between partners, and of the displeasure with which it ARTICLE III. MUTUAL OBLIGATIONS OF PARTNERS. SECTION 2435. Profits of individual partner. 2436. In what business partner may not engage. 2437. In what he may engage. 2438. Must account to firm for profits. 2435. All profits made by a general partner, in Profits of individual the course of any business usually carried on by the partner. partnership, belong to the firm. NOTE.-Russell vs. Austwick, 1 Sim., p. 52; Parsons on Partnership, p. 233, et seq. In what business partner may not 2436. A general partner, who agrees to give his personal attention to the business of the partnership, may not engage in any business which gives him an engage. interest adverse to that of the partnership, or which prevents him from giving to such business all the attention which would be advantageous to it. NOTE.-Parsons on Partnership, p. 237; Lock vs. Lynam, 4 Ir. Eq., p. 188; Glassington vs. Thwaites, 1 Sim. & Stu., p. 124; England vs. Curling, 8 Beav., p. 129; Russell vs. Austwick, 1 Sim., p. 52; Long vs. Masestre, 1 Johns. Ch., p. 305; Law vs. Cross, 1 Black, U. S., p. 533; Caldwell vs. Lieber, 7 Paige, p. 483; Burton vs. Wookey, 6 Madd., p. 367. 2437. A partner may engage in any separate business, except as otherwise provided by the last two sections. NOTE.-Caldwell vs. Lieber, 7 Paige, p. 483; Ship 2438. A general partner transacting business contrary to the provisions of this Article may be required In what engage. he may Must account to firm for profits. by any copartner to account to the partnership for the profits of such business. NOTE.-Russell vs. Austwick, 1 Sim., p. 52; Fawcett vs. Whitehouse, 1 Russ. & M., p. 132; Hichens vs. Congreve, 1 Russ. & M., p. 132; Parsons on Partnership, p. 236. ARTICLE IV. Liability of partners to third persons. Liability for each LIABILITY OF PARTNERS. SECTION 2442. Liability of partners to third persons. 2443. Liability for each other's acts as agents. 2444. Liability of one held out as partner. 2445. No one liable as partner unless held out as such. 2442. Every general partner is liable to third persons for all the obligations of the partnership, jointly with his copartners. NOTE.-Parsons on Partnership, p. 63. 2443. The liability of general partners for each other's acts other's acts is defined by the Title on Agency. as agents. Liability of one held out as partner. NOTE. The law regulating the liability of partners is a mere branch of the law of agency.-Ernest vs. Nicholls, 6 H. of L. Cas., p. 417; Cox vs. Hickman, 9 C. B. (N. S.), pp. 47, 98. 2444. Any one permitting himself to be represented as a partner, general or special, is liable, as such, to third persons to whom such representation is communicated, and who, on the faith thereof, give credit to the partnership. NOTE. That one may be liable as a partner who is not so in fact if he permits himself to be held out to the world as such is an undoubted rule of law. "The reason is obvious; any person may lend his credit to another, as he may lend his money or property, and if he chooses to lend his credit or responsibility he must, of course, abide by the consequences of any contracts made on the faith of it."-Parsons on Partnership, p. 122; Story on Partn., Secs. 64, 65; Griswold vs. Waddington, 15 Johns., p. 57; Stearns vs. Haven, 14 Verm., p. 540; Whitman vs. Leonard, 3 Pick., p. 177; Ed mundson vs. Thompson, 2 Fost. & Fin., p. 564; Reber p. 520. 2445. No one is liable as a partner who is not No one such in fact, except as provided in the last section. liable as partner unless held out NOTE. A peculiar rule has long been established at as such. common law by which any one receiving or voluntarily acquiring a right to receive a share of the net profits of a partnership business is liable to third persons as a partner, whether they were aware of the fact or not.Smith vs. Wright (Ct. of Appeals), 1 Abb. Pr., p. 243; Fitch vs. Hall, 16 How. Pr., p. 175; Wood vs. Vallette, 7 Ohio St., p. 172; Grace vs. Smith, 2 W. Blacks., p. 998; Waugh vs. Carver, 2 H. Blacks., p. 235; Cheap vs. Cramond, 4 B. & Ald., p. 663. But this rule is most earnestly condemned by the best writers on the subject (Story on Partn., Sec. 36; Lindley on Partn., p. 40, and note); and has been declared to be a bad rule by eminent Judges.