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Scott Rowley. Modern Law of Partnership (1916).

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 CHAPTER XIX
DISSOLUTION OF PARTNERSHIP
SECTION
570. In general.
571. Nature and grounds-Uniform
Partnership Act.
572. Expiration of term.
573. Express will of one partner in
partnership for indefinite term.
574. Express ivill of all partners.
575. By expulsion of partner.
576. By express will of one partner
in contravention of agreement.
577. By event making partnership un-
lawful-War.
578. Marriage of a woman partner.
579. By death of a partner.
580. By bankruptcy.
581. Levy of attachment or execution
sale.
582. By judicial decree and by opera-
tion of law-Generally.
583. Dissolution for insanity.
584. Dissolution for other incapacity
of partner.
585. Dissolution for conduct preju-
dicially affecting carrying on of
business.
586. For wilful or persistent breach
of partnership agreement.
587. When further concerted action
impracticable.
588. When business can only be car-
ried on at loss.
589. For fraud in inception of rela-
tion.
590. Annulment of partnership.
727
SECTION
591. Dissolution by transfer of part-
. ner's interest.
592. Status.of partnership after disso-
lution.
593. Powers of partners after dissolu-
tion-Generally.
594. Notice of dissolution.
595. Uniform Partnership Act as to
powers after dissolution and
character of notice.
596. Character of notice required and
persons entitled to notice.
597. Dissolution terminates contract
of agency.
598. Powers of partner to administer
firm affairs.
599. Some general powers and dis-
qualifications of partner after
dissolution.
600. Admissions of partner after dis-
solution.
601. Power over firm property.
602. Power to collect, pay, or com-
promise firm debt.
603. Power to make new contracts.
604. Powers as to negotiable paper.
605. Authorization of giving of ne-
gotiable paper.
606. Note given after dissolution as
discharge of debt.
607. Liquidating partner.
608. Holding out as partner after dis-
solution.
§ 570 LAW OF PARTNERSHIP 728

§ 570. In general.-A partnership is presumed to con-

tinue until its dissolution is proved.' The subject of dissolution
is an extensive and important one. Any competent persons may
enter into a partnership in a moment's time, if they so desire,
but it is often extremely difficult to dissolve the partnership, at
least in such a manner as to be fair to all parties thereto and
to third parties, and so as to avoid after effects of a disastrous
nature. The question of what may constitute a dissolution of
a partnership is treated under a somewhat different classification
by different authors, and there is a still larger discrepancy among
the various jurisdictions and courts, as the question is largely
governed .by statute in some jurisdictions. The various causes
of dissolution are often grouped in several divisions, as dissolu-
tion by act of the parties, by judicial decree, and by operation of
law, but inasmuch as such a classification is somewhat unsatis-
factory, owing to the overlapping in certain cases from one
division into another, each cause of dissolution will be treated
separate and distinct from such a general classification, though
the classification of the Uniform Partnership Act will be fol-
lowed so far as practicable. Half the space occupied by the
provisions of the Uniform Partnership Act is devoted to the
subject of dissolution, stating the causes of dissolution and va-
rious rules as to the application of assets, the winding up of the
business and the powers of partners.
§ 571. Nature and grounds-Uniform Partnership Act.-
The framers of the Uniform Partnership Act, recognizing that
after dissolution the partners still have liabilities as such, con-
nected with winding up the business, did not treat dissolution
as the termination of the relation, as some authors have called
it. This act provides as to the nature and causes for dissolution:
Sec. 29. "The dissolution of a partnership is the change in the
relation of the partners caused by any partner ceasing to be
1Cobb v. Martin, 32 Okla. 588, 123 Deposit Co. y. Simmons, 122 Pac.
Pac. 422; Bowles v. Biffles (Okla.), 319, 67 Wash. 673.
151 Pac. 193; Alaska Banking & Safe
729 DISSOLUTION § 571

associated in the carrying on as distinguished from the winding

up of the business. Sec. 30. On dissolution the partnership is
not terminated, but continues until the winding up of partnership
affairs is completed. Sec. 31. Dissolution is caused: (1) With-
out violation of the agreement between the partners. (a) By the
termination of the definite term or particular undertaking speci-
fied in the agreement. (b) By the express will of any partner
when no definite term or particular undertaking is specified.
(c) By the express will of all the partners who have not assigned
their interests or suffered.them to be charged for their separate
debts, either before or after the termination of any specified term
or particular undertaking. (d) By the expulsion of any partner
from the business bona fide in accordance with such a power
conferred by the agreement between the partners; (2) In con-
travention of the agreement between the partners, where the
circumstances do not permit a dissolution under any other pro-
visions of this section, by the express will of any partner at any
time; (3) By any event which makes it unlawful for the busi-
ness of the partnership to be carried on or for the members to
carry it on in partnership; (4) By the death of any partner;
(5) By the bankruptcy of any partner or the partnership; (6)
By decree of court under section 32. Sec. 32. (Dissolution by
Decree of Court.) . (1) On application by or for a partner the
court shall decree a dissolution whenever: (a) A partner has
been declared a lunatic in any judicial proceeding or is shown to
be of unsound mind, (b) a partner becomes in any other way
incapable of performing his part of the partnership contract,
(c) a partner has been guilty of such conduct as tends to affect
prejudicially the carrying on of the business, (d) a partner wil-
fully or persistently commits a breach of the partnership agree-
ment, or otherwise so conducts himself in matters relating to
the partnership business that it is not reasonably practicable to
carry on the business in partnership with him, (e) the business
of the partnership can only be carried on at a loss, (f) other
circumstances render a dissolution equitable. (2) On the ap-
plication of the purchaser of a partner's interest under sections
§ 572 LAW OF PARTNERSHIP 730

28 [referring to the issuance of a charging order against a part-

ner's interest] or 29: (a) After the termination of the specified
term or particular undertaking, (b) at any time if the partner-
ship was a partnership at will when the interest was assigned
or when the charging order was issued." An attempt will be
made here so far as practicable, to discuss the causes of dissolu-
tion of partnership in the order followed in the Uniform Part-
nership Act.
§ 572. Expiration of term.-Dissolution of a partnership
by act of the partners in accord with their agreement is worked
ipso facto by the expiration of the limited period for which the
partnership was formed.' So, also, the accomplishment of the
particular transaction or venture to which the partnership was
devoted terminates the relation.' The Uniform Partne;ship
Act merely declares the general rule in this respect as to dissolu-
tion."
§ 573. Express will of one partner in partnership for in-
definite term.-If the length of life of a partnership has not
been definitely fixed, the firm exists, in general, at will and may
be dissolved whenever any one of its members bona fide' so
2
Ex parte Ruffin, 6 Ves. 119, 5 R. Minn. 408, 23 N. W. 840; Phillips v.
R. 237; Phillips v. Reeder, 18 N. J. Reeder, 18 N. J. Eq. 95; McAuley v.
Eq. 95; Morrill v. Weeks, 70 N. H. Palmer, 53 Hun (N. Y.) 635, 25 N.
178, 46 Atl. 32; Peyser v. Myers, 63 Y. St. 969, 6 N. Y. S. 402, 3 Silver-
Hun 634, 18 N. Y. S. 736, 45 N. Y. nail 245 (affd. 125 N. Y. 742, 26 N.
St. 413 (affd. 135 N. Y. 599, 32 N. E. 912, 4 Silvernail Ct. App. 339);
E. 699); Hoffman v. Hauptner, 135 Kennedy v. Porter, 109 N. Y. 526, 17
App. Div. 148, 119 N. Y. S. 1022; N. E. 426; Jones v. Jones, 18 Ohio
Masters v. Brooks, 132 App. Div. C. C. 260, 10 Ohio C. D. 71; Sims v.
(N. Y.) 874, 117 N. Y. S. 585; Schla- Smith, 11 Rich. L. (S. Car.) 565. And
ter v. Winpenny, 75 Pa. St. 321; Isler compare Petrikin v. Collier, 1 Pa. St.
v. Baker, 6 Humph. (Tenn.) 85; 247.
3
Bank of Mobile v. Andrews, 2 Sneed 4Uniform Partnership Act, §
(Tenn.) 535. See 1 224 on dura- (1, a).
tion of relation. 5 "The Supreme Court of Arkansas,
3 Bank of Montreal v. Page, 98 Ill. in Howell v. Harvey, 5 Ark. 270, 39
109; Spurck v. Leonard, 9 Ill. App. Am. Dec. 376, said this: 'As a gen-
174; Potter v. Tolbert, 113 Mich. 486, eral principle, contracts subsisting
71 N. W. 849; Bohrer v. Drake, 33 during pleasure, are naturally and
731 DISSOLUTION § 573
chooses.' "It is universally conceded that a contract of partner-
ship containing no stipulation as to the time during which it
shall continue in force does not endure for the life of the part-
ners, or of either of them, nor for any longer time than their rnu-
tual consent, [and] may be dissolved by either partner at his own
necessarily dissolvable by the mere upon such a copartnership agreement
exercise of the will of either of the by implication arising out of the busi-
parties; and this is the principle ac- ness engaged in, or the circumstances
cording to the civil law under ordi- of the case. It may be said that it
nary circumstances. * * * In cases of is generally understood that such con-
equity, we think the true rule to be tract relations are not formed except
this, that to enable one partner to with a view of engaging in some busi-
dissolve at will the partnership, two ness which may require both time and
things must occur; first, the renun- capital to carry out the object for
ciation of the partnership must be in which the partnership was formed.
good faith, and secondly, it must not It is nevertheless true that unless the
be made at an unreasonable time. term for which the partnership is to
This is the doctrine of the civil law.' continue is limited or fixed by the
The rule laid down in the second par- agreement, either party may, at his
agraph of the foregoing excerpt was pleasure, dissolve the relation. This
not the rule of the common law (see is elementary law. The defendant ex-
30 Cyc. Law & Proc., p. 650; Meysen- ercised his right, and the partnership
burg v. Littlefield, 135 Fed. 184; was dissolved by his refusing to con-
Blake v. Sweeting, 121 Ill. 67, 12 N. tinue the business further in com-
E. 67; Carlton v. Cummins, 51 Ind. pany with complainant. It does not
478; Koenig v. Adams, 37 Kans. 52, 14 concern us what his reasons or no-
Pac. 439), and is not the rule in this tions for doing so were." See
state, either at law or in equity, un- also Gleeson v. Costello (Ariz.),
less it is made so by § 5475, Rev. 138 Pac. 544; First Internation-
Codes." Freund v. Murray, 39 Mont. al Bank of Portal v. Brown
539, 104 Pac. 683, 25 L. R. A. (N. S.) (Minn.), 153 N. W. 522; Mul-
959. See also Stitt v. Rat Portage vey v. Anderson, 187 Mo. App.
Lumber Co., 98 Minn. 52, 107 N. W. 430, 173 S. W. 738; Feather-
824. stonhaugh v. Fenwick, 17 Ves.
r Champlin, J., delivering the opin- 298, 11 R. R. 77; Peacock
ion of the court in Walker v. Whipple, v. Peacock, 16 Ves. 49, 10 R.
58 Mich. 476, 25 N. W. 472, says: "In R. 138; Crawshay v. Maule, 1
this case it is conceded that the co- Swanst. 495-508, 1 Wils. 181; How-
partnership entered into was not lim- ell v. Harvey, 5 Ark. 270, 39 Am. Dec.
ited by the express agreement of the 376; Lawrence v. Robinson, 4 Colo.
parties. It was therefore determina- 567; Lapenta v. Lettieri, 72 Conn.
ble, in the absence of fraud, at the 377, 44 Atl. 730, 77 Am. St. 315; Null
will of either party. I do not agree v. Parsons, 145 Ill. App. 436; Carlton
that a limitation may be ingrafted vt Cummins, 51 Ind. 478; Koenig v.
6 573
LAW OF PARTNERSHIP 732

will at any time."7 As was said by the court in" an action brought
in equity to settle the affairs of a partnership formed by oral
agreement for an indefinite time: "A partnership for an in-
definite period is in law a partnership at the will of the partners,
and either partner may withdraw when he pleases, and dissolve
the partnership if he acts without any fraudulent purpose." The
code of Louisiana makes specific provision for this contingency
as follows:' "If the partnership has been contracted without
any limitation of time one of* the partners may dissolve the
partnership by notifying his partners that he does not intend
to remain any longer in the partnership, provided, nevertheless,
the renunciation to the partnership be made bona fide, and it
does not take place unseasonably." The desire of a partner to
terminate a partnership agreement, the term of which has not
been fixed, may be indicated by his merely giving notice to the
other partner or partners."o Likewise the intention of a partner
Adams, 37 Kans. 52, 14 Pac. 439; Rice v. Angell, 73 Tex. 350, 11 S.
Blaker v. Sands, 29 Kans. 551; W. 338, 3 L. R. A. 769; McMahon v.
Fletcher v. Reed, 131 Mass. 312; McClernan, 10 W. Va. 419. And com-
Whiting v. Leakin, 66 Md. 255, 7 Atl. pare Beaver v. Lewis, 14 Ark. 138.
7
688; Whitman v. Robinson, 21 Md. Karrick v. Hannaman, 168 U. S.
30; Fletcher v. Reed, 131 Mass. 312; 328, 42 L. ed. 484, 18 Sup. Ct. 135.
Buck v. Smith, 29 Mich. 166, 18 Am. 8 Fletcher v. Reed, 131 Mass. 312
Rep. 84; Berry v. Folkes, 60 Miss. (1881).
576; Gaty v. Tyler, 33 Mo. App. 494; 9 Code La., art. 2884.
Freund v. Murray, 39 Mont. 539, 104 10 "The dissolution of a partnership
Pac. 683, 25 L. R. A. (N. S.) 959; at will may be implied from circum-
Dobbins v. Tatem (N. J. Eq.) 25 Atl. stances; but, when not the result of
544; Wood v. Warner, 15 N. J. Eq. mutual agreement there must be no-
81; Pine v. Ormsbee, 2 Abb. Pr. (N. tice by the party desiring a dissolu-
S.) (N. Y.) 375; Briggs v. Weid- tion, to his copartner, of his election
mann Cooperage Co., 3 N. Y. S. 813, to terminate the partnership, or his
24 N. Y. St. 300 (affd. 125 N. Y. election must be manifested by un-
704, 26 N. E. 752); Loorya v. Kup- equivocal acts or circumstances
perman, 25 Misc. 518, 54 N. Y. S. brought to the knowledge of the
1005; McElvey v. Lewis, 76 N. Y. other party, which signify the exercise
373; Smith v. Ervin, 168 Pa. St. 271, of the will of the firm that the part-
31 Atl. 1067; Yoos v. Doyle, 4 Lack. nership be dissolved." Spears v.
Leg. N. (Pa.) 128; Heck v. McEwen, Willis, 151 N. Y. 443, 45 N. E. 849.
12 Lea (Tenn.) 97; Green v. Waco Quoted in Freund v. Murray, 39
State Bank, 78 Tex. 2, 14 S. W. 253; Mont. 539, 104 Pac. 683, 25 L. R. A.
733 DISSOLUTION § 574

to accomplish a dissolution of the firm may, it seems, be effected

by conduct such as removing the personal effects of his associ-
ates during the latter's absence from the building in which the
partnership business is conducted, and refusing to permit him
to longer engage in the partnership business." So, also, it has
been held that where no definite provision was made as to the
time during which the partnership was to continue, and no formal
notice of an intention to dissolve was given prior to the bringing
of suit, the partnership will be treated as being strictly at will
and as dissolved from the date of filing the bill.12 Where a
partner at will repudiates and denies the partnership, it is dis-
solved from that time." Further a partner who has dissolved
the firm is not ordinarily liable in damages for loss resulting
to his copartners from his conduct, at least when he has acted in
good faith and without fraud."
§ 574. Express will of all partners.-Of course, the fact
that the partnership was or was not originally formed to continue
for a definite period will not prevent the members of the firm
from agreeing, at any time, to dissolve the relation which they
then maintain." Any contract, as between the parties thereto,

(N. S.) 959. See further Blake v.
Sweeting, 121 Ill. 67, 12 N. E. 67;
Boyd v. Tabb, 7 Ky. L. (abstract)
225; Avery v. Craig, 173 Mass. 110,
53 N. E. 153; Major v. Todd, 84 Mich.
85, 47 N. W. 841; Baldwin v. Walser,
41 Mo. App. 243; Beller v. Murphy,
139 Mo. App. 663, 123 S. W. 1029;
Abbot v. Johnson, 32 N. H. 9; Skin-
ner v. Tinker, 34 Barb. (N. Y.) 333;
Eagle v. Bucher, 6 Ohio St. 295, 67
Am. Dec. 342; Yoos v. Doyle, 4 Lack.
Leg. N. (Pa.) 128. And compare
Wilson v. Davis, 1 Mont. 183.
". Solomon v. Kirkwood, 55 Mich.
256, 21 N. W. 336; Freund v. Mur-
ray, 39 Mont. 539, 104 Pac. 683, 25
L. R. A. (N. S.) 959.
12 Wiggins v. Brand, 202 Mass. 141,
88 N. E. 840.
1s Gleeson v. Costello (Ariz.), 138
Pac. 544.
14 Fletcher v. Reed, 131 Mass. 312;
Walker v. Whipple, 58 Mich. 476, 25
N. W. 472; Beller v. Murphy, 139
Mo. App. 663, 123 S. W. 1029; Bald-
win v. Walser, 41 Mo. App. 243;
Gaty v. Tyler, 33 Mo. App. 494;
Freund v. Murray, 39 Mont. 539, 104
Pac. 683, 25 L. R. A. (N. S.) 959.
15 Ex parte Ruffin, 6 Ves. 119, 5 R.
R. 237; Lichenstein v. Murphree, 9
Ala. App. 108, 62 So. 444; Black v.
Hunter (Cal.), 147 Pac. 463; Phelps
v. State, 109 Ga. 115, 34 S. E. 210;
Richardson v. Gregory, 126 Ill. 166,
§ 574 LAW OF PARTNERSHIP 734

may be terminated at any time by all the parties thereto, and

contracts of partnership are not unlike other contracts in this
respect." This intent to dissolve need not ordinarily be expressed
in words but may be implied, as for instance by discontinuance
or abandonment of the partnership business," or by sale of the
whole of the partnership property and business.'" By the Uni-
form Partnership Act it seems that partners who have assigned
their interest or whose interest has been charged are not neces-
sary parties to an agreement among partners for a dissolution."
While the partnership agreement as between the partners may be
dissolved at any time by the consent of all, and while it may be
under certain formalities dissolved as to third persons, it must
be understood that a dissolution by agreement of the partners
can not injuriously affect third parties without their consent,
that is, as to the liability of the members or of the partnership
property for existing debts, or obligations, nor as to future obli-
gations incurred by one or more of the partners where the third
parties are entitled to notice of the dissolution, and have no
formal notice or actual knowledge as to such dissolution. It has
18 N. E. 777; Ligare v. Peacock, 109 17 N. E. 426; Bragg v. Geddes, 93
Ill. 94; Bank of Montreal v. Page, Ill. 39; Hazell v. Clark, 89 Mo. App.
98 Ill. 109; Kelley v. Hanes, 143 Ill. 78.
App. 1; Wantling v. Howarth, 65 Ill. 17 Richardson v. Gregory, 126 Ill.
App. 598; Wood v. Fox's Heirs, 1 166, 18 N. E. 777 (affg. 27 Ill. App.
A. K. Marsh. (Ky.) 451; Mitchell v. 621) ; Spurck v. Leonard, 9 Ill. App.
Murphy, 131 La. 1040, 60 So. 677; 174; Ligare v. Peacock, 109 Ill. 94;
Simpson v. Ritchie, 110 Maine 299, Potter v. Tolbert, 113 Mich. 486, 71
86 Atl. 124; Wood v. Gault, 2 Md. N. W. 849; Dobbins v. Tatem (N. J.),
Ch. 433; Dille v. Parker, 204 Mass. 25 Atl. 544; Ferguson v. Baker, 116
163, 90 N. E. 520; Ferguson v. N. Y. 257; Green v. Waco State Bank,
Baker, 116 N. Y. 257; Bushby v. 78 Tex. 2, 14 S. W. 253. And com-
Berkeley, 135 App. Div. 443, 119 N. pare Wright v. Cudahy, 168 Ill. 86,
Y. S. 739; Frear v. Lewis, 151 N. Y. 48 N. E. 39; First Nat. Bank of Shak-
S. 486; Gould v. Banks, 8 Wend. (N. opee v. Strait, 75 Minn. 396, 78 N. W.
Y.) 562, 24 Am. Dec. 90; Dupuy v. 101.
Dawson (Tex. Civ. App.), 147 S. W. Is Coggswell &c. Co. v. Coggswell
698. And compare Stevenson v. (N. J.), 40 Atl. 213; In re Welles,
Shields, 7 La. 433; Truesdell v. Ba- 191 Pa. St. 239, 43 Atl. 207.
ker, 2 Rich. L. (S. Car.) 351. 19 Uniform Partnership Act, § 31
1o Kennedy v. Porter, 109 N. Y. 526, (1, c).
735 DISSOLUTION § 575
been seen that a partnership may be terminated by agreement
of all the partners, or by one or more of them, less than all.
It is also true that the relation may be terminated by the conduct
of the partners without any express agreement therefor, by a
sort of estoppel."o In one case21 where both parties agreed, and
the evidence showed, that to all outward appearances, and in
their relations to third persons, there was on a certain day, a
dissolution of the partnership, and a transfer of the property
purchased to one partner, Carter, J., in his opinion said: "We
are of the opinion that such apparent termination of the part-
nership relations of the parties should be treated as an actual
dissolution among themselves, unless it is made to appear by a
preponderance of the evidence that, as alleged by Wright (one
of the partners), he and Cudahy (the other partner) continued
to be partners secretly throughout the deal." The acts were not,
perhaps, conclusive as to the dissolution, but were at least pre-
sumptive thereof, and estopped the parties from denying the
fact of dissolution, unless they could, by clear evidence, establish
the fact that there was-in fact no dissolution.

