As a consequence of this, it has been held in England (where English law. bankruptcy is deemed a public act), that when a firm becomes bankrupt, no notice is required to free the assignees from liability to the public, or to customers for subsequent acts done by the former partners (a). And so far has this been carried, that even where debtors of the firm have, in ignorance of its bankruptcy, made payment to the partners of debts formerly contracted, they have been held liable in repetition to the assignees (b). When a single partner becomes bankrupt, the English rule is, that the partnership is dissolved. And this rule holds good whether the partner was made bankrupt for a private or for a company debt. The case would seem to be different in companies with transferable shares and managing officials (c). When in a private partnership a partner becomes bankrupt, it is held accordingly that the authority of all the partners to bind each other terminates, and that without any notice to the public or to customers. The assignees of the bankrupt partner are not therefore bound by the subsequent acts of the solvent partners; nor are these last liable for the acts of the bankrupt partner (d). But though this appears to be the general rule, it should seem that it is not always strictly enforced in cases of bona fide creditors who have dealt with the solvent partners in entire ignorance of the bankruptcy of another partner (e), and there is no reason to suspect fraud (f). It must be confessed, however, that upon this branch of the subject the law of England seems far from being in a very satisfactory state, and cannot therefore be expected to throw much light on the nature of the principles by which it should be regulated. In the law of Scotland we are left very much to be guided by Scottish law. theory, as no reported cases raising the questions now under consideration are, so far as the author is aware, to be found. It is undoubtedly true that a partnership is effectually dissolved by the Sequestration mercantile sequestration; and as this is made public by advertise of firm. Notour bankruptcy of firm. Bankruptcy of partner. Sequestration of partner. Notour bankruptcy of partner. Retirement of dormant partners. ment in the Gazette and other newspapers, it does not seem that any special notice is required to save a partner, or those in his right, from liability for the acts of such of the other partners as may still attempt to carry on the concern (a). A more difficult question presents itself, when it is asked whether the bankruptcy of a firm under the Act 1696, c. 5, commonly called notour bankruptcy, is sufficient to save from liability for the future acts of the partners without notice. Here there is not necessarily such publication as in the case of seques tration. As regards the bankruptcy of an individual partner, it must be observed that the law of Scotland differs from that of England, in so far as a company may remain solvent though some of its members become bankrupt; for it is only when a partner is rendered bankrupt for a company debt, that the company becomes bankrupt (b). When a partner is sequestrated for a private and not for a company debt, his agency to bind the firm of course ceases; and as his sequestration is a public act, it would seem that the solvent partners will no longer be bound by his acts and deeds as in relation to the firm, though no notice have been given to the customers. And by parity of reasoning, it should seem to follow that his trustee will not be bound by the subsequent acts of the remaining partners. Whether the notour bankruptcy of a partner under the Act 1696, c. 5, for a private debt has the same effect, is a much more difficult question. 3. Retirement of Dormant Partners. When a latent partner retires, it is difficult to see why he should be required to give notice to the public in order to protect himself from liability for future obligations of the firm; for the public cannot be relying on his guarantee, seeing they are unaware of his ever having had any connection with the concern. It has accordingly been held in many English cases, that notice to the (a) Sh. Bell's Com. 228. (b) 19 and 20 Vict. c. 79, s. 8. public or customers is not in a case of this kind necessary (a). The same rule is also adopted in American law (b). In Scotland the rule is said to be different; and the case of Kay v. Pollock (otherwise Hay v. Mair), decided in 1809 (c), seemingly overruling the previous case of Armour v. Gibson (d), is generally referred to in support of this view. It is probable, however, that here, as in many other instances, the difference between the two legal systems is more apparent than real. A man may be a dormant and not a secret partner,—that is to say, his name may not appear in the firm, or in the general business of the company, and yet his existence as a partner may have become known by facts and circumstances. Now it is only where the partnership has been strictly secret, that the English rule is understood to apply (e). Accordingly, where the existence of a dormant partner is known to a particular creditor, he will be liable to that creditor, unless due notice has been given of his retirement (ƒ). Scotch and not different. CASES OF CONTINUING LIABILITY TO BE MADE RESPONSIBLE FOR subsequent to dissolution. We have seen that dissolution or retirement, with due notice, Liability continuing has the effect of relieving partners from liability for the subsequent acts of their former copartners, and that in some cases notice is not even necessary for this purpose. Instances, however, do occur in which dissolution or retirement with due notice does not relieve from this liability. These may be classed under the two following heads:-1. When the agency to bind the firm, as regards the partners or any of them, together with their implied guarantee, has not been entirely withdrawn. 