SECTION II.

LIABILITIES EX CONTRACTU OF PARTNERS INTER SE. (a)

Of the COMMON LAW MAXIM that ONE PARTNER cannot maintain AN ACTION against the FIRM upon PARTNERSHIP CONTRACTS.-It is an ancient maxim of the common law, that if a plaintiff in an action against a firm in partnership upon a partnership contract is himself a member of the firm, the action is not maintainable; for being himself liable as one of the partners upon all contracts binding upon the co-partnership, he is in principle, it is said, both plaintiff and defendant in the action, which cannot be permitted.

AN INDENTURE inter partes was made between HOUSTON (one of four partners in a bank) of the first part, Perring, Barber, Shaw, (the other three partners,) and HOUSTON, (the fourth partner,) bankers and copartners of the second part, and Oliver Vill of the third part, which recited that HOUSTON, in his individual capacity, was indebted to "Perring, Barber, Shaw, and HOUSTON," in a considerable sum of money, the amount of which could not then be exactly ascertained, and that HOUSTON might become indebted to them in further sums of money, and that for securing to the said Perring, Barber, Shaw, and HOUSTON the payment of the said debt, and of what might thereafter become due to them from HOUSTON, the latter had assigned certain property to the said Oliver Vill as a trustee for the co-partnership, and had agreed to enter into the covenant thereinafter set forth, and the deed then contained a covenant on the part of HOUSTON with Perring, Barber, Shaw, and HOUSTON, to pay to them the debt then owing, and all sums which might thereafter become due from him to them, and it was held that no action at law could have been maintained upon this covenant, as the parties suing thereon must necessarily have been both plaintiffs and defendants in the action. (b)

If, therefore, an indenture inter partes be expressed to be made between a firm in partnership by its trading name of the one part, and one of the partners in his own name individually of the other part, and such indenture contains covenants on the part of the firm with the one partner

(a) As to the plaintiffs in such actions, see ante, 282-285.

(b) De Tastet v. Shaw, 1 B. & Ald. 669.

individually, and the latter seals the deed in common with the other partners of the firm, the partner so sealing the deed cannot maintain an action upon it, inasmuch as he seals it as one of the members of the firm as well as on his own individual account, and is therefore both covenantor and covenantee in the deed.

IF BILLS OF EXCHANGE or PROMISSORY NOTES be accepted or given in the trading name of the firm, or be expressed to be accepted or given by some one or more of the partners for and on behalf of the co-partnership, and the payee of such bills or notes is himself a member of the firm, he cannot maintain an action upon them against the co-partnership. When one partner draws a bill on his own firm, by its trading name, and the bill is accepted by the firm in such trading name, it is the case, it has been said, of a man's drawing upon himself; he is both drawer and drawee, and if he sues the firm upon the bill, he is in principle suing himself, which cannot be permitted. (c) The rule, in fact, is that all partners ought to be made defendants in actions upon co-partnership contracts, as the contract is the joint contract of all of them, and not the separate contract of each partner; and a plaintiff, who sues on such a contract, without joining all, may be met by a plea in abatement. When, therefore, the plaintiff himself is one of the partners, and is met by such a plea alleging that he is himself a co-contractor, his action is defeated, for he cannot sue out a fresh writ making himself both plaintiff and defendant in the action.

But if the contract, though made concerning the partnership affairs, and in furtherance of the joint undertaking, is the individual contract of the partners who are parties to it; if it is made by them in their own names and not in the name of the firm, the objection does not, of course, apply. Thus, if a deed be expressed to be made between three of the partners, nominatim of the one part, and a fourth partner of the other part, and the three covenant nominatim with the fourth, then, as the deed is the individual contract of the parties executing it, and not the contract of the firm of which they are members, although it may be entered into for partnership purposes, and made concerning partnership affairs, there can be no objection to the fourth partner suing the other three upon their covenant.

Thus if a deed expressed to be made between A. and B., two out of several partners of a firm of the one part, and C., another partner, of the

(c) Neale v. Turton, 12 Moore, 368; 4 Bing. 149, s. c. Mainwaring v. Newman, 2 B. & P. 120, 125 Teague v. Hubbard, 8 B. & C.345;

2 M. & R. 369. Smith v. Jarvis, 2 Raym. 1484.

other part, recites that D. has advanced 5007. by way of a loan to the co-partnership, and contains a covenant on the part of A. and B. with D. to repay D. the 5007. by a day certain, D. may maintain an action of covenant against A. and B. for the money, as the contract is not the contract of the firm at large, but the individual contract of the persons who are made parties to it.