-See French vs. Styring, 2 C. B. (N. S.), p. 362; Cox vs. Hickman, 9 id., p. 63; 3 id., p. 544. A mere agreement for a share in the gross receipts of a business (Story on Cont., Sec. 207; Lindl. on Partn., p. 38; Pattison vs. Blanchard, 5 N. Y., p. 186; see Heyhoe vs. Burge, 9 C. B., p. 431); or for a compensation for services (Vanderburgh vs. Hall, 20 Wend., p. 70; Rawlinson vs. Clarke, 15 M. & W., p. 292; Pott vs. Eyton, 3 C. B., p. 32; Loomis vs. Marshall, 12 Conn., p. 69; Burckle vs. Eckhart, 3 N. Y., p. 132; 1 Den., p. 337; Brockway vs. Burnap, 16 Barb., p. 309), or the use of property (Heimstreet vs. Howland, 5 Denio, p. 68), to be equal to a specified proportion of the profits (Denny vs. Cabot, 6 Metc., p. 82; Ex parte Hamper, 17 Ves., p. 404), does not create a partnership liability. The rule stated at the head of the note is abolished by the Code, and henceforth only partners and persons brought within the rule of Sec. 2444 are to be held liable for the engagements of a firm. ARTICLE V. Duration of partnership. Total dissolution TERMINATION OF PARTNERSHIP. SECTION 2449. Duration of partnership. 2450. Total dissolution of partnership. 2451. Partial dissolution. 2452. Partner entitled to dissolution. 2454. Notice by change of name. 2449. If no term is prescribed by agreement for its duration, a general partnership continues until dissolved by a partner or by operation of law. NOTE.-See Sec. 2450. 2450. A general partnership is dissolved as to all of partner the partners: ship. Partial dissolution. 1. By lapse of the time prescribed by agreement for its duration; 2. By the expressed will of any partner, if there is no such agreement; 3. By the death of a partner; 4. By the transfer to a person, not a partner, of the interest of any partner in the partnership property; 5. By war, or the prohibition of commercial inter- NOTE.-Subd. 1.-Parsons on Partnership, p. 395. Subd. 4.-Heath vs. Sansom, 4 B. & Ad., p. 175; Johnson vs. Evans, 7 M. & G., p. 240; Habershon vs. Blurton, 1 De G. & Sm., p. 121; Nerot vs. Burnand, 4 Russ., p. 247; Marquand vs. N. Y. Manufacturing Co., 17 Johns., p. 525; Mumford vs. McKay, 8 Wend., p. 442. Subd. 5.-Griswold vs. Waddington, 16 Johns., p. 490. 2451. A general partnership may be dissolved, as to himself only, by the expressed will of any partner, notwithstanding his agreement for its continuance, sub ject however to liability to his copartners for any damage caused to them thereby, unless the circumstances are such as entitle him to a judgment of dissolution. NOTE.-Skinner vs. Dayton, 19 Johns., pp. 513, 538; see Marquand vs. N. Y. Mfg. Co., id., p. 525; Bagley 2452. A general partner is entitled to a judgment Partner of dissolution: 1. When he, or another partner, becomes legally incapable of contracting; 2. When another partner fails to perform his duties under the agreement of partnership, or is guilty of serious misconduct; or, 3. When the business of the partnership can be carried on only at a permanent loss. NOTE.-Subd. 1.-Jones vs. Noy, 2 Myl. & K., p. 125; Leaf vs. Coles, 1 De G., M. & G., p. 171. But in Anon, 2 Kay & J., p. 441, it was held that insanity was not a sufficient ground for dissolution, unless it was shown to be probably permanent. Subd. 2.-It has been held that slight cause is sufficient to warrant a dissolution (Bishop vs. Breckles, Hoffm., p. 534); but the contrary has been ruled in several cases.-Anderson vs. Anderson, 25 Beav., p. 190; Goodman vs. Whitcomb, 1. Jac. & W., pp. 569, 592; see Eagle Fire Ins. Co. vs. Caminet, 2 Edw. Ch., p. 127. Subd. 3.-Jennings vs. Baddelay, 3 Kay & J., p. 78; see Harrison vs. Tennant, 21 Beav., p. 482; Reeve vs. Parkins, 2 Jac. & W., p. 390; Beaumont vs. Meredith, 3 Ves & B., p. 180; Buckley vs. Cater, 17 Ves., p. 15; Pierce vs. Piper, id., p. 1. entitled to dissolution. Notice of termina 2453. The liability of a general partner for the acts of his copartners continues, even after a dissolu- tion. tion of the copartnership, in favor of persons who have had dealings with and given credit to the partnership during its existence, until they have had personal 14-vol. ii. |