2. When, though complete with (a) Evans v. Drummond, 4 Esp. 89, 3 Ross L. C. 638; Brook v. Enderby, 2 Brod. and Bing. 71; per Patteson, J., in Heath v. Sansom, 4 B. and Ad. 177; Carter v. Whalley, 1 Barn. and Ad. 11, 3 Ross L. C. 635. (b) Story on Part. 159. (c) Jan. 27, 1809, 15 F. C. 102. (d) 1774, M. 14575. (e) See Addison on Contracts, p. 668; (f) Evans v. Drummond, 4 Esp. 89; When agency not entirely withdrawn. Agency implied for winding up. How limited. drawal with due notice has taken place, a partner has done something to lead the public to believe otherwise. 1. When the agency to bind the firm as regards the partners or any of them, together with their implied and corresponding guarantee, has not been entirely withdrawn. A very ordinary example of this presents itself in the case of a firm which, notwithstanding its formal dissolution, continues to exist for the purpose of winding up. Here the partnership, and with it the agency of the former partners, at once terminates as to the power of contracting future debts or obligations; but it still continues for the purpose of recovering debts, fulfilling engagements, and calling on the former partners to contribute (a). Indeed, unless this were the case, as was observed in Butchart v. Dresser (b), it would often be necessary, at the instant of dissolution, to apply to the Court for a receiver (judicial factor), even although the partners did not differ on any item of the partnership accounts. And the same has been laid down in the law of Scotland (c). In accordance with this rule, a retiring partner is liable for the costs of an unsuccessful action brought by the remaining partners for a company debt (d). And after dissolution, a former partner has implied authority to bind the firm in so far as may be necessary to settle existing claims, and to complete transactions begun, but not completed prior to dissolution (e). Some doubts would seem to have been cast upon this doctrine by the English case of Pinder v. Wilks (f); but, in truth, the circumstances of the case are not very fully reported, and it has been regarded as of questionable authority (g). This liability for inchoate acts, completed subsequent to dissolution, also attaches to the representatives of a deceased or retiring 4 D. 1061; Young v. Collins, 1852, 14 D. 540, reversed 1 Macq. 385; Bell v. Williamson, 1857, 19 D. 704. (a) Grant v. Chalmers, 1771, M. 14581; Douglas, Heron, and Co., 1778, M. 14605; idem 1792, 1 Bell's Ill. 245, aff. 3 Paton 428; Royds v. Fraser, 1822, 1 S. 352; Campbell, 1830, 8 S. 625, note; Roger v. Jamieson, 1838, 16 S. 418; Thom v. North British Bank, 1850, 13 D. 134; W. of Scot. Mall. Iron Co., 1855, 17 D. 461. (b) 10 Ha. 453. (c) See Drysdale v. Lawson, 1842, (d) Kinnear v. Thomson, 1830, 8 S. 512. (e) Butchart v. Dresser, 4 De G. M. and G. 542; Smith v. Stokes, 1 East 363; Morgan v. Marquis, 9 Ex. 145; Graham v. Whichelo, 1 C. and M. 188; Ault v. Goodriche, 4 Russ. 430. (ƒ) 5 Taunt. 612, and 1 Marsh. 248. (g) Coll. 372. partner; and this was so in the Roman law (a). But this liability does not extend to any acts which are not strictly necessary for winding up (b); and any abuse of the agency implied for that purpose will justify the appointment of a judicial factor (c). notes. The implied agency does not validate a draft, acceptance, or Bills and indorsation, made by one partner after dissolution so as to bind the others; and it implies no authority to do so, that the notice of dissolution empowered one partner to receive the assets and pay the debts of the company (d). In order to bind the firm after dissolution, all the partners must join in the draft, acceptance, or indorsement, or it must be signed by some person specially authorized to act for them (e). When a skeleton or blank bill has been signed by the firm, and dated prior to dissolution, though filled up subsequently to that event, it has been held to bind the partners (ƒ). And when, prior to dissolution, two partners drew a bill payable to their own order, and after dissolution one of them indorsed it to a party who knew of the dissolution, the indorsee was held entitled to recover against both partners (g). It sometimes happens that the agency of some one or more of the partners is specially arranged to continue for certain purposes after dissolution. In all such cases the exercise of this power within its prescribed limits will bind the late members of the firm. In Burton v. Issitt, one of two partners was specially authorized to use the name of the other in prosecuting for recovery of partnership property (h). This was held to validate promissory-notes issued in the name of the firm so as to bind the retiring partner. The same was held in Smith v. Winter, where the continuing partner had express permission to use the name of his former associate (¿). Agency conpartner. ferred on one public are mis 2. When, notwithstanding complete withdrawal of agency and When the guarantee has taken place with due notice, a partner has done some- led. thing to lead the public to believe otherwise, he may still remain liable for subsequent acts of his former partners. (a) Dig. lib. xvii. t. 2, 1. 40. (b) Kilgour v. Finlyson, 1 H. Blacks. 156; Abel v. Sutton, 3 Esp. 108. (c) Young v. Collins, as reversed in House of Lords, 1 Macq. 385. (d) Cases last cited; and Snodgrass v. Hair, 1848, 8 D. 390. (e) Same cases, and Wrightson v. Pullar, 1 Stark. 375. (f) Usher v. Dauncey, 4 Camp. 97, (g) Lewis v. Reilly, 1 Q. B. 349. (i) 4 M. and W. 454. |