CHAPTER XXX.

PARTNERS.

I. What is necessary to constitute a Partnership,..

II. How far the Acts of one Partner are binding on his
Co-partners,

III. Of Actions by and against Partners,

IV. Evidence,

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I. What is necessary to constitute a Partnership.

In order to constitute a complete partnership, as well between the parties as in respect to strangers who may deal with them, a communion of participation of profits and loss is essential (a). The shares of the parties must be joint, though it is not necessary that they should be equal. If the parties be jointly concerned in the purchase, they must also be jointly concerned in the future sale, otherwise they are not partners. A., for himself and his two partners (who were general merchants), B., for himself and partner (who were oil-merchants), C., for himself and son (who were also oilmerchants), agreed to purchase jointly as much oil as they could procure, on a prospect that the price of that commodity would rise. A. was to be the ostensible buyer, and the others were to share in his purchase, at the same price which he might give. A. and Co. were to have a half, B. and Co. a quarter, and C. and Co. the remaining quarter. In pursuance of this agreement, A. and Co. ordered a broker to buy quantities of oil. The broker accordingly bought several ship-loads, and among the rest a ship-load from the plaintiffs. To some of the vendors, (not plaintiffs in this action,) B. and Co., and C. and Co., during the treaty, declared it to be a common concern between them and A. and Co.; but, with respect to the plaintiffs, the purchase was made in the name of A. and Co. only, without any notice that the other defendants had any concern in it. The majority of the court, viz. Heath, J., Gould, J., and

(a) A distinction must be observed between an actual partnership, and those cases in which there is only an inchoate right of partnership, which may or may

not be completed at the option of the intended partners. See Fox v. Frith, 10 M. & W. 131; and Gabriel v. Evill, 9 M. & W.298.

Lord Loughborough, C. J., were of opinion that B. and Co. and C. and Co. were not to be considered as partners with A. and Co., on the ground that there was no communion of profit and loss. Each party was to have a distinct share of the whole; the one to have no interference with the share of the other, but each to manage his share as he judged best. The profit or loss of the one might be more or less than that of the other (b). So a member of a provisional committee of an intended railway company has been held not to be liable for contracts entered into, without his assent or authority, by other members of the committee, upon the ground that the intended association did not amount to a partnership, there being no communion of profit and loss (c). But in such a case it is a question for the jury whether the defendant authorized the company's solicitor, or secretary, or any member of the committee, to hold him out to the world as personally responsible for the reasonable and necessary expenses incurred in forming such a company, and on its behalf; and then whether the credit was given on the faith of his being so personally responsible (d.

Where the executors of a deceased partner continued his share of the partnership property in trade for the benefit of his infant daughter; it was held, that they were liable upon a bill drawn for the accommodation of the partnership, and paid in discharge of a partnership debt; although their names were not added to the firm, but the trade was carried on by the other partners under the same firm as before, and the executors, when they divided the profits and loss of the trade, carried the same to the account of the infant, and took no part of the profits themselves (e).

A father, established in business, on his son's coming of age, told him he should have a share in it, and held him out to the world as his partner; the son acted as such for several years, but the particular share which the son was to have, was not settled: it was held, that as there was a partnership as between the parties and the rest of the world, the presumption of law was, that they were partners inter se; that this presumption not having been repelled, the son, though not entitled to a moiety, was entitled to a share of profits; but it was left to the jury to consider what was a fair and just proportion for the father to give, and the son to expect: the jury found that the son was entitled to a fourth part of the profits (f). Where an infant held himself out as in partnership with I. S., and continued to act as such till within a short

(b) Coope and others v. Eyre and others, 1 H. Bl. 37.

(c) Reynell v. Lewis, 15 M. & W. 517. See also Bright v. Hutton, 3 H. L. Cas. 241.

(d) Baillie v. Macaulay, 13 Q. B. 815; S. C. 19 L. J., Q. B. 73; Higgins v. Hopkins, 3 Exch. 163; S. C. 18 L. J., Exch.

113; Landman v. Entwistle, 7 Exch. 632; S. C. 21 L. J., Exch. 208.

(e) Wightman v. Townroe, 1 M. & S.

