for a consideration which has failed. (g) In the next place, persons who enter into partnership know that it may be determined at any time by death and other accidents; and unless they provide against such contingencies, they may fairly be considered as content to take the chance of their happening. (h) Apportionmium when ment of pre partnership ceases sooner pected. than was ex On the other hand, if a person receives a premium for taking another into partnership, which is to endure for a certain time, and then himself does anything which determines the partnership before that time has elapsed, he may be fairly considered as having precluded himself from insisting on his strict right to retain or be paid his whole premium. Moreover, where there has been no misconduct, the tendency has been to regard a premium paid for a partnership for a term of years as apportionable in the event of a premature determination of the partnership by an unforeseen occurrence. The fact that the consideration for the premium has partially failed has been considered sufficient to render it inequitable to retain or obtain payment of the whole premium. * Similar views have been taken with respect to what is right in cases of a similar kind, arising on the death of a solicitor who has been paid a premium by an articled clerk. In such *73 cases, the premium paid, the time during which instruction was to be given, and the time during which it actually was given, are considered, and a fair apportionment of the premium is then made. () The principles applicable to cases of this description are not even yet well settled; nor are the decisions upon them easy to reconcile. The following rules are, however, submitted to the reader as guides on this subject: 1. Where a partnership is entered into for no specified time, and there is no agreement for are turn or an apportionment of 1. Partnerships the premium in the event of an unexpected determina- at will. tion of the partnership, no part of the premium is returnable on the happening of such event. A case of fraud must be dealt with on its own demerits; and a person taking another into partnership (g) See Taylor v. Hare, 1 Bos. & Pul. N. R. 260. (h) See Akhurst v. Jackson, 1 Swanst. 85; Whincup v. Hughes, L. R. 6 C. P. 78. (i) See Hirst v. Tolson, 2 Mac. & G. 134; Ex parte Bayley, 9 B. & C. 691. These cases have been discussed, and not altogether approved in Whincup v. Hughes, L. R. 6 C. P. 78. for no definite time cannot, as soon as he has received the premium, dissolve the partnership and retain what has been paid as the consideration for it. (k) But laying aside fraud, and supposing there to be nothing except a partnership created for no specified time and and determined soon after its creation, it is difficult to hold that it was in fact entered into for a longer time, and that the person who came in, paying a premium, has not got all for which he stipulated. (7) 2. Where a partnership is entered into for a specified time, and is determined prematurely, the cause of its deterinination must be considered. 2. Partnerships for a time. mination. *74 If, (a). Death is a contingency which all persons entering into partPremature ter nership know may unexpectedly put an end to it. therefore, they do not expressly guard against this risk, they may reasonably be treated as content to incur it; and if death should unexpectedly happen, no return of premium not expressly provided for can, it is apprehended, be demanded. (m) *But even in this case, if a person knows himself to be in a dangerous state of health, and conceals that fact, and induces another to enter into partnership with him, and to pay him a premium, and shortly afterwards dies, the fraud so practiced will entitle the partner paying the premium to a return of part of it; and he can obtain such return in an action for partnership account; he need not rescind the contract in toto. (n) (b). Bankruptcy of the partnership as distinguished from the (b) By bank bankruptcy of one of the partners cannot, it is appreruptcy. hended, be a ground for apportioning a premium; for it is a contingency which every one may fairly be taken as contemplating. (0) But the bankruptcy of a partner receiving a premium is a ground for its apportionment if he was embarrassed when the partnership commenced, and this fact was not known to his co-partner; (p) but not if it was. (2) What the effect would be if he became embarrassed after the commencement of the part (k) Featherstonhaugh v. Turner, 25 Beav. 382. See, also, Hamil v. Stokes, Dan. 20, and Burdon v. Barkus, 4 De G. F. & J. 42 per L. J. Turner. (1) See per Lord Eldon in Tattersall v. Groote, 2 Bos. & P. 134. (m) See Whincup v. Hughes, L. R. 6 C. P. 78. (n) Mackenna v. Parkes, 36 L. J. Ch. 366, and 15 W. R. 217. (0) See Akhurst v. Jackson, 1 Swanst. 85. (p) Freeland v. Stansfeld, 2 Sm. &. G. 479. (9) Akhurst v. Jackson, 1 Swanst. 