§ 575. By expulsion of partner.-There is no power on

the part of some members of a partnership to expel a member
unless it is expressly given in the partnership agreement and such
power must be exercised in good faith and strictly in accordance
,with the power as granted.22a The power must be exercised by
20 Paton v. Wright, 15 How. Pr. son, 60 L. J. Ch. 482 [1891], 2 Ch. 84,
(N. Y.) 481; Armstrong v. Fahne- 64 L. T. 782; Smith v. Mules, 9 Hare
stock, 19 Md. 58; Green v. Waco State 556, 21 L. J. Ch. 803, 16 Jur. 261;
Bank, 78 Tex. 2, 14 S. W. 253. Hart v. Clark, 6 De G., M. & G. 232,
21 Wright v. Cudahy, 168 Ill. 86, 48 24 L. J. Ch. 137, 3 Eq. R. 264, 3 W.
N. E. 39. R. 147; Clarke v. Hart, 6 H. L. Cas.
21a See Lindley Partnership (8th 633; Carmichael v. Evans [19041, 1
ed.), pp. 490-493, and following cases: Ch. 486. See also Patterson v. Sil-
Russell v. Russell, 49 L. J. Ch. 268, liman, 28 Pa. St. 304; Piatt v. Oli-
14 Ch. Div. 471, 42 L. T. 112; Steu- ver, 3 McLean (U. S.) 27, Fed. Cas.
art v. Gladstone, 10 Ch. Div. 626, 40 L. No. 11116 (affd. 3 How. 333, 11 L.
T. 145, 27 W. R. 512; Blisset v. Dan- ed. 622) ; Kimball v. Gearhart, 12 Cal.
iel, 10 Hare 493; Andrews v. Mitch- 27; Gorman v. Russell, 14 Cal. 531.
ell [19051, A. C. 78: Fisher v. Tack-
§ 576 LAW OF PARTNERSHIP 736

all whose concurrence is required,22 and can not be exercised for

omission of duty unless the omission was intentional,2 3 but a
partner has no right to an opportunity to explain his conduct,
unless to the other partners, if they are to decide whether
expulsion is justifiable.2 " Mr. Lindley says: "If a partner has
been in fact wrongfully expelled and damnified it is not easy
to see why an action for damages should not lie."" Under the
definition of dissolution given in the Uniform Partnership Act,
rightful expulsion of a partner would ipso facto dissolve the firm,
since he ceases to be associated in carrying on the business.26 The
American cases on the subject of expulsion are very few, as will
be seen from those cited.
§ 576. By express will of one partner in contravention of
agreement.-The Uniform Partnership Act in permitting
dissolution by express will of one partner in contravention of
agreement at any time has followed what is probably the better
rule and that supported by the weight of authority in this coun-
try.27 But the holdings are far from being in conformity on
this question. The principle that one partner may terminate
at will a partnership agreement when no time was fixed
for its termination has not always been applied, when the firm
has come into being, unattended by any prescribed limit as to
the length of its existence, for the accomplishment of a particular
object; in such case, there are many holdings that dissolution
prior to the achievement of the purpose of the partnership should
only be for cause." Where a partnership has been formed to
22 Smith v. Mules, 9 Hare 556, 21 L. 493, citing Catchpole v. Ambergate
J. Ch. 803, 16 Jur. 261; Steuart v. &c. R. Co., 1 El. & Bl. 111, and judg-
Gladstone, 10 Ch. Div. 626, 40 L. T. ment of Cleasby and Pollock B. B.
145, 27 W. R. 512. in Wood v. Woad, L. R. 9 Ex. 190.
23 Smith v. Mules, 9 Hare 556, 21 26 Uniform Partnership Act, H§ 29,
L. J. Ch. 803, 16 Jur. 261. 31 (1, d).
24 Green v. Howell (1910), 1 Ch. 27 Uniform Partnership Act, § 31
495; Wood v. Woad, L. R. 9 Ex. 190; (2).
Cooper v. Wandsworth Board of 28 Beaver v. Lewis, 14 Ark. 138;
Works, 14 C. B. (N. S.) 180; Clark Burgess v. Badger, 124 Ill. 288, 14
v. Leach, 32 Beav. 14. N. E. 850; Walker v. Whipple, 58
25 Lindley Partnership (8 ed.), p. Mich. 476, 25 N. W. 472; Hubbell v.
737 DISSOLUTION § 576

continue for a definite period, the right of a partner to dissolve

at will is an open question. Some cases hold that every partner
has an indefeasible right to dissolve the partnership,2 " and it is
held that the voluntary assignment of one partner's interest
works such dissolution, though the term has not expired."o But
there are many cases denying the right to dissolve a partnership
agreement before expiration of its term." Even if a partner has
Buhler, 43 Hun 82, 6 N. Y. St. 578; v. Dayton, 19 Johns. (N. Y.) 513, 10
Pearce v. Ham, 113 U. S. 585, 28 L. Am. Dec. 286." See also Blake v.
ed. 1067, 5 Sup. Ct. 676. And com- Dorgan, 1 G. Greene (Iowa) 537;
pare Cole v. Moxley, 12 W. Va. 730. Karrich v. Hannaman, 168 U. S. 328,
29 That the dissolution of such a 42 L. ed. 484, 18 Sup. Ct. 135; La-
partnership may be accomplished at penta v. Lettieri, 72 Conn.377,44 Atl.
will, see Solomon v. Kirkwood, 55 730, 77 Am. St. 315; Swift v. Ward,
Mich. 256, 21 N. W. 336, in which 80 Iowa 700, 45 N. W. 1044, 11 L.
Cooley, C. J., delivering the opinion R. A. 302; Monroe v. Conner, 15
of the court says: "The rule on this Maine 178, 32 Am. Dec. 148; Walker
subject is thus stated in an early New v. Whipple, 58 Mich. 476, 25 N. W.
York case. The right of a partner to 472; Mason v. Connell, 1 Whart.
dissolve, it is said, 'is a right in- (Pa.) 381; Bagley v. Smith, 10 N.
separably incident to every partner- Y. 489, 19 How. Pr. 1, 61 Am. Dec.
ship. There can be no such thing as 756; In re Slemmer's Appeal, 58 Pa.
an indissoluble partnership. Every St. 168, 98 Am. Dec. 255; Kinloch v.
partner has an indefeasible right to Hamlin, 2 Hill Eq. (S. Car.) 19, 27
dissolve the partnership, as to all fu- Am. Dec. 441; Green v. Waco State
ture contracts, by publishing his Bank, 78 Tex. 2, 14 S. W. 253.
own volition to that. effect; and 30 Monroe v. Hamilton, 60 Ala. 226;
after such publication the other Miller v. Brigham, 50 Cal. 615; Mar-
members of the . firm have no quand v. New York Mfg. Co., 17
capacity to bind him by any contract. Johns. (N. Y.) 525; Conrad v. Buck.
Even where the partners covenant 21 W. Va. 396; Westbrook v. Wheel-
with each other that the partnership er, 25 Ont. 559.
shall continue several years, either s' Howell v. Harvey, 5 Ark. 270, 39
partner may dissolve it the next day Am. Dec. 376; Pearpoint v. Graham,
by proclaiming his determination for 4 Wash. (U. S.) 232, Fed. Cas.
this purpose; the only consequence No. 10877; Ross v. Cornell, 97 Ga.
being that he thereby subjects himself 340, 22 S. E. 394; Gerard v. Gateau,
to a claim for damages for a breach 84 Ill. 121, 25 Am. Rep. 438; Cash v.
of his contract. The power given Earnshaw, 66 Ill. 402; Berry v. Folkes,
by one partner to another to make 60 Miss. 576; Hartman v. Woehr, 18
joint contracts for them both is not N. J. Eq. 383; Van Kuren v. Tren-
only a revocable power, but a man ton &c. Mfg. Co., 13 N. J. Eq. 306;
can do no act to divest himself of Ferrero v. Buhlmeyer, 34 How. Pr.
the capacity to revoke it.' Skinner (N. Y.) 33; Smith v. Mulock, 24 N.
47-Row. ON PARTN.-VOL. 1
§ 576 LAW OF PARTNERSHIP . 738

such right he may nevertheless by his exercise thereof without

cause, render himself liable in damages to his copartners." "Some
courts have held that a partner can not terminate such a partner-
ship [one formed for a specific purpose or for a specified time]
at will; but the trend of the authorities now is that it may be
done, but, if it is done without legal cause, it will subject the
wrongdoer to liability for resulting damages."" "There may be
cases in which equity would enjoin a dissolution for a time, when
the circumstances were such as to make it specially injurious.
* * * When one partner becomes dissatisfied there is com-
monly no legal policy to be subserved by compelling a continu-
ance of the relation, and the fact that a contract will be broken
by the dissolution is no argument against the right to dissolve.
Most contracts may be broken at pleasure, subject, however, to
responsibility in damages. And that responsibility would exist
in breaking a contract of partnership as in other cases."" Where
a partnership agreement provides that it shall be terminated
"by mutual arrangement only," it is held in England that a part-
nership is created for the joint lives of the partners and it can
not be terminated by act of one partner." But in Texas a similar
agreement has been construed as making the partnership deter-
minable at will."
Y. Super. Ct. 569, 1 Abb. Pr. (N. S.) 360 (affd. 164 N. Y. 603, 58 N. E.
374; Bishop v. Breckles, 1 Hoff. Ch. 1088) ; Westwood v. Cole, 120 N. Y.
(N. Y.) 534; Von Tagen v. Roberts, S. 884; Skinner v. Dayton, 19 Johns.
2 Pearson (Pa.) 137; Hannaman v. (N. Y.) 513, 10 Am. Dec. 286; Cock-
Karrick, 9 Utah 236, 33 Pac. 1039 ley v. Brucker, 54 Ohio St. 214, 44 N.
(affd. 168 U. S. 328, 42 L. ed. 484, 18 E. 590; Addams v. Tutton, 39 Pa.
Sup. Ct. 135); Cole v. Moxley, 12 W. St. 447; Mason v. Connell, 1 Whart.
Va. 730; Henn v. Walsh, 2 Edw. Ch. (Pa.) 381; Cole v. Moxley, 12 W. Va.
129. 730. And compare Bishop v. Breck-
32 Uniform Partnership Act, § 38, les, 1 Hoff. Ch. (N. Y.) 534.
2 (a) II; Karrick v. Hannaman, 168 33 Beller v. Murphy, 139 Mo. App.
U. S. 328, 42 L. ed. 484, 18 Sup. Ct. 663, 123 S. W. 1029.
34
135; Blake v. Dorgan, 1 G. Greene Cooley, C. J., in Solomon v. Kirk-
(Iowa) 537; Monroe v. Conner, 15 wood, 55 Mich. 256, 21 N. W. 336.
Maine 178, 32 Am. Dec. 148; Bagley 35 Moss v. Elphick [1910], 1 K. B.
v. Smith, 10 N. Y. 489, 19 How. Pr. 846, 19 Ann. Cas. 382.
1, 61 Am. Dec. 756; Hagenaers v. 36 Wright v. Ross, 30 Tex. Civ. App.
Herbst, 30 App. Div. 546, 52 N. Y. S. 207, 70 S. W. 234.
 DISSOLUTION § 577

§ 577. By event making partnership unlawful-War.-

Again, the law may operate to dissolve a partnership when an
event happens which renders business of the firm unlawful.3 7
It is a well grounded principle that no partnership can exist
for the accomplishment of an illegal purpose. If on the one
hand the purpose for which the parties joined their efforts was
illegal, it can be plainly seen that no partnership is formed, al-
though the liabilities of actual partners may devolve upon those
persons attempting to form a partnership, as to certain third
parties. On the other hand, assuming the business of the part-
nership to have been legal when the partnership was formed and
the business commenced, and later to become illegal, what effect
would this have upon the firm? It is very generally, if not uni-
versally established, that under such circumstances the firm would
be immediately dissolved by the operation of the law making the
business illegal. Mr. Lindley, in his work on Partnership, says:
"Upon principle it is apprehended that if, by any change in the
law, it becomes illegal to carry on a business, every partnership
formed before making the law for the purpose of carrying
on that business, must be taken to have been dissolved by the
law in question. So if, the law remaining unchanged, some
event happens which renders. it illegal for the members of a
firm to continue to carry on their business in partnership, such
event dissolves the firm." 3 For example, until recent legislation
changed the law, a sale of land in California to Japanese was
legal, and a partnership, entered into and conducted exclusively
for the purpose of selling land to Japanese was legal. Upon
the passing of the recent statute by California, refusing the right
to Japanese to purchase land, such a partnership would dissolve,
providing, of course, that its objects were all for objects made
illegal by the statute. To the same effect would have been the
rule when a partnership was organized before the Chinese ex-
clusion act was passed, for the sole aim and purpose of bringing
37 Esposito v. Bowden, 7 El. & Bl. 1209, 5 W. R. 732; Griswold v. Wad-
763, 27 L. J. Q. B. 17, 3 Jur. (N.. S.) dington, 16 Johns. (N. Y.) 438.
38 Lindley Partnership, p. 584.
 §577 LAW OF PARTNERSHIP 740

Chinese into this country, or a partnership for the purpose of

assisting runaway slaves, before such act was prohibited by law.
As to the second ground given by Lindley, where the business
itself is not illegal, but where the association of the partners
becomes illegal, and the firm is dissolved, no better illustration
can perhaps be used than a proclamation of war declared be-
tween two nations, citizens of which nations are in partnership.
There has been considerable doubt expressed, however, as to
whether such a condition of war absolutely dissolves the firm, or
whether the partnership is simply suspended during the term of
the existence of the state of war. Mr. Chief Justice Spencer
said," in referring to war as dissolving partnerships as set forth
above, that: "When the objects and intentions of an union of two
or more individuals to prosecute commercial business are con-
sidered; when it is seen that an event has taken place without
their fault, and beyond their control, which renders their respec-
tive nations, and, along with them, the defendants themselves,
- enemies of each other; that all communication and intercourse
have become unlawful; that they can no longer co-operate in the
conduct of their common business by affording each other ad-
vice, and are kept hoodwinked as to the conduct of each other;
that the trade itself in which they were engaged has ceased to
exist; that if they enter into any contracts, they are incapable
of enforcing their performance by an appeal to the courts; that
their allegiance leads them to support opposite and conflicting
interests-I am compelled to say that the law can not be so
unjust as to pronounce that a partnership so circumstanced, when
all its objects and ends are prostrated, shall continue; and, with
the clearest conviction in my mind, and in analogy to the cases
to which reference has been made, I have come to the conclusion
that the partnership between the defendants was at least sus-
pended, and I incline to the opinion that it was ipso facto dis-
solved by the war, and consequently that the defendant, J. W., is
3 Griswold , v. Waddington, 15
Johns. 57 (affd. 16 Johns. (N. Y.)
438).
741 DISSOLUTION & 578

not liable to this action." In one case" it was held that the war
of 1860 dissolved a copartnership existing between infants in
Illinois and a person in Mississippi; but the dissolution had no
regard to things past. The parties continued partners as to
property actually acquired, and remained bound to account to
each other therefor. In all such cases, the partnership is dis-
solved by operation of law, except in such jurisdictions as hold
that the relation is simply suspended, in which case the suspen-
sion also occurs by operation of law.' The general rule is that
if a war breaks out which renders the members of the partner-
ship alien enemies, it operates as a dissolution of the firm.42 The
provision of the Uniform Partnership Act, which is merely
declaratory of the general law, is that a partnership is dissolved
by any event which makes it unlawful for the business of the
partnership to be carried on or for the members to carry it on
in partnership." The foregoing examples have fallen tinder the
first alternative of this provision. The second applies where a
partner becomes disqualified to continue in the business, or as a
partner. Thus, in Indiana, it is declared that the election and
qualification of a member of a law firm as judge dissolves the
partnership," and at common law, marriage of a woman partner
made her incompetent to contract and dissolved the firm.
§ 578. Marriage of a woman partner.-The subject of the
competency of a married woman as a party to a contract of
40 Douglas Case, 14 Ct. of Cl. 1. New Orleans v. Matthews, 49 N. Y.
41 See § 186, on aliens as partners. 12; Booker v. Kirkpatrick, 26 Grat.
42 McAdams v. Hawes, 9 Bush (Va.) 145; Taylor v. Hutchison, 25
(Ky.) 15; New York Life Ins. Co. Grat. (Va.) 536, 18 Am. Rep. 699. See
v. Clopton, 7 Bush (Ky.) 179, 3 Am. note, Dorsey v. Kyle, 96 Am. Dec.
Rep. 290; Matthews v. McStea, 91 U. 629.
S. 7, 23 L. ed. 188; Buchanan v. 4 Uniform Partnership Act, § 31
Curry, 19 Johns. (N. Y.) 137, 10 Am. (3).
Dec. 200; Seaman v. Waddington, 16 4 Felt v. Mitchell, 44 Ind. App. 96,

Johns. (N. Y.) 510; Griswold v. Wad- 88 N. E. 723; Justice v. Lairy, 19 Ind.
dington, 15 Johns. 57 (affd. 16 Johns. App. 272, 49 N. E. 459, 65 Am. St.
(N. Y.) 438) ; Woods v. Wilder, 43 405.
N. Y. 164, 3 Am. Rep. 684; Bank of 4 See post § 578.
 §578 LAW OF PARTNERSHIP 742

partnership was previously discussed." Additional discussion

from the viewpoint of dissolution because of the marriage of a
woman partner will follow here. Under the common law, the
marriage of a woman partner worked a dissolution of the firm
of which she was a member," and it was held that the marriage
of a man and woman who are partners will dissolve the partner-
ship relation." Only in certain excepted cases could a married
woman, at common law, enter into a contract of partnership
with any person. The rule has been very generally changed by
statute in this country at the present time. In Ohio, for instance,
the statute is as follows: "A husband or wife may enter into
any engagement or transaction with each other or with any
other person, which either might if unmarried; subject, in trans-
actions between themselves, to the general rules which control
the actions of persons occupying confidential relations with each
other."" The emancipation of woman as to property rights,
and the gradual growth thereof is well shown in the law of Ohio.
The law in that state originally followed the common-law rule,
of (with certain minor exceptions) no right to contract. In
1884 it was provided by legislative enactment that: "The sep-
arate property of the wife shall be under her sole control and
shall not be taken by any process of law for the debts of the
husband, or be in any manner conveyed or incumbered by him,
and she may, in her own name, during coverture, contract to
the same extent and in the same manner as if she were unmar-
ried.""o Prior to this, in 1861, a statute had been passed, making
the real and personal property of a married woman her separate
estate. In one case" the court said: "That a married woman
46 See H§ 190, 191, on Married 4SBassett v. Shepardson, 52 Mich.
Women; and Husband and Wife as 3, 17 N. W. 217. And compare Bur-
competent parties. ney v. Savannah Grocery Co., 98 Ga.
4 Little v. Grayson, 30 Pittsb. Leg. 711, 25 S. E. 915, 58 Am. St. 342.
Jour. (Pa.) 222; Little v. Hazlett, 197 49Ohio Code, § 7999.
Pa. St. 591, 47 Atl. 855; Brown v. 500hio Rev. Stat 1884, § 3100.
Chancellor, 61 Tex. 437. And com- 51.Payne v. Thompson, 44 Ohio St.
pare Nerot v. Burnand, 4 Russ. 247; 192, 5 N. E. 654.
Alexander v. Morgan, 31 Ohio St.
546.
743 DISSOLUTION §578

had not capacity at common law to enter into a partnership with

her husband will not admit of serious controversy." If she be
endowed with capacity to enter into a contract of copartnership
with her husband in Ohio it is so by virtue of some enabling
statute. * * * As the transactions involved in this con-
troversy occurred prior to the legislation of 1884 (81 Ohio L.
65, 209), we are not called upon to consider or construe these
enactments." It is seen by the above decision that at least until
the statute of 1884, the law was well recognized in Ohio that a
wife could not enter into a partnership with her husband, al-
though another case" recognizes the principle, under the act of
1861, that the wife could join in a partnership, with persons
other than her husband, as to her separate estate or property,
but no further. The question as to whether or not the act of
1884 galve to the wife the capacity to enter into a partnership
with her husband, was carefully and expressly evaded by the
Supreme Court in the case" cited above, and the point has not
since been expressly decided in any reported Ohio case, insofar
as the author has been able to ascertain. However, in his opin-
ion, the act of 1884 did give the wife this right, and the right
is even more thoroughly established in the present law cited
above. In several jurisdictions it has been expressly held that a
wife may be partner with her husband." Does, then, the mar-
riage of a woman dissolve a partnership of which she-is a mem-
ber? The answer is that it must depend entirely upon the rule
in the particular jurisdiction, there being three classifications
thereof. In the first, where the old common-law rule prevails,
'such a marriage to any one would dissolve the partnership. In
52 Citing 1 B1. Com. 442; Mathews 5 Scatt v. Conway, 58 N. Y. 619;
Partnership, § 9; 1 Collyer Partner- Zimmerman v. Erhard, 83 N. Y. 74;
ship (6th ed.), § 14; Parsons Partner- Graff v. Kinney, 15 Abb. N. Cas. 397,
ship, p. 23; Brown v. Jewett, 18 N. 37 Hun (N. Y.) 405, 1 How. Pr.
H. 230. (N. S.) 59; Krouskop v. Shontz, 51
53 Swasey v. Antram, 24 Ohio St. Wis. 204, 8 N. W. 241, 37 Am. Rep.
87. 817; Todd v. Lee, 15 Wis. 365.
5 Payne v. Thompson, 44 Ohio St.
192, 5 N. E. 68.
§ 579 LAW OF PARTNERSHIP 744

the second, where a wife can, in general, enter into such a part-
nership, excepting with her husband, a marriage by the woman
partner with one of her copartners would dissolve the firm. In
the third, where a woman may enter into a contract with any one,
her marriage to a member of the firm would not work a disso-
lution."

§ 579. By death of a partner.-The death of one of the

partners ordinarily terminates the partnership as to all the mem-
bers thereof." Death of a special partner, like that of a general
partner, dissolves a partnership." The reasons for such dissolu-
56See generally H§ 190, 191.
5 Pigott v. Bagley, M'Clel. & Y.
569, 19 Eng. Rul. Cas. 509n; Bur-
well v. Mandeville, 2 How. (U.
S.) 560, 11 L. ed. 378; Scholefield
v. Eichelberger, 7 Pet. (U. S.)
586, 8 L. ed. 793; Ruggles v. Buck-
ley, 175 Fed. 57, 27 L. R. A. (N.
S.) 541, 99 C. C. A. 73; Didlake v.
Roden Grocery Co., 160 Ala. 484, 49
So. 384; Lee v. Wimberly, 102 Ala.
539, 15 So. 444; Espy v. Comer, 76
Ala. 501; Knapp v. McBride, 7 Ala.
19; Humphries v. McCraw, 5 Ark.
61; Louis v. Elfelt, 89 Cal. 547, 26
Pac. 1095; Gleason v. White, 34 Cal.
258; Filley v. Phelps, 18 Conn. 294;
Canfield v. Hard, 6 Conn. 180; Mul-
herin v. Rice, 106 Ga. 810, 32 S: E.
865; Carter v. Lipsey, 70 Ga. 417;
Andrews v. Stinson, 254 Ill. 111, 98
N. E. 222, Ann. Cas. 1913 B, 927 and
note (revg. judgment 164 Ill. App.
25); McCall v. Moss, 112 Ill. 493;
Remick v. Emig, 42 Ill. 342; Talcott
v. Dudley, 4 Scam. (Ill.) 427; For-
rester v. Oliver, 1 Bradw. (Ill.) 259
(revd. 96 Ill. 315); Schmidt v.
Archer, 113 Ind. 365, 14 N. E.
543; Cobble v. Tomlinson, 50
Ind. 550; Williamson v. Wilson, 1
Bland (Md.) 418; Goodburn v.
Stevens, 5 Gill (Md.) 1; Marlett v.
Jackman, 3 Allen (Mass.) 287; Jen-
ness v. Carleton, 40 Mich. 343; Rob-
erts v. Kelsey, 38 Mich. 602; Mudd
v. Bast, 34 Mo. 465; Costello v.
Costello, 209 N. Y. 252, 103 N.
E. 148 (affg. judgment 137 N.
Y. S. 132, 152 App. Div. 280);
Gratz v. Bayard, 11 Serg. & R. (Pa.)
41; Potter v. Moses, 1 R. I. 430; Bank
of Mobile v. Andrews, 2 Sneed
(Tenn.) 535; Morris v. Owen (Tex.
Civ. App.), 143 S. W. 227; Davis v.
Christen, 15 Grat. (Va.) 11.
58 Burwell v. Cawood, 2 How. (U.
S.) 560, 11 L. ed. 378; Scholefield v.
Eichelberger, 7 Pet. (U. S.) 586, 8
L. ed. 793; McKinzie v. United States,
34 Ct. Cl. (U. S.) 278; Pitkin v. Pit-
kin, 7 Conn. 307, 18 Am. Dec. 111;
Oliver v. Forrester, 96 Ill. 315; Nel-
son v. Hayner, 66 Ill. 487; Remick v.
Emig, 42 Ill. 342; Johnson v. Clark,
18 Kans. 157; Ellis v. Johnson, 4 Ky.
L. (abstract) 991; Smith v. Smith, 51
La. Ann. 72, 24 So. 618; Price v.
Succession of Mathews, 14 La. Ann.
11; Cane v. Battle, 3 La. Ann. 642;
Hamlin v. Mansfield, 88 Maine 131,
33 Atl. 788; Knowlton v. Reed, 38
Maine 246; Williamson v. Wilson, 1
Bland (Md.) 418; Goodburn v.
745 DISSOLUTION § 579

