passed, and they borrowed money for the society in the absence of any rule enabling them so to do, it was held that they were personally liable to repay it. (o) So, where directors of a company authorized the manager to overdraw the company's account, they were held liable for the overdraft, for although the company had no power to borrow without the consent of a meeting of shareholders, they had power to do so with such consent. (p) promoters of Further, where a person purports to contract as an agent, and he has in truth no principal; so that the contract, unless Contracts with binding on the party to it, is wholly void, he is treated companies. as having contracted on his own behalf, and is personally liable. accordingly. Thus, if a person contracts on behalf of a company not yet formed, he is liable on that contract; and he is not relieved from such liability by the subsequent adoption of the contract by the company when formed (2), unless the contract is so worded as to exclude personal liability. Again, if directors contract as principals, which is quite consistent with their acting on behalf of the company Express per(r), they will be bound personally by their contract, sonal liability. provided it is not actually illegal. The fact that the contract is one which would not bind the company is not per se sufficient to render it void as against the directors personally. Therefore, where the directors of a company disagreed and divided into two parties, and one party retired, and the other party covenanted to indemnify them, this covenant was held binding on the directors who entered into it, irrespectively of the question how far the whole transaction was one which the directors had power to enter into on the part of the company. (8) But if the contract is illegal, no action can be maintained upon it; and therefore, where the directors of a railway company agreed that it should *pay the expenses *369 which might be incurred by another company in attempting to obtain an act of Parliament for the formation of a line which, (0) Richardson v. Williamson, L. R. 6 Q. B. 276, explained by Mellish, L. J. in 7 Ch. 801. (p) Cherry v. Col. Bank of Australasia, L. R. 3 P. C. 24. 'See 2 Kent Com. 630; Ewell's Evans on Agency, 308, note; Blakely v. Bennecke, 59 Mo. 193; Eichbaum v. Irons, 6 W. & S. 67. (9) Kelner v. Baxter, L. R. 2 C. P. 174; Scott v. Lord Ebury, ib. 255. (r) See Kay v. Johnson, 2 Hem. & M. 118, in which a decree for the specific performance of an agreement for a lease was made against directors personally. (8) Haddon v. Ayres, 1 E. & E. 118; Barker v. Allan, 5 H, & N. 61. when made, was to be handed over to the first company, it was held that this was an agreement to the effect that the first company should do that which was altogether illegal, and that an action against the directors for a breach of the agreement could not be sustained. (†) bility several B. Liability, several as well as joint. Before the Judicature Acts there was a marked difference beEquitable lia- tween the views taken at law and in equity with referas well as joint. ence to the nature of partnership debts; for whilst at law they were all joint, so that on the death of one partner the survivors became solely liable for them,' in equity they were all, primâ (t) Macgregor v. Dover and Deal Rail. Co. 18 Q. B. 618. 'See post, Survivorship; Williams v. Rayers, 14 Bush, 777; Curry v. Warrington, 5 Harr. 147. One who brings suit against partners must show the existence of a joint contract or joint promise, express or implied. Sager v. Tupper, 38 Mich. 258. In an action against several as partners, although but one of the defendants be brought into court, if he appears and pleads the general issue, the plaintiff is not entitled to recover, unless he establishes a joint liability of the defendants. Halliday v. McDougal, 20 Wend. 81; 22 Id. 264. A partnership between four was dissolved by the death of one, and letters of administration on his estate were taken out by a surviving member. The survivors, having formed a new firm, took the stock, and each gave his note for one-third of said stock, at an appraised value, payable to the firm: Held, that the three were chargeable jointly for the whole value of the stock. Washburn v. Goodman, 17 Pick. 519. A suit was brought against two as partners; both were served with process; both appeared and pleaded jointly; notice to produce a book containing the contract on which the action was brought was given to both, and it was produced. The contract was in the name of the firm, and was proved to be in the handwriting of one of the defendants. Upon the trial, an admission was made by the counsel acting for both defendants, that a certain amount of labor was done by plaintiff for defendants, and certain payments made to him: Held, that the evidence was sufficient to establish a joint liability on the part of the defendants. Balliet v. Fink, 