tenants in common with the solvent partner, his representatives, or assigns, and cannot sue any of these parties in trover for the partnership goods.' It may here be remarked that ejectment will lie by one partner against his copartners on a demise by him to the firm, and that the lessees in such case cannot dispute their lessor's title on the ground of partnership." 'Fox v. Hanbury, Cowp. 445; Smith v. Stokes, 1 East, 363; Smith v. Oriel, id. 368; Salomons v. Nissen, 2 T. R, 674. 2 Francis v. Doe, 4 M. & W. 331. CHAPTER XVII. OF THE RELATIVE RIGHTS OF PARTNERS AND THIRD PERSONS. SEC. 405. Of the liability of partners for acts of their copartners. SEC. 406. Trustee and cestui que trust liable in certain cases. Agreements between partners not binding on third persons, unless. SEC. 407. SEC. 408. Limitations upon the authority of a partner, when operative. SEC. 409. SEC. 413. SEC. 414. SEC. 415. Assignment of partnership property made by one partner. SEC. 416. Of liabilities for loans effected in firm name. SEC. 417. For purchases made by one partner. SEC. 418. SEC. 419. SEC. 420. SEC. 421. SEC. 422. SEC. 423. SEC. 424. SEC. 425. For sales made by one partner. Property pledged by one partner. Of liabilities under bills of exchange, notes, etc. Absence of name of partner does not defeat his liability. SEC. 426. Of liabilities under guaranties given in firm name. SEC. 436. SEC. 437. Distinction between admission of simple and joint debtor. SEC. 438. Part payment by one, effect of. SEC. 439. SEC. 440. Effect of undertaking of one relative to firm business. Of the liabilities of partners for the acts of their copartners. 1 SEC. 405. Generally one partner has an implied authority to bind the firm by contracts relating to the partnership, whether such contracts be evidenced by bare agreements, oral or written, or by negotiable securities, as bills of exchange and promissory notes. To use a strong expression of Lord Kenyon, "One partner may pledge the credit of the other to any amount" The exceptions to this general rule will be noticed in another chapter. The rule is applicable both to dormant and nominal partners. For, notwithstanding some few dicta which tend to a contrary doctrine, it is now an undoubted and The firm, however, are not bound by entries in the partnership books which have not been communicated to their customer. Simpson v. Ingham, 2 B. & C. 65. 2D. Gibbs, J., Young v. Hunter, 4 Taunt. 583; D. Lord Tenterden, Lloyd v. Ashby, 2 Carr. & P. 138. He may transfer, assign, or otherwise dispose of any debt due the firm, or any of the partnership effects, so far as the same can be transferred or assigned by law, Arnold v. Brown, 24 Pick. (Mass.) 89; Wells v. Mitchell, 1 Ired. (N. C.) 484; McClellan v. Remsen, 36 Barb. (N. Y.) 622; Lamb v. Durant, 12 Mass. 54; Fromme v. Jones, 13 Iowa, 474; Cullum v. Bloodgood, 15 Ala. 34; Boswell v. Green, 25 N. J. L. 390; Clark v. Rives, 33 Mo. 579; U. S. Bank v. Binney, 5 Mas. (U. S.) 176; Williams v. Barnett, 10 Kan. 455; Steele v. First National Bank, 60 Ill. 23; if the sale be free from fraud on the part of the purchaser, Dickard's Case, 5 Watts (Penn.) 22; Whitton v. Smith, 1 Freem. Ch. (Miss.) 231, however fraudulent may have been his own intention. Wells v. Mitchell, 1 Ired. (N. C.) 484. But, as he merely acts as the agent of his copartners, they are only bound by his acts within the scope of the partnership business, and of his apparent authority as such; consequent ly, if he sells the property of the firm to discharge his private debts, the purchaser acquires no title thereto against his copartners, as he is charged with notice of the fraud, and is put upon inquiry whether the partner has the consent of his copartners to make such sale. In Stegall v. Coney, 49 Miss. 761, the court happily expresses the rule thus: "The authority of a partner is limited to things done in the regular course of the business of the firm; outside of this he has no authority. If he attempts to mortgage or assign under suspicious circumstances, such act would be of no effect as against the parties injured thereby. A transfer by a partner of the joint effects in fraud of a copartner will constitute the transferee who received them with notice, or without consideration, a trustee for the benefit of the firm or its creditors. If the joint funds were employed by one partner to purchase property, either in his own name or that of another, with the intent to defraud his copartners, or the creditors of the firm, the property so purchased will be treated as trust funds for the firm and its creditors, and it seems that the rule is not affected by the fact either of the creditor's knowledge or ignorance of the partnership