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CHAPTER III.

OF THE LIMITS OF LIABILITY.

WE propose to consider, in this chapter, the limits of partnership liability; in other words, to investigate at what time liability commneces and ceases, both in general, and as far as regards incoming, retiring, and deceased partners respectively.

SECTION I.

Of the Commencement of Liabilities in general.

THE time of commencement of a general partnership is usually fixed by the partnership deed. But where no time is mentioned, the partnership liabilities will begin from the date of the deed (a). It is almost unnecessary to add, that, as regards third persons, the time of the execution of the deed is immaterial, if the parties commenced their partnership previously (b).

In adventures, the liabilities must of course commence from the time fixed by the contract, unless before that time the parties have held themselves out to the world as partners (c). It is often, however, a matter of much doubt under what circumstances the promoters of an undertaking shall be deemed

(a) Williams v. Jones, 5 Barn. & Cres. 108.

(b) Battley v. Bailey, 1 Scott,

N. R. 143.

(c) It may here be observed once for all, that wherever the partner

ship agreement is resorted to in order to establish the liability of partners, it is on the supposition that the parties have not held themselves out to the world as partners.

liable as partners for goods supplied, or work and labour done, in the course of establishing the undertaking before the partnership business has actually commenced. Questions of this nature generally arise in regard to joint-stock companies, where the business is of a very public and extensive nature; but they may also occur in more private undertakings. Thus, in Howell v. Brodie (a), the plaintiff, who was a builder, brought his action for work and materials, against the defendant, a conveyancer, as a partner with one Wilson, in the building of Portman market. It appeared that Wilson projected the market, and had, on his own credit, employed the plaintiff in the erection of it, and was sole tenant of it under Lord Portman. In 1829, Wilson applied to the defendant professionally to draw an act of Parliament for establishing the market; and from that time till 1833, the defendant, who knew that it was to be a partnership concern, advanced various sums towards its erection, and was consulted at every stage. It did not appear that previously to 1833, any distinct proposal was made as to the particular share the defendant was to take; though, in the course of the transactions before that year, something was said as to his taking half a share in such market as might come to £6000, which suggestion was subsequently abandoned. The amount of the sums advanced before October, 1833, was £14,000. On these the defendant received no interest, nor did Wilson ever render any account, although profits to the amount of £1500 had been received from the market before 1833. In October, 1833, an agreement was entered into between Wilson and the defendant, under which it was settled, that the market should be valued and the defendant have a seventh share. It was held by the Court of Common Pleas, that the defendant was not a partner till October, 1833.

In the preceding case, it was said by Bosanquet, J., that in order to constitute a partner, it is not necessary that the amount of his share should be distinctly ascertained, but that the omission to ascertain it is a strong circumstance to shew that no partnership exists. It will be seen presently, that this circumstance was much relied upon by Lord Kenyon, in Saville v. Robertson, as a ground for holding that no partnership existed in that case (6).

(a) 6 Bing. N. C. 44.

(b) See post, p. 354.

In adventures relating to the purchase and sale of goods, it commonly happens, from the tenor of the agreement, that the partnership liabilities are deemed to commence from the time when the goods are ordered. But to arrive at this conclusion, we must be satisfied that the person ordering the goods was, at the time of such order, the agent of all the ad

venturers.

If this principle be kept in mind, we shall readily distinguish the following cases.

In Gouthwaite v. Duckworth (a), the question was, whether the plaintiffs, in an action for goods sold and delivered, could recover against Duckworth, as a partner with Browne and Powell, under the following circumstances:-Duckworth had various transactions in business with Browne and Powell in 1808, and was a creditor of theirs for advances on the joint account of all three. In September, 1808, he entered into an agreement with Browne to be jointly concerned in an adventure to Lisbon with him and Powell, of which adventure Duckworth was to have one-half share. Brown and Powell were to purchase goods for the adventure, and to pay for them; and the returns of such adventure were to be made to Duckworth, and to go in liquidation of his demands on Browne and Powell. In consequence of this agreement, Browne purchased goods from different persons, and, amongst others, from the plaintiff Gouthwaite. If any loss were to arise on the sales of the adventures, Duckworth was to bear his proportion, and was also to receive his share of the profits, if any, after reimbursing himself his previous advances. Duckworth at the same time purchased and sent out goods in his own name; and Browne was to receive a share of the profit, and to bear a proportion of the loss on the sales of these last-mentioned goods. Duckworth afterwards received from the supercargo, on account of the adventure, £186, though, from what particular set of goods this arose, Duckworth could not tell. This sum Duckworth applied in reimbursing himself the advances he had made to Browne and Powell on account of the adventure. On consideration of these facts, the Court of King's Bench were of opinion, that the defendant Duckworth was a partner in this transaction, and that the verdict which had been obtained against him