tion are thus stated in a leading case:" "One of the essential

elements of a contract of copartnership consists in the right
which each member has to the continuance of all his associates
as members of the firm. If one withdraws, the copartnership
is at an end. The delectus personarunt lies at the foundation
of the agreement of the parties, and is one of the main considera-
tions on which it rests. The personal qualities of each member
of a firm enter largely into the inducements which lead parties to
form a copartnership; and if the abilities and skill, or the char-
acter and credit, of any one are withdrawn, the contract be-
tween them is terminated and the copartnership is dissolved.
When, therefore, by the death of a member of a firm, his per-
Stevens, 5 Gill (Md.) 1; Walker v. Waddington, 15 Johns. (N. Y.) 57
House, 4 Md. Ch. 39; Hall v. Clagett, (affd. 16 Johns. (N. Y.) 438);
48 Md. 223; Dyer v. Clark, 5 Metc. Cheeseman v. Wiggins, 1 Thomp. & C.
(Mass.) 562, 39 Am. Dec. 697; Wash- (N. Y.) 595; Jacquin v. Buisson, 11
burn v. Goodman, 17 Pick. (Mass.) How. Pr. (N. Y.) 385; Champion v.
519; Van Kleeck v. McCabe, 87 Mich. Williams, 2 Ohio Dec. 388, 2 Ohio
599, 49 N. W. 872, 24 Am. St. 182; (N. P.) 329; In re Smith's Estate, 11
Jenness v. Carleton, 40 Mich. 343; Phila. (Pa.).131; Gratz v. Bayard, 11
Roberts v. Kelsey, 38 Mich. 602; Serg. & R. (Pa.) 41; Darling's Es-
Hoard v. Clum, 31 Minn. 186, 17 N. tate, 7 Kulp (Pa.) 323; Potter v.
W. 275; Robertshaw v. Hanway, 52 Moses, 1 R. I. 430; Jones v. McMich-
Miss. 713; Mayson's Admr. v. Beaz- ael, 12 Rich. L. (S. Car.) 176; Fisher
ley's Admr., 27 Miss. 106; Exchange v. Tucker, 1 McCord Eq. (S. Car.)
Bank v. Tracy, 77 Mo. 594; Edwards 169; Tompkins v. Tompkins, 18 S.
v. Thomas, 66 Mo. 468; Mudd v. Bast, Car. 1; Carroll v. Alston, 1 S. Car.
34 Mo. 465; Beller v. Murphy, 139 Mo. 7; Bank of Mobile v. Andrews, 2
App. 663, 123 S. W. 1029; Gaskill v. Sneed (Tenn.) 535; Isler v. Baker, 6
Adams, 83 Mo. App. 380; Greenburg Humph. (Tenn.) 85; Landa v. Shook,
v. Early, 4 Misc. 99, 30 Abb. N. Cas. 87 Tex. 608, 30 S. W. 536; Alexander's
300, 23 N. Y. S. 1009, 53 N. Y. St. Exrs. v. Lewis, 47 Tex. 481; McNeish
130.; Ames v. Downing, 1 Bradf. Sur. v. United States Hulless Oat Co., 57
(N. Y.) 321; Dexter v. Dexter, 43 Vt. 316; Walker v. Wait, 50 Vt. 668;
App. Div. 268, 60 N. Y. S. 371; Du- Tenney v. New England Protective
rant v. Pierson, 124 N. Y. 444, 26 N. Union, 37 Vt. 64; Davis v. Christian,
E. 1095, 21 Am. St. 686, 12 L. R. A. 15 Grat. (Va.) 11; Vilas v. Farwell,
146; Stewart v. Robinson, 115 N. Y. 9 Wis. 460; Crawshay v. Maule, 1
328, 22 N. E. 160, 5 L. R. A. 410; Swanst. 495-520, 1 Wils. 181; Ex parte
Sage v. Woodin, 66 N. Y. 578; Eg- Ruffin, 6 Ves. 119, 5 R. R. 237.
berts v. Wood, 3,Paige Ch. (N. Y.) 59 Marlett v. Jackman, 3 Allen
517, 24 Am. Dec. 236; Griswold v. (Mass.) 287.
§ 579 LAW OF PARTNERSHIP 746

sonal liability ceases and his estate is by operation of law ab-

solved from all future contracts and transactions entered into
in the name of the firm, it would seem to follow as a necessary
consequence, that the power of the surviving copartners to bind
each other by new contracts and engagements must at once
cease. The copartnership would then be terminated not only as
to the deceased partner and his estate, but also as to the other
members of the firm. The delectus personarum would no longer
exist. The contract of copartnership did not confer any power
or authority on the several copartners to bind each other indi-
vidually, or to act in behalf of any number of them less than
the whole. The copartnership constituted the principal; and the
several copartners were agents, not of the different persons com-
prising the firm, but only of all taken together and forming one
body united in a community of interest for common objects.
If, then, the members of the firm are held to be bound by a
contract entered into by one of the copartners in the name of
the firm after its dissolution by the death of a member, such
liability does not arise or grow out of the agreement of copart-
nership. On the contrary, it is directly adverse to the nature
and spirit of the contract between the parties. No such agency
was created by the formation of the copartnership. It presents
the anomaly of holding a party responsible for the act of an
agent after the principal-the copartnership-had ceased to exist,
and all authority to act in its behalf had been revoked by an act
of God." Even where a partnership agreement provides for
the continuance of the business after the death of any one of the
partners,"o it seems that, strictly speaking, the effect of such
60 Page v. Ratliffe, 76 L. T. (N. ed. 404; Smith v. Ayer, 101 U. S.
S.) 63; Hunter v. Dowling (1895), 320, 25 L. ed. 955; Burwell v. Cawood,
2 Ch. 223, 64 L. J. Ch. 713, 13 R. 474, 2 How. (U. S.) 560, 11 L. ed. 378;
72 L. T. 653, 43 W. R. 619; Jennings Espey v. Corer, 76 Ala. 501; Houston
v. Jennings, 67 L. J. Ch. 190; Ex parte v. Stanton, 11 Ala. 412; Knapp v. Mc-
Bevan, 10 Ves. 107; Dowse v. Gor- Bride, 7 Ala. 19; Edgar v. Cook, 4
ton (1891), A. C. 190, 60 L. J. Ch. Ala. 588; Blodgett v. American Nat.
745, 64 L. T. 809, 40 W. R. 17; In Bank, 49 Conn. 9; Butler v. American
re Johnson, L. R. 15 Ch. Div. 548; Toy Co., 46 Conn. 136; Duffield v.
Jones v. Walker, 103 U. S. 444, 26 L. Brainerd, 45 Conn. 424; Rand v.
747 DISSOLUTION § 579

agreement upon the happening of the contingency mentioned, will

be the formation of a new firm," although the courts of some
jurisdictions apparently take the view that it will prevent the
dissolution of the partnership." It has been held that if a con-
tinuance of the business after death of a partner is stipulated in
the partnership agreement, it is binding only at the option of the
deceased partner's representatives or heirs." But death of a
partner always dissolves an ordinary partnership, unless the arti-
cles of. partnership provide for a continuance of the firm after

Wright, 141 Ind. 226, 39 N. E. 447;
Stanwood v. Owen, 14 Gray (Mass.)
195; Jenness v. Carlton, 40 Mich. 343;
Roberts v. Kelsey, 38 Mich. 602; Mat-
tison v. Farnham, 44 Minn. 95, 46 N.
W. 347; Hoard v. Clum, 31 Minn. 186,
17 N. W. 275; Edwards v. Thomas, 66
Mo. 468; Scharringhausen v. Luebsen,
52 Mo. 337; Wild v. Davenport, 48
N. J. L. 129, 7 Atl. 295, 57 Am. Rep.
552; Stewart v. Robinson, 115 N. Y.
328, 22 N. E. 160, 163, 5 L. R. A.
410; Wilson v. Simpson, 89 N. Y.
619; Delemater v. Hepworth, 48 Hun
618, 2 N. Y. S. 310, 15 N. Y. St. 833;
In re Laney, 50 Hun 15, 18 N. Y. St.
463, 2 N. Y. S. 443 (affd. 119 N. Y.
607, 23 N. E. 1143); Jones v. Procter,
5 Ohio Dec. 416, 5 Ohio N. P. 315;
Peters v. Campbell, 2 Ohio Dec. (Re-
print) 526, 3 West. L. Month. 587;
Brew v. Hastings, 196 Pa. St. 222, 46
Atl. 257, 49 Am. St. 706; Wilcox v.
Derickson, 168 Pa. St. 331, 31 Atl.
1080; In re Leaf's Appeal, 105 Pa.
St. 505; Roessler's Estate, 5 Pa. Dist.
776; Laughlin v. Lorenz's Admr., 48
Pa. St. 275, 86 Am. Dec. 592; Carter
v. Young, 9 Lea (Tenn.) 210; God-
frey v. Templeton, 86 Tenn. 161, 6
S. W. 47; Morrow v. Morrow, 2 Tenn.
Ch. 549; Alexander's Exrs. v. Lewis,
47 Tex. 481; McNeish v. United
States Hulless Oat Co., 57 Vt. 316;
Walker v. Wait, 50 Vt. 668; Tenney
v. New England Protective Union, 37
Vt. 64.
61 Pitkin v. Pitkin, 7 Conn. 307, 18
Am. Dec. 111; Hornaday v. Cowgill,
54 Ind. App. 631, 101 N. E. 1030;
Ellis v. Johnson, 4 Ky. L. (abstract)
991; Mattison v. Farnham, 44 Minn.
95, 46 N. W. 347; Hoard v. Clum, 31
Minn. 186, 17 N. W. 275; Brenner v.
Hirsche, 69 Miss. 309, 13 So. 730;
Wild v. Davenport, 48 N. J. L. 129, 7
Atl. 295, 57 Am. Rep. 552; Stewart v.
Robinson, 115 N. Y. 328, 22 N. E. 160,
163, 5 L. R. A. 410; McGrath v.
Cowen, 57 Ohio St. 385, 49 N. E. 338;
Wilcox v. Derickson, 168 Pa. St. 331,
31 Atl. 1080. See also Andrews v.
Stinson, 254 Ill. 111, 98 N. E. 222,
Ann. Cas. 1913 B, 927 and note. And
compare Lee v. Wimberly, 102 Ala.
539, 15 So. 444.
62 Ferris v. Van Ingen, 110 Ga. 102,
35 S. E. 347; Rand v.. Wright, 141
Ind. 226, 39 N. E. 447; Roberts v. Kel-
sey, 38 Mich. 602; Edwards v.
Thomas, 66 Mo. 468; Farmers' &
Traders' Say. Inst. v. Garesche, 12
Mo. App. 584.
63 Andrews v. Stinson, 254 Ill. 111,
98 N. E. 222, Ann. Cas. 1913 B, 927
and note.
9 580 LAW OF PARTNERSHIP 748

such death. In an Indiana case" there was a contract between

the members of a banking partnership, which contained the
following provision: "In case of the death of any one of the
partners, his or her heirs or legal representatives shall occupy
the same place in the copartnership as was occupied by the part-
ner; and it shall not be competent for such heirs or legal repre-
sentatives to withdraw such capital until the expiration of the
term of partnership." One of the partners, William H. Morri-
son, died during the continuance of the agreement, the firm later
encountering reverses, and the firm passed into a receiver's hands.
In adjusting the matters, the court, in its opinion thus touches
upon the question under discussion, as follows: "By the death
of William H. Morrison in March, 1881, however, there can be
little doubt, as we think, that the law would have worked a dis-
solution of the partnership, were it not for the provision to the
contrary in the articles of agreement." By that provision Mary
Morrison, widow and administratrix of William H. Morrison,
took his place in the company, and the partnership was contin-
ued under the board of control until March 1, 1882 (the time of
the expiration of the partnership agreement.)" Mining part-
nerships are an exception in this respect to the ordinary part-
nership. In a California case" the rule as to joint owners of
mines is stated as follows: "They form what is termed a mining
partnership, which is governed by many of the rules relating to
ordinary partnerships, but which has also some other rules pecu-
liar to itself, one of which is that one person may convey his in-
terest in the mine and business without dissolving the partner-
ship." Death of a member of a joint stock company does not,
ipso facto, work a dissolution."
§ 580. By bankruptcy.-Again, a partnership is dissolved
by operation of law when either the firm itself or any one of its
64 Rand v. Wright, 141 Ind. 226, 39 83 Am. Dec. 96 (quoted in Congden
N. E. 447 (1895). v. Olds, 18 Mont. 487, 46 Pac. 261).
65 Citing Schmidt v. Archer, 113 See also Taylor v. Castle, 42 Cal. 367.
Ind. 365, 14 N. E. 543, and authorities 67 Carter v. McClure, 98 Tenn. 109,
cited. 38 S. W. 585, 36 L. R. A. 282, 60 Am.
66 Skillman v. Lachman, 23 Cal. 198, St. 842.
749 DISSOLUTION § 581

members is adjudged insolvent or a bankrupt.68 In like manner

an assignment for the benefit of creditors, ordinarily, it seems,
accomplishes a dissolution,6 " or an assignment by one partner
of his interest for the benefit of his individual creditors." And
the continuation of the business after such adjudication or as-
signment will not in all probability change the effect of either."
The subject of bankruptcy is of such importance in partnership
law that it will be treated in a separate chapter," and under the
general discussion of the topic will be treated its relation to dis-
solution.
§ 581. Levy of attachment or execution sale.-A levy of
execution against one partner on his interest in the firm and the
sale of such interest works a dissolution of the firm." But this
68 Ex.parte Ruffin, 6 Ves. 119, 5 R. 34 L. ed. 283, 10 Sup. Ct. 924; Davis
R. 237; Fox v. Hanbury, Cowp. 449; v. Megroz, 55 N. J. L. 427, 26 Atl.
Amsinck v. Bean, 22 Wall. (U. S.) 1009; Ferrero v. Buhlmeyer, 34 How.
395, 22 L. ed. 801; Lacey v.. Cowan, 162 Pr. (N. Y.) 33; Carrol v. Evans, 27
Ala. 546, 50 So. 281; McNutt v. King, Tex. 262.
59 Ala. 597; Wells v. Ellis, 68 Cal. 70 Saloy v. Albrecht, 17 La. Ann.
243, 9 Pac. 80; Gordon v. Freeman, 75; Arnold v. Brown, 24 Pick.
11 Ill. 14; Talcott v. Dudley, 4 Scam. (Mass.) 89, 35 Am. Dec. 296; Mar-
(Ill.) 427; Fitch v. Pryse, 4 Ky. L. quand v. N. Y. Mfg. Co., 17 Johns.
(abstract) 904; Williamson v. Wilson, (N. Y.) 525; Ogden v. Arnot, 29
1 Bland (Md.) 418; Arnold v. Brown, Hun (N. Y.) 146; Conrad v. Buck, 21
24 Pick. (Mass.) 89, 35 Am. Dec. 296; W. Va. 396; Cameron v. Stevenson,
Eustis v. Bolles, 146 Mass. 413, 4 Am. 12 U. C. C. P. 389. See note 30,
St. 327, 16 N. E. 286; Atwood v. Gil- ante § 576, on dissolution by express
lett, 2 Doug. (Mich.) 206; Halsey v. will of one partner in contravention
Norton, 45 Miss. 703, 7 Am. Rep. 745; of partnership agreement.
Greene v. Breck, 32 Barb. (N. Y.) 73; 7' Atwood v. Gillett, 2 Doug.
Welles v. March, 30 N. Y. 344; Mar- (Mich.) 206. And compare Fitch v.
quand v. New York Mfg. Co., 17 Pryse, 4 Ky. L. 904.
Johns. (N, Y.) 525; Havens v. Hus- 72 See post ch. 22.

sey, 5 Paige Ch. (N. Y.) 30; Lovins
v. Laub, 85 Misc. 336, 147 N. Y. S.
304; Blackwell v. Claywell, 75 N. Car.
213; In re McKelvy's Appeal, 72 Pa.
St. 409; Siegel v. Chidsey, 28 Pa. St.
279, 70 Am. Dec. 124.
69 Simmons v. Curtis, 41 Maine 373;
Riddle v. Whitehill, 135 U. S. 621,
73 Theriot v. Michel, 28 La. Ann.
107; Sanders v. Young, 31 Miss. 111;
Morrison v. Blodgett, 8 N. H. 238, 29
Am. Dec. 6; Renton v. Chaplain, 9 N.
J. Eq. 62; Carter v. Roland, 53 Tex.
540; Aspinall v. London &c. R. Co.,
11 Hare 325, 1 W. R. 518; Habershon
v. Blurton, 1 De Gex. & Sm. 121.
§ 582 LAW OF PARTNERSHIP 750

rule does not hold if the levy and sale was made by collusion of
one partner with his creditor in order to force a dissolution and
deprive a copartner of valuable rights." It has been held that
where the seizure of the interest of one partner deprives the
partnership of control of firm property, the partnership is dis-
solved." Merely filing an attachment against partnership prop-
erty," or mere seizure of such property under writ of attach-
ment," will not dissolve the firm.
§ 582. By judicial decree and by operation of law-Gen-
erally.-The various ways in which a partnership may be
dissolved are often classified under three heads: by operation
of law; by act of the partners themselves; and by the decree of
a court of competent jurisdiction. The text-writers who follow
this classification make dissolution by judicial decree one of the
great divisions of the subject of dissolution with several-subdi-
visions. This method has not been fully observed here, owing
to the fact that in such a classification numerous subdivisions
overlap from one general division. Hence the subject of disso-
lution by judicial decree will be treated in a very general man-
ner. The same observations apply to dissolution by operation
of law, as a general division. Both these methods of dissolution
occur by reason of the working of the law. The difference lies
mainly in this, that by operation of law the dissolution is auto-
matic, the law works of its own volition or momentum, while
by judicial decree the law is set in motion by order of a court.
These two methods are, in a way, set off from a third method
and often referred to in text-books where the dissolution occurs
by reason of the acts of the parties. The difficulty of proceeding
according to the above three classifications with subdivisions
thereunder, may be better realized when we consider that the
partnership itself must be formed by the acts of the parties
74 Renton v. Chaplain, 9 N. J. Eq. 76
Foster v. Hall, 4 Humph.
62. (Tenn.) 346.
s Borah v. O'Neill, 116 La. 672, 41 77 Barber v. Barnes, 52 Cal. 650.
So. 29. Contra: Choppin v. Wil-
son, 27 La. Ann. 444.
-751 DISSOLUTION §) 582

themselves, and that in very many instances the dissolution of

the firm by act of law or by judicial decree is founded upon
some act of the partners or part of them, and further that it
is often necessary to resort to judicial decree as to whether or
not there has been a dissolution, or acts which should result in
dissolution, by either or both of the other two methods. By
some authorities it has been held that a partnership at will may
be dissolved by act of the parties, while a partnership for a definite
term can only be dissolved by judicial decree." Another, and
probably more strongly grounded rule is that any partner may
at any time terminate the partnership relation, with or without
cause, subject always to the provision that should he do so
without sufficient grounds, that he shall be liable in damages to
the partner or partners injured." This diversity of opinion in
the different jurisdictions further illustrates the difficulty of a
general classification, as the same identical case might be classi-
fied under one division in one state, and otherwise in an adjoin-
ing state. The same diversity of opinion exists as between dis-
solution by operation of law and by judicial decree. As is
shown elsewhere herein, abandonment of the partnership
agreement, in certain jurisdictions, ipso facto, dissolves a
partnership, while in other jurisdictions there must be an
order of court to produce the same result. The marriage of a
woman partner, in such jurisdictions as have not departed from
the common-law rule, is usually given as an example of dissolution
by operation of law, and such is undoubtedly the case, yet it
is submitted that this is also dissolution by the act of a party, as,
in legal contemplation, at least, the woman partner knew the
law, and elected to do, voluntarily, an act which she knew would
dissolve the firm. This is really, it would seem, dissolution
by a combination of an act of a party and operation of law.
Moreover, bankruptcy of a partner is usually given as an ex-
7 Cash v. Earnshaw, 66 Ill. 402; 7 Monroe v. Conner, 15 Maine 178,
Sieghortner v. Weissenborn, 20 N. J. 32 Am. Dec. 148; Lapenta v. Lettieri,
Eq. 172; Bishop v. Breckles, 1 Hoff. 72 Conn. 377, 44 Atl. 730, 77 Am. St.
Ch. (N. Y.) 534; Cole v. Moxley, 12 315; Mason v. Connell, 1 Whart.
W. Va. 730. (Pa.) 381.
§ 582 LAW OF PARTNERSHIP 752

ample qf dissolution by operation of law. True, the law does

say that bankruptcy of a partner dissolves a partnership, yet it
takes a judicial decree to create a state of bankruptcy, and,
further, in cases of voluntary bankruptcy, the decree is based
upon an act of a partner consenting thereto. Therefore, it would
appear that dissolution by reason of voluntary bankruptcy arises
as follows: 1, by act of a party; 2, by judicial decree; 3, by op-
eration of law, and that all three methods enter into the final
dissolution. Analysis of the cases will show that a very large
number of dissolved partnerships occur by reason of a com-
bination of two or more of the above general classifications.
The general classification is, however, not without merit, and
has considerable value when applied to individual cases, as there
are many cases which can come squarely within one of these
three divisions, and probably all cases come within the three
divisions. The difficulty appears where an attempt is made to
bring each of the different causes of dissolution entirely within
one of the above three divisions. Under the Uniform Partner-
ship Act certain causes are given whereby a partner may on
application have a dissolution decreed by a court, and those
grounds for dissolution will be considered next, with reference
to the existing decisions on the subject, which do not always
make a decree of court necessary to work a dissolution on some
of those grounds. In general, when a partnership is formed to
continue for a specified time and can not be terminated at will
without the risk that the dissolving' partner will be liable to re-
spond to his associates in damages, resort may be had to a court
of equity to decree dissolution."o
s0 Northen v. Tatum, 164 Ala. 368, (N. S.) 839, Ann. Gas. 1913 D, 1143
51 So. 17; Howell v. Harvey, 5 Ark. and note (revg. judgment 154 App.
270, 39 Am. Dec. 376; Moran v. Mc- Div. 925, 136 N. Y. S. 81); Waterbury
Inerney, 129 Cal. 29, 61 Pac. 575, v. Merchants' Union Exp. Co., 50
948; Kennedy v. Kennedy, 3 Dana Barb. (N. Y.) 157; Richards v. Baur-
(Ky.) 239; Sieghortner v. Weissen- man, 65 N. Car. 162; Durbin v. Bar-
born, 20 N. J. Eq. 172; Berolzheimer ber, 14 Ohio 311; Fleming v. Carson,
v. Strauss, 7 Civ. Proc. 225, 51 N. Y. 37 Ore. 252, 62 Pac. 374; Bank of Mo-
Super. Ct. 96; Barclay v. Barrie, 209 bile v. Andrews, 2 Sneed (Tenn.)
N. Y. 40, 102 N. E. 602, 47 L. R. A. 535; Isler v. Baker, 6 Humph.
753 DISSOLUTION § 583

§ 583. Dissolution for insanity.-*,Insanity does not ipso

facto operate to dissolve a partnership. There must ordinarily
be some act by a court of competent jurisdiction, whereby the
relation is terminated. The reason is obvious. In order to
constitute a valid partnership inter sese there must be a meeting
of minds of the persons assuming the partnership. Each mem-
ber has a right to the rational advice and aid of his copartner,
in the absence of a contract or a rule of law to the contrary.
Each has the right to the protection and the care which a rea-
sonable man would or could bestow. How necessary it then is for
each person in the firm to be in his right mind and reason, may
be seen. In an English case" the court laid down the following
rule of law upon the subject: "It is clear upon principle that
the complete incapacity of a party to an agreement to perform
that which was a condition of the agreement is a ground for
determining the contract. The insanity of a partner is a ground
for the dissolution of the partnership because it is immediate
incapacity; but it may not in the result prove to be a ground of
dissolution, for the partner may recover from his malady. When
a partner, therefore, is afflicted with insanity, the continuing
partner may, if he think fit, make it a ground of dissolution,
but in that case I consider with Lord Kenyon that in order to
make it a ground of dissolution he must obtain a decree of the
court. If he does not apply to the court for a decree of dissolu-
tion, it is to be considered that he is willing to wait to see whether
the incapacity of his partner may not prove merely temporary.
If he carry on the partnership business in the expectation that
his partner may recover from his insanity, so long as he con-
tinues the business with that expectation or hope, there can be
no dissolution." It can thus be seen that dissolution on the
(Tenn.) 85; Swepson v. Davis (Tenn. E. 327. See further Hoffman v.
Ch.), 60. S. W. 619; Daniel v. Gil- Hauptner, 135 App. Div. (N. Y.) 148,
lespie, 65 W. Va. 366, 64 S. E. 254; 119 N. Y. S. 1022; Connelley v. Cus-
Wood v. Beath, 23 Wis. 254. Disso- ter, 52 Wash. 697, 100 Pac. 335.
lution by contract, however, precludes 81 Jones v. Noy, 2 Myl. & K. 125,
action for same. Adams v. Carmony, 3 L. J. Ch. 14.
44 Ind. App. 291, 87 N. E. 708, 89 N.

