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already sufficiently sustained by the foregoing authorities, we may refer more at length to the judgment of the court in the case of Fereday v. Wightwick. From the report of that case it appears that six persons had taken a lease for years of mines, and also another lease of the surface of the property, and had worked the mines as a joint concern. One of them mort gaged his interest or share for money borrowed, and then became bankrupt, at which time he was greatly indebted to the concern, of which he had been the manager. A bill was filed by such of the original partners as continued to be interested in the concern, and by other persons who were either representatives of deceased original partners or claimed as purchasers of shares. The plaintiffs sought a decree directing the share of the partner who had become bankrupt to be applied in repaying the debt due from him to the partnership. The defendants, who claimed under the bankrupt partner, insisted that the common principles of partnership were not applicable to the case of mines, which were of the nature of real property. In deciding the case, the master of the rolls, Sir John Leach, said: "The mines and surface were used with a communion of expense and a communion of profit. The first question is, whether this is partnership property, liable to be sold and disposed of to pay the partnership debts; and wheth er a partner, having sold part of his share, his interest is to be considered subject, in the first place, to repayment of what is due from him to the partnership. This question is concluded by authority, but I am willing to decide it upon principle. Mining concerns are to some purposes trading concerns, but they are not so to all. They are not so in this particular, viz.: that they are not, as an ordinary partnership trade, subject to dissolution on the death or bankruptcy of any of the partners, and the shares are transferable without the consent of the partners. In these particular instances they have not all the incidents of a trading concern; in other respects, it has been repeatedly held that they have. Now, it is a universal principle in regard to all property, whether real or personal, acquired for the purpose of a partnership, that property so acquired is, upon the dissolution of the partnership, subject to sale and accounts between the partners, and to payment of the partnership debts; that is a universal principle. To apply the

rule to this particular case the property was acquired by these partners for the purposes of the partnership concern. Therefore, though in the nature of real property, it is subject to all the debts of the partnership, and subject to the debts of one of the partners incurred in the administration of the property. There can be no doubt, therefore, that the plaintiffs have a right to make this claim." Taml. 250; Coll. on Mines,

128.

In the case before us the plaintiff had a lien upon the partnership property for the debts due he creditors of the concern, and also for moneys advanced by him for its use, and such lien subsisted after the conveyance made by Burt to Depuy and Burrell, unless it was lost by reason of their having become purchasers in good faith, for a valuable consideration, without notice on their part of the existence of such lien. In their answer they claimed the benefits accruing to innocent purchasers in such cases.

It appears from the finding of the court that Depuy had actual notice at the time from Burt that he was in debt on the partnership account in a considerable sum, though it did not appear that Burrell had such notice. It also sufficiently appears that at the time of Depuy's and Burrell's purchase the plaintiff and Burt were prosecuting the mining business upon these mining grounds. While we do not undertake to say in this place that one partner may not convey or charge his interest in mining ground, on his private account, to the extent of his legal title, provided the purchaser or mortgagee deals with him in good faith and without notice of the partnership rights, and there is nothing in the transaction or in the circumstances connected with it or the subject-matter of it from which notice might be inferred (Coll. on Part., Sec. 135), yet if a purchaser or mortgagee in such case is apprised of facts sufficient to put him on inquiry and to lead him by a diligent investigation to a discovery of the truth, he will be deemed to have notice of the truth as it may be. Here the defendants Depuy and Burrell were necessarily aware of the working of these mining grounds by plaintiff and Burt as mining partners, and it was their duty to ascertain, as they might have done, the condition of the affairs of the concern, and whether or not there existed upon the property which they purchased a lien resulting from

the relation of the partners to each other and to the creditors of the partnership. Besides this, one of the parties had actual notice of the existence of the partnership lien of the plaintiff. They must, therefore, be deemed to have taken the property cum onere-subject to an adjustment of the account between the partners and the payment of the partnership debts, and also of the amount due the plaintiff on the partnership ac

count.

The judgment must be and is hereby reversed, and the cause remanded for further proceedings.