(a) 12 East, 421.

should stand. Lord Ellenborough said-" It comes to the question, whether, cotemporary with the purchase of the goods, there did not exist a joint interest between these defendants. The goods were to be purchased, as Duckworth states in his examination, for the adventure: that was the agreement. Then, what was this adventure? Did it not commence with the purchase of these goods for the purpose agreed upon, in the loss and profits of which the defendants were to share?"

But if it can be shewn that the person who made the order was not at that time the agent for the others, they are not liable on such contract of sale, and no subsequent bare acknowledgment of such contract will make them liable. This was decided in a case where there was a stipulation that the orders given for the goods were to be each separately paid, and that one should not be bound for any goods or stores ordered or shipped by the other. Thus, in Saville v. Robertson (a), which was an action for goods sold and delivered, brought under certain orders of the Lord Chancellor, made upon the petition of the plaintiff and others in the bankruptcy of the defendant, it appeared that the defendants and one Samuel Pearce, since deceased, and William Robertson, since a bankrupt, entered into the following (amongst other) articles of agreement :— "Articles of agreement, made &c., between J. Robertson and J. Hutchinson, of London, merchants and copartners, as well on the part and behalf of themselves as of others who have or shall subscribe their names on the back of these presents, of the one part, and S. Pearce, of &c., merchant, of the other part, &c. Whereas the said S. Pearce is the sole owner and proprietor of the ship Triumph, &c.; and whereas the said J. Robertson, J. Hutchinson, S. Pearce, and others, who have subscribed their names on the back of these presents, have mutually agreed upon a joint undertaking and risk as to profit and loss in a certain voyage or maritime adventure, about to be performed under the direction of the said parties, who have or shall have a majority of interest therein, or of a committee appointed by them: Now these presents witness, that they, the said J. R. and J. H., on behalf of themselves and all others who have or shall subscribe, &c.; and the said S. P., for himself, in consideration of the trust which they severally repose in each other,

(a) 4 T. R. 720.

and also in pursuance of the said agreement, have and do, each for himself, his heirs, executors, &c., mutually covenant and agree with each other, &c.;-1st. That the said ship Triumph, whereof the said S. Pearce is sole owner, shall, from the day of the date, and until her return from her intended voyage, be at the disposal, direction, and risk of all the parties hereto, jointly, at the valuation of £3750, &c. 2nd. That the said J. R. and J. H., by themselves and others, who have or shall subscribe, &c., shall and will, on or before the 24th August next, procure and provide a cargo of goods for the said intended voyage, to the value of between £22,000 and £25,000, and which goods shall, in the judgment and opinion of the majority of the parties to these presents, be deemed eligible and proper for the voyage and markets, &c. &c.; and that they, the said J. R. and J. H., and other the persons who subscribe, &c., shall and will prepare and ship the said cargo, at such time and in such manner as the majority of the said concerned, or their committee, shall direct. 4th. That, in case the said S. Pearce shall be desirous to increase his interest in the said joint concern, he shall be permitted so to do, by shipping, on the joint account, as many goods, over and above the goods to be shipped by the said J. R., J. H., and others, who shall subscribe, &c., as he may think proper; but the said goods so to be shipped by the said S. Pearce are to be such articles as the majority of the concerned, or their committee, shall approve of as proper for the voyage and market. 5th. That the said £3750, together with the amount of the additional outfits to be advanced by the said S. Pearce, the amount of half of the premiums of insurance to be made by the said S. P. on the said ship, freight, and cargo, and such amount of goods as the said S. P. may ship on the joint account, as above mentioned, shall be considered as the said S. P.'s share or capital in the said joint undertaking; and he, the said S. P., shall be entitled to receive the profit or bear the loss thereon, in the exact proportion as the amount of all such sums shall be to the remainder or other part of the said joint concern; and that the said J. R. and J. H., and the subscribers, &c., shall receive the profit, or bear the loss, in the like proportion as to the sums set opposite to their several names." On the 28th July, 1787, the following memorandum was indorsed on the articles by the same persons:-"Notwithstanding what may be understood to be the meaning of the foregoing articles,