85. nership has not been decided; but the tendency of the most recent decisions is in favor of an apportionment in such a case. The bankruptcy of the partner paying the premium cannot entitle him or his trustee to a return of any part of it; unless he has been made bankrupt by his co-partner who has received the premium. (r) (c). The lunacy of a partner causing a dissolution would probably be considered as a ground for apportioning the pre- (c) Lunacy. mium. * *75 (d). Disagreements between the partners resulting in a dissolution have given rise to much difficulty. The strong (Disagreetendency of modern decisions is to apportion the pre- ment. mium in these cases not only where neither partner is to blame (8); but a fortiori where the partner receiving the premium has so misconducted himself as to give the partner paying it a right to have the partnership dissolved (t); and it matters not that the latter may himself not be altogether free from blame. (u); nor is the rule altered by the fact that the partners have agreed to dissolve since the institution of legal proceedings. (x) There may, however, be misconduct on the part of the partner paying the premium so gross as to deprive him of his right to have any of it returned. (y) It might be supposed that any misconduct on the part of partner which was suf ficient to entitle his co-partners to a dissolution in invitum would be sufficient to deprive him of his right to have any part of his premium returned to him in the event of a dissolution founded on such misconduct. (2) Such a principle is at all events rational and comparatively easy of application. But V. C. Wickens, in Wilson v. Johnstone (a), held it to be erroneous. He considered that the misconduct must be such as to amount to a complete repudiation (r) As in Hamil v. Stokes, Dan. 20, and 4 Price, 161. In this case it is to be observed that the contract of partnership was not rescinded on the ground of fraud. (8) Atwood v. Maude, 3 Ch. 369. (t) Bullock v. Crockett, 3 Giff. 507. (u) Atwood v. Maude, 3 Ch. 369, where the partner paying the premium was plaintiff; Astle v. Wright, 23 Beav. 77; Pease v. Hewitt, 31 Beav. 22. Compare Airey v. Borham, 29 Beav. 620, Misconduct. where nothing was returned. (x) Bury v. Allen, 1 Coll. 589; Astle v. Wright, 23 Beav. 77; Wilson v. Johnstone, 16 Eq. 606. Compare Lee v. Page, 7 Jur. N. S. 768. (y) See Wilson v. Johnstone, 16 Eq. 606; Airey v. Borham, 29. Beav. 620; Atwood v. Maude, 3 Ch. 369. (z) See Atwood v. Maude, 3 Ch. 369; Airey v. Borham, 29 Beav. 620. (a) 16 Eq. 606. of the contract of partnership. What misconduct amounts to such a repudiation is, however, nowhere defined; and the present state of the authorities is such that no rule can be safely relied on. The whole subject requires re-consideration by the Court of Appeal. be returned. 3. There does not appear to be any definite rule for deciding in 3. Amount to any particular case the amount which ought to be returned. The time for which the partnership was entered into, and the time for which it has in fact lasted, are the most important matters to be considered; but other circumstances must often be taken into account in order to decide what is fair between the parties. At the same time the rule adopted in the most recent decisions has been to apportion the premium solely with reference to the agreed and actual duration of the partnership. (V) (b) See Wilson v. Johnstone, 16 Eq. 606; Atwood v. Maude, 3 Ch. 369; Bury v. Allen, 1 Coll. 589; Astle v. Wright, 23 Beav. 77; Pease v. Hewitt, 31 Beav. 22. 122 Compare Bullock v. Crockett, 3 Giff. 507; Freeland v. Stansfeld, 1 Sm. & G. 479; Hamil v. Stokes, Dan. 20, where this rule was not adhered to. OF THE PERSONS CAPABLE OF ENTERING INTO PARTNERSHIP. THE parties to a contract of partnership may be considered with reference to 1. Their number. SECTION 1.-OF THE NUMBER OF PARTNERS. partners. By the common law of this country there is no limit to the number of persons who may be associated together in part- Number of nership. (a) But from time to time various statutes have been passed, declaring that certain partnerships shall be either alto Statutes regunumber of perbe partners. lating the sons who may gether illegal, or, at all events, deprived of some important rights, or exposed to serious penalties, if their members exceed a prescribed number. Of these statutes the Companies act, 1862, is the only one of present practical importance. This act, by § 4, limits the greatest number of persons who can carry on business as partners otherwise than under its provisions to ten, if the business is that of bankers, and to twenty in other cases. But this enactment does not apply to partnerships formed before the 2d November, 1862, (see § 2) nor to those formed in pursuance of some other act of Parliament, or of letters patent, nor to companies engaged in working mines within and subject to the jurisdiction of the Stannaries. All the other statutes relating to this subject, except the Banking act of 7 Geo. IV., c. 46, have been repealed (b); and (a) As to the supposed illegality of partnerships so large as to be incapable of practically suing and being sued, see infra, book i. c. 6. (b) A list of them will be found in the 2nd edit. of this treatise, vol. i, p. 82. |