interfere with or act in the business of the association, which is confined exclusively to the board of managers." They have a right to inspect the subscription-list book, but no general right to inspect the books and papers of the association." The members of a limited partnership may deal with it as stockholders may with a corporation; may claim as creditors against its assigned estates; and are entitled to receive a proportionate share of the fund with the other creditors."

46. Liability of Members. - When the association is legally formed, members who have paid in their subscriptions in full are not liable to creditors of the association if its assets be insufficient to satisfy their claims; and members who have not paid in their subscriptions are liable only for the amount remaining unpaid." The act further directs that no execution shall be issued against any member, except upon an order of the court or of a judge thereof in which the suit was brought, and then only upon inquiry into the facts; and that the association shall keep a subscriptionlist book for the purpose of supplying the necessary information, which shall be open to inspection by creditors and members at all reasonable times.

When a member contributes real estate, subject to an encumbrance which he agrees to pay, the value of the encumbrance, on his failure to pay it, is to be treated as an unpaid cash subscription, for which he is liable." This immunity, however, can be claimed only when the association has been organized and has prosecuted its business in accordance with the requirements. Any substantial defect in the organization or violation of the duties imposed upon it by law will prevent its becoming or remaining a limited partnership, with the liabilities incident to such an association. Thus, the members will be liable as general partners for all the debts of the association, if the certificate contain untrue statements," if the association attempt to transact business

69 Act Pa., June 2, 1874, P. L. 271. 70 12 W. N. Cas. (Pa.) 452 (1882). 71 151 Pa. 558 (1892).

72 Act Pa., June 2, 1874, P. L. 271, Sec. 2. 73 157 Pa. 93 (1893).

744 Pa. Supr. Ct. 106 (1897).

before any of the capital is paid in," if the schedule of the property contributed be not sufficient to enable a creditor to properly estimate the value of the property," or if no subscription-list book be kept as required by law."

A mere failure to comply literally with the provisions of the statute will not destroy the immunity of the members from liability, if the compliance be substantial. For instance, a failure to record the articles of association before the commencement of negotiations, which resulted in a contract after the recording of the articles, will not render the members of the association liable as individuals or as general partners for goods delivered under the contract."

Where the organization is defective, one, who buys an interest in the concern months afterwards and honestly puts his money into its business, cannot be relieved, but will be liable as a general partner. Like one buying into an ordinary mercantile partnership, he is bound to inquire into the organization and condition of the concern in which he invests his money." But the penalty imposed for attempting to incur a greater liability than five hundred dollars without writing signed by two managers is imposed by the statute only on those who are guilty of the violation; and, the act of a single manager in disregard of this provision will not extend the liability of the other members of the association."° A limited-partnership association is liable for the wrongful acts which it expressly or impliedly authorizes. But its members and officers are not personally responsible for such acts, unless they participate in them."

47. Dissolution and Winding Up. - A limited-partnership association may be dissolved whenever the period fixed for its duration expires, or whenever by a vote of majority in number and interest the members shall so determine. Notice of the dissolution must be given by publication."2

75 195 Pa. 58 (1900).

76 94 Pa. 249 (1880); 160 Pa. 85 (1894).

77 177 Pa. 270 (1896).

78 163 Pa. 487 (1894).

79 127 Pa. 145 (1889).

8064 Fed. Rep. 309 (1894).

81 149 Pa. 29 (1892).

82 Act Pa., June 2, 1874, P. L. 271, Sec. 8.

In case of dissolution by voluntary action, three liquidating trustees, only two of whom can be managers of the association, must be elected. The members may enter into a special agreement as to the value of their respective interests for voting for these trustees. If they cannot agree, the court may appoint." These trustees have full power to settle the affairs of the association, and distribute its assets among the members after payment of its debts, under the direction of the court." The liquidating trustees are entitled to credit for salaries paid to persons employed in the management and care of the business; and, a member who serves as a liquidating trustee is entitled to compensation for his services.

85

On dissolution, the assets are to be distributed as follows: (1) To the payment of all debts for wages of labor; (2) to the satisfaction of the other liabilities and indebtedness of the association; (3) among the members in proportion to their respective interests."

832 Dist. Rep. (Pa.) 826 (1893).

84 Act Pa., May 10, 1889, P. L. 183, Sec. 2.

85 157 Pa. 630 (1893).

86 Act Pa., June 2, 1874, P. L. 271, Sec. 9.

THE LAW OF CORPORATIONS

(PART 1)

NATURE AND KINDS

DEFINITION

1. A corporation is an artificial person created by law, consisting of one or more natural persons united in one body under such grants as secure a succession of members without changing the identity of the body, and empowered to act in a certain capacity, or to transact business of some designated form or nature like a natural person.'

We have seen that artificial persons are such as are created and devised by human laws for the purpose of society and government, and that they are called corporations, or bodies politic,' which derive their existence and powers from legislation. The word person when used in a public statute includes artificial as well as natural persons, unless it clearly appear in the context that the term has been used in a more limited sense.'

Our definition is enlarged in its scope and comprehensive. By various constitutional and statutory provisions definitions are given which, while not differing materially, serve to more fully explain the status of a corporation. Thus, a corporation is called a creature of the law, having certain

1 Stand. Dict.

21 Black. Comm. 123; see The Law of Personal Rights.

38 Wheat. (U. S.) 465 (1823).

For notice of copyright, see page immediately following the title page