partner or partners the right to dissolve the partnership if the excess be not returned upon notice.

Sometimes each partner is obligated that he will not endorse a note or become surety for another without the consent of his partners, for by so doing he is liable by becoming insolvent to work a dissolution of the partnership.

Any other provisions peculiar to the case should also be inserted.

452. Kinds of Partners.-Partners may be, (1) real or ostensible, (2) dormant or concealed, (3) nominal, (4) limited or special.

A real or ostensible partner is one who is published as a partner and in fact is a partner accepting all the benefits and risks of the partnership.

A dormant or concealed partner is sometimes called a silent partner. He is not published to the world as a partner but in fact is one. Being unknown as a partner, he is in a position to share the profits of a prosperous business and to avoid personal responsibility in case of failure. Should his position be discovered he becomes a real partner and is liable as such whether creditors trusted the partnership on his account or not.

A nominal partner as the name implies is a partner in name only. His name appears in the business but in reality he has no interest in it. Persons of influence often lend their credit in this way to near relatives. He does not share the profits but in case of failure he is liable for the debts of the partnership in the same manner as if he were a real partner. In fact he is a partner so far as third persons

are concerned,

A special or limited partner is one whose liability is limited by the amount of his investment. He is solely a creature of statute being unknown to the common law.

453. Who May be Partners.-Those who are competent to contract generally may become partners. In states where the statutes have given to married women the right to contract she can also become a partner especially with the consent of her husband.

454. Firm Name.—It is usual for the partners to fix upon a firm name or title by which they will be known. The law gives them the greatest latitude in this regard. They may choose the name of one of the partners or they may go outside and adopt a name that does not include the name of any partner.

Sometimes states by statute forbid the addition of & Co. when it does not represent some one. All suits at law must be brought in the names of the individuals composing the firm.

455. Duration of Partnership.-The partnership being formed by the voluntary consent of the partners they may fix the period of its duration and in many cases do so. If no limit is fixed upon, it exists at the pleasure of any partner who may terminate it by withdrawal. While its duration may not be expressly stated yet it may be implied from the circumstances, as where the partnership appears to have been formed for a single transaction.

The partnership may exist for the life of the parties, but it requires an express stipulation to continue it beyond the death of either partner. In no such case will its continuation beyond the death of any partner be presumed.

456. How Property Held in Partnership.-Partnership property is held jointly. Each partner owns an undivided part, and each is entitled to the possession of every parcel. Neither can say this is my part and that is his. They are joint tenants without the right of survivorship. (See sec. 21.) Partnership further differs from joint tenancy in that a joint tenant cannot dispose of the interest of the other, while in partnership each partner has the power to dispose of the entire property. In case the partnership property be real estate, purchased by partnership funds for partnership purposes, it is firm property, and liable for the firm debts, but if not so purchased and held it belongs to the partners individually. In firm real estate the widow of a partner has no dower until the firm debts are paid. In case of the sale of real estate held by the firm, each member of the firm must join in the conveyance, by signing his name and affixing his private seal.

457. Losses and Gains. It has been said that sharing in the gains and losses is one of the first tests of the existence of a partnership, for no real partnership can exist that does not consider the element of profit. The partners usually determine in their agreement how and in what proportion the gains and losses shall be divided, but in the absence of any such agreement, the law presumes that they are to share equally, notwithstanding their investments may appear to be very unequal. But the fact that a person receives a portion of the profits will not alone make him a partner. This will depend

upon the circumstances of each case, considering the intention of the parties and the way in which the alleged partner was held forth to the public. For as we observed in agency, which partnership much resembles, individuals may not be partners as between themselves, yet as to third persons they may be. The question frequently arises when a clerk or agent is employed upon an agreement, that his services shall be compensated for, not by a fixed salary, but by a share of the profits. Unless the agreement gives him an interest in the capital stock, and the right to an accounting, he is not a partner, and cannot be held as such.

It may be agreed that a partner shall share in the profits, but will not be liable for the losses. This agreement is valid as between themselves, but like all such agreements, it will not be binding upon third persons who have no knowledge of it. If the creditor knew of this agreement at the time of extending the credit, he is bound by it.

CHAPTER XXXVIII.

PARTNER'S AUTHORITY AND LIABILITY.