48-Row. ON PARTN.-VOL. 1
, 583 LAW OF PARTNERSHIP 7 54

ground of insanity may be very difficult to determine. The in-

sanity must be clearly proven. The question may also arise as to
the degree of mental impairment and the length of time thereof.
It would be safe to say that both must be such as to render the
affected partner incapable of assuming his duties to the firm.
Lord Kenyon says: 8 2 "If I was clearly satisfied that Bennet
.(the alleged insane partner) was restored to a sound mind, and
could afford the proper assistance to Sayer, the partnership
ought not to be dissolved. * * * If he has merely a ray of
intellect, I ought not to re-engraft him in his partnership." A
Louisiana case" held that where one party is insane, and the
other member of the partnership conducts the business of the
firm, without a notice that the firm is dissolved (according to the
Louisiana statute), the firm continues and there is no dissolu-
tion by reason of the insanity ipso facto, regardless of the in-
sanity being notorious and unmistakable. There are, however,
one or two cases contrary to the above general rule, which hold
that such a principle is dangerous, the theory being that an in-
sane partner might, with the broad powers of agency given his
copartners, be heavily involved before there could be a judicial de-
cree dissolving the firm, and which would not have occurred had
they had the benefit of his sane and rational advice." There could
be little reason for fear of the contracts of the insane partner,
however, especially if he were apparently insane, as his contracts
could be avoided upon this ground. The following general rules
may be stated: Insanity of a partner, even though adjudicated,
does not ipso facto work a dissolution of the partnership."
82 Sayer v. Bennett, 1 Cox 107. St. 112; Cresse v. Loper, 72 N. J.
83 Jurgens v. Ittman, 47 La. Ann. Eq. 784, 65 Atl. 1001; Barclay v. Bar-
367 (1895). See also Raymond v. re, 209 N. Y. 40, 102 N. E. 602, 47 L.
Vaughn, 128 Ill. 256, 21 N. E. 566, R. A. (N. S.) 839 and note, Ann.
4 L. R. A. 440, 15 Am. St. 112. Gas. 1913 D, 1143 and note; Fried-
84 Parsons Partnership, p. 362; Isler burgher v. Jaberg, 20 Abb. N. Gas.
v. Baker, 6 Humph. (Tenn.) 85. See 279, 11 N. Y. St. 718; Sander v.
also Cape Sable Co's Case, 3 Bland Sander, 2 Coll. Ch. Cas. 276; Sayer
(Md.) 606. v. Bennet, 1 Cox Ch. 107; Kirby v.
85 Raymond v. Vaughn, 128 Ill. 256, Carr, 2 Jun. 741, 8 L. J. Exch.
21 N. E. 566, 4 L. R. A. 440, 15 Am. 31, 3 Y. & C. Exch. 184, 2 Jur. 741;
755 DISSOLUTION § 83

Where insanity of a permanent, hopeless nature beclouds the

mind of one of the members of the firm, equity may properly dis-
solve the partnership.8 6 Where insanity is merely of a temporary
character with a prospect of recovery, the partnership will not be
dissolved." As to dissolution for insanity the Uniform Partner-
ship Act merely declares the general rule." The Uniform Part-
nership Act provides that dissolution by decree of court may be

Anonymous, 2 Kay & J. 441; Jones v. Barrie, 209 N. Y. 40, 102

v. Noy, 2 Myl. & K. 125, 3 L. J. Ch. N. E. 602, 47. L. R. A. (N.
14; Fisher v. Melles, L. R. 18 Eq. Cas. S.) 839, Ann. Cas. 1913 D.
268n; Wrexham v. Hudleston, 1 1143 and note (revg. judgment
Swanst. 514n. See also Sadler v. Lee, 154 App. Div. 925, 139 N. Y. S.
6 Beav. 324, 7 Jur. 476, 12 L. J. Ch. 81); Jones v. Noy, 2 Myl. &
407; Reynolds v. Austin, 4 Del. Ch. K. 125, 3 L. J. Ch. 14; Jones
24; Davis v. Lane, 10 N. H. 156; v. Lloyd, L. R. 18 Eq. 265, 43 L. J.
Griswold v. Waddington, 15 Johns. Ch. 826, 30 L. T. 487, 22 W. R. 785;
(N. Y.) 57 (affd. 16 Johns. 438); Whitwell v. Arthur, 35 Beav. 140;
Page v. Vankirk, 1 Brewst. (Pa.) Kirby v. Carr, 3 Younge & C. 184,
282. And see the note to Breaux v. L. J. Ex. Eq. 31, 2 Jur. 741; Rowland
Le Blanc, 50 La. Ann. 228, 23 So. 281, v. Evans, 30 Beav. 302; Waters v.
69 Am. St. 403. Taylor, 2 Ves. & B. 299, 13 R. R. 91;
86 "The rule supported by the de- Leaf v. Coles, 1 De G., M. & G. 171;
cided weight of authority, and an- Bagshaw v. Parker, 10 Beav. 532;
nouncing the correct doctrine, is that Milne v. Bartlett, 8 L. J. Ch. 254, 3
the insanity of a partner does not, Jur. 358; Jurgens v. Ittmann, 47 La.
per se, work a dissolution of the Ann. 367, 16 So. 952; Griswold v.
partnership, but may constitute suffi- Waddington, 15 Johns, (N. Y.) 57
cient grounds to justify a court of (affd. 16 Johns. (N. Y.) 438) ; Fried-
equity in decreeing its dissolution. burgher v. Jaberg, 20 Abb. N. Cas.
But this doctrine must be understood (N. Y.) 279, 11 N. Y. St. 718.
and is applied by courts of equity 87 Barclay v. Barrie, 209 N. Y. 40,

with appropriate limitations and re- 102 N. E. 602, 47 L. R. A. (N. S.)

strictions; for, while curable, tempo- 839, Ann. Cas. 1913 D, 1143 and note;
rary insanity will be sufficient, upon Leaf v. Coles, 1 De G., M. & G. 171;
an inquisition, to sustain an adjudi- Jones v. Lloyd, 43 L. J. Ch. 826, L.
cation of insanity in the county court,R. 18 Eq. 265, 30 L. T. 487, 22 W. R.
* * * yet it will not authorize a 785; Jones v. Noy, 2 Myl. & K. 125;
court of chancery to decree a disso- Sayer v. Bennett, 1 Cox 107; Patey
lution of a partnership, if the malady v. Patey, 5 L. J. Ch. 198; Anonymous,
be temporary only, with a fair pros- 2 Kay & J. 441; Raymond v. Vaughn,
pect of recovery within a reasonable 128 Ill. 256, 21 N. E. 566, 4 L. R. A.
time." Raymond v. Vaughn, 128 Ill. 440, 15 Am. St. 112.
256, 21 N. E. 566, 4 L. R. A. 440, 15 88 Uniform Partnership Act, § 32
Am. St. 112. See also Barclay (1, a).
§ 584 LAW OF PARTNERSHIP 756

had on application by or for a partner. Ordinarily dissolution

because of a partner's insanity is asked by a copartner, but it
is held that the dissolution may be at the instance of the partner
of unsound mind not so adjudicated by his next friend, the court
saying:" "If this were not the law anybody might at his will
and pleasure commit waste on a lunatic's property or do damage
or serious injury and annoyance to him and his property, with-
out there being any remedy whatever." A dissolution for lunacy
will not ordinarily be dated as from the beginning of the lunacy.o
§ 584. Dissolution for other incapacity of partner.-Like-
wise, it has been declared that a bill for dissolution may be
predicated on either the ill health or physical incapacity of a
partner which prevents him from performing the duties in-
cumbent on him in the business," or'upon his lack of requisite
skill." In the leading American case on this subject it was
said " "the cases and text-writers, as well as common sense,
make it apparent that 'permanent' incapacity as a ground for
dissolution does not, and should not, mean incurable and per-
petual disability during the life of the -partner. It means in-
capacity which is lasting rather than merely temporary, and the
prospect of recovery from which is remote, which has continued
or is reasonably certain to continue during so substantial a por-
tion of the partnership period 'as to defeat or materially affect
89 Jones v. Lloyd, L. R. 18 Eq. 265, 93 Barclay v. Barrie, 209 N. Y. 40,
43 L. J. Ch. 826, 30 L. T. 487, 22 W. 102 N. E. 602, 47 L. R. A. (N. S.)
R. 785. 839, Ann. Cas. 1913 D, 1143 (revg.
96 Sander v. Sander, 2 Coll. Ch. Cas. Barclay v. Barrie, 142 App. Div. 670,
276; Besch v. Frolich, I Phila. (Pa.) 127 N. Y. S. 403, in which it is held
172; Sayer v. Bennet, 1 Cox 107; that a - partnership will not be dis-
Anonymous, 2 Kay & J. 441. solved because one of the parties suf-
91 Casky v. Casky, 5 Ky. L. (ab- fered a paralytic stroke when there
stract) 775; Whitwell v. Arthur, 35 was a probability that he would be
Beav. 140; Barclay v. Barrie, 209 N. able to resume his partnership duties
Y. 40, 102 N. E. 602, 47 L. R. A. (N. before the expiration of the partner-
S.) 839, Ann. Cas. 1913 D, 1143 and ship term). See also Barclay v. Bar-
note. rie, 64 Misc. 403, 119 N. Y. S. 463.
92 Caskey v. Casky, 5 Ky. L. (ab-
stract) 775.
757 DISSOLUTION .§ 585

and obstruct the purpose of the partnership. It would seem

that there ought to be no doubt or difference of opinion con-
cerning the proposition that when a partner has been totally in-
capacitated from attending to his duties for three years and
eleven months out of a partnership period of four years and
eleven months, with no assurances that he will recover before
the expiration of the unexpired balance of twelve months, the
incapacity has been of a permanent, and not a temporary or fleet-
ing character, and of a substantial, and not inconsequential, na-
ture, and that the purpose of his partners in joining him. with
them has been materially and essentially defeated." And the
court was inclined to think that, the cause having been in court
for several years, until after the expiration of the partnership
period, equity would demand that the dissolution be dated as of
the beginning of the action, since the delay was without the
plaintiff partner's fault
§ 585. Dissolution for conduct prejudicially affecting car-
rying on of business.-The clause of the Uniform Partner-
ship Act permitting dissolution to be decreed for conduct of a
partner which tends prejudicially to affect the -carrying on of
the business," and the next clause permitting dissolution when-
ever a partner wilfully or persistently commits a breach of the
partnership agreement, or otherwise so conducts himself in
matters relating to the partnership business that it is not reason-
ably practicable to carry on the business in partnership with
him," are very similar to provisions of the English Partnership
Act.96 While the general law has always recognized the right
to a dissolution because of a partner's misconduct, it may seem
at first rather difficult to distinguish between the kinds of mis-
conduct mentioned in each of these clauses, there seemingly
being an overlapping. However, under the first clause the ob-
jectionable misconduct need not be connected with the business,
4 Uniform' Partnership Act, § 32 96 English Partnership Act, § 35
(1, c). (c), (d).
9?Uniform Partnership Act, § 32
(1, d).
1 586 LAW OF PARTNERSHIP 758

but it must be of such a nature, with regard to the particular

business of the firm, that it is calculated to injure it," and Mr.
Lindley says: "for instance, gambling on the stock exchange,
though such gambling may in no way be connected with the
business of the firm, would probably in most cases be ground
for dissolution."" So it seems a partner has a right to a dissolu-
tion if a copartner has become liable to a criminal prosecution
because guilty of a fraudulent breach of trust." And a dentist
who issued advertisements disparaging and imputing misconduct
to other dentists was held guilty of professional misconduct.'
Habitual intoxication, extravagance and dishonesty are good
grounds for dissolution. 2 It was said in a leading American
case:' * * * "Gross misconduct, want of good faith, or
criminal want of diligence, or such cause as is productive of seri-
ous and permanent injury in the partnership concerns, or ren-
ders it impracticable to carry on the business, is good ground
for a dissolution at the suit of the injured partner. Habitual
drunkenness, great extravagance, or unwarrantable negligence
in conducting the business of the partnership justifies a. dissolu-
tion; but then it must be a clear case of positive or meditated
abuse to authorize such a decree. For minor misconduct and
grievances, if they require redress, the court will interfere by
way of injunction, to prevent the mischief."' A dissolution may
be decreed for a partner's acts which show his deliberate resolve
to break up and ruin the firm business.'
§ 586. For wilful or persistent breach of partnership
agreement.-A dissolution may be decreed for wilful and
97 Lindley Partnership (8 ed.), p. 'Clifford v. Timms (1908), A. C. 12
655. (affg. [1907] 2 Ch. 236).
o8 Lindley Partnership (8 ed.), p. 2 Ambler v. Whipple, 20 Walt. (U.
655, citing Pearce v. Foster, 55 L. S.) 546. 23 L. ed. 403.
J. Q. B. 306, 17 Q. B. D. 536, 54 L. T. 3 Howell v. Harvey, 5 Ark. 270, 39
664, 34 W. R. 602, 51 J. P. 213; Am. Dec. 376.
Carmichael v. Evans [1904], 1 Ch. 4 See Marnet Oil & Gas Co. v.
486. Staley, 218 Fed. 45.
99 Essel v. Hayward, 30 Beav. 158, 5 Sutro v. Wagner, 23 N. J. Eq.
29 L. J. Ch. 806, 6 Jur. (N. S.) 690, 388 (affd. 24 N. J. Eq. 389).
8 R. 593. S 3.
759 DISSOLUTION § 586

persistent breach of the partnership articles by a partner.' "A

partner is under no obligation to continue a member of a part-
nership when his copartner persistently and wilfully violates the
essential conditions upon which the contract of the partnership
rests. He is not under the necessity of remaining in the firm,
and resorting to his action at law upon the partnership contract
for redress."' So dissolution has been decreed where a partner
failed to contribute capital or funds as he had agreed to, when
such contribution was required to successfully carry on the
business.' So the abandonment or desertion of the partnership
business is ground for a dissolution by decree of court.' It has
even been held in a few cases that abandonment works a dissolu-
tion ipso facto."o The inability of one partner to perform his
obligations and to contribute his skill, diligence and labor may
be ground for dissolution by decree." So is the loan of firm
money contrary to the partnership articles;" or refusal to make
monthly balances and pay differences, as agreed;" or to pay
over proceeds of sales as required by the partnership articles.'
It seems that dissolution may be properly decreed on account of
bad faith in the matter of the partnership accounts or failure
to keep them;" or of the disposition of firm property in settle-
6Uniform Partnership Act, § 32 v. Roane, 99 U. S. 355, 25 L. ed. 476;
(1, d). See Moore v. Price, 116,Ala. Burgess v. Badger, 124 Ill. 288, 14 N.
247, 22 So. 531; Breaux v. Le Blanc, E. 850; Ligare v. Peacock, 109 Ill. 94.
50 La. Ann. 228, 23 So. 281, 69 Am. 10 Beaver v. Lewis, 14 Ark. 138;
St. 403; Bruce v. Ross, 18 La. 341; Whitman v. Leonard, 3 Pick.
Abbott v. Johnson, 32 N. H. 9; West- (Mass.) 177; Potter v. Moses, 1 R.
wood v. Cole, 66 Misc. 53, 120 N. Y. I. 430; Ayer v. Ayer, 41 Vt. 346.
S. 884; Durbin v. Barber, 14 Ohio x1 Fogg v. Johnston, 27 Ala. 432, 62
311. Am. Dec. 771.
7 Rosenstein v. Burns, 41 Fed. 841. 12 Dumont v. Ruepprecht, 38 Ala.
8 Boyd v. Myn:tt, 4 Ala. 79; Tur- 175.
nipseed v. Goodwin, 9 Ala. 372; 13 Meaher v. Cox, 37 Ala. 201.
Breaux v. Le Blanc, 50 La. Ann. 228, 14 Maher v. Bull, 44 Ill. 97.
23 So. 281, 69 Am. St. 403; Hartman 15 Cheesman v. Price, 35 Beav. 142;
v. Woehr, 18 N. J. Eci. 383; Brien v. Cottle v. Leitch, 35 Cal. 434; Adams
Harriman, 1 Tenn. Ch. 467; Wood v. Shewalter, 139 Ind. 178, 38 N. E.
v. Beath, 23 Wis. 254. 607; Gowan v. Jeffries, 2 Ashm. (Pa.)
9 Arnold v. Brown, 24 Pick. 296; Werner v. Leisen, 31 Wis. 169;
(Mass.) 89, 35 Am. Dec. 296; Denver Wood v. Beath, 23 Wis. 254.
§ 587 LAW OF PARTNERSHIP 760

ment of private debts;" or fraudulent conduct toward copart-

ners.' 7
§ 587. When further concerted action impracticable.-
Again, equity will administer relief to a partner whose asso-
ciate. so conducts himself in other ways than by breach of the
partnership agreement as to render further concerted action im-
practicable.'" This rule may be applied where there are con-
stant quarrels, irreconcilable differetices and personal ill-will
which make co-operation impossible.19 "But it is not considered
to be the duty of the court to enter into partnership squabbles,
and it will not dissolve a partnership on the ground of the ill-
temper or misconduct of one or more of the partners unless
the others are in effect excluded from the concern, or unless the
misconduct is of such a nature as utterly to destroy the mutual
confidence which must subsist between partners if they are to
continue to carry on their business together." 0 "That such em-
16 Hubbard v. Moore, 67 Vt. 532, 32 5 N. Y. Wkly Dig. 484; Henn v.
Atl. 465. Walsh, 2 Edw. Ch. (N. Y.) 129;
17 Lisco v. Husmann, 98 Nebr. 276, Berry v. Cross, 3 Sandf. Ch. (N. Y.)
152 N. W. 383; Lovejoy v. Bailey, 214 1; Reiter v. Morton, 96 Pa. St. 229;
Mass. 134, 101 N. E. 63. Slemmer's Appeal, 58 Pa. St. 168, 98
18 Harrison v. Tennant, 21 Beav. Am. Dec. 255; Page v. Vankirk, 1
482; Watney v. Wells, 30 Beav. 56; Brewst. (Pa.) 282; Singer v. Heller,
Goodman v. Whitcomb, 1 Jac. & W. 40 Wis. 544; Werner v. Leisen, 31
589; Smith v. Jeyes, 4 Beav. 503; Wis. 169.
Anonymous, 2 Kay & J. 441; Rosen- '0 Fooks v. Williams, 120 Md. 436,
stein v. Burns, 41 Fed. 841; Moore v. 87 Atl. 692; Gerard v. Gateau, 84 Ill.
Ptice, 116 Ala. 247, 22 So. 531; Mea- 121, 25 Am. Rep. 438; Blake v. Dor-
her v. Cox, 37 Ala. 201; Howell v. gan, 1 G. Greene (Iowa) 537; Whit-
Harvey, 5 Ark. 270, 39 Am. Dec. 376; man v. Robinson, 21 Md. 30; Philip
Gerard v. Gateau, 84 Ill. 121, 25 Am. v. Von Raven, 26 Misc. 552, 57 N. Y.
Rep. 438; Cash v. Earnshaw, 66 Ill. S. 701; Lafond v. Deems, 1 Abb.
402; Lev. v. Karrick, 8 Iowa 150; N. Cas. 318, 52 How. Pr. 41 (revd. 81
Blake v. Dorgan, 1 G. Greene (Iowa) N. Y. 507, 8 Abb. N. Cas. 344);
537; Kennedy v. Kennedy, 3 Dana Singer v. Heller, 40 Wis. 544; Leary
(Ky.) 239; Groth v. Payment, 79 v. Shont, 33 Beav. 582; Baxter v.
Mich. 290, 44 N. W. 611; Sieghortner West, 1 Drew & Sm. 173.
v. Weissenborn, 20 N. J. Eq. 172; 20 Lindley Partnership, 580. See
Bishop v. Breckles, .1 Hoff. Ch. (N. also Cash v. Earnshaw, 66 Ill. 402;
Y.) 534; Flammer v. Green, 47 N. Gerard v. Gateau, 84 Ill. 121, 25 Am.
Y. Super. Ct. 538; Llorens v. Costa, Rep. 438; Loomis v. McKenzie, 31
761 DISSOLUTION § 587

bittered relations may exist as would render it impracticable to

conduct the business, and justify a decree dissolving the part-
nership, admits of no discussion, on principle as well as upon
authority. Permanent mischiefs would be the result, that could
only be avoided by a severance of the partnership relations.
* * * In all the cases we have examined, where the partner-
ship has been dissolved on account of the unfriendly relations
between the partners, it has generally been at the instance of the
party who was not himself at fault, and where the estrangement
was such as would prevent the successful management of the
business. A party who is the author of the ill-feeling between
himself and partners ought not to be permitted to make the
relation he has induced, the ground of a dissolution of the part-
nership. His conduct may have been taken with a view to that
very result, and it would be inequitable to allow him advantage
from his own wrongful acts. It would allow one partner, at his
election, to put an end to his own deliberate contract, when the
other had been guilty of no wrongful act or omission of duty.
The results flowing from the premature dissolution.of a partner-
ship might be most disastrous to a partner who had embarked
his capital in the enterprise.""
So the partner who has caused such want of confidence that
the business can not be carried on together is not entitled to
a dissolution.22 But a partner who refuses to allow his asso-
ciate to participate in the management of the common business
can not, it seems, successfully resist the termination by a court
Iowa 425; Henn v. Walsh, 2 Edw. Blake v. Dorgan, 1 G. Greene (Iowa)
Ch. (N. Y.) 129; Fischer v. Raab, 537; Bush v. Linthicum, 59 Md. 344;
57 How. Pr. (N. Y.) 87; Lafond v. Sieghortner v. Weissenborn, 20 N. J.
Deems, 1 Abb. N. Cas. 318, 52 How. Eq. 172; Sutro v. Wagner, 23 N. J.
Pr. (N. Y.) 41 (revd. 81 N. Y. 507, Eq. 388 (affd. 24 N. J. Eq. 589);
8 Abb. N. Cas. 344); Slemmer's Ap- Watney v. Wells, 30 Beav. 56; Har-
peal, 58 Pa. St. 168, 98 Am. Dec. 255; rison v. Tennant, 21 Beav. 482;
Sloan v. Moore, 37 Pa. St. 217; An- Smith v. Jeyes, 4 Beav. 503; Waters
dersen v. Andersen, 25 Beav. 190. v. Taylor, 2 Ves. & B. 299, 13 R. R.
21 Gerard v. Gateau, 84 Ill. 121, 25 91; Newton v. Doran, 1 Grant Ch.
Am. Rep. 438. U. C. 590.
22 Meaher v. Cox, 37 Ala. 201;
§ 587 LAW OF PARTNERSHIP 7 62

of equity of the existence of the firm." The same rule applies

where one partner refuses to consult the other about the busi-
ness.24 Where a lack of harmony and agreement impair the car-
rying out of the purpose for which the partnership was formed,
dissolution may undoubtedly be required,2 ' as it also may, ap-
parently, when any one of the partners insists upon ignoring the
business meetings of the firm.26 On the other hand, a partner
will not, it seems, be compelled to suffer the penalty of dissolu-
23 "If part of the capital of an v. Fagan, 17 Cal. 178; Major v. Todd,
agreed partnership has been paid, ac- 84 Mich. 85, 47 N. W. 841; Groth v.
cepted, and used, and the business Payment, 79 Mich. 290, 44 N. W.
has been commenced in the name of 611; Wilcox v. Pratt, 52 Hun 340, 5
the firm, he is an actual partner until N. Y. S. 361, 23 N. Y. St. 686 (affd.
the partnership is legally dissolved, 125 N. Y. 688, 3 Silv. Ct. App. 199, 25
and a mere exclusion of such person N. E. 1091) ; Roberts v. Eberhart, 1
by the others from the business of Kay 148, 23 L. J. Ch. 201, 2 W. R.
the firm by illegal acts on their part 125; Goodman v. Whitcomb, 1 Jac. &
is not a legal dissolution, but is a W. 589.
ground for an application to a court 2- "If, as alleged, the defendant is
of equity for a dissolution upon his insolvent, and has taken possession
part." Hartman v. Woehr, 18 N. J. of the partnership's property and con-
Eq. 383. See also Einstein v. verted the same to his own use, and
Schnebly, 89 Fed. 540; Gillett refused to consult or allow the plain-
v. Higgins, 142 Ala. 444, 38 tiff to participate in the management
So. 664, 4 Am. Cas. 459 and of the firm's business, it is a sufficient
note; Gorman v. Russell, 14 Cal. 531; ground to dissolve the partnership,
Kennedy v. Kennedy, 3 Dana (Ky.) and to entitle the plaintiff to the set-
239; Beller v. Murphy, 139 Mo. App. tlement thereof." . Havner v. Ste-
663, 123 S. W. 1029; Nathan v. Ba- phens, 22 Ky. L. 498, 58 S. W. 372.
con, 75 N. J. Eq. 401, 72 Atl. 359; See also Leary v. Shont, 33 Beav.
Hartman v. Woehr, 18 N. J. Eq. 383; 582; Waters v. Taylor, 2 Ves. & B.
Wilcox v. Pratt, 52 Hun 340, 5 N. Y. 299, 13 R. R. 91.
S. 361, 23 N. Y. St. 686 (affd. 125 N. 25 Meaher v. Cox, 37 Ala. 201;
Y. 688, 3 Silvernail Ct. App. 199, 25 Pease v. Hewitt, 31 Beav. 22, 8
N. E. 1091); Candee v. Baker, 131 Jur. (N. S.) 1166, 7 L. T. 11,
App. Div. 641, 116 N. Y. S. 55; 10 W. R. 535; Baxter v. West, 1
Gowan v. Jeffries, 2 Ashm. (Pa.) Drew & Sm. 173; Moore v. Price,
296; Holder v. Shelby (Tex. Civ. 116 Ala. 247, 22 So. 531; Null v. Par-
App.), 118 S. W. 590; Werner v. sons, 145 Ill. App. 436; Sutro v.
Leisen, 31 Wis. 169. And compare Wagner, 23 N. J. Eq. 388 (affd. 24
Hewitt v. Hayes, 204 Mass. 586, 90 N. J. Eq. 589); Philipp v. Von Raven,
N. E. 985, 27 L. R. A. (N. S.) 514; 26 Misc. 552, 57 N. Y. S. 701.
Karrick v. Hannaman, 168 U. S. 328, 26 De Berenger v. Hamel, 7 Jar.
42 L. ed. 484, 18 Sup. Ct. 135; Smith Byth. (2d ed.) 25.
 763 DISSOLUTION § 588

