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a public officer, and an action by a shareholder against PARTNERS. him for a dividend declared and payable might possibly lie, there would be very great, not to say insuperable difficulties in executing a judgment obtained by the plaintiff in such an action" (c).
The rule, it must be remembered, has no application to actions by one partner against another, in respect of matters unconnected with the partnership business (d).
The rule, again, has no application to persons who are not actually partners.
Hence, actions are constantly brought on agreements for partnership. If, for example, the member of a firm agrees to introduce a stranger, an action lies for a breach of the contract (e).
Erception 1.-Where there is an agreement which, though relating to partnership business, can be treated as separate and distinct from other matters in question between the partners.
Under this exception, which includes many different cases, a partner may often sue his fellow partners.
Thus an action can be brought by one partner against another for the breach of a covenant or express agreement entered into by his co-partner, not by the firm, with him (f). He can again maintain an action against his co-partners for the non-performance of a written agreement to render accounts and divide profits (g), for rent covenanted to be paid (h), or for not indemnifying him against a debt (i), and he can often sue his copartners on a bill of exchange.
(c) 2 Lindley, Partnership, 2nd ed., 888, 889. The difficulty as to executing the judgment seems to apply to all actions against an unincorporated company by a shareholder.
(d) 2 Lindley, Partnership, 2nd eil., 873, 875.
(c) McNeill v. Reid, 9 Bing. 68 ; Gale v. Leckie, 2 Stark. 107 ; Andrews v. Garstin, 10 C. B., N. S., 444 ; 31 L. J. 15, C. P. Compare Lindley, Partnership, 2nd ed., 863, 864.
(f) See Lindley, Partnership, 2nd ed., 869, 870 ; Bullen, Pleadings, 3rd ed., 229.
(9) Ouston v. Ogle, 13 East, 538.
If a bill or note is given to A. by his partners, B. and C., in such a form as not to bind the firm, but to bind B. and C., A. can sue them on the bill, even though it had reference to a partnership transaction ; for A. is acknowledged by the bill to have a claim against B. and C., independent of any claim which they have against him (k); but if a bill is accepted in such a manner as to bind the firm, a partner cannot sue his co-partners upon it (1).
A partner further can sue his co-partner for a breach of a contract to furnish capital (m), or for not contributing the share which he had agreed to contribute to the partnership expenses (n), and can bring an action against his fellow-partners, where the partnership has been dissolved, and it has been agreed that they should take his share of the partnership property at a certain value, for the amount of the valuation (o); for a final balance struck after a statement of accounts (P); for money received to his use (q), or for money of his own placed in their hands for a specified partnership purpose, and no other, and misapplied (r). So, he can sue them on an agreement to indemnify him in respect of some particular transaction (s), and for contribution in respect of a particular loss (t).
(k) Neale v. Turton, 4 Bing. 149, Esp. judgment of Best, C. J., 151 ; Heywood v. Watson, 4 Bing. 496; Beecham v. Smith, E. B. & E. 442 ; 27 L. J. 257, Q. B., esp. judgment of Crompton, J., 260.
(2) Neale v. Turton, 4 Bing. 149, 151 ; Moffat v. Van Millingen, 2 B. & P. 124. Byles, Bills, 8th ed., 38, 39.
(m) Hesketh v. Blanchard, 4 East, 144.
(n) Brown v. Tapscott, 6 M. & W. 119; French v. Styring, 2 C. B.,
(6) Jackson v. Stopherd, Cr. & M. 361.
(t) Sedgwick v. Daniell, 2 H. & N. 319; 27 L. J. 116, Ex. For cases
Exception 2.—Where the matters in respect of which an action is brought are connected with the partnership business only through
Matters the wrongful act of the partner sued (u).
with partWhere one partner received money to the use of nership another and paid it to the firm, it was held that he might business
through be sued, for he was bound to hand the money over to his wrongful co-partner (x); and so where a partner, in fraud of his
partner. co-partners, gave a note in the name of the firm for a private debt of his own, and his co-partners were compelled to pay the note, he was held liable to them for all which they had been compelled to pay (y); since, “if a person who owes a debt to A. by any contrivance causes B. to pay it, the action for money paid will lie to recover back the amount, and the machinery by which the mischief was brought about is utterly immaterial" (2).