458. General Rule of Authority and Liability. It is a general rule that the firm and all its members are bound by the acts and the contracts of one partner, while acting within the scope of the partnership business. This power of one to bind all arises from the agency which all confer on each other. It also rests upon the community of interest whereby each partner owns the whole in common with all the others.

459. Scope of Business.-Every partnership is created for transacting a certain kind or kinds of business. Outside of this a partner has no power to bind the firm. Third persons dealing with the firm are supposed to take notice of the nature and scope of the business before extending to the firm any credit, and hence a partner who acts in a matter entirely outside of this, does not bind the firm. Thus, a firm organized for the purpose of conducting a wholesale jewelry business would not be bound by one partner who agrees to purchase. in the firm name a stock farm.

460 Partners May Bind the Firm. The firm is responsible for any acknowledgments, admissions, or representations of a partner transacting partnership business. Any fraud he may commit in such matters will bind the firm, for they have held him out as a person worthy of confidence, and besides, they must share in any profits arising out of such fraud. One partner may compromise a debt either owing to or by the firm, and he may also assign firm property in satisfaction of firm debts. Each partner may make or endorse negotiable paper for the firm. He may also sell and transfer the entire partnership assets. He may borrow money in the firm name, but if the partnership name be the name of one partner, a note signed by him is presumed to be his individual note, and the contrary must be shown. It matters not that money borrowed in the firm name by a partner was misapplied by him, the firm will still be bound.

461. Partners Cannot Bind the Firm.-A partner cannot bind his copartners by submitting a partnership question to arbitration; neither can a partner give the firm paper in payment of his individual debt. It has also been held that a partner cannot apply the firm's funds to the payment of his own debts. Outside of a special authority a partner cannot bind the firm by becoming surety for another. One partner cannot bind his copartners by contracts under seal. It is not altogether settled whether one partner can make a general assignment of firm assets for the benefit of firm creditors, but the weight of authority seems to be in favor of it.

462. Relations to Each Other.- While a partner may make many contracts that will be binding on the firm, yet if they suffer any loss from his gross negligence or fraud, he will be liable to the other partners. So if he violate any of the provisions of the partnership agreement, he is liable. It might easily be inferred from this that the partners may make any agreement they choose, limiting the power of each partner to bind the others, but such an agreement is void as to third persons who have no knowledge of it.

In the absence of an agreement to the contrary, each partner is bound to devote his best skill and endeavor to the interests of the copartnership, and he cannot make a charge for so doing. He should never permit a private interest to be at variance with the joint interest, or engage in competition with the joint business. If he steps in and appropriates firm business to himself, the profits will belong to the firm.

463. A Partner's Liability.-The partners cannot, by an agreement among themselves, release each other from a personal responsibility for firm debts. The firm assets are first liable for the firm debts, after which the partners are individually responsible for the full amount of the indebtedness. If in an insolvent firm of three members two have no property beyond their interest in the firm, and the third is wealthy, he will be obliged to pay the debts of the firm.

A somewhat difficult question arises when a partner is engaged in business outside of the firm, and becomes insolvent. His private creditors may seek to attach or levy upon his interest in the partnership. The general rule is that their claim will be postponed to the claim of the firm creditors. Hence, if the firm be also insolvent, there will be nothing remaining of the firm's assets for the individual creditors. This rule is said to exist, not because the firm creditors have a superior right to the preference, but because of the equity existing between the partners. If the individual creditors be allowed to withdraw a partner's interest, this would leave more of the firm debts to be paid from the private funds of the remaining partners. It would be in effect requiring these partners to pay the insolvent partner's private debts.

A common rule is that in levying an execution against one partner for his private debt, the sheriff may take possession of the entire joint property to invoice it, but he cannot divide it. He can only sell the partner's interest in it, but cannot deliver exclusive possession, for the debtor himself had no such right. The purchaser becomes a tenant in common with the remaining partners, and holds his share in any case subject to an accounting between the parties.

There is much diversity of opinion and practice as to the method to be pursued in this case, and we have only attempted to give above one method of procedure. The student should consult the decisions of the courts of his own state before acting.

That the partnership assets are reserved for the firm creditors, is the universal rule, but whether the private assets are reserved for the private creditors is not so well settled. The latter is the law in Illinois and in many other States.