tion by reason of a mere error of judgment, 17 or because of con-

duct toward some of the customers of the firm which may be
deserving of severe criticism, but which involves no permanent
injury to the partnership interest.2 " It thus appears that, gen-
erally speaking, any circumstance which makes practically im-
possible the continuation of the partnership or the attainment
of its purpose, is sufficient to warrant its dissolution."
§ 588. When business can only be carried on at loss.-
Dissolution may also be decreed on the fact that loss only will
accompany the prosecution of the business should the same be
continued until the arrival of the time anteriorly determined
upon as that at which the partnership relation was to cease.o
A partner "is at liberty to withdraw himself and his capital from
the concern whenever it becomes reasonably certain that the busi-
ness can no longer be carried on at a profit, whether through
the misconduct of his copartner or from a failure of the business
itself." He is not "required to continue in the firm until the
partnership expires by limitation of time, but is at liberty at once
to ask for a dissolution and a winding up of the affairs of the
partnership."" The law is well and clearly settled affirmatively
as to the right of a court to dissolve a partnership where certain
matters have made the continuance of the partnership impossible
or disadvantageous to the partners. When the partners enter
the relation, they do so in contemplation of a profit thereby.
If, then, it be clearly shown that a profit can not be made, a
court will, upon proper application and showing order a dissolu-
27 Cash v. Earnshaw, 66 Ill. 402. son v. Deese, 35 Ga. 84; Sebastian
28 Gerard v. Gateau, 84 Ill. 121, 25 v. Booneville Academy Co., 22 Ky. L.
Am. Rep. 438. 186, 56 S. W. 810; McBurnie v. Sem-
29 "The court will require a strong ple, 14 Ky. L. 30, 19 S. W. 183.
case to be made, and it is laid down 30 See Jennings v. Baddeley, 3 Kay
as a general principle, a court of & J. 78, 3 Jur. (N. S.) 108; Wilson
equity has no jurisdiction to declare v. Church, 13 Ch. Div. 1; Sieghortner
a separation between partners for v. Weissenborn, 20 N. J. Eq. 172;
trifling causes or temporary griev- Holladay v. Elliott, 8 Ore. 84; Heck
ances, involving no permanent mis- v. McEwen, 12 Lea (Tenn.) 97.
chiefs." Gerard v. Gateau, 84 Ill. 121, 31 Rosenstein v. Burns, 41 Fed. 841.
25 Am. Rep. 438. See further Jack-
§ 5-88 LAW OF PARTNERSHIP 764

tion of the firm." One example is where a partnership is formed

wholly for the express purpose of promoting a certain patent,
which proves a total failure." It is likewise held that, in a
case where, in order to make the business profitable, there must
be money advanced by the partners, and one or both are either
unwilling or unable, the partnership may be dissolved." In an-
other case" it is held that whenever the conditions of a partner-
ship are incapable of being filled, or the fruits arising from
it can not be properly enjoyed, a good cause for renunciation
is furnished. A New York case" holds that a dissolution will
be decreed where the whole partnership scheme is found to be
visionary, impracticable, or founded upon erroneous principles.
It might be inquired why the matter should be brought into
court, instead of the parties dissolving the firm by mutual con-
sent. This question may be answered by saying that one of the
partners, by reason of personal enmity, or otherwise, might re-
fuse to dissolv6 the firm by mutual consent, and cases may be
conceived where the withdrawal by one, without the consent of
the other, might give rise to an action for damages, while a
dissolution by judicial decree, for the above grounds will not,
by reason'alone thereof, give any such right of action. The
rule would be modified if the condition of the firm should be
shown to be due to the fault of one or more of the members,
less than all. In such a case the offending party might be liable
to his partner for damages for his wrong, but, as is plainly seen,
his liability does not grow from the dissolution of the firm, but
for his wrongful actions from which the dissolution results.
32 Jennings v. Baddeley, 3 Kay & Holladay v. Elliott, 8 Ore. 85; Brien
J. 78, 3 Jur. (N. S.) 108; Harrison v. Harriman, 1 Tenn. Ch. 467.
v. Tennant, 21 Beav. 482; Bailey v. 3 Baring v. Dix, 1 Cox 213, 1 R.
Ford, 13 Sim. 495, 12 L. J. Ch. 482; R. 23.
Rosenstein v. Burns, 135 U. S. 449, 3 Weissenborn v. Sieghortner, 21
41 Fed. 841, 34 L. ed. 193; Brown N. 3. Eq. 483.
v. Hicks, 8 Fed. 155; Meaher v. Cox, 35Howell v. Harvey, 5 Ark. 270, 39
37 Ala. 201; Dunn v. McNaught, 38 Am. Dec. 376.
Ga. 179; Jackson v. Deese, 35 Ga. 84; 3 Lafond v. Deems, 52 How. Pr.
v. O'Neill, 23 N. Eq. 207; (N.o. Y.) 41, 1 Abb. N. Gas. 318.
Hoies
765 DISSOLUTION § 589

§ 589. For fraud in inception of relation.-The Uniform

Partnership Act permits dissolution when other circumstances
than those named which have been previously treated, render
it equitable." This, under the general law, the court will un-
doubtedly do when it appears that the party seeking release was
induced to become a partner by means of fraud or deceit," or,
at the option of the complainant, it will where there has been
no ratification of the partnership agreement after the fraud was
discovered," decree a rescission of the same and require the de-
fendants to place their associate in statu quo."0
§ 590. Annulment of partnership.-The question of the
annulment of partnerships is here treated, not as a form of dis-
solution, but as analogous thereto. The difference consists in
this: that dissolution refers to the severing of a relation, while
annulment is simply the finding of a court that no such rela-
tion has existed. The one includes future relations, the other
refers to all firm connections. Thus, it may be said that there is,
in fact, no such thing possible as the annulment of a partnerphip,
as the term itself implies that there never has been any partner-
ship. Perhaps the logical term would be annulment of an ap-
parent partnership. The distinction between true partnerships
3'Uniform Partnership Act, § 32 son v. Cunningham, 92 Mo. 131, 5 S.
(1, f). W. 12; Harlow v. La Brum, 82 Hun
38 "If he has been induced to enter 292, 64 N. Y. St. 72, 31 N. Y. S. 487
into the partnership contract through (affd. 151 N. Y. 278; 45 N. E. 859) ;
the deceit of his copartner, he may Jones v. Weir, 217 Pa. 321, 10 Ann.
withdraw whenever the fraud prac- Cas. 692.
ticed upon him becomes known." He 39 St. John v. Hendrickson, 81 Ind.
is not "required to continue in the 350. And compare Hunter v. White-
firm until the partnership expires by head, 42 Mo. 524.
40
limitation of time, but is at liberty Newbigging v. Adam, 34 Ch. Div.
at once to ask for a dissolution and a 582; Mycock v. Beatson, 13 Ch. Div.
winding up of the affairs of the part- 384, 49 L. J. Ch. 127, 42 L. T. 141, 28
nership." Rosenstein v. Burns,. 41 W. R. 319; Pillans v. Harkness,
Fed. 841. See further Howell v. Colles 442; Rawlins v. Wickham, 3
Harvey, 5 Ark. 270, 39 Am. Dec. 376; De G. & J. 304; Howell v. Harvey, 5
Oteri v. Soalzo, 145 U. S. 578, 36 L. Ark. 270, 39 Am. Dec. 376; Richards
ed. 824, 12 Sup. Ct. 895.; Hynes v. v. Todd, 127 Mass. 167. See post
Stewart, 10 B. Mon. (Ky.) 429; Gib- § 776 on rescission.
§ 590 LAW OF PARTNERSHIP 766

inter sese and partnership liability as to others must be kept in

mind, in order to get the full import of this subject. According
to the principles heretofore discussed, there can be no annul-
ment of partnership liability inter alios, unless the third parties,
who have obtained rights against the firm, have done so with
knowledge of the true condition of affairs, or otherwise have
not acted in a bona-fide manner. As to an apparent partnership,
however, between the parties themselves, or as to third parties,
in some instances, who have knowledge of the true conditions
between the partners there may be an annulment which will
make the apparent partnership void ab initio, and which will
leave all such parties without any rights against the apparent
firm. The rule is well stated in a Massachusetts case" in which
case Richards, by alteration of books, and in other ways, fraudu-
lently induced Todd to enter the firm. The court, in its opinion
held that: "The effect of Todd's election to avoid the contract
for the fraud practiced on him is that, as between the parties,
there has never existed any copartnership. * * * It is also
clear that as Todd, by holding himself out as a member of a
firm, rendered himself liable to the creditors of such apparent
firm, Richards should, in order to place him in statu quo, in-
demnify him against the claims of such creditors." The usual
ground of annulment of the contract is fraud or misrepresenta-
tion.42 Owing, perhaps, to the difficulties which have been sug-
gested courts have liesitated in annuling partnerships except upon
41 Richards v. Todd, 127 Mass. 167. N. Y. S. 372; Kimmins v. Wilson, 8
42 See Richards v. Todd, 127 Mass. W. Va. - 584; Newbigging v. Adam,
167; Oteri v. Scalzo, 145 U. S. 578, 34 Ch. Div. 582; Jennings v. Brough-
588, 12 Sup. Ct. 895, 36 L. ed. 824; ton, 17 Beav. 234 (affd. 5 DeG., M. &
Perry v. Hale, 143 Mass. 540, 10 N. E. G. 125) ; Hamil v. Stokes, 4 Price
174; Smith v. Everett, 126 Mass. 304; 161; Andrews v. Garstin, 10 C.
Hynes v. Stewart, 10 B. Mon. (Ky.) B. (N. S.) 444; Stainbank v.
429; Gibson v. Cunningham, 92 Mo. Fernley, 9 Sim. 556; Rawlins v. Wick-
131, 5 S. W. 12; Hunter v. White- ham, 1 Giff. 355, 3 DeG. & J. 304;
head, 42 Mo. 524; Harlow v. La Colt v. Woollaston, 2 P. Wms. 154;
Brum, 151 N. Y. 278, 45 N. E. 859; Green v. Barrett, 1 Sim. 45; Pillans
More v. Rand, 60 N. Y. 208; Hol- v. Harkness, Colles 442; Redgrave v.
lister v. Simonson, 36 App. Div. 63, 55 Hurd, 20 Ch. Div. 1.
 767 DISSOLUTION § 591

strong proof and ample grounds. Moreover, the usual rules

of ratification and of estoppel apply, and a partner who becomes
cognizant of the fraudulent nature of the partnership contract,
and thereafter recognizes it as valid, can not have the partner-
ship annulled, and the ratification will be ab initio." The Uni-
form Partnership Act provides for damages and indemnity to
one who is entitled to rescind a partnership contract because
of fraud and misrepresentation in its inception and for liens
on firm property and subrogation to creditors' rights in order to
secure a partner who has paid out money because of such fraud."
§ 591. Dissolution by transfer of partner's interest.-As
regards the effect of the transfer of one partner's interest, the
Uniform Partnership Act, while clarifying the rules of law gen-
erally, is not supported in all respects by the decisions. Under
its provisions the transfer of a partner's interest, either by volun-
tary or forced sale, does not automatically work a dissolution,
but a purchaser of a partner's interest, who is otherwise enti-
tled merely to receive the profits to which the assigning partner
would have been entitled, may, at the expiration of the specified
partnership term or particular undertaking, or at any time if
the partnership was at will when assigned or charged, apply to
court for a decree of dissolution." Under the law in states
where this act has not been adopted, a transfer of a partner's
interest does not always work a dissolution, but it seems that
the reason for this is usually that there is an agreement to the
contrary. In a New York case" one partner made an assign-
ment of all his property, including his interest in the partner-
ship. In an action growing out of this assignment, the court
said: "It does not seem to be disputed by either party to this
controversy that the act of Beadle in assigning his whole prop-
4 Gerard v. Gateau, 84 Ill. 121. 4 Uniform Partnership Act, § 39.
4 Andriessen's Appeal, 123 Pa. St. 46 Uniform Partnership Act, Hi 27,
303, 16 Atl. 840; St. John v. Hend- 28, 32 (2).
rickson, 81 Ind. 350; Evans v. Mont- a Ogden v. Arnot, 29 Hun (N. Y.)
gomery, 50 Iowa 325; Jennings v. 146 (1883).
Broughton, 17 Beav. 234 (affd. 5
DeG., M. & G. 126).
§ 591 LAW OF PARTNERSHIP 768

erty, including, therefore, whatever might belong to him in the

partnership, worked a dissolution of the partnership. This must
be so, because one partner can not against the will of the other,
introduce a new member into the partnership."" The court
further held that the right of closing up the business of the firm
belonged to the remaining partner, subject, of course, to the
control of the court. In another case" holding the same prin-
ciple, an exception is added that where the assignment is from
one partner to another, there is not, ipso facto, a dissolution
of the partnership. "Whether it shall so operate depends on its
terms, and the intention of the parties, as from these it may be
collected. If the withdrawal of the assignor from the partner-
ship is contemplated,-if there is a termination of his authority
and duty as a partner, and as between him and the assignee, ex-
emption from liability for the future transactions which may
be had by the assignee, in the prosecution of the original under-
taking, it is as to them a dissolution."o But when the assignment
is intended as a mere security for a debt, and is to operate only
on the share of the net profits of the assignor, on a settlement
of the partnership transactions, at the expiration of the partner-
ship, and he remains bound to all duties as partner-bound to
contribute time, labor, and skill to the prosecution of the com-
mon undertaking,-it will not operate a dissolution, not even as
between the partners themselves."" It should not be under-
stood that there can not be an assignment of interest by one
partner to a third party without closing the business, as the re-
maining partner may accept the assignee of his withdrawing
partner into partnership, but this in itself creates a new part-
nership, with the business of the old one, which is itself dis-
solved. Moreover, if there were a stipulation in the partnership
agreement that a partner could -transfer his interest or a part
thereof to a third party, and that the third party would be ac-
48 Citing Marquand v. New York 5
OCiting Parsons Partnership, 400.
Manf. Co., 17 Johns. (N. Y.) 525; 51 Citing Taft v. Buffum, 14 Pick.
Story Partnership, 307. (Mass.) 322, and Buford v. Neely, 2
4 Monroe v. Hamilton, 60 Ala. 226 Dev. (N. Car.) 481.
(1877).
769 DISSOLUTION § 591

cepted as a partner by the other members, the contract would

govern, and the assignment would not work a dissolution of the
partnership. As expressed in one case: "It is said that an as-
signment of a partner's interest works a dissolution of the firm,
and many authorities are cited to sustain this proposition. The
reason for the rule is that a partner can not introduce a new
member into the firm without the consent of the other members,
nor make them members of another firm; but there is no rule
of law which forbids a partnership, with the consent of all its
members, to admit a new member, arid when members so taken
in are recognized and treated by all as partners, and the busi-
ness is continued with them under the original agreement, this
is sufficient to make them partners, and does not work a dissolu-
tion of the firm."" But as a general rule, any change in the
membership of a firm operates as a dissolution of the same and
the formation of a new partnership." And by the weight of
authority, the transfer of a partner's interest works a dissolu-
tion of the partnership, ipso facto, if a partnership at will and
furnishes ground for dissolution by decree on application of a
partner or the purchaser where the partnership was for a fixed
term," except, perhaps, when such transfer is contemplated by
52 Gorder v. Pankonin, 83 Nebr. 1 R. I. 430; Bank of Mobile v. An-
204, 119 N. W. 449, 131 Am. St. 629. drews, 2 Sneed (Tenn.) 535; Euless
3 Webb v. Butler (Ala.), 68 So. v. Tomlinson (Tex. Civ. App.), 38 S.
369; Hatchett v. Blanton, 72 Ala. 423; W. 534; Mensing v. Atchison (Tex.
Zimmerman v. Harding, 33 S. Ct. 387, Civ. App.), 26 S. W. 509; Shedd v.
227 U. S. 489, 57 L. ed. 608; Ross v. Bank of Br .ttleboro, 32 Vt. 709; Pe-
Cornell, 45 Cal. 133; McCall v. Moss, ters v. McWilliams, 78 Va. 567. See
112 Ill. 493; Blake v. Sweeting, 121 ante §§ 224, 550. And compare Rice v.
Ill. 67, 12 N. F. 67; White v. White, Maddox, 9 N. Y. S. 524, 16 Daly 156,
5 Gill (Md.) 359; Arnold v. Brown, 30 N. Y. St. 550. Apparently, however,
24 Pick. (Mass.) 89, 35 Am. Dec. a change in the name of the firm with-
296; Houghton v. Bradley, 113 Mich. out any change in the membership
599, 71 N. W. 1112; Allen v. Logan, thereof does not work a dissolution
96 Mo. 591, 10 S. W. 149; Mudd v. of the partnership. Billingsley v.
Bast, 34 Mo. 465; Henry v. Mahone, Dawson, 27 Iowa 210; Rowe v. Sim-
23 Mo. App. 83; Hutchinson v. mons, 113 Cal. 688, 45 Pac. 983; Gill
Sperry, 158 App. Div. 704, 143 N. Y. v. Ferris, 82 Mo. 156.
S. 876 (revg. judgment 140 N. Y. S. 5 In re Suprenant, 217 Fed. 470;
220, 79 Misc. 523) ; Potter v. Moses, Karrick v. Hannaman, 168 U. S. 328,
49-Row. ON PARTN.-VOL. 1
§ 591 LAW OF PARTNERSHIP
18 S, Ct. 135, 42 L. ed. 484; Fourth
Nat. Bank v. New Orleans &c. R. Co.,
11 Wall. (U. S.) 624, 20 L. ed. 82;
Chapman v. Hughes, 104 Cal. 302, 37
Pac. 1048, 38 Pac. 109; Schurtz v.
Romer, 82 Cal. 474, 23 Pac. 118;
Miller v. Brigham, 50 Cal. 615; Brad-
ley v. Harkness, 26 Cal. 69; Schleicher
v. Walker, 28 Fla. 680, 10 So. 33;
Phelps v. State, 109 Ga. 115, 34 S. E.
210; Edens v. Williams, 36 Ill. 252;
Clark v. Carr, 45 Ill. App. 469; Sum-
merlot v. Hamilton, 121 Ind. 87, 22
N. E. 973; Barkley v. Tapp, 87 Ind.
25; Love v. Payne, 73 Ind. 80, 38 Am.
Rep. 111; Reece v. Hoyt, 4 Ind. 169;
Chase v. Scott, 33 Iowa 309; Mc-
Adams' Exrs. v. Hawes, 9 Bush (Ky.)
15;. Conwell v. Sandidge, 5 Dana
(Ky.) 210; Spaunhorst v. Link, 46
Mo. 197; Freeman v. Hemenway, 75
Mo. App. 611; Tennent v. Guenther,
31 Mo. App. 420; Schlicher v. Vogel,
61 N. J. Eq. 158, 47 Ati. 448 (affd. 65
N. J. Eq. 404, 54 Atl. 1125) ; Renton
v. Chaplain, 9 N. J. Eq. 62; Mechan-
ics' Bank v. Godwin, 5 N. J. Eq. 334;
De Manderfield v. Field, 7 N. Mex.
17, 32 Pac. 146; Comstock v. Bu-
chanan, 57 Barb. (N. Y.) 127 (affd.
57 Barb. (N. Y.) 146, and note);
Mumford v. McKay, 8 Wend. (N. Y.)
442, 24 Am. Dec. 34; Marquand v.
New York Mfg. Co., 17 Johns. (N.
Y.) 525; Sistare v. Cushing, 4 Hun
(N. Y.) 503; Eilers Music House v.
Reine, 65 Ore. 598, 133 Pac. 788;
Swoope v. Wakefield, 10 Pa. Super.
Ct. 342; Wilson v. Waugh, 101 Pa.
St. 233; In re Horton's Appeal, 13
Pa. St. 67; Power v. Kirk, 1 Pittsb.
(Pa.) 510; Cochran v. Perry, 8 Watts
& S. (Pa.) 262; Heck v. McEwen, 12
Lea (Tenn.) 97; Babb v. Mosby, 7
Lea (Tenn.) 105; Schuster v. Fren-
denthal, 74 Tex. 53, 11 S. W. 1051;
770
Watson v. McKinnon, 73 Tex. 210, 11
S. W. 197; Moore v. Steele, 67 Tex.
435, 3 S. W. 448; Carroll v. Evans,
27 Tex. 262; Sherk v. First Nat. Bank
(Tex. Civ. App.), 152 S. W. 832;
Sanchez v. Goldfrank (Tex. Civ.
App.), 27 S. W. 204; Kellar v. Self,
5 Tex. Civ. App. 393, 24 S. W. 578;
Schneider v. De Smith, 2 Posey
Unrep. Cas. (Tex.) 317; Sandberg
v. Scougale, 75 Wash. 313, 134 Pac.
1051; Heath v. Sansom, 4 B. & Ad.
172. See Waller v. Davis, 59 Iowa
103, 12 N. W. 798; Wiggin v. Good-
win, 63 Maine 389; Taft v. Buffum,
14 Pick. (Mass.) 322; Davis v. Me-
groz, 55 N. J. L. 427, 26 Atl. 1009;
Rogers v. Nichols, 20 Tex. 719. And
compare Cody v. Cody, 31 Ga. 619;
State v. Quick, 10 Iowa 451; Russell
v. Leland, 12 Allen (Mass.) 349; Rus-
sell v. White, 63 Mich. 409, 29 N. W.
865. This, however, does not appar-
ently hold good as to mining partner-
ships. Settembre v. Putnam, 30 Cal.
490; Bissell v. Foss, 114 U. S. 252, 29
L. ed. 126, 5 Sup. Ct. 851; Skillman
v. Lachman, 23 Cal. 198, 83 Am. Dec.
96; Harris v. Lloyd, 11 Mont. 390, 28
Pac. 736, 28 Am. St. 475. "A com-
mercial partnership is dissolved when
one of the partners disposes of his
interest, but a mining partnership,
which results from the operation of
a mine by some of the joint owners
with the consent of the others, is not
dissolved by the conveyance by one
of these owners of his interest in
the mine or the lease to a stranger;
but the grantor then ceases to be a
member of the copartnership, and the
stranger becomes a partner in his
place. The delectus personae which
is an essential element of an ordi-
nary partnership is not an indispensa-
ble attribute of a mining partner-
771 DISSOLUTION § 592

the partnership agreement," but while in some cases it has been

held that the formation of a corporation which takes over the
business and all the assets of the firm works a dissolution of
the partnership, the authorities do not, at first glance, speak as
with one voice upon this subject."

