the plenitude of its power, may choose to confer; nor can these be in any respect limited by the usages of the common law. When, again, they owe their origin to prerogative, the rights and privileges they enjoy can never exceed what the principles of the constitution empower the Crown to confer. In considering, therefore, the law of corporations, a distinction must be made between the practice of remoter times, and what must be held to be law since the constitution has settled into its existing form. Corporations may, it is true, continue to enjoy privileges of the most invidious nature conferred on them by competent authority in remote ages, until deprived of them by Act of Parliament; but when it is asked what privileges can now be conferred otherwise than by the Legislature, regard must be had simply to the existing state of the constitution, and precedents prior to the Revolution are of no importance whatever. These considerations lead to the inference that, apart from special legislation, the existing law of corporations is at the present day substantially the same in Scotland as in England. Exclusive privileges, aggressive powers, the right of framing bye-laws binding on the public, and even what are termed the naturalia of a corporation, have all a tendency to affect more or less directly the liberty of the subject, or the general rights of the community. Now it cannot be supposed, a priori, that the law regulating the creation or management of associations vested with rights and privileges of this kind should differ in England and Scotland. Such an assumption would infer a difference in constitutional law; and therefore we may reasonably conclude, that whatever anomalies the old law of Scotland might exhibit in this respect prior to the Union, they have long since ceased to exist either by disuse or by legislative action. |