28 Pa. St. 266. In an action against A. & W., former partners, on an alleged joint indebtedness for goods sold and delivered, A.'s answer denied the sale and delivery, but admitted that the goods were left with the defendants for sale on commission, and that sales of the same were made to a certain amount, for which an indebtedness was admitted; and W.'s answer admitted in part the sale and delivery and indebtedness alleged. The plaintiffs in reply denied the statement in A.'s answer, and moved for judgment on the pleadings: Held, that the motion was rightly denied, and judgment of dismissal properly rendered. Such a state of the pleadings furnishes no basis for a several judgment against either of the defendants. Beatty t. Ambs, 11 Minn. 331. facie, separate as well as joint, so that on the death of a partner his If a partnership and an individual are joint makers of a note, when nothing appears to the contrary, the partnership is liable for one-half the amount of the note. Hosmer v. Burke, 26 Iowa, 353. The liability of a partner is to be determined by the law of the place where the partnership is carried on, and not where the debt was incurred. Hastings v. Hopkinson, 28 Vt. 108. In some of the States, either by statute or decisions of the courts, partnership debts are considered as both joint and several. In Mississippi all partnership contracts are declared by statute to be joint and several; therefore, in a suit against one partner, counts on a firm debt for which he is severally liable, may be joined with counts on an individual debt, but if the creditor treat the contract as joint, by suing all the partners, he must prove a joint contract as alleged, and cannot amend by discontinuing as to part of the defendants and joining a count on a contract by one only, in order to meet the proof which is of such a contract. Miller v. Northern Bank, etc. 34 Miss. 412. In Strong v. Niles, 45 Conn. 52, a firm was dissolved, and part of its members, as a new firm, went on with the business. The plaintiff, who had been a book-keeper of the old firm, kept on with the new, and carried a balance due him for services from the old firm into his account with the new; and his account thus made up was afterwards paid by the new firm, they not knowing that it embraced any part of the old account: Held, that as the members of the new firm were personally liable for the debts of the old, the plaintiff was entitled to retain the money so received. See, also, Griffin v. Samuel, 6 Mo. 50; Wilson v. Home, 37 Miss. 477; Neil v. Childs, 10 Ired. L. 195; Silverman v. Chase, 90 Ill. 37; Mason v. Tiffany, 45 Ill. 392. The rights of partnership creditors are not affected by equities between the partners. Bartels v. Creditors, 11 La. Ann. 433. In an action against the members of an unincorporated association, sued as partners, the court will not delay the relief to which the plaintiff is entitled as against all the defendants, pending an inquiry instituted by the defendants to ascertain which of them, as between themselves, is primarily liable for the debt. Manning v. Gasharie, 27 Ind. 399. Where H. individually, and T. individually, signed an agreement, whereby they agreed to account to D. for the proceeds of certain bills of lading, which were simultaneously delivered by D. to H. for himself and T., they being partners, and for any insurance money which should be received as such proceeds, until certain drafts accepted by D., for account of such partnership, against the goods covered by the bills of lading, should be provided for, the bills of lading having been held by D. as security for such acceptances, and the goods having been insured by such partnership, in the name of H., and having been lost at sea: Held, that T. and H. were liable, the two jointly, and each of them individually, to fulfill such agreement; and, T. and H. having become insolvent, and assigned their partnership, as well as their individual estates, for the benefit of their creditors, that D. had a right, at his election, to come in under such assignment, as a creditor of T. and H,, individually, and to exhaust his remedy thereunder, against the separate estate of each of them, and afterward come in on the surplus of the joint estate of the two, after the payment of the joint debts of the two. Drake v. Taylor, 6 Blatchf. 