412.

(f) Peacock v. Peacock, 2 Campb. 45; but see Andrews v. Pugh, 24 L. J., Chan. 58.

period of his coming of age, but there was no proof of his doing any act as a partner after twenty-one; it was held, that it was his duty to notify his disaffirmance of the partnership on arriving at the age of twenty-one; and, as he had neglected to do so, that he was responsible to persons who had trusted I. S. with goods subsequently to the infant's attaining twenty-one, on the credit of the partnership (g).

In respect of creditors, he who takes a moiety of all the profits indefinitely, shall, by operation of law, be made liable to losses, if losses arise; upon the principle, that, by taking a part of the profits, he takes from the creditors a part of that fund which is the proper security to them for the payment of their debts. "Traders," said Tindal, C. J., " become partners between themselves by a mutual participation of profit and loss; but as to third persons they are partners if they share the profits of a concern; for he who receives a share of the profits receives a part of that fund upon which the creditors of the concern have a right to rely for payment; and is, therefore, to be made liable to losses although he may have expressly stipulated for exemption from them" (h). Upon the same principle creditors of a trader who have signed a deed of arrangement have been held liable for debts incurred by the trustee under the deed in carrying on the business (i). A. and B., ship-agents at different ports, entered into an agreement to share, in certain proportions, the profits of their respective commissions, and the discount on tradesmen's bills employed by them in repairing the ships consigned to them, &c. It was, however, expressly stipulated between A. and B., that they were not to be answerable for each other's losses. It was held, that although, with respect to each other, these persons were not to be considered as partners under this agreement, yet they had made themselves such with regard to all persons with whom either contracted as ship-agent (k). The distinction taken in the preceding case as to an agreement not constituting a partnership as between the parties themselves, though it may have that effect, quoad third parties, was recognized in the following case:-A., having neither money nor credit, offered to B., that if he would order with him certain goods to be shipped upon an adventure, if any profit should arise from them, B. should have half for his trouble: B. having lent his credit on this contract, and ordered the goods on their joint account, which were furnished accordingly, and afterwards paid for by B. alone; it was held that B. was entitled to recover back such payment in assumpsit against A., who had not accounted to him for the profits; such contract not constituting a partnership as between themselves, but

(g) Goode and Bennion v. Harrison, 5 B. & A. 147.

(h) Pott v. Eyton, 3 C. B. 39.

(i) Hickman v. Cox, 18 C. B. 618; S. C.

25 L. J., C. P. 277.

(k) Waugh v. Carver, 2 H. Bl. 235; Heyhoe v. Burge, 9 C. B. 431; S. C. 19 L. J., C. P. 243.

only an agreement for a compensation for trouble and credit, though B. was liable as a partner to third persons, creditors (4). But where two persons, who were never in partnership as general partners, concur in giving an order for an undivided parcel of goods, they are not, therefore, liable jointly to the seller, if, upon the whole of the transaction, the intention of the parties appears to have been that the buyers should be severally responsible for the amount of their respective interests in the goods (m).

A party paying a deposit on shares in a trading company, and afterwards signing the deed of partnership, is to be considered as a partner from the time of his paying the deposit (n). But in an action for goods and work applied in equipping a mine (the defendant being charged as one of the company concerned in working it), it was held, that the mere payment of deposits without any signature of a deed, or interference in management, was not enough to make the defendant liable, unless the jury believed, from the evidence, that an actual conveyance of an interest in the mine had been made to her (0). In Ralph v. Harvey, however, where a defendant was charged with a debt as partner in a mining company, it was held, that the fact of partnership might be shown by evidence short of strict proof that he had executed a deed of co-partnership, or was legally interested in the mine; and that declarations made by him, either before or after the debt was incurred, might be used for this purpose (p). So in Owen v. Van Uster (q), it was held to be sufficient evidence to prove a person to be a member of a trading company, that he and others had agreed to form a company, and that the business had been carried on upon the footing of that agreement. Maule, J., in his judgment, thus explains the case of Vice v. Anson: "In order to make Lady Anson liable it was necessary to prove that she was the person in whose behalf the expenses which were the subject of the action had been incurred. The proof relied upon was, that Lady Anson had said that she was a shareholder; but that was disposed of by showing that she made that admission under the false impression that she had a legal interest in the mine. That case by no means decides that persons cannot be shareholders in a mine except by having a legal interest in it. It only shows, that if there be no other way of proving a person to be a shareholder than by proving that he had a legal interest, that interest must be properly proved."