§ 592. Status of partnership after dissolution.-That the

partnership continues even after dissolution for the purpose of
settling its affairs, is so firmly settled that the citation in full
of the numerous authorities holding to that effect is.practically
unnecessary."' It has been well said that: "Whenever a part-
ship." Loy v. Alston, 172 Fed. 90. poration. These and other facts and
See also Bentley v. Brossard, 33 circumstances go to effect the result
Utah 396, 94 Pac. 736. in the particular case. This ques-
55 Heck v. McEwen, 12 Lea (Tenn.) tion of the dissolution of a firm by
97; Ferrero v. Buhlmeyer, 34 How. the formation of a corporation has
Pr. (N. Y.) 33. sometimes arisen in cases where no
56 In a well-considered note ap- rights of third persons, like creditors,
pended to Seufert v. Gille, 230 Mo. have intervened, and the circum-
453, 131 S. W. 102, 31 L. R. A. (N. -stances of some cases have been held
S.) 471, it is said: "Dissolution of to indicate a dissolution while the cir-
Partnership by Reason of Forma- cumstances in other cases have been
tion of Corporation. The question held to negative it." See further Cape
indicated by the foregoing title has Sable Co.'s Case, 3 Bland Ch. (Md.)
received a negative answer in some 606; Francklyn v. Sprague, 121 U. S.
cases and a positive answer in others, 215, 30 L. ed. 936, 7 Sup. Ct. 951;
but this is due not so much to dif- Coggswell &c. Co. v. Coggswell (N.
ferences of opinion with respect to J. Eq.), 40 Atl. 213; Hennessy v.
the state of the law as variations in Griggs, 1 N. Dak. 52, 44 N. W. 1010.
state of fact. It is probably safe to And compare Whitely v. Bradley, 13
say that the mere formation of a Cal. App. 720, 110 Pac. 596; Pearce
corporation does not necessarily ter- v. Sutherland, 164 Fed. 609, 90 C. C.
minate the partnership which it suc- A. 519; Watkins v. Delahunty, 133
ceeds, and that whether it does or App. Div. (N. Y.) 422, 117 N. Y. S.
not depends on the additional and 885; Ruettell v. Greenwich Ins. Co.,
peculiar facts and circumstances of 16 N. Dak. 546, 113 N. W. 1029; Metz
each case. For instance, in deter- v. Commercial Bank, 45 S. Car. 216,
mining this question it is important 23 S. E. 13. This subject will be
to observe whether the partners them- more fully treated in a subsequent
selves intended the partnership should chapter on change of partnership into
be dissolved, or whether the firm did corporation.
in fact cease to do business and was 5 "I am satisfied that notwithstand-

succeeded in all things by the cor- ing the dissolution of the partner-
§ 592 LAW OF PARTNERSHIP

nership is dissolved the object of the association is terminated,

and nothing remains to be done except the arrangement of the
affairs of the partnership; and until they are settled, as between
the parties, the partnership may be said to continue. Engage-
ments may be contracted which can not be fulfilled during its
existence, exposed as partnerships are to sudden and extraor-
dinary terminations. For the purpose, therefore, of making
ship, yet, for the purpose of fulfilling E. 510; Kemp v. Coffin, 3 G. Greene
engagements made during its exist- (Iowa) 190; Isenhart v. Hazen, 10
ence, it had a limited existence le- Kans. App. 577, 63 Pac. 451; Combs
gally, and subsisted for such purpose, v. Boswell, 1 Dana (Ky.) 473; Van-
even after the act of dissolution by cleave v. Nelson, 49 La. Ann. 621, 21
the parties." Johnson v. Totten, 3 So. 734; Perrin v. Keene, 19 Maine
Cal. 343, 58 Am. Dec. 412. "Upon a 355, 36 Am. Dec. 759; Seldner v. Mt.
dissolution, each partner becomes Jackson Nat. Bank, 66 Md. 488, 8 Atl.
chargeable with all the debts and 262, 59 Am. Rep. 190; Marlett v.
claims he owes or is accountable for Jackman, 3 Allen (Mass.) 287; Oliver
to the partnership, with all interest v. Olmstead, 112 Mich. 483, 70 N. W.
accruing upon the same debts and 1036; Barton v. Lovejoy, 56 Minn.
claims." McCoy v. Crosfield, 54 Ore. 380, 57 N. W. 935, 45 Am. St. 482;
591, 104 Pac. 423. "At dissolution, the Bank of Port Gibson v. Baugh, 9 Sm.
powers of the partners over the part- & M. (Miss.) 290; Allen v. Logan,
nership assets continue only so far 96 Mo. 591, 10 S. W. 149; Hutchins
as is necessary for the purpose of v. Gilman, 9 N. H. 359; Baldwin v.
winding up the affairs of the part- Johnson, 1 N. J. Eq. 441; Gray v.
nership." Nathan v. Bacon, 75 N. J. Green, 142 N. Y. 316, 37 N. E. 124,
Eq. 401, 72 Atl. 359. All the part- 40 Am. St. 596; Feigley v. Whitaker,
ners are still bound after dissolu- 22 Ohio St. 606, 10 Am. Rep. 778;
tion for the complete execution of a Jack v. McLanahan, 191 Pa. St. 631,
contract made during the existence 43 Atl. 356; Galliott v. Planters' &
of the partnership. Burdett v. Hay- Mechanics' Bank, 1 McMul. (S. Car.)
man, 63 W. Va. 515, 60 S. E. 497, 15 209, 36 Am. Dec. 256; Anderson N-.
L. R. A. (N. S.) 1019, 129 Am. St. Norton, 15 Lea (Tenn.) 14, 54 Am.
1014; Peacock v. Peacock, 16 Ves. Rep. 400; Baptist Book Concern v.
Jr. 49-57; Bell v. Morrison, 1 Pet. Carswell (Tex. Civ. App.), 46 S. W.
(U. S.) 351, 7 L. ed. 174; Lock- 858; Torrey v. Baxter, 13 Vt. 452;
wood v. Comstock, Fed. Cas. No. Rootes v. Wellford, 4 Munf. (Va.)
8449, 4 McLean (U. S.) 383; 215, 6 Am. Dec. 510; Roots v. Mason
Barringer v. Sneed, 3 Stew. (Ala.) City Salt & Mining Co., 27 W. Va.
201, 20 Am. Dec. 74; Burr v. 483; Lange v. Kennedy, 20 Wis. 279.
Williams, 20 Ark. 171; Whiting v. See Wilder v. Morris, 7 Bush (Ky.)
Farrand, 1 Conn. 60; Smyth v. Har- 420. And compare Stephens v. Or-
vie, 31 Ill. 62, 83 Am. Dec. 202; Need- man, 10 Fla. 9. See also 3 Elliott Ev.,
ham v. Wright, 140 Ind. 190, 39 N. § 2572.
773 DISSOLUTION § 593

good outstanding engagements the partnership must in legal con-

templation have a continuance, although, as between the parties
themselves, it is actually determined."" Dissolution of a firm
does not abrogate firm contracts nor change the liability of the
partners to third persons on firm contracts." Under the Uni-
form Partnership Act the relationship of partners may be said
to continue after dissolution so far as necessary to wind up the
business and complete transactions begun, except that there may
be under some circumstances a partnership liability to persons
who have no notice of the dissolution, and all the partners may
be liable for acts of a partner who has no notice of dissolution
by act of a partner, or death or bankruptcy of a partner.60
§ 593. Powers of partners after dissolution-Generally.-
Generally, dissolution terminates all the implied powers of a
partner to bind copartners by virtue of their mutual agency in
the firm business," except those incident to the completion of
transactions begun and the winding up of the business." And
further than this as to persons having notice of the dissolution
Levy v. Cadet, 17 Serg. & R. 30 Barb. (N. Y.) 279; Stirnermaun
(Pa.) 126, 17 Am. Dec. 650. v. Cowing, 7 Johns. Ch. (N. Y.) 275;
59 Hohnadel v. Ellsworth, 154 Ill. Allison v. Davidson, 17 N. Car. 79;
App. 484; Axton v. Kentucky Bot- Benham v. Gray, 5 C. B. 138, 17 L. J.
tlers' Supply Co., 159 Ky. 51, 166 S. C. P. 50, 57 E. C. L. 138; Cleve v.
W. 776; In re Suprenant, 217 Fed. Bickerdike, 5 Quebec Pr. 391.
470; Curtis v. Sexton, 252 Mo. 221, 62 Uniform Partnership Act, § 33;
159 S. W. 512; Strickland v. Strick- Scott v. Atlanta Wood & Iron Nov-
land, 95 S. Car. 492, 79 S. E. 520; elty Works, 12 Ga. App. 216, 76 S.
Bagley v. Brack (Tex. Civ. App.), E. 1082; Brewster v. Hardeman, Dud-
154 S. W. 247. ley (Ga.) 138; Schlau v. Enzen-
60Uniform Partnership Act, H§29, bacher, 265 Ill. 626, 107 N. E.'107;
33, 34, 35. Ketchum v. Larkin, 88 Iowa 215, 55
ex Bower v. Douglass, 25 Ga. 714; N. W. 472; Seldner v. Mt. Jackson
Brewster v. Hardeman, Dudley (Ga.) Nat. Bank, 66 Md. 488, 8 Atl. 262, 59
138; Buard v. Lem6e, 12 Rob. (La.) Am. Rep. 190; Holloway v. Turner,
243; Commercial Bank v. Perry, 10 61 Md. 217; Buxton v. Edwards, 134
Rob. (La.) 61, 43 Am. Dec. 168; Pe- Mass. 567; McArthur v. Oliver, 53
ters v. Gardere, 8 La. 565; Bank of Mich. 305, 19 N. W. 5; Marietta &c.
Port Gibson v. Baugh, 9 Sm. & M. R. Co. v. Mowry, 28 Hun (N. Y.) 79;
(Miss.) 290; Hutchins v. Gilman, 9 Ayer v. Ayer, 41 Vt. 346; Torrey v.
N. H. 359; Gansevoort v. Kennedy, Baxter, 13 Vt. 452; King v. Smith,
 §593 LAW OF PARTNERSHIP 774

one partner can only bind his copartner by express authority."

Therefore, it has been said on good authority that the termina-
tion of a partnership changes the former general agency of each
of the members of the dissolved firm into a special one." "Be-
fore the partnership is dissolved, each member is the agent of the
others, and the partnership will be bound by any contract made
by a partner within the scope of the partnership business. After
the death of one of the partners has dissolved the partnership,
this general agency is changed by operation of law to a special
agency. That agency is limited to selling the goods of the part-
nership, collecting the assets, paying the debts, and doing other'
acts which are necessary or proper to close and wind up the
business. The surviving partner or partners have no right or
authority after the dissolution to make any new contract to bind
4 C. & P. 108, 19 E. C. L. 430; Butch- * * * One member of a partnership
art v. Dresser, 10 Hare 453. after dissolution can not bind the
63 Stephens v. Orman, 10 Fla. 9; partnership except so far as neces-
Smith v. Dennison, 101 Ill. 531; sary for winding up its business. 1
Dunlap v. Limes, 49 Iowa 177; Mark Lindley on Partnership (2d ed.), p.
v. Bowers, 4 Mart. (N. S.) (La.) 95; 525, star pp. 218, 219. The rule is
Leserman v. Bernheimer, 113 N. Y. stated at star pages 218 and 219, 1
39, 20 N. E. 869; Bowler v. Huston, Lindley on Partnership, as follows:
30 Grat. (Va.) 266, 32 Am. Rep. 673; 'Other cases, which have been already
Smith v. Winter, 8 L. J. Exch. 34, 4 referred to, clearly show that after
M. & W. 454. the dissolution of an ordinary part-
4 "After the dissolution of the nership, no one aware of the dissolu-
partnership, neither partner has au- tion is entitled on any ground of
thority, without special mandate so to implied agency to hold the members
do, to bind his former partners, either of the late firm responsible for acts
in the renewal of a partnership debt, done by each other subsequently to
the imposition of a new obligation on the dissolution; and every one must
it, or to in any manner vary the feel the force of Lord Kenyon's ob-
form or character of the obligation servation in Abel v. Sutton, that, if
already existing." Bank of Monroe the contrary doctrine were to pre-
v. Drew Inv. Co., 126 La. 1028, 53 So. vail, a man could never know when
129, 32 L. R. A. (N. S.) 255, and he was to be at peace and freed from
note. "It is the rule that each part- all concerns of the partnership.'"
ner is the agent of the partnership, Harris v. Zier, 43 Wash. 573, 86 Pac.
within the scope of the partnership 928. And compare People v. Devlin,
business. * * * Such agency ceases 63 Misc. (N. Y.) 363, 118 N. Y. S.
upon dissolution of the copartnership, 478.
where notice thereof is given.
775 DISSOLUTION § 594

the partnership assets."" But as to third persons who have no

notice of the dissolution, the powers of a partner to bind the
firm remain the same as before dissolution.""
§ 594. Notice of dissolution.-One important subject in
partnership law is the giving of notice of the dissolution of a
partnership. Each partner is, as a general rule, the general agent
for the firm as to all matters within the apparent scope of the
firm business, the firm is liable to bona-fide third persobs for
such acts of one or more of the partners, and each partner is
personally liable for all firm debts. This agency and liability
continue as long as the partnership exists, and third parties have
a right to consider it in existence until they have knowledge,
actual or constructive, that the relation has ceased. Thus, "if
a partnership is dissolved, or one of the known members retires
from the firm, until the dissolution or retirement is duly notified,
the power of each to bind the rest remains in full force, al-
though as between the partners themselves a dissolution or a
retirement is a revocation of the authority of each to act for the
others."" Such notice is not always held necessary in a case
65 Bass Dry Goods Co. v. Granite Ind. 469; Price v.. Towsey, 3
City Mfg. Co., 116 Ga. 176, 42 S. E. Litt. (Ky.) 423, 14 Am. Dec.
415. 81; Hall v. Heck, 92 Mich. 458,
66 See post § 594. "The rule is 52 N. W. 749; Stoddard Mfg. Co.
well settled that where a partner- v. Krause, 27 Nebr. 83, 42 N. W. 913;
ship is dissolved, or one or more of Ketcham v. Clark, 6 Johns. (N. Y.)
its members retires from the firm, 144, 5 Am. Dec. 197; Shamburg v.
without giving notice to the party Ruggles, 83 Pa. St. 148; Anderson
with whom the partnership is deal- v. Clayton, 39 Utah 343, 117 Pac.
ing, the power of each member to 41. See also Lucas v. Bank of Da-
bind the firm remains in full force, rien, 2 Stew. (Ala.) 280; Grady v.
although, as between themselves, a Robinson, 28 Ala. 289; Pyron v.
dissolution or retirement is a revoca- Ruohs, 120 Ga. 1060, 48 S. E. 434;
tion of the authority of each to act Bredhoff v. Lepman, 181 Ill. App. 247;
for the others." Easton v. Wosten- Iddings v. Pierson, 100 Ind. 418;
holm, 137 Fed. 524. Humphrey v. Mattox, 19 Ky. L. 1053,
67 Lindley Partnership, *214; Uni- 42 S. W. 1100; Nevens v. Bulger, 93
form Partnership Act, § 35. See Maine 502, 45 Atl. 503; Howe v.
further Stewart v. Sonneborn, 51 Thayer, 17 Pick. (Mass.) 91; Elkin-
Ala. 126; Holland v. Long, 57 ton v. Booth, 143 Mass. 479, 10 N. E.
Ga. 36; Strecker v. Conn,; 90 460; Westinghouse Electric & Mfg.
 §594 LAW OF PARTNERSHIP 776

where a partnership is dissolved by operation of law, since it is

said every one is bound to take notice of such dissolution be-
cause of its general notoriety, and this rule has been applied in
case of death of a partner," marriage of a feme sole partner,"
bankruptcy,"o or war." The same rules as to partnership liability
after dissolution to persons without notice apply when one part-
ner has sold his interest and retired from the firm. It seems
that where a person has actual knowledge, formal notice is un-
necessary." Conversely, a person who, when dealing with a
partner, had no knowledge that a partnership had ever existed,
is not entitled to notice of dissolution." If no valid partnership
Co. v. Hubert (Mich.), 141 N. 68National Union Bank v. Hol-
W. 600; Chamberlain v. Dow, lingsworth, 135 N. Car. 556, 47 S. E.
10 Mich. 319; Comfort v. Ly- 618; Bass Dry Goods Co. v. Granite
nam, 67 Mo. App. 668; Deer- City Mfg. Co., 116 Ga. 176, 42 S. E.
ing v. Flanders, 49 N. H. 225; 415; Price v. Mathews, 14 La.
Union Nat. Bank v. Dean, 154 App. Ann. 11.
Div. 869, 139 N. Y. S. 835; Bynum. 69 The rule requiring notice to third
v. Clark, 125 N. Car. 352, 34 S. E. parties has been held not to obtain
438; Easton v. Ellis, 1 Handy (Ohio) where the dissolution has been
70, 12 Ohio Dec. 32; Taylor v. Young, worked by the marriage of a feme
3 Watts (Pa.) 339; Robinson v. sole partner or by the death of one
Floyd, 159 Pa. St. 165, 28 Atl. 258, of the members of the firm. Little
33 Wkly. Notes Cas. (Pa.) 409; An- v. Llazlett, 197 Pa. 591, 47 Atl. 855.
derson v. Clayton, 39 Utah, 343, 117 70 Uniform Partnership Act, § 35 b
Pac. 41; Dickinson v. Dickinson, 25 (2) ; Eustis v. Bolles, 146 Mass. 413,
Grat. (Va.) 321; Egholm v. Williams, 16 N. E. 286, 4 Am. St. 327.
81 Wash. 609, 143 Pac. 152. And 71Griswold v. Waddington, 16
compare Price v. Succession of Johns. (N. Y.) 438 (affg. 15 Johns.
Mathews, 14 La. Ann. 11; Planters' 57).
Bank v. St. John, 1 Woods (U. S.) 72UniOn Nat. Bank of Franklin-
585, Fed. Cas. No. 11208; Puritan ville v. Dean, 154 App. Div. 869, 139
Trust Co. v. Coffey, 180 Mass. N. Y. S. 835; Miller v. Pfeiffer, 168
510, 62 N. E. 970; Eustis v. Bolles, Ind. 219, 80 N. E. 409. See also
146 Mass. 413, 16 N. E. 286, 4 Holtgreve v. Wintker, 85 Ill. 470;
Am. St. 327; Griswold v. Wadding- Ach v. Barnes, 107 Ky. 219, 53 S. W.
ton, 15 Johns. 57 (affd. 16 Johns. (N. 293, 21 Ky. L. 893; Young v. Tib-
Y.) 438). See Jeter v. Burgwyn, 113 bitts, 32 Wis. 79.
N. Car. 157, 18 S. E. 113. See also 7TFirst International Bank of Por-
as to necessity and nature of such tal v. Brown, 130 Minn. 210, 153 N.
notice to relieve a retirirg partner W. 522; Chamberlain v. Dow, 10
from further liability, 3 Elliott Ev., Mich. 319; Swigert v. Aspden, 52
§ 2574. Minn. 565. 54 N. W. 738; Wright v.
777 DISSOLUTION § 595

ever existed, notice of dissolution may be unnecessary.74 A dor-

mant partner need not give notice of dissolution of a firm- or
retirement from it in order to escape further liability," unless
his connection has become known, and then persons who have
dealt with him are entitled to notice.7 6
§ 595. Uniform Partnership Act as to powers after disso-
lution and character of'notice.-The law generally recognizes
a difference in the character of notice required to be given to
creditors of the firm or those who have had dealings with it and
to the world at large. In this respect and as to powers after
dissolution the Uniform Partnership Act provides: "After dis-
solution a partner can bind the partnership except as provided
in paragraph (3), (a) by any act appropriate for winding up
partnership affairs or completing transactions unfinished at dis-
solution; (b) by any transaction which would bind the partner-
ship if dissolution had not taken place provided the other party
Fonda, 44 Mo. App. 634; Bloch v. 534; Gorman v. Davis &c. Co., 118
Price, 24 Mo. App. 14; Blanks v. N. Car. 370, 24 S. E. 770; Deford
Halfin (Tex. Civ. App.), 30 S. W. v. Reynolds, 36 Pa. St. 325; Vac-
941 (1895). caro v. Toof, 9 Heisk. (Tenn.) 194;
7 Chamberlain v. Dow, 10 Mich. Baptist Book Concern v. Carswell
319; Jeter v. Burgwyn, 113 N. Car. (Tex. Civ. App.), 46 S. W. 858
157, 18 S. E. 113. (1898); Reynolds v. Bowley, L. R.
75 Hornaday v. Cowgill, 54 Ind. App. 2 Q. B. 474; Heath v. Sansom, 4 B.
631, 101 N. E. 1030; Oppenheimer v. & Ad. 172; Darling v. Magnan, 12 U.
Clemmons, 18 Fed. 886; Bigelow v. C. Q. B. 471; Carter v. Whalley, 1
Elliot, 1 Cliff. (U. S.) 28, Fed. Cas. B. & Ad. 11; Eng. Partnership Act
No. 1399; Austin v. Appling, 88 Ga. (1890), § 36 (3).
54, 13 -S. E. 955; Nussbaumer v. 70 Park v. Wooten, 35 Ala. 242;
Becker, 87 Ill. 281, 29 Am. Rep. 53; Warren v. Ball, 37 Ill. 76; Cregler
Pitkin v. Benfer, 50 Kans., 108, 31 v. Durham, 9 Ind. 375; Elmira Iron
Pac. 695, 34 Am. St. 110; Lieb v. & Steel Rolling Mill Co. v. Harris,
Craddock, 87 Ky. 525, 9 S. W. 838, 124 N. Y. 280, 26 N. E. 541, 3 Sil-
10 Ky. L. 570; Magill v. Merrie, 5 B. vermail Ct. App. 351; Davis v. Al-
Mon. (Ky.) 168; Scott v. Colmesnil, len, 3 N. Y. 168; Rowland v. Estes,
7 J. J. Marsh. (Ky.) 416; Elwards v. 190 Pa. St. 111, 42 Atl. 528; Brown
McFall, 5 La. Ann. 167; Lacaze v. v. Foster, 41 .S. Car. 118, 19 S. E.
Sejour, 10 Rob. (La.) 444; Gros- 299; Milmo Nat. Bank v. Bergstrom,
venor v. Loyd, 1 Metc. (Mass.) 19; 1 Tex. Civ. App. 151, 20 S. W. 836;
Kelley v. Hurlburt, 5 Cow. (N. Y.) Farrar v. Deflinne, 1 C. & K. 580.
§ 595 LAW OF PARTNERSHIP 778

to the transaction: (I) had extended credit to the partnership

prior to dissolution and had no knowledge or notice of the dis-
solution; or (II) though he had not so extended credit, had
nevertheless known of the partnership prior to dissolution, and
having no knowledge or notice of dissolution, the fact of disso-
lution had not been advertised in a newspaper of general circula-
tion in the place (or in each place if more than one), at which
the partnership business was regularly carried on. (2) The lia-
bility of a partner under paragraph (lb) shall be satisfied out of
partnership assets alone when such partner had been prior to
dissolution: (a) unknown as a partner to the persons with whom
the contract is made; and (b) so far unknown and inactive in
partnership affairs that the business reputation of the partnership
could not be said to have been in any degree due to his connec-
tion with it. (3) The partnership is in no case bound by any
act of a partner after dissolution: (a) where the partnership
is dissolved because it is unlawful to carry on the business, unless
the act is appropriate for winding up partnership affairs; or, (b)
where the partner has become bankrupt; or (c) where the part-
ner has no authority to wind up partnership affairs, except by
a transaction with one who (I) had extended credit to the part-
nership prior to dissolution and had no knowledge or notice of
his want of authority; or (II) had not extended credit to the
partnership prior to dissolution, and, having no knowledge or
notice of his want of authority, the fact of his want of authority
has not been published as provided in paragraph (1bll). (4)
Nothing in this section shall affect the liability tinder section
16 of any person who after dissolution represents himself or
consents to another representing him as a partner in a partner-
ship engaged in carrying on business."" This section of the
act as originally drafted and as adopted in Wisconsin and Penn-
sylvania, was afterward rewrittein. it being thought that, under
the draft as written there was a remote possibility that a secret
and inactive partner might be bound to a person who extended
7 Uniform Partnership Act, § 35 as

rewritten.
779 DISSOLUTION § 596

credit to the partnership after dissolution unless notice had been

given or published and a bare possibility that if notice of disso-
lution had not been published a person who.extended credit to
the partnership after dissolution might hold all the partners,
though he never heard of the partnership before dissolution."
By this act knowledge and notice are thus defined: A person
has "knowledge" of a fact within the meaning of this act not
only when he has actual knowledge thereof, but also when he has
knowledge of such other. facts as in the circumstances show
bad faith. A person has "notice" of a fact within the meaning
of this act when the person who claims the benefit of the notice:
(a) states the fact to such person, or (b) delivers through the
mail, or by other means of communication, a written statement
of the fact to such person or to a proper person at his place of
business or residence." This act provides for actual notice only
to those who have extended credit on the faith of the partner-
ship and thus is in conflict with most of the holdings.
§ 596. Character of notice required and. persons entitled
to notice.-Under the general law:so "The familiar and well-
settled rule is that a dissolution of the copartnership by act of the
parties, whether a complete discontinuance of the concern, or
the retirement of a single partner, or addition of a member,
does not affect the outside world, unless proper notice is given;
7829 Harv. L. Rev. 312. The fol- no knowledge or notice of the dis-
lowing were the provisions of this solution; or such third person, not
section as to notice before rewrit- having had business relations with
ing: "If the partnership is not dis- the partnership by which a credit was
solved because it has become unlawful extended to the partnership, has no
to 'carry on the business, a partner knowledge or notice of the dissolu-
can not after dissolution bind the tion, and the fact of dissolution has
partnership to third persons by any not been advertised in a newspaper of
act which is not necessary to wind general circulation of the place (or
up the partnership affairs or to com- of each place if more than one) at
plete transactions then unfinished, un- which the partnership business was
less such third person, having bad regularly carried on."
relations with the partnership by 7 Uniform Partnership Act, § 3.
which a credit was extended upon 80 Pinney, J., in Thayer v. Goss, 91
the faith of the partnership, has had Wis. 90, 64 N. W. 312 (1895).
§ 596 LAW OF PARTNERSHIP 780