14. estate remained liable for them. (u) Whilst all the partners were alive this equitable doctrine had practically no effect; for courts of equity had no jurisdiction to enforce payment of ordinary debts recoverable by action; and although courts of bankruptcy exercised both legal and equitable jurisdiction, a partnership debt was treated as a joint debt provable against the joint estate of the partners, and not as a joint and separate debt provable either against their joint or against their separate estates at the option of the creditor. (x) The effect of the Judicature Acts upon this subject is, it is apprehended, to render the estate of a deceased partner liable for all ordinary partnership debts and to enable creditors of a firm to maintain an action against the executors of a deceased partner in respect of them; but it must not be too hastily assumed that for all purposes partnership debts must now be treated as separate as well as joint: a partnership debt is not so treated in bankruptcy since the Judicature Acts any more than before. The equitable doctrine on this subject is a consequence of *370*the rules which regulate the application of partnership assets in the event of the death of a partner. As will be seen hereafter, those assets do not belong beneficially to the surviving partners, but must be applied first in payment of the partnership debts and then be divided between the survivors and the estate of the deceased, according to their respective shares; and if there is a deficiency of assets, the partners are Equitable doctrine illustrated. (u) Except in partnership cases the liability in equity on a joint contract is joint as at law; Other v. Iveson, 3 Drew. 177; Jones v. Beach, 2 DeG. M. & G. 886; Rawstone v. Parr, 3 Russ. 539. See as to joint and several contracts, Kendall v. Hamilton, decided by Baron Huddleston on 19th March, 1878. There a partnership contract, which before the Judicature Act would have been at law clearly jointly only, was held to be joint and several; an action on the contract against two out of three partners followed by judgment, was held to be no bar to a subsequent action on the same contract against a third partner, whose connection with the firm was not known when the first action was brought. It certainly would be absurd to hold that whether a contract is to be treated as joint or as joint or several, is to depend upon whether one of the parties happens to die. The rules in bankruptcy relating to the proof of joint debts will probably still remain; trade debts being paid out of trade assets; but it is to be hoped that all partnership contracts will, as a rule, be henceforward treated as joint and several, both in ordinary actions and in actions for administration. The case is under ap peal. See Mason v. Tiffany, 45 l. 392; Silverman v. Chase, 90 id. 37. (x) See infra, book iv. ch. 2, § 4. entitled to contribution from the estate of the deceased. But, further, it has long been held that a creditor of the firm is himself entitled to obtain payment from the estate of the deceased (y); even although he may have taken as a security for his debt a bond or covenant binding the partners jointly. (2) Bishop v. Thus, in Bishop v. Church (a), two partners borrowed 2000l., for which they afterwards gave their joint bond. One of them then died, and the other became bankrupt. A Church. bill was filed by the creditor for payment of the bond out of the estate of the deceased partner; and it was held that his estate continued liable notwithstanding that it was discharged at law, the bond being joint and not joint and several. In this case, it was also held that the bond ought to be treated as joint and several so as to make the estates of the deceased partner liable as for a specialty debt and not as for a simple contract debt, as would have been the case without the bond, (b) In Beresford v. Browning (c), now the leading case on this subject, four partners agreed that on the death of any of Beresford v. them the survivors should not be bound to pay out his Browning. capital at once, but should pay it by certain instalments, as ascertained at the last preceding stock-taking. The agreement did not *purport to bind the survivors jointly and severally. *371 But it was held that, even if they were at law bound only jointly, they were liable in equity severally as well as jointly; for the agreement was nothing more than an arrangement for carrying out a pre-existing joint and several liability. Nor, if the creditor sues the surviving partners and obtains judgment against them, will he be therefore precluded from Effect of judgproceeding to enforce his original claim against the es (y) Hoare v. Contencin, 1 Bro. C. C. 27, shows that this was not always the case. (z) See, in addition to the cases cited in the next few notes, Primrose v. Bromley, 1 Atk. 90; Darwent v. Walton, 2 Atk. 510; Lane v. Williams, 2 Vern. 292; and see Sleech's case, 1 Mer. 539; Devaynes v. Noble, 2 R. & M. 495, and the cases there commented on; Smith v. Smith, 3 Giff. 263. The cases only relate to mercantile partnerships, but quære if there is any difference in this ment. respect between them and other partnerships. (a) 2 Ves. S. 100 and 371. Simpson v. Vaughan, 2 Atk. 31, is a very similar case. (b) The following cases are to the same effect as Bishop v. Church, viz., Simpson v. Vaughan, 2 Atk. 31; Thomas v. Frazer, 3 Ves. 399; Burn v. Burn, ib. 573; Orr v. Chase, 1 Mer. 729, Appendix. (c) 20 Eq. 564, and 1 Ch. D. 30. |