SAWYER, J., concurring:

The determination of the rights of the parties to this suit depends upon the question whether the property was he'd in the ordinary mode of holding ditches and mining ground in this State as tenants in common, or held as partnership property in the strict sense in which these terms are used in relation to mercantile transactions. I have no doubt that mining claims, ditches and lands, may be held as partnership property, as well as any other, and when so held, for the purposes of discharging the partnership obligations or settling the partnership affairs, that such property will be subjeet in equity to all the incidents of other partnership property. The title to claims may be held by parties as tenants in common, while there may be a strict partnership for the purpose of working them; or there may be a partnership both in the ownership and in the working of the claims. Whether the relationship of the parties is one or the other, or neither, must depend upon the facts of each particular case. These principles are distinctly indicated in Bradley v. Harkness, 26 Cal. 76. Parties purchasing the interest of one of the copartners in partnership property acquire such interest only as the vendor had, and that is, his share of the residue, after the affairs of the concern are wound up and the debts paid, including the balance due one partner from the other on the partnership account: Jones v. Parsons, 25 Cal. 104. And this rule in equity applies to real estate constituting a part of the assets of the firm, as well as to personalty. True, if the record legal title to realty be in one of the partners alone, and he should convey to an innocent party for a valuable consideration without notice of the trust, such party might take a

title under the recording acts; but whether he would or would not, would depend upon principles having no peculiar relation to partnership rights. In such case, also, all the rules of law relating to possession, as affecting the question of notice, would doubtless be applicable as in other cases between individuals having no connection with partnership transactions. And these rules would doubtless obviate many of the difficulties suggested by the learned judge who tried the case.

The finding in this case is an opinion rather than a finding, and liable to the criticisms suggested in Hidden v. Jordan, 28 Cal. 305; but from the facts stated I think there was a partnership in working the mines, and that a large portion at least, of the property in question, was partnership property. Much of it, including a considerable portion of the claims and of the water rights, was purchased by the two parties interested with the common funds resulting from the joint working of the claims and from the common proceeds of sales of water. The profits and losses were to be shared according to their respective interest. This state of facts, without any specific agreement modifying the rights of the parties, would constitute the property so purchased, and the proceeds of the same and of their joint labor, partnership property. As to this portion of the property the judgment is, therefore, erroneous.

It may be that the claims before owned and purchased in severalty in undivided interests were he'd by them throughout their connection as tenants in common. Whether they were or were not is not distinctly found as a fact, and we should not be justified in determining the question from the facts found. Those interests were doubtless originally purchased as tenancies in common; but whether from the evidence before the court, and the manner in which the parties blended their interests in those claims with their subsequent purchases and in working the whole, the court would be justified in finding that they put in the claims originally held with the new purchases as partnership property, it is not our province now to determine. This will be a fact to be determined on the new trial. If so, it became partnership property, and subject to all the incidents of such prop

erty. If not, and it was originally held and still continues to be held as a tenancy in common, then it was not partnership property, and the plaintiff has no claim to have the sum due him from his cotenant or copartner in other matters charged upon it.

It avers

The complaint alleges a partnership, and seeks a dissolution and settlement of the affairs of the concern. all the property to be partnership property. On the next trial it will devolve upon the court to determine the facts whether a partnership existed or not and if so, whether the whole, or only a part, and in that event, what part of the property described in the complaint is partnership property; and unless other equities appear requiring a different disposition, to subject that part to plaintiff's demand in case any balance shall be found due him on partnership account. For these reasons I think the judgment must be reversed and the cause remanded.

BINNEY V. THE INCE HALL COAL AND CANNEL COM

PANY.

(35 L. J. Ch. 363. Before the Vice Chancellor, 1865).

Attempted restriction upon transfer of shares. A company's deed provided that the company should not be affected by notice of any trust, and that where any share should become vested in any person, for any interest not absolute, the receipt of the shareholder should remain a sufficient discharge: Held, that the equitable mortgagee of shares had a right to sue the company.

Net profits defined. Net profits, properly so called, are to be ascertained by putting a value on all the assets of the company of whatever nature, and deducting therefrom all liabilities, including among such liabilities the amount of the contributed capital, the surplus then remaining being net profits.

Distribution of profits set apart as continuing capital. Circumstances considered under which net profits may, at the wish of the majority of shareholders, be applied in repayment of contributed capital, although the deed of settlement seems to contemplate a continuing capital, as in an ordinary partnership; there being, however, no express prohibition in the deed.

'Fletcher v. Hawkins, 11 M. R. 290.

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