that actual notice must be brought home to former customers,

or those who are creditors by having dealt with it, but notice by
publication is sufficient as to all others.""1 As to the actual no-
tice or notice in fact required to be given to those formerly hav-
ing dealings with the firm, it is immaterial by what means such
notice is brought to the knowledge of the patrons or in what
form it was given, so that such patrons get the information
either directly or through some legitimate means of communica-
tion.82 It is not sufficient to charge such a person with notice
that he had means and opportunity to learn of the dissolution."
Mere publication in a newspaper of notice of dissolution is al-
most universally held insufficient as to parties who have had
prior dealings with the firm," even though the person sought
e1 Citing Bates Partnership, 606; 1 470; Uhl v. Bingaman, 78 Ind. 365;
Lindley Partnership, 221. See also Gross v. Breckenridge Bank (Ky.),
Neal v. Smith, 116 Fed. 20, 54 C. C. A. 90 S. W. 5, 4 L. R. A. (N.. S.) 800
226; Union Nat. Bank of Franklin- and note; Robertson Lumber Co. v.
ville v. Dean, 154 App. Div. 869, 139 Anderson, 96 Minn. 527, 105 N. W.
N. Y. S. 835; Lichenstein v. Mur- 972; Gage v. Rogers, 51 Mo. App.
phree (Ala. App.), 62 So. 444; Gross 428; National Shoe &c. Bank v.
v. Breckenridge Bank (Ky.), 90 S. Herz, 24 Hun (N. Y.) 260 (affd. 89
W. 5, 4 L. R. A. (N. S.) 800; Nev- N. Y. 629); Bank of Monongahela
ens v. Bulger, 93 Maine 502, 45 Atl. Valley v. Weston, 159 N. Y. 201, 54
503; Vietor v. Spalding, 202 Mass. N. E. 40, 45 L. R. A. 547; Davis v.
234, 88 N. E. 846; Simmons Hdw. Keyes, 38 N. Y. 94; Ellison v. Sex-
Co. v. Peck, 176 Mo. App. 86, 162 ton, 105 N. Car. 356, 11 S. E. 180, 18
S. W. 1061. Am. St. 907; Irby v. Vining, 2 Mc-
s2 Miller v. Pfeiffer, 168 Ind. 219, Cord L. (S. Car.) 379; Martin v.
80 N. E. 409; Bowman v. Blanton, Walton, 1 McCo- L. (S. Car.) 16;
141 Ky. 407, 132 S. W. 1041; Cen- Williams v. Connor, 14 S. Car. 621;
tral Nat. Bank v. Frye, 148 Mass. Prentiss v. Sinclair, 5 Vt. 149, 26 Am.
498, 20 N. E. 325; Holt v. Allen- Dec. 288; Young v. Tibbitts, 32 Wis.
brand, 52 Hun 217, 4 N. Y. S. 922, 79; Henry C. Werner Co. v. Calhoun,
22 N. Y. St. 925; Coddington v. Hunt, 55 W?. Va. 246, 46 S. E. 1024.
6 Hill (N. Y.) 595; Laird v. Ivens, 83 Gross v. Breckenridge Bank
45 Tex. 621. See also Kehoe v. Car- (Ky.), 90 S. W. 5, 4 L. R. A. (N.
ville, 84 Iowa 415, 51 N. W. 166; S.) 800.
Hall v. Jones, 56 Ala. 493; Hunt 8 Bush v. W. A. McCarty Co., 127

v. Colorado Milling &c. Co., 1 Colo. Ga. 308, 56 S. E. 430, 9 Ann. Cas.
App. 120, 27 Pac. 873; Danforth v. 240 and note; Richards v. Butler,
Hertel, 3 Pennew. (Del.) 57, 49 Atl. 65 Ga. 593; Page v. Brant, 18 Ill.
168; Holtgreve v. Wintker, 85 Ill. 37; Denman v. Dosson, 19 La. Ann.
781 DISSOLUTION § 596

to be charged with notice is a subscriber to the paper in which

the notice was published." Nor is merely the mailing of notices
to patrons, without proof of receipt, sufficient," although if no-
tices were placed in the mails properly addressed, a rebuttable
presumption of fact arises that they were received in due course.8 7
A change in the firm name as used in signs, letterheads and else-
where, if it clearly indicates the retirement of a partner, may
be notice of such fact." Notice to an agent of one who has been
a customer of the firm is usually sufficient" if within the scope
9; Skannel v. Taylor, 12 La. Ann. 389; Zollar v. Janvrin, 47 N. H. 324;
773; Brashear v. Dwight, 2 La. Ann. Vernon v. Manhattan Co., 17 Wend.
403; Rose v. Coffield, 53 Md. 18, 36 (N. Y.) 524 (affd. 22 Wend. (N.
Am. Rep. 389; Boyd v. McCann, 10 Y.) 183); Hutchins v. Bank of Ten-
Md. 118; Sibley v. Parsons, 93 Mich. nessee, 8 Humph. (Tenn.) 418; Wood
538, 53 N. W. 786; Pope v. Risley, v. Jefferies (Va.), 83 S. E. 1074.
23 Mo. 185; Graves v. Merry, 6 Cow. 86 Meyer v. Krohn, 114 Ill. 574, 2
(N. Y.) 701, 16 Am. Dec. 471; Na- N. E. 495; Kenney v. Altvater, 77 Pa.
tional Bank v. Norton, 1 Hill (N. Y.) St. 34; Haynes v. Carter, 12 Heisk.
572; Austin v. Holland, 69 N. Y. 571, (Tenn.) 7.
28 Am. Rep. 246; Commonwealth 87 Meyer v. Krohn, 114 Ill. 574, 2
Bank v. Mudgett, 44 N. Y. 514 (affg. N. E. 495; Austin v. Holland, 69 N.
45 Barb. (N. Y.) 663) ; Ellison v. Y. 571, 25 Am. Rep. 246.
88
Sexton, 105 N. Car. 356, 11 S. E. Barfoot v. Goodall, 3 Campb.
180, 18 Am. St. 907; Scheiffelin v. 147; American Linen Thread Co. v.
Stevens, 60 N. Car. 106, 84 Am. Dec. Wortendyke, 24 N. Y. 550; Holt v.
355; Robinson v. Floyd, 159 Pa. St. Allenbrand, 52 Hun (N. Y.) 217,
165, 28 Atl. 258, 33 W. N. C. (Pa.) 4 N. Y. S. 922; Kirby v. Hewitt, 26
409; Little v. Clark, 36 Pa. St. 114; Barb. (N. Y.) 607. See also Henry
Watkinson v. Bank of Pennsylvania, C. Werner Co. v. Calhoun, 55 W. Va.
4 Whart. (Pa.) 482, 34 Am. Dec. 246, 46 S. E. 1024.
521; White v. Murphy, 3 Rich. L. 89 Page v. Brant, 18 Ill. 37; Hunt
(S. Car.) 369; Haynes v. Carter, 12 v. Colorado Milling &c. Co., 1 Colo.
Heisk. (Tenn.) 7, 27 Am. Rep. 747; App. 120, 27 Pac. 873; Miller v. Pfeif-
Gilbough v. Stahl Bldg. Co., 16 Tex. fer, 168 Ind. 219, 80 N. E. 409; Ach
Civ. App. 448, 41 S. W. 535; Ami- v. Barnes, 107 Ky. 219, 53 S. W. 293,
down v. Osgood, 24 Vt. 278, 58 Am. 21 Ky. L. 893; Tobias v. Wierck, 30
Dec. 171; Henry C. Werner Co. v. App. Div. 486, 52 N. Y. S. 312 (affg.
Calhoun, 55 W. Va. 246, 46 S. E. 163 N. Y. 584, 57 N. E. 1126); Cox
1024; Gilchrist v. Brande, 58 Wis. v. Pearce, 112 N. Y. 637, 20 N. E.
184, 15 N. W. 817. 566, 3 L. R. A. 563; Bonnet v. Tips
8 Treadwell v. Wells, 4 Cal. 260; Hardware Co. (Tex. Civ. App.), 59
Reilly v. Smith, 16 La. Ann. 31; Rose S. W. 59 (1900).
v. Coffield, 53 Md. 18, 36 Am. Rep.
§ 596 LAW OF PARTNERSHIP 782

of his authority," although not communicated by the agent to

the principal." The fact that one purchases from an entire
stranger doing business for himself in the firm's place of busi-
ness is sufficient notice of a sale to the stranger by the old
partners." General notoriety of the dissolution is evidence from
which notice can be inferred," but it depends on the circum-
stances as to whether sufficient notoriety is shown," and it has
been held insufficient where no published or personal notice was
given." The requirements of notice by publication if not regu-
lated by statute, are complied with where the notice is published
in a newspaper of general circulation in the locality where the
partnership had its place of business in such a manner as fairly
to inform the public of the dissolution." Where notice .has been
properly given the mutual agency of each partner to bind the
90 Neal v. Smith, 116 Fed. 20, 54 95Martin v. Searles, 28 Conn. 43;
C. C. A. 226; Marsh v. Wheeler, 77 Lyon v. Johnson, 28 Conn. 1;
Conn. 449, 59 Atl. 410, 107 Am. St. Pitcher v. Barrows, 17 Pick. (Mass.)
40. 361, 28 Am. Dec. 306.
91 Westinghouse Electric &c. Co. v. 90 Mauldin v. Mobile Branch Bank,
Hubert, 175 Mich. 568, 141 N. W. 2 Ala. 502; Lucas v. Bank of Darien,
600, Ann. Cas. 1915 A, 1099n; Straus 2 Stew. (Ala.) 280; Mowatt v. How-
v. Sparrow, 148 N. Car. 309, 62 S. E. land, 3 Day (Conn.) 353; Bush v.
308; Jenkins Bros. Shoe Co. v. Ren- McCarty Co., 127 Ga. 308, 56 S. E.
frow, 151 N. Car. 323, 66 S. E. 212, 430, 9 Ann. Cas. 240n. See also
25 L. R. A. (N. S.) 231. Compare Askew v. Silman, 95 Ga. 678, 22 S. E.
Mims v. Brook, 3 Ga. App. 247; 573; Shurlds v. Tilson, 2 McLean
United Dressed Beef Co. v. Burrell, (U. S.) 458, Fed. Cas. No. 12, 827;
140 App. Div. 131, 124 N. Y. S. 1072. Backus v. Taylor, 84 Ind. 503; Solo-
92 Clapp v. Upson, 12 Wis. 492. mon v. Kirkwood, 55 Mich. 256, 21
93 Mauldin v. Mobile Branch Bank, N. W. 336; Polk v. Oliver, 56 Miss.
2 Ala. 502; Brashear v. Dwight, 2 566; Citizens' Nat. Bank v. Weston,
La. Ann. 403; Gage v. Rogers, 51 Mo. 162 N. Y. 113, 56 N. E. 494 (revg.
App. 428; Holdane v. Butterworth, 19 App. Div. 627, 45 N. Y. S. 1136,
5 Bosw. (N. Y.) 1; Brown v. Fos- and following Monongahela Valley
ter, 41 S. Car. 118, 19 S. E. 299. Bank v. Westbn, 159 N. Y. 201, 54
94 Humes v. O'Bryan, 74 Ala. 64; N. E. 40, 45 L. R. A. 547); Graves
Mauldin v. Mobile Branch Bank, 2 v. Merry, 6 Cow. (N. Y.) 701, 16
Ala. 502; Lucas v. Bank of Darien, 2 Am. Dec. 471; Lansing v. Gaine, 2
Stew. (Ala.) 280; Roof v. Morrisson, Johns. (N. Y.) 300, 3 Am. Dec. 422;
37 Ill. App. 37; Hammond v. Aiken, Watkinson v. Bank of Pennsylvania,
3 Rich. Eq. (S. Car.) 119; Southwick 4 Whart. (Pa.) 482, 34 Am. Dec. 521;
v. Allen, 11 Vt. 75. Galliott v. Planters' and Mechanics'
783 DISSOLUTION § 596

other by contracts is terminated." That part of the rule as

ordinarily stated and the texts upholding it which relate to actual
notice to "customers" has been construed in a Georgia case which
holds actual notice is necessary to creditors only, and contains
otherwise a good exposition of the principles governing notice."
It was said: "the court, in certain instructions to the jury, which
are complained of by the plaintiff in error, charged them, in effect,
that if the plaintiff was a 'customer' of the firm, she would be enti-
tled to actual notice of the dissolution. We think the court erred
in so charging. In order to relieve an ostensible partner from
liability for debts contracted in the partnership name subse-
quently to his withdrawal from the firm, the dissolution must
be made known 'to creditors and to the world,' but it is not
necessary that the notice should be actual or personal except as
to creditors. Although it is often said in text-books and de-
cisions that actual notice or knowledge of the dissolution must
be brought home to former 'customers' of the firm, this language
has reference only to creditors. * * * A customer, in the
sense in which the term was used in this case,-that is to say,
one whose dealings with the partnership have been confined to
the purchase of its goods,- is entitled only to such notice as
should be given to 'the world.' " Continuing, as to what notice
should be given to the public at large, the court said: "As to
the notice which should be given to 'the world,' no inflexible
Bank, 1 McMul. (S. Car.) 209, 36 Am. Davis v. Keyes, 38 N. Y. 94; Pineiro
Dec. 256; Simonds v. Strong, 24 Vt. v. Gurney, 60 Hun 584, 15 N. Y. S.
642; Prentiss v. Sinclair, 5 Vt. 149, 26 217, 39 N. Y. St. 469; Brisban v.
Am. Dec. 288; Young v. Tibbitts, 32 Boyd, 4 Paige Ch. (N. Y.) 17; Bain
Wis. 79; Wright v. Pulham, 2 Chit. v. Wilson, 10 Ohio St. 14; Harris v.
121, 18 Rev. Rep. 784; Godfrey v. Zier, 43 Wash. 573, 86 Pac. 928; Jones
Turnbull, 1 Esp. 371; Gorham v. v. Lloyd, L. R. 18 Eq. 265; Benham v.
Thompson, 1 Peake 42, 3 Rev. Rep. Gray, 5 C. B. 138; Willis v. Dyson,
650. 1 Stark. 164, 2 E. C. L. 70. See also
9 Kennedy v. Bohannon, 11 B. Mon. Kelly v. Murphy, 70 Cal. 560, 12 Pac.
(Ky.) 118; Monroe v. Conner, 15 467; Filippini v. Stead, 4 Misc. 405,
Maine 178, 32 Am. Dec. 148; Good- 23 N. Y. S. 1061.
speed v. Wiard Plow Co., 45 Mich. 9S Askew v. Silman, 95 Ga. 678, 22
322, 7 N. W. 902; Osborn v. Wood, S. E. 573 (1895).
125 Mo. App. 250, 102 S. W. 580;
 §596 LAW OF PARTNERSHIP 784

rule can be laid down. Publication in a public gazette circu-

lated in the locality in which the business of the partnership has
been conducted, if such publication is fair and reasonable as to
its terms and the number of times it is made, is usually sufficient
notice to the world."' An editorial notice, not signed by any
member of the firm may be as effectual for this purpose as an
advertisement purporting to issue by authority of the partners
over their signature.' * * * Whether this is so or not is
generally a question for the jury. * * * 'It is not an abso-
lute, inflexible rule that there must be a publication in a news-
paper to protect a retiring partner. Any means of fairly publish-
ing the fact of such dissolution as widely as possible, in order
to put the public on its guard,-as by advertisement, public no-
tice in the manner usual in the community, the withdrawal of
the exterior indications of the partnership,-are proper to be
considered on the question of notice.'" It should be left to the
jury to say whether the retired partner made a reasonable and
bona-fide effort to acquaint the public with the fact of his re-
tirement, and whether, on the other hand, the creditor, with the
means and opportunity afforded him, knew, or ought to have
known, of the fact. Even in the absence of any showing that
notice of the dissolution was given, the fact that a considerable
time elapsed between the dissolution and the contracting of the
debt has been deemed sufficient to render the creditor chargeable
with notice. * * * There is some question as to whether
the jury may infer notice from general notoriety of the disso-
lution.' We think, however, that the evidence excluded by the
court below in this case, as to the general notoriety of Askew's
withdrawal from the partnership, although such notoriety may
not of itself have been sufficient to charge the plaintiff with no-
tice of the fact, ought to have been allowed to go to the jury, to
99 Citing Ewing v. Trippe, 73 Ga. 2 Quoting from Lovejoy v. Spaf-
776; Parsons' Partnership (4th ed.), ford, 93 U. S. 430, 23 L. ed. 851.
§ 317 and notes. 3 Citing Bates Partnership, § 622
1 Citing Solomon v. Kirkwood, 55 and cases cited.
Mich. 256, 21 N. W. 336; Young v.
Tibbitts, 32 Wis. 79.
785 DISSOLUTION § 596

be considered by them for what it was worth, in connection with

the other evidence bearing on the question of notice." Does the
fact that a withdrawing partner allows the remaining partners
to continue to use his name as part of the firm name of itself
amount to a representation that he is still, a partner therein?'
In an English case decided in 1892, it was held that it does not
amount to such a representation. In that case, the creditor suing
had conducted no business with the old firm. The new firm
continued to use the old firm name, which included the name
of the withdrawing partner, but notified their bankers and their
principal creditors of the dissolution. Kay, L. J., in his opinion,
said: "Does the fact that John Frazer permitted his brother
to carry on the business under the old firm name amount to the
representation by him to the bank that he, John Frazer, was a
partner in the firm? I think Newsome v. Coles, 2 Camp. 617,
shows that it does not." This statement should, perhaps, be
qualified somewhat, to conform to American law. It is un-
doubtedly true that such a use of a withdrawing partner's name
would not be conclusive against him, yet it would be submitted
to the jury, for what it is worth, coupled with other facts, and
it would probably be necessary for the withdrawing partner to
show that the creditor either knew or should have known that
he was no longer connected with the firm, to make the withdrawal
a defense. It is a question of fact for the jury whether a pre-
vious customer had notice of dissolution of a partnership, and
the burden of proving notice is on the partner seeking to escape
liability.'
4 In re Frazier, 2 Q. B. 633. 299; Martin v. Walton, 1 McCord L.
5 Shurlds v. Tilson, 2 McLean (U. (S.. Car.) 16; Henry C. Werner Co.
S.) 458, Fed. Cas. No. 12827; Maul- v. Calhoun, 55 W. Va. 246, 46 S. E.
din v. Branch Bank, 2 Ala. 502; Dan- 1024; Young v. Tibbitts, 32 Wis. 79.
forth v. Hertel, 3 Pennewell (Del.) See also Roberts v. Spencer, 123
57, 49 Atl. 168; Meyer v. Krohn, 114 Mass. 397; Pitcher v. Barrows, 17
Ill. 574, 2 N. E. 495; Robertson Lum- Pick (Mass.) 361, 28 Am. Dec. 306.
ber Co. v. Anderson, 96 Minn. 527, 6 Dellapiazza v. Foley 112 Cal. 380,
105 N. W. 972; Osborn v. Wood, 125 44 Pac. 727; Birckhead v. De Forest,
Mo. App. 250, 102 S. W. 580; Brown 120 Fed. 645, 57 C. C. A. 107; Moore
v. Foster, 41 S. Car. 118, 19 S. E. v. Duckett, 91 G. 752, 17 S. E.
5M.-Row3
ON PARTN.-VOL. I
§ 597 LAW OF PARTNERSHIP 786

§ 597. Dissolution terminates contract of agency.-The

dissolution of a partnership authorized to act as an agent re-
vokes the agency.' This rule applies whether the dissolution is
by death or otherwise and whatever the character of the agency.'
The reason for the rule is that "it is a general rule of the com-
mon law that an authority by a principal to two persons to do
an act is joint, and the act must be concurred in by both. * * *
When a firm is appointed to an agency, this rule would neces-
sarily be modified to the extent that either member of the firm
could do any act within the scope of the agency, the same as he
could perform any other partnership act. By appointing a part-
nership firm it would be implied that the authority was joint
and several. But, upon dissolution of the firm, such an agency
would cease. This is the necessary result of the principles al-
luded to. The principal would not be bound by the act of a
surviving member of a firm, because he had never appointed him
to act, nor agreed to be responsible for his acts; and the latter
could incur no obligation against the deceased member or his
representatives."' Merely a change in a firm's name without
a change in personnel will not affect its authority as agent."o But

1037; Pursley v. Ramsey, 31 Ga. 403;
Dixon Nat. Bank. v. Spielmann, 35
Ill. App. 184; Strecker v. Conn, 90
Ind. 469; Uh1 v. Harvey, 78 Ind. 26;
Duff v. Baker, 78 Iowa 642, 43 N.
W. 463; Mitchum v. Bank of Ken-
tucky, 9 Dana (Ky.) 166; Grinnan
v. Baton Rouge Mills Co., 7 La. Ann.
638; Reading Braid Co. v. Stewart,
20 Misc. 86, 45 N. Y. S. 69 (affg.
19 Misc. 431, 43 N. Y. S. 1129);
Ellison v. Sexton, 105 N. Car. 356, 11
S. E. 180, 18 Am. St. 907; New-
comet v. Brotzman, 69 Pa. St. 185;
Southwick v. Allen, 11 Vt. 75.
7 Schlau v. Enzenbacher, 265 Ill.
626, 107 N. E. 107, L. R. A. 1915 C,
576; Hartford F. Ins. Co. v. Wil-
cox, 57 Ill. 180; Davidson v. Pro-
vost, 35 Ill. App. 126; Meysenburg
v. Littlefield, 135 Fed. 184; Rowe
v. Rand, 111 Ind. 206, 12 N. E. 377;
Johnson v. Wilcox, 25 Ind. 182; Hol-
bert v. Keller, 161 Iowa 723, 142 N.
W. 962; Angle v. Mississippi & M.
R. Co., 9 Iowa 487; Wheaton v. Cad-
illac Automobile Co., 143 Mich. 21,
106 N. W. 399; Salisbury v. Bris-
bane, 61 N. Y. 617; Thomas v. Gwyn,
131 N. Car. 460, 42 S. E. 904; Lar-
son v. Newman (N. Dak.), 121 N.
W. 202, 23 L. R. A. (N. S.) 849
note; Robson v. Drummond, 2 Barn.
& Ad. 303.
8 See cases cited in preceding note.
* Martine v. International L. Ins.
Soc., 53 N. Y. 339, 13 Am. Rep. 529.
10 Billingsley v. Dawson, 27 Iowa
210.
787 DISSOLUTION § 5)98

the authority of a surviving partner to act as agent may come

from ratification."1 One Arkansas case seems contrary to the
general rule in holding that, where a client had contracted
with a firm of attorneys for the services of one particular at-
torney at a stipulated fee, after his death the surviving partner
could render the services and recover their value.12
§ 598. Powers of partner to administer firm affairs.-
Where a partnership is dissolved by death the surviving part-
ner or partners have the right, and are under the duty to wind
up the firm business, and are entitled to exclusive possession of
the firm assets.'" If a partner or partners are bankrupt or in-
solvent, the insolvent partner or partners have the right to wind
up the business.'" In other cases, except where dissolution is
caused by the wrongdoing of one partner, or there is an agree-
i1 Lavidson v. Provost, 35 Ill. App. Mich. 201; Robertshaw v. Hanway,
126. 52 Miss. 713; Hanway v. Robert-
12 Smith v. Hill, 13 Ark. 173. shaw, 49 Miss. 758; Holman v. Nance,
13 Campbell v. Floyd, 153 Pa. St. 84 Mo. 674; Judy v. St. Louis Ice
84, 25 Atl. 1033; Wickliffe v. Eve, Mfg. &c. Co., 60 Mo. App. 114;
17 How. (U. S.) 468, 15 L. ed. 163; Loewenstein v. Loewenstein, 114
McGorray v. O'Connor, 87 Fed. 586, App. Div. 65, 99 N. Y. S. 730;
31 C. C. A. 114; Bischoffsheim v. Murray v. Mumford, 6 Cow. (N. Y.)
Baltzer, 20 Fed. 890; Kenton Fur- 441; Enck v. Gerding, 67 Ohio St.
nace R. &c. Co. v. McAlpin, 5 Fed. 245, 65 N. E. 880; In re Shipe's Ap-
737; Andrews v. Brown, 21 Ala. peal, 114 Pa. St. 205, 6 Atl. 103;
437, 56 Am. Dec. 252; Adams v. Hawkins v. Capron, 17 R. I. 679, 24
Ward, 26 Ark. 135; Marlatt v. Scant- Atl. 466; Gant v. Reed, 24 Tex. 46,
land, 19 Ark. 443; McKay v. Joy, 70 76 Am. Dec. 94; In re Auerbach, 23
Cal. 581, 11 Pac. 832; People v. Hill, Utah 529, 65 Pac. 488; Stearns v.
16 Cal. 113; Gray v. Palmer, 9 Cal. Houghton, 38 Vt. 583; Dyer v. Morse,
616; Filley v. Phelps, 18 Conn. 294; 10 Wash. 492, 39 Pac. 138, 28 L. R.
Price. v. Hicks, 14 Fla. 565; Terri- A. 89; Knox v. Gye, L. R. 5 H. L.
tory v. Redding, 1 Fla. 242;. Gard- 656, 42 L. J. Ch. 234.
ner v. Cumming, Ga. Dec. 1; Com- 141Bankruptcy Act, § 5; U. S.
mercial Nat. Bank v. Proctor, 98 Bankr. L. (1898), § 5 (h) ; Eng.
Ill. 558; Miller v. Jones, 39 Ill. 54; Partnership Act (1890), § 38. See
Needham v. Wright, 140 Ind. 190, also Vetterlein v. Barnes, 6 Fed.
39 N. E. 510; Holland v. Fuller, 13 693; Ex parte Owen, L. R. 13 Q. B.
Ind. 195; Starr v. Case, 59 Iowa Div. 113; Luckie v. Forsyth, 3 J. &
491, 13 N. W. 645; Pfeffer v. Steiner, L. 388. Compare Hubbard v. Guild,
27 Mich. 537; Barry v. Briggs, 22 8 N. Y. Super. Ct. 662.
§ 599 LAW OF PARTNERSHIP 788