So in the case of COVENANTS and AGREEMENTS between PARTNERS to contribute CAPITAL or LABOUR to the JOINT STOCK of the CO-PARTNERSHIP, not to trade on THEIR OWN ACCOUNT, &c., entered into by them in their own names with each other, each of the partners who neglects to fulfil his covenant is liable to an action at the suit of all the rest for the joint damage sustained by them in respect thereof, inasmuch as the contract is the individual contract of the different parties who thereby agree to become partners. The covenant of each covenantor is, in contemplation of law, made with all the rest excluding himself, and all the rest are joint tenants against him; " for if there be twenty partners, and one of them covenants with all the rest, he is in that respect several from them all, and they all joint against him." (d)

Thus, where an indenture tripartite entered into between Taylor of the first part, Clipsham of the second part, and Castle of the third part, recited that the three parties had contracted with his Majesty's commissioners of prize goods to buy and take all brandy wines which at any time before the first day of September then next coming should be condemned as lawful prize and ordered to be sold, at such rates and prices, and upon such conditions as were set forth in the contract with the commissioners. And each of the three did then for himself, his executors, &c., covenant and agree with the other and others of them respectively, and his and their respective executors, &c., that there should be a joint stock of 6001. to be raised equally by the parties, and deposited in the hands of Hynton, a goldsmith, to be disposed of by the parties, or any two of them, and that all the prize brandies should be bought by them in partnership, upon their joint account; and that none of the parties during the continuance of the partnership should sell, merchandize, or trade in brandy wines by himself only, or in company with any other, but only upon the same joint account; and that no brandies which should come to the hands of any of the parties should be sold by him without the assent of the others, in writing under their hands, and that the gain should be equally divided, and the loss equally borne; and that all the monies which should

(d) Thimblethorp v. Hardesty, 7 Mod. 117. Vesey ▼. Mantell, 9 M. & W. 325.

be received by any of the partners should be paid in to Hynton by the party who should receive it, to be disposed of as the joint stock was directed to be disposed of; it was held that one of the partners was liable to an action at the suit of the other two for a breach by him of the covenants contained in this deed. (e)

So where four fiddlers entered into articles of agreement under seal to play together for their joint profit, and bound themselves each to the other not to play asunder except on my Lord Mayor's day, it was held that one of them who had played by himself at a tavern for his own private advantage contrary to the agreement, was liable to an action at the suit of the other three for the recovery of the 201. (ƒ)

The herald painters entered into articles of co-partnership under seal in their own names individually, and covenanted each for himself with the other and others of them to work for their joint benefit, and bring all their work to one shop for sale, and divide the profits between them in certain shares and proportions, and it was held that one of the covenantors who had not brought his work to the appointed place was liable to an action at the suit of the other covenantees for his breach of contract. (g)

And as regards SIMPLE CONTRACTS inter partes between partners in their own names individually for the formation of a joint stock, and a contribution by each of them of a certain amount of capital, to be paid to the bankers of the co-partnership, or to one of such partners as a trustee for all the rest, any one of the partners neglecting to pay his share or proportion of the agreed capital, may be sued by all the rest, as the contract is in like manner with all the rest, excluding himself, he being in contemplation of law several from them all in respect of his particular share of the joint contribution, and they all joint against him. If several of the partners sign an agreement, constituting one of their number a trustee for the whole body, and authorizing him to sue for and receive their several contributions to the joint stock, each of the partners signing the agreement is liable to an action at the suit of the partner so appointed for not paying up his share of the contribution.

Twenty-two persons agreed to charter a small steam-boat to ply for hire with passengers and goods between London and Herne Bay during the winter season, and to share the profits and loss of the adventure. Some agreed to subscribe 507., and others 257., and all were to share in the

(e) Eccleston v. Clipsham, 1 Saund. 153; 2 Keb. 338, 347, s. c.

(f) Spencer v. Durant, Comb. 115.

(g) Saunders v. Johnson, Skin. 401; Comb. 230, s. c.

profits, and contribute to the losses in proportion to the amount of their several subscriptions. The plaintiff, one of the twenty-two parties who signed the agreement, and a subscriber of 507., was authorized to charter a suitable vessel, and to make the necessary arrangements for setting the scheme afloat, and each of the parties paid him 107. per cent. for the purpose of defraying the expenses of the preliminary proceedings, and by the agreement they further bound themselves to pay to the plaintiff, each in proportion to his subscription, such further instalments as it might be necessary to call for from time to time should the earnings of the boat be insufficient. The steam-boat was accordingly chartered, and continued to ply until the end of the season, when the joint adventure being at an end, the accounts were made up and balanced, and it was found that the expenses had so far exceeded the earnings of the boat as to render it necessary for the plaintiff to call for an instalment from the subscribers to meet the deficiency. The defendant was therefore applied to as one of the subscribers for his share of the general contribution, according to the agreement, which he refused to pay, and it was held that the plaintiff was entitled to maintain an action against him upon the agreement for the recovery thereof. (h)

Six persons entered into articles of co-partnership as carriers of passengers; each agreed to horse and convey a stage coach for a certain number of miles in a given time, and in default to pay a forfeiture or penalty of 501. as liquidated damages to the plaintiff, who was one of the six, and who was authorized to receive, and empowered to sue for such forfeiture when it occurred; and it was agreed that the amount should be divided amongst such of the parties to that agreement as should not have subjected themselves to any such forfeiture to the exclusion of every defaulter, and it was held that one of the six who had neglected to horse and convey the coach according to his agreement, was liable to an action, at the suit of the plaintiff, for the recovery of the 507., as liquidated damages for his breach of contract. "It has been insisted," observed Best, C. J., that this agreement makes the parties to it partners, and therefore, that if any of them have claims against the others they must go into a court of equity. In that which is sought to be recovered in this action the defendant has no interest whatever. It is a penalty to be paid by the plaintiff for the use of the other contracting parties, the defendant himself being by the terms of the agreement expressly excluded from any share in it. There are no accounts to be settled before this claim can be decided, and, there

(h) Brown v. Tapscott, 6 M. & W. 123.

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