ownership. Ackley v. Stachlin, 56 Mo. 558. Upon the general proposition that one partner cannot sell the partnership goods in payment of his own debts, or otherwise beyond the scope of his real or apparent power as partner, see Caldwell v. Scott, 54 N. H. 414; Todd v. Larch, 75 Penn. St. 155; Dunklin v. Kimball, 50 Ala. 251; Rogers v. Batchelor, 12 Pet. (U. S.) 221; Pierce v. Pass, 1 Port. (Ala.) 232; Burwell v. Springfield, 15 Ala. 273; Nall v. McIntyre, 31 id. 532; Filley v. Phelps, 18 Conn. 294; Bourne v. Woolbridge, 10 universal proposition, that a dormant partner is in all cases liable for the contracts of the firm during the time that he is actually a partner;' and we have already seen that a nominal partner is similarly liable during the time that he holds himself out to the world as partner.2 B. Monr. (Ky.) 492; Jackson v. Holloway, 14 id. 133; Jones v. Lusk, 2 Metc. (Ky.) 356; Minor v. Gow, 19 Miss. (11 Smed. & M.) 322; Buck v. Mosley, 24 Miss. 170; Dob v. Halsey, 16 Johns. (N. Y.) 34; Leonard v. Winslow, 2 Grant's (Penn.) Cas. 139; Purdy v. Powers, 6 Penu. St. 492; McKinney v. Brights, 16 id. 399; Sauntry v. Dunlap, 12 Wis. 364. In such cases, as the purchaser acquires no title to the property, the other partners may follow it and treat it as trust property held for the benefit of the firm by the partner, or by any person in whose hands it may come, except a bona fide purchaser who is not charged with notice of the fraud. Kelly v. Greenleaf, 3 Story (U. S.), 93; Craughton v. Forrest, 17 Miss. 131. In Dunklin v. Kimball, 50 Ala. 251, two of the partners (the firm becoming insolvent) assigned the partnership assets to a trustee without the consent of the third partner. The trustee sold the property and it was held that he was liable to the partner for $1,000, the amount of the property which by law was exempt from attach ment. And such a sale is also fraudulent and void as against partnership creditors, particularly if the firm is insolvent, and they may in equity pursue the property. Yale v. Yale, 13 Conn. 185 French v. Lovejoy, 12 N. H. 458; and no better title is acquired even though the firm is actually largely indebted to the partner making the sale. Saylor v. Mockbie, 9 Iowa, 209. But a partnership in fact must exist. The mere circumstance, that by law the parties might be regarded as quasi partners, will not have this effect, unless the circumstances are such as to create an equitable estoppel. A person not dealing with them as partners cannot charge them as such. This was well illustrated in a recent case in New York. Central City Savings Bank v. Walker et al., 67 N. Y. 425. In that case it was sought to hold the defendants reponsible as partners under circumstances detailed by Allen, J. In the opin Hubert v. Nelson, Davies' B. L. 8; Hoare v. Dawes, 1 Doug. 371; Coope v. Eyre, 1 H. Bl. 37; Robertson v. Wilk ion he said, "the defendants are sought to be charged as makers of a promissory note, under the name of The Utica Steam Woolen Company,' a corporation whose charter had expired by its own limitation, and of which the defendants were stockholders. The corporation became such by filing a certificate pursuant to the act of 1811, relative to incorporations for manufacturing purposes, and the acts amendatory thereof, by the terms of which the corporate existence was limited to twenty years from the day of filing the certificate. 3 R. S. (Edm. ed.) 726. The defendants served with process, became stockholders after the organization of the corporation, and were ignorant in fact of the day of filing the certificate and of the expiring of the charter. The plaintiff dealt with the corporation as such not with the individual stockhold. ers as copartners or associates in a jointstock association. The defendants did not hold themselves out as copartners, neither did they by word or act assent to the making of the note in suit, or to the transaction of any business in the name of the corporation in their behalf or with knowledge that its legal existence had terminated. Some six months after the expiration of the charter a dividend was paid to the defendants, as from the earnings of the corporation, by the check of the treasurer, as annual dividends had been paid in former years, but without due notice to them that it was not paid from the earnings of the corporation, or that the corporation had ceased to exist, and there was no proof that it was paid from the earnings of the business transacted in the name of the company after the lapse of the twenty years from its organization. The claim to recover is based solely on the fact that the agent of the corporation, without any authority other than that conferred by resolution of the trustees and