one of the partners could then insist that the property should be applied first to the satisfaction of the joint debts, for his interest in the partnership and its assets had ceased. Unless therefore, the conveyances

of the partners in this case and the act of fusion were fraudulent, the bank of which the complainant is receiver has no claims upon the property now held by the New Orleans and Carrollton Railroad Company, arising out of the facts that it is a creditor of the partnership, and was such a creditor when the property belonged to the firm."

Question 619: In what way may the right of the partnership creditor to subject the partnership assets to the payment of his debt be lost?

Case 620. Ex parte Sillitoe, Glyn & Jameson's Reports 382.

"The rule is that a partner in a firm, against which a commission in bankruptcy issues, shall not prove in competition with the creditors of the firm who are in fact his own creditors; shall not take part of the funds to the prejudice of those who are not only creditors of the firm, but of himself."

Question 620: The firm of M, N and O owes debts to A, B and C and to O, the debt to O being for money loaned. The firm becomes bankrupt, O puts in his claim. Will the Court allow it? Why?

PART V

DISSOLUTION OF PARTNERSHIPS

Chapter 75. Dissolution by Lapse of Time, Agreement

and Transfer of Partner's Interest.

Chapter 76. Death of Partner.

Chapter 77. Dissolution by Bankruptcy Proceedings and by Judicial Decree.

CHAPTER 75

DISSOLUTION BY LAPSE OF TIME, AGREEMENT

AND TRANSFER OF PARTNER'S INTEREST

§ 625.

The accounting between the partners and distribution of assets.

§ 620. (Partnerships, Sec. 61.)

(Note: Partnerships may be dissolved:

1. By act of the parties:

(1) By lapse of time and accomplishment of object. (2) By mutual agreement of the partners.

(3) By a transfer by a partner of his interest.

2. By act of law:

(1) Death of the partner.

(2) Bankruptcy of the partner.

3. By judicial decree:

(1) On account of internal dissensions.

(2) On account of partner's incapacity.

(3) On account of partner's misconduct.

(4) On account of financial failure of the enterprise.)

§ 621. (Partnerships, Sec. 62.) Dissolution by lapse of time or accomplishment of object.

Case 621. Howell v. Harvey, 5 Ark. 270.

Point Involved: Whether a party in a partnership at will is entitled to withdraw without notice.

LACY, J.: "In the present case the partnership was to continue during the pleasure of the contracting parties. It is therefore strictly a partnership at will, and subject to the rules that govern such agreement. Chancellor Kent says, that it is an established principle of the law of partnership, that if it be without any definite period, any party may withdraw at a minute's notice when he pleases and dissolve the partnership. The existence of engagements with third persons will not prevent the dissolution though their engagements will not be affected by the act. He admits that cases may occur where reasonable notice might be advantageous, but he holds it not to be requisite, and he adds that a party may, in a case free from fraud, choose an unreasonable time for the dissolution. The exception he makes in a case of fraud indicates to our minds that the rule is not so unbending or universal, as it is laid down, unless the limitation is intended to include those cases where the renunciation is made in good faith and at a proper time. As a general principle, contracts subsisting during pleasure, are naturally and necessarily dissolvable by the mere exercise of the will of either of the parties; and this is the principle according to the civil law under ordinary circumstances, and to such an extent is it carried that a positive stipulation against the dissolution at the will of either of the parties will be held utterly void, as inconsistent with the true nature and intent of such relation. In cases of equity, we think the true rule to be this, that to enable one partner to dissolve at will the partnership, two things must occur; first, the renunciation of the partnership must be in good faith, and sec

ondly, it must not be made at an unreasonable time.

Question 621: Where a partnership may be dissolved at will, what notice must either party desiring to withdraw give the other?

Case 622. Brown v. Leach, 178 New York Supplement, 322.

"(1) A. B. Leach & Co. became joint adventurers with the plaintiff in the enterprise, and A. B. Leach & Co. could not exclude the plaintiff from the enterprise for the purpose of securing the entire benefit of the profits to itself. A joint adventure is subject to the same rules as a technical partnership. Where the partnership has for its object the completion of a specified piece of work, or the effecting of a specified result, it will be presumed that the parties intended the relation to continue until the object has been accomplished. Until that time arrives one partner cannot terminate the partnership and continue the enterprise for his own benefit, nor can one partner exclude the other without his consent. It may be terminated at any time by consent, but the consent must be mutual. Hardin v. Robinson, 178 App. Div. 724, 729, 162 N. Y. Supp. 631, affirmed 223 N. Y. 651, 119 N. E. 1047. When A. B. Leach notified the plaintiff that he had elected to terminate the adventure, and that either party was free to go on with the enterprise, plaintiff protested, and specifically and repeatedly notified A. B. Leach that he could not use the incident of the termination of the option to eliminate the plaintiff from the situation and proceed with the matter for his sole profit.

"Leach first attempted to put the plaintiff in default by refusing to indorse the note for $100,000, and then demanding that plaintiff advance the $100,000, then notifying the plaintiff that he refused to exercise the option, and significantly stating that either party could continue the matter; then Levering, by representing that Leach was definitely out of the matter, and that he must

take up the matter with other parties, which was impossible while the agreement with plaintiff was outstanding, obtained from plaintiff a release therefrom. We find Levering, as soon as he could locate Leach, resuming negotiations. Not content to await Leach's return to the city, Levering follows him to his golf club, on Sunday, and exhibits to him the release that he has induced the plaintiff to sign, and then resumes the enterprise, with the understanding that Leach alone should receive the profit.

"(2) It is a well-settled rule that copartners and joint adventurers owe the duty of utmost good faith to their copartners and coadventurers, and that until the copartnership is terminated or joint adventure is abandoned a copartner or joint adventurer cannot act for himself. If he does, and thereby obtains for himself the benefits that otherwise would accrue to the partnership or joint adventurers, he will be held liable in equity to account to his copartner or coadventurers. May v. Hettrick Brothers Co., 181 App. Div. 3, 13, 167 N. Y. Supp. 966; Stem v. Warren, 185 App. Div. 823, 831, 174 N. Y. Supp. 30.

"It is my opinion that A. B. Leach did not observe that good faith with the plaintiff that the law requires of coadventurers, and that with full knowledge of the conditions, and with the sole design of excluding the plaintiff from participation in the profits of the enterprise, which the report of the engineer showed to be reasonably certain, he ostensibly withdrew from the enterprise, knowing full well, not alone that without his assistance the plaintiff could not carry out the contract of June 27, 1917, but also that, in the limited time between the notification of his withdrawal and the day when large payments must be made upon the properties of the Island Oil & Transportation Corporation, Levering would be unable to arrange with others to finance the corporation; that his refusal to go on with the enterprise was for the purpose of eliminating plaintiff from participation in the profits and securing them for himself.