(1) Hesketh v. Blanchard, 4 East, 144. See also on this point Rawlinson v. Clarke, 15 M. & W. 592; and Caldicott v. Griffiths, 8 Exch. 898.

(m) Gibson v. Lupton and Wood, 9 Bingh. 297.

(n) Lawler v. Kershaw, 1 M. & Malk. 93.

(0) Vice v. Lady Anson, 1 M. & Malk. 96; 7 B. & C. 409. In Steigenberger v. Carr, 3 Scott's N. R. 471; 3 M. & Gr.

191; Tindal, C. J., says, "with respect to this case of Vice v. Lady Anson, I cannot think its doctrine will ever be extended: and certainly none of the subsequent cases place much reliance upon it.”

(p) Ralph v. Harvey, and Richards v. Harvey, 1 Q. B. 845.

(q) 20 L. J., C. P. 61. See also upon this point Thomas v. Clarke, 18 C. B. 662; S. C. 25 L. J., C. P. 309.

Where a mining company was formed, the capital to be 30,000l., in 3000 shares of 107. each, and 2000 shares only were actually subscribed for, of which the defendant took 100; it was held, that letters subsequently written by the defendant to the directors, requiring them to call a meeting for the purpose of changing a director, were evidence to go to the jury to show that he authorized the directors to proceed with the smaller amount of capital, so as to render him liable for the price of articles supplied for the use of the mines on the order of the directors (r). A project having been formed for the establishment of a company for the manufacturing of sugar from beet-root, a prospectus was issued, stating the proposed capital to consist of 10,000 shares of 251. each. The directors began their works, and entered into contracts respecting them, and manufactured and sold some sugar; but only a small portion of the proposed capital was raised, and only 1,400 out of the 10,000 shares were taken; it was held, that a subscriber, who had taken shares, and paid a deposit on them, was not liable upon such contracts of the directors without proof that he knew and assented to their proceeding on the smaller capital, or expressly authorized the making of the contract (s). The agreement to take shares in a concern which is to have a certain amount of capital is a conditional contract; that is, provided that that amount of capital is subscribed for, and unless that condition is waived the subscriber is not a shareholder in the sense of a person having agreed to take shares (t).

Where it was proved that A. had contributed to the funds of a building society, and had been present at a meeting of the society, and party to a resolution that certain houses should be built; it was held, that he was liable in an action for work done in building those houses, without proof that he had any actual interest in them, or in the land on which they were built (u). A merchant in London recommended consignments to a merchant abroad, and it was agreed that the commission on all sales of goods recommended by one house to the other should be equally divided, without allowing any deduction for expenses; it was held, that this was a participation in profit, and constituted a partnership between the parties quoad hoc (x). In 1820, W. advanced to A. and B., then carrying on business in partnership as brewers, the sum of 24,000l., and the three executed a deed, by the terms of which a partnership stock was created, in which they all had a joint property: W., however, was not to have any definite aliquot proportion of the profits, but was to have an account of the profits as between themselves, so as to get 2,000l. or 2,4007. a-year, as the case might be, out of the clear profits: W.'s name never appeared to the

(r) Tredwen v. Bourne, 6 M. & W. 461. See Dickenson v. Valpy, 10 B. & C. 128; Hawken v. Bourne, 8 M. & W. 703; and Peel v. Thomas, 15 C. B. 714; S. C. 24 L. J., C. P. 86; and see ante, p. 1150. (s) Pitchford v. Davis, 5 M. & W. 2.

(t) See Galvanized Iron Company v. Westoby. 8 Exch. 17; S. C. 21 L. J., Exch. 302.

(u) Braithwaite v. Skofield, 9 B. & C. 401.

(x) Cheap v. Barclay, 4 B. & A. 663.