Who to sue
Rule 23.-Actions for breaches of contracts made with a firm must be brought :
1. On the bankruptcy of the firm, by the ruptey of Trustee (a) or Trustees of the bankrupts (1).
2. On the bankruptcy of one or more partners, by the solvent partners, together with the Trustee or Trustees of the bankrupt partner or partners.
The expression “ bankruptcy of a firm ” means nothing Bank
ruptcy (u) 2 Lindley, Partnership, 2nd ed., 873.
of firm. (c) Smith v. Barrow, 2 T. R. 476. (y) Cross v. Cheshire, 7 Exch. 43 ; 21 L. J. 3, Ex.
(z) Ibid., per Pollock, C. B. Conf. Heilbut v. Nevill, L. R. 4 C. P. 354.
(a) The term “the trustee” is substituted by the Bankruptcy Act, 1869, for the expression “assignee in bankruptcy.” Whenever a trustee in bankruptcy is referred to, he is, to distinguish him from an ordinary trustee, described as the Trustee.
(6) Partners, like other persons, can, of course, after bankruptcy, bring actions in which they sue merely as trustees for other people. Chapter 1X., post.
Bankruptcy of one or more partners.
more than the bankruptcy of all the persons who make up the firm.
If all the partners, A., B., and C., are bankrupt, any action which but for the bankruptcy would have been brought in their names, and therefore any action on a contract with the firm, must be brought by the Trustee or Trustees of the bankrupts.
The property of the different bankrupts will generally, under the Bankruptcy Act, 1869 (c), vest in the same Trustee; but if a separate Trustee should be appointed for each of the partners, all the Trustees must join in an action on contracts with the partnership (d).
The effect of the bankruptcy of one partner is to dissolve the firm, both as regards the bankrupt and as regards the partners inter se, and to make the Trustee a tenant in common (not a co-partner) with the solvent partners of all the partnership property (e). action which but for the bankruptcy of one of the partners, C., would have been brought by A., B., and C., must after his bankruptcy be brought in the names of A. and B., the solvent partners, and the Trustee of the bankrupt C. (f). It should further be noticed that owing to the legal fiction by which the title of the Trustee dates, not from the time of C.'s being adjudicated a bankrupt, but from the time of the commission of an act of bankruptcy (g), it may happen that A., B., and the Trustee, can bring an action where A., B., and C. could not have sued (h).
The Bankruptcy Act, 1869, enables the Trustee, subject to certain conditions, to use the names of the solvent partners if they are unwilling to bring an action (i). If,
(c) 32 & 33 Vict. c. 71, s. 102.
(f) Eckhardt v. Wilson, 8 T. R. 140 ; Thomason v. Prere, 10 East, 418; Graham v. Robertson, 2 T. R. 282.
(g) Bankruptcy Act, 1869, s. 11.
on the other hand, the Trustee declines to join in an action, the solvent partners may use his name upon indemnifying him (k).
Unincorporated Companies.—If a company which is Unincorempowered to sue, &c., is being wound up, actions porated
companies. be brought in the name of the officer empowered to sue. If a company not empowered to sue, &c., is being wound up, it will probably be registered for that purpose under the Companies Act, 1862 (1). In this case an action may be brought either in the name of the official liquidator, or in such other name as the court may
direct (m). “The doctrine that by the bankruptcy of one member of a firm the whole firm is dissolved, is not it applicable to mining partnerships (n); and although the bankruptcy of a shareholder in an unincorporated company with transferable shares may dissolve the company as to him (o), it is conceived that such bankruptcy does not dissolve it as to the other shareholders inter se” (p); and though the Trustee becomes, on the bankruptcy of a shareholder, entitled to his shares, he does not become by the mere bankruptcy a shareholder (9).
It would seem that on the bankruptcy of a member of an unincorporated company, provided it be one not empowered to sue by an officer, actions on contracts made before the bankruptcy should be brought in the name of the solvent members and of the Trustee (r).
(k) Whitehead v. Hughes, 2 D. P. C. 258 ; 2 Lindley, Partnership, and ed., 1119.
(1) Companies Act, 1862, s. 180; 2 Lindley, Partnership, 2nd ed., 1219.
(m) Companies Act, 1862, s. 203 ; 2 Lindley, Partnership, 2nd, ed., 1274, 1275.
(n) Ex parte Broadbent, i Mont. & A. 638.