under an appointment by them during the existence of the corporation, continued to carry on the busi inson, 3 Price, 538; Wintle v. Crowther, 1 Cromp. & Jerv. 316. Ante. 9 Trustee and cestui que trust liable as partners in certain cases. SEC. 406. It makes no difference, as to third persons, whether the partnership is carried on for the benefit of the partners themselves, or for the benefit of their cestui que trusts. Both the trustees and the cestui que trusts are liable. In regard to the liability of the latter, ness and contract debts, including that to pledge the credit of the whole and in controversy, in the name of the cor- to have empowered any one of the poration, after the term for which it number to bind all in any matter within was created had expired. The conten- the ordinary course of the business of tion is that there was an implied con- the defunct corporation. As cestuis que tract of copartnership" between the trust having a common interest, each stockholders, by which they became had dominion over his own share, but liable as copartners to third persons. had no power over that of the others. The property and property rights of the There was an entire absence of any incorporation were not owned by the in- tent of the parties to subject themselves dividual stockholders, either during the to the risks and to the powers which existence of the corporation or after its are vested in each member of a partnerdissolution. During the life of the cor- ship. By the Law Merchant, if the inporation the body corporate was the dividual shareholders have received any legal owner, and upon the expiration of part of the earnings of the business the charter the legal title vested in the carried on by the trustees after the cortrustees in office, at the time, in trust poration ceased to exist, or have shared for the creditors and stockholders. 1 in the property of the corporation, they R. S., 600. § 1; Mickles v. The Roches- may, perhaps, be held to account in ter City Bank, 11 Paige's Ch. (N. Y.) 118. equity to the extent they have profited; The stockholders were merely cestuis que but this does not make them liable in trust, entitled to share ratably in the an action at law upon the contracts of property after the payment of debts. the trustees or of the corporation. ClaThey did not assume to exercise any vering v. Westley, 3 P. Wms. 402. Neirights of ownership in the property. It ther is there any evidence that the deis true that individuals may quoad third fendants ever constituted Clogher their persons be charged as partners when agent to contract in their name or incur they are not in fact partners inter sese, by obligations in their behalf, or that they voluntarily and knowingly sharing in ever received the benefit of his acts so the profits of the business or by holding as to charge them with his obligations themselves out as partners and thus in- within the maxim, qui sentit commodum ducing a credit on the faith of a part- sentire debet et onus. The only act that nership. Story on Part., §§ 63, 64. A is relied upon as an adoption of his acts liability may be created by an equitable is the receipt of the dividend in August, estoppel, but when it is sought to be 1866. But this wants the essential fact established upon the footing of a con- that it was paid or received as the proftract of partnership between the parties, its of a partnership business, as well an agreement must be shown, and it as the element of knowledge of the acts will not be implied from the joint own- now claimed to have been ratified, or ership of property, nor will the relation that the dividend was not, in fact, from arise by operation of law. Story on the earnings of the corporation, for and Part., 2, 3, 32. A partnership does as which it was paid and received. A not result from a joint ownership of prop. ratification can only be implied after erty, but there must be an agreement, knowledge of all the material facts is express or implied, to participate in the brought home to the party. A receipt profits or losses of the business. Chase of money as a part of the earnings of a v. Barrett, 4 Paige's Ch.(N.Y.) 148; Porter corporation is no ratification of acts of v. McClure, 15 Wend. (N. Y.) 187; Living- business carried on outside of the corston v. Lynch, 4 Johns.Ch.(N.Y.)573. The poration without knowledge of him who stockholders, who were but cestuis que is sought to be charged with them that trust cannot, without other evidence than the moneys came from such business. the proof of their interest, be held to Baldwin v. Burrows, 47 N Y. 199; have authorized each other as partners, Dounce v. Myrick, 45 id. 180; Rowan v. 'Thicknesse v. Bromilow, 2 Crom. & Jerv. 428. |