ment or order of court leaving to one partner the power of

liquidating the firm assets each partner is entitled to take part
in winding up firm affairs." By the Uniform Partnership Act,
"unless otherwise agreed, the partners who have not wrong-
fully dissolved the partnership or the legal representative of the
last surviving partner, not bankrupt, has the right to wind up
the partnership affairs: provided, however, that any partner, his
legal representatives or his assigns, upon cause shown, may obtain
winding up by the court."" It is provided also that the part-
nership is in no case bound by acts of a bankrupt partner." It
is not uncommon for partners to provide by agreement that one
partner shall take the firm assets as owner and that he shall
assume firm debts, and such arrangement is binding between the
partners," though not on third parties who have not consented
to such arrangement.'"
§ 599. Some general powers and disqualifications of part-
ner after dissolution.-A partner after dissolution may use
the firm name if not in such a manner as to render other part-
ners liable,2 o but he has no implied power to use it so as to bind
other partners. 2 ' After dissolution, partners have the power,"
15 Granger v. McGilvra, 24 Ill. v. Ray, 26 Can. Sup. Ct. 79 [affg. 22
152; Skannel v. Taylor, 12 La. Ann. Ont. App. 12 (revg. 24 Ont. 497)];
773; Davis v. Briggs, 39 Maine 304; Bresse v. Griffith, 24 Ont. 492.
Ellicott v. Nichols, 7 Gill (Md.) 85, 20 Cronly v. Bank of Kentucky, 18
48 Am. Dec. 546; Hilton v. Van- B. Mon. (Ky.) 405; First Commer-
derbilt, 82 N. Y. 591; Ruffner v. cial Bank v. Talbert, 103 Mich. 625,
Hewitt, 7 W. Va. 585; Eng.- Part- 61 N. W. 888, 50 Am. St. 385; Bank
nership Act. (1890), § 39. of Mobile v. Andrews, 2 Sneed
1o Uniform Partnership Act, § 37. (Tenn.) 535.
17 Uniform Partnership Act, § 35 21 Holbrook v. Nesbitt, 163 Mass.
(2). 120, 39 N. E. 794; Burchell v. Wilde
18 Mafflyn v. Hathaway, 106 Mass. (1900), 1 Ch. 551, 69 L. J. Ch. 314,
414; Young v. Clute, 12 Nev. 31. 82 L. T. Rep. (N. S.) 576; Levy v.
1o Bedford v. Deakin, 2 B. & Ald. Walker, 10 Ch. D. 436; Chappell v.
210, 2 Stark. 178, 3 E. C. L. 366; 'Griffith, 50 J. P. 86, 53 L. T. (N. S.)
Lacy v. McNeale, 4 D. & R. 7, 16 E. 459; Aikins v. Piper, 15 Grant Ch.
C. L. 185; Featherstone v. Hunt, 2 (U. C.) 581.
D. & R. 233, 1 B. & C. 113, 1 L. J. K. 22 Dew v. Pearson, 73 Wash. 602,
B. (0. S.) 49, 8 E. C. L. 49; Isbester 132 Pac. 412; Sandberg v. Scougale,
789 DISSOLUTION § 599

and are under the duty to perform existing firm contracts."

Third persons are not relieved from liability on their existing
contracts with the firm," unless it is expressly so agreed, or may
be implied by law.25 It has been seen that the agency of a part-
nership is terminated by dissolution.2 6 A continuing guaranty
to a firm of an account of a customer or patron is terminated
by change in the membership of such firm, except as to goods
sold, or credits extended, before dissolution." Confession of
75 Wash. 313, 134 Pac. 1051; Davis Bing. (N. Cas.) 296, 4 Jur. 105, 9 L.
v. Sowell, 77 Ala. 262; Western J. P. C. 194.
Stage Co. v. Walker, 2 Iowa 504, 65 24 Dew v. Pearson, 73 Wash. 602,
Am. Dec. 789; White v. Kearney, 2 132 Pac. 412; Roehm v. Horst, 91
La. Ann. 639; Feige v. Babcock, 111 Fed. 345, 33 C. C. A. 550 (affd. 178
Mich. 538, 70 N. W. 7; Holmes v. U. S. I., 20 Sup. Ct. 780, 44 L. ed.
Shands, 27 Miss. 40; Bryant v. Haw- 953) ; Smith v. Hill, 13 Ark. 173;
kins, 47 Mo. 410; Dean v. McFaul, Turk v. Nicholson, 30 Iowa 407;
23 Mo. 76; Powell v. Roberts, 116 Campbellsville Lumber Co. v. Brad-
Mo. App. 629, 92 S. W. 752; French lee, 96 Ky. 494, 29 S. W. 313, 16 Ky.
v. Griffin, 104 N. Car. 141, 10 S. E. L. 572; Palmer v. Sawyer, 114 Mass.
166; Robertson v. Wood, 10 Kulp. 1; Swobe v. New Omaha Thomson-
(Pa.) 76; Ault v. Goodrich, 4 Russ. Houston Electric Light Co., 39 Nebr.
430, 28 Rev. Rep. 151; Crawshay v. 586, 58 N. W. 181; McCraney v. Mc-
Collins, 2 Russ. 325, 26 Rev. Rep. 83; Cool, 19 Ont. 470 (affd. in 18 Ont.
Eng. Partnership Act (1890), H§ 38, App. 217).
39. See also Bryant v. Hawkins, 47 25 Roberts v. Kelsey, 38 Mich. 602;
Mo. 410. Wheaton v. Cadillac Automobile Co.,
23 Fail v. McRee, 36 Ala. 61; Whit- 143 Mich. 21, 106 N. W. 399; Hurl-
ing v. Farrand, 1 Conn. 60; Jack- but v. Post, 14 N. Y. Super. Ct. 28;
sonville &c R. &c. Co. v. Warri- Holmes v. Caldwell, 8 Rich. L. (S.
ner, 35 Fla. 197, 16 So. 898; Ar- Car.) 247; Fulton v. Thompson, 18
nold v. Hart, 176 Ill. 442, 52 N. E. Tex. 278; Tasker v. Shepherd, 6 H.
936 (affg. 75 Ill. App. 165); Dick- & N. 575, 30 L. J. Exch. 207; Dou-
son v. Indianapolis Cotton Mfg. Co., gall v. Ockerman, 9 U. C. Q. B. 354.
63 Ind. 9; Ayres v. Chicago &c. R. 26 Holbert v. Keller, 161 Iowa 723,
Co., 52 Iowa 478, 3 N. W. 522; Mu- 142 N. W. 962. See ante H§592, 593.
tual Bldg. &c. Assoc. v. Fidelity 27 Lyon v. Plum, 75 N. J. L. 883,
&c. Co. of Maryland, 50 La. Ann. 69 Atl. 209, 14 L. R. A. (N. S.)
291, 23 So. 405; Nickerson v. Russell, 1231 note, 127 Am. St. 858. See
172 Mass. 584, 53 N. E. 141; Hughes generally the following cases: Grant
v. Gross, 166 Mass. 61, 43 N. E. v. Naylor, 4 Cranch U. S. 224, 2 L.
1031, 55 Am. St. 375, 32 L. R. A. ed. 603; Crane Co. v. Specht, 39 Nebr.
620; Booker v. Kirkpatrick, 26 Grat. 123, 57 N. W. 1015, 42 Am. St. 562;
(Va.) 145; Anderson v. Weston, 6 People v. Backus, 117 N. Y. 196, 22
sg 600 LAW OF PARTNERSHIP 790

judgment for a firm debt by one partner after dissolution will

not bind other partners.2 ' Nor after dissolution except by death
can a partner make a valid assignment for benefit of creditors."
So far as within the scope of his authority, the members of a
partnership are liable for wrongful acts of a partner after dis-
solution,"o nor are they relieved from liability for wrongful acts
of partners before dissolution, for which they would have been
liable had the firm continued."
§ 600. Admissions of partner after dissolution.-Dissolu-
tion likewise seems to preclude a member of the late firm from
making a new promise to stop the running of the statute of lim-
itations," and from binding his copartners by an admission of
N. E. 759; City Nat. Bank v. Phelps, 32 See ante § 467. Tate v. Clem-
97 N. Y. 44, 49 Am. Rep. 513; Penoyer ents, 16 Fla. 339, 26 Am. Rep. 709;
v. Watson, 16 Johns. (N. Y.) 100; Bell v. Morrison, 1 Pet. (U. S.) 351,
Taylor v. Wetmore, 10 Ohio, 490; 7 L. ed. 174; Mayberry v. Willoughby,
Smith v. Montgomery, 3 Tex. 199; 5 Nebr. 368, 25 Am. Rep. 491; Shoe-
Myers v. Edge, 7 T. R. 250; Strange maker v. Benedict, 11 N. Y. 176, 62
v. Lee, .3 East 484; Pemberton v. Am. Dec. 95; Van Keuren v. Parme-
Oakes, 4 Russ. 154; Cosgrave Brew- lee, 2 N. Y. 523, 51 Am. Dec. 322;
ing &c. Co. v. Starrs, 5 Ont. Rep. Kerper v. Wood, 48 Ohio St. 613, 29
189; Dry v. Davy, 10 Ad. & El. 30, N. E. 501, 15 L. R. A. 656n; Jack v.
3 Jur. 315. McLanahan, 191 Pa. St. 631, 43 Atl.
28 Mitchel v. Rich, 1 Ala. 228; Con- 356; Bush v. Stowell, 71 Pa. St. 208,
ery v. Rotchford, 30 La. Ann. 692; 10 Am. Rep. 694; Reppert v. Colvin,
Morgan v. Richardson, 16 Mo. 409, 48 Pa. St. 248; Levy v. Cadet, 17 Serg.
57 Am. Dec. 235; Lambert v. Con- & R. (Pa.) 126, 17 Am. Dec. 650;
verse, 22 How. Pr. (N. Y.) 265; Davis v. Poland, 92 Va. 225, 23 S.
Mair v. Beck (Pa.), 2 Atl. 218, 1 E. 292. Compare Forbes v. Gar-
Sad. 360. field, 32 Hun (N. Y.) 389; Clement
29 Deckert v. Filbert, 3 Watts & S. v. Clement, 69 Wis. 599, 35 N. W.
(Pa.) 454; Kellogg v. Cayce, 84 Tex. 17, 2 Ain. St. 760. Contra: Beardsley
213, 19 S. W. 388. v. Hall, 36 Conn. 270, 4 Am. Rep.
30 Smith v. Jameson, 1 Peake 213, 5 74; Cady v. Shepherd, 11 Pick.
T. R. 601. See also Powell v. Rob- (Mass.) 400, 22 Am. Dec. 379; Vinal
erts, 116 Mo. App. 629, 92 S. W. v. Burrill, 16 Pick. (Mass.) 401;
752. Merritt v. Day, 38 N. J. L. 32, 20
3 In re Hughes, 15 Quebec Super. Am. Rep. 362; Mills v. Hyde, 19 Vt.
Ct. 225; Roberts v. Adams, 8 Port. 59, 46 Am. Dec. 177; Wheelock v.
(Ala.) 297, 33 Am. Dec. 291; Brown Doolittle, 18 Vt. 440, 46 Am. Dec.
v. Higginbotham, 5 Leigh (Va.) 583, 163.
27 Am. Dec. 618.
791 DISSOLUTION § 600

liability." On this latter point, however, the cases are not in

harmony. Some of thern hold that admissions of a partner
after dissolution are entirely incompetent against the other part-
ners, mutual agency having ceased." The other rule is that
admissions made by one partner after dissolution in winding up
the business concerning an engagement made before dissolution,
are binding on the copartners, the theory being that the original
joint interest in the obligations before dissolution is a sufficient
foundation to render the admissions of one of those jointly bound
competent against the others so bound," but even under this rule,
the fact of partnership must first be proved. 6 The Uniform Part-
33 See ante § 468. As a general v. Sayre, Anth. N. P. (N. Y.) 119
rule the power of a partner to make (2d ed. 162); Meggett v. Finney, 4
admissions binding upon the firm Strob. (S. Car.) 220; Chardon v. Oli-
ceases after dissolution. Burdett v. phant, 3 Brev. (S. Car.) 183, 6 Am.
Greer, 63 W. Va. 515, 60 S. E. 497, Dec. 572; White v. Union Ins. Co.,
15 L. R. A. (N. S.) 1019n, 129 Am. 1 Nott & McC. (S. Car.) 556, 9 Am.
St. 1014. See further Barringer v. Dec. 726; Berryhill's Exrs. v. Mc-
Sneed, 3 Stew. (Ala.) 201, 20 Am. Kee's Exrs., 1 Humph. (Tenn.) 31;
Dec. 74; Burns v. McKenzie, 23 Cal. Bispham v. Patterson, 2 McLean (U.
101; Barnes v. Northern Trust Co., S.) 87, Fed. Cas. No. 1441. And
169 Ill. 112, 48 N. E. 31; Hamilton compare Wood v. Braddick, 1 Taunt.
v. Summers, 12 B. Mon. (Ky.) 11, 54 104; Schoneman v. Fegley, 7 Pa. St.
Am. Dec. 509; Herrick v. Conant, 4 433. See also 3 Elliott Ev., § 2573.
La. Ann. 276; Clarke v. Jones, 1 Rob. 34Baker v. Stackpoole, 9 Cow. (N.
(La.) 78; Atwood v. Gillett, 2 Doug. Y.) 420, 18 Am. Dec. 508; Hart v.
(Mich.) 206; National Bank of Com- Woodruff, 24 Hun (N. Y.) 510;
merce v. Meader, 40 Minn. 325, 41 Pringle v. Leverich, 97 N. Y. 181, 49
N. W. 1043; Flowers v. Helm, 29 Am. Rep. 522; Mackintosh v. Kim-
Mo. 324; Pope v. Risley, 23 Mo. 185; ball, 101 App. Div. 494, 92 N. Y. S.
Brady's Admr. v. Hill, 1 Mo. 315, 13 132; Wallis v. Randall, 81 N. Y. 164.
Am. Dec. 503; Vergennes Bank v. 35 Wood v. Braddick, 1 Taunt. 104;
Cameron, 7 Barb. (N. Y.) 143; Hart Bispham v. Patterson, 2 McLean (U.
v. Woodruff, 24 Hun (N. Y.) 510; S.) 87, Fed. Cas. No. 1441; Parker v.
Lansing v. Gaine, 2 Johns. (N. Y.) Merril, 6 Greenl. (Maine) 41.
300, 3 Am. Dec. 422; Hackley v. 36 Boor v. Lowery, 103 Ind. 468, 3
Patrick, 3 Johns. (N. Y.) 536; Smith N. E. 151, 53 Am. Rep. 519; Cady
v. Ludlow, 6 Johns. (N. Y.) 267; v. Shepherd, 11 Pick. (Mass.) 400,
Hopkins v. Banks. 7 Cow. (N. Y.) 22 Am. Dec. 379; Allcott v. Strong,
650; Walden v. Sherburne, 15 Johns. 9 Cush. (Mass.) 323; Pennoyer v.
(N. Y.) 409; Brisban v. Boyd, 4 David, 8 Mich. 407; Willis v. Hill,
Paige Ch. (N. Y.) 17; Hart v. Wood- 2 Dev. & B. L. (N. Car.) 231.
ruff, 24 Hun (N. Y.) 510; Mercer
§ 601 LAW OF PARTNERSHIP 792

nership Act provides that "an admission or representation made

by any partner concerning partnership affairs within his authority
as conferred by this act is evidence against the partnership,"" and
since the right to wind up firm affairs was given by this act it
seems that the undoubted intention was to make admissions of a
partner engaged in winding up firm business after dissolution,
competent against the other members of the firm.
§ 601. Power over firm property.-Partners on dissolu-
tion, save for death, may, by agreement, give control of the firm
property to one member." Whenever a partner's interest is
transferred voluntarily, or at execution sale, or to a trustee in
bankruptcy, the remaining partners have the control and disposi-
tion of the firm property." In cases of dissolution for other
causes each partner who has not wrongfully caused dissolution
has an equal right to the control and disposition of firm property,
but only for the purpose of winding up the business and distrib-
uting the proceeds."o Such powers may be modified by agree-
37Uniform Partnership Act, § 11. Trojan Button-Fastener Co., 56 Hun
38 Gaisell v. Johnston, 68 Wash. 648, 10 N. Y. S. 91, 31 N. Y. St. 374;
470, 123 Pac. 783; Johnston v. Gaisell, Fraser v. Kershaw, 2 Jur. (N. S.)
68 Wash. 700, 123 Pac. 784; Stanton 880.
v. Lewis, 26 Conn. 444; Renfrow v. 4oUniform Partnership Act, § 37;
Pearce, 68 Ill. 125; Baldwin v. John- Karrick v. Hannaman, 168 U. S. 328,
son, 1 N. J. Eq. 441; Smith v. Pros- 18 Sup. Ct. 135, 42 L. ed. 484; La-
key, 177 N. Y. 526, 69 N. E. 1131 penta v. Lettieri, 72 Conn. 377, 44
(revg. 82 App. Div. 19, 81 N. Y. S. Atl. 730, 77 Am. St. 315; Bach v.
424, and affg. 39 Misc. 385, 79 N. Y. State Ins. Co., 64 Iowa 595, 21 N. W.
S. 851); Smith v. Underhill, 64 Hun 99; Hogendobler v. Lyon, 12 Kans.
639, 19 N. Y. S. 249, 47 N. Y. St. 23; 276; Claiborne v. Creditors, 18 La.
Weston v. Watts, 55 Hun 608, 8 N. 501; Phillips v. Reeder, 18 N. J. Eq.
Y. S. 633, 29 N. Y. St. 289 (affd. 121 95; Bennett v. Buchan, 61 N. Y..222
N. Y. 678, 24 N. E. 1095); Jones v. (affg. 53 Barb. (N. Y.) 578, 5 Abb.
Jones, 10 Ohio Cir. Dec. 71, 18 Ohio Pr. (N. S.) 412) ; Castle v. Marks,
Cir. Ct. 260; Nixon v. Champion, 4 50 App. Div. 320, 63 N. Y. S. 1039;
Leg. Gaz. (Pa.) 73, 29 Leg. Int. 76; Kennett v. Hopkins, 20 Misc. 259, 45
Mygatt v. McClure, 3 Head (Tenn.) N. Y. S. 797 (affd. 40 App. Div. 367,
495; Hetterman Bros. Co. v. Young, 57 N. Y. S. 961); Van Doren v. Hor-
Ch. App. (Tenn.), 52 S. W. 532. ton, 19 Hun (N. Y.) 7; Noonan v.
39 Reece v. Hoyt, 4 Ind. 169; Chase McNab, 30 Wis. 277; Fisher v. Mc-
v. Scott, 33 Iowa 309; Macdonald v. Phee, 28 Nova Scotia 523; Murphy
793 DISSOLUTION § 601

ment" and must not be exercised so as to prejudice the rights

of creditors or of other partners,12 but in a manner to conserve the
interests of all the partners.43 If a partner after dissolution re-
tains the proceeds from the sale of firm property for more than
a reasonable time he may be chargeable with interest," and if
one partner carries on the business after dissolution he must
account for profits to his copartners." A partner after dissolu-
tion can not transfer firm property to pay his individual debts
unless firm creditors are paid and the copartners have consented."
A sale or transfer of firm property to raise money to pay debts
is valid," such as assigning a book account for full value." But
no partner, after dissolution, any more than at any other time,
can assign the firm property generally for the -benefit of cred-
itors."o Partners have no right to partition of firm real estate
so long as firm debts are not paid." One partner may convey
the equitable title to firm realty if necessary to pay firm debts,
v. Yeomans, 29 U. C. C. P. 421. Com- 37 Maine 408; Morse v. Bellows, 7
pare Hockin v. Whellams, 6 Mani- N. H. 549, 28 Am. Dec. 372; Thursby
toba 521. v. Lidgerwood, 69 N. Y. 198; Rob-
41 Phillips v. Reeder, 18 N. J. Eq. bins v. Fuller, 24 N. Y. 570.
95. 48 Fourth Nat. Bank v. Flach, 2
42 Claiborne v. Creditors, 18 La. 501. Ohio S. & C. P. Dec. 443.
43 Rassaert v. Mensch, 17 Cal. App. so Stanton v. Lewis, 26 Conn. 444;
637, 120 Pac. 1072; Breyfogle v. Bow- Kellar v. Self, 5 Tex. Civ. App. 393,
man, 157 Ky. 62, 162 S. W. 787. 24 S. W. 578; Paton v. Wright, 15
4 Randolph v. Inman, 172 Ill. 575, How. Pr. (N. Y.) 481; Egberts v.
50 N. E. 104; Buckley v. Kelly, 70 Wood, 3 Paige (N. Y.) 517, 24 Am.
Conn. 411, 39 Atl. 601. Dec. 236.
45 Karrick v. Hannaman, 168 U. S. 51 Moran v. McInerney, 129 Cal. 29,
328, 18 Sup. Ct. 135, 42 L. ed. 484. 61 Pac. 575, 948; Bates v. Babcock,
4 Cannon v. Lindsey, 85 Ala. 198, 95 Cal. 479, 30 Pac. 605, 16 L. R. A.
3 So. 676, 7 Am. St. 38; McLanahan v. 745, 29 Am. St. 133; Coward v. Clan-
Ellery, 3 Mason (U. S.) 269, Fed. ton, 79 Cal. 23, 21 Pac. 359; Lyman
Cas. No. 8869; Curry v. Burnett, 36 v. Lyman, 2 Paine (U. S.) 11, Fed.
Ind. 102; Geortner v. Canajoharie, 2 Cas. No. 8628; Pennybacker v. Leary,
Barb. (N. Y.) 625; Treadwell v. 65 Iowa 220, 21 N. W. 575; Molineaux
Williams, 9 Bosw. (N. Y.) 649; Cor- v. Raynolds, 54 N. J. Eq. 559, 35 Atl.
win v. Suydam, 24 Ohio St. 209; 536; Mendenhall v. Benbow, 84 N.
Crossman v. Shears, 3 Ont. App. 583. Car. 646; Haeberly's Appeal, 191 Pa.
47 Bach v. State Ins. Co., 64 Iowa St. 239, 43 Atl. 207; Kruschke v. Ste-
595, 21 N. W. 99; Milliken v. Loring, fan, 83 Wis. 373, 53 N. W. 679.
§ 602 LAW OF PARTNERSHIP 7
794

since firm realty is considered as personalty for the purpose of

paying debts."
§ 602. Power to collect, pay, or compromise firm debt.-
It is each partner's right and duty to collect firm debts after dis-
solution, and give receipts for them." By agreement this right
and duty may be conferred on one partner only." Such partner
must use due diligence and must account for the moneys taken
in." He has no power to deduct individual debts of his own
from firm debts," nor to take in satisfaction notes payable to
himself," or property other than money," or subject the other
partners to a new obligation in their settlement." Each part-
ner has the same right and duty to pay firm debts which he has
52 Shanks v. Klein, 104 U. S. 18, Dowell v. North, 24 Ind. App. 435,
26 L. ed. 635; Dupuy v. Leaven- 55 N. E. 789; Manning v. Brickell,
worth, 17 Cal. 262; Burchinell v. 3 N. Car. 133; Esterly v. Bressler,
Koon, 8 Colo. App. 463, 46 Pac. 932; 15 Pa. Super. Ct. 455.
McKee v. Covalt, 71 Kans. 772, 81 55 Metcalf v. Fouts, 27 Ill. 110;
Pac. 475; State v. Neal, 29 Wash. 391, Hanna v. McLaughlin, 158 Ind. 292,
69 Pac. 1103; Myers v. Myers, 61 L. 63 N. E. 475; Chretien v. Giron, 115
T. (N. S.) 757; Langlois v. Dubray, La. 24, 38 So. 881; Phelan v. Hutch-
17 Quebec Super. Ct. 328. ison, 62 N. Car. 116, 93 Am. Dec.
53 Heartt v. Walsh, 75 Ill. 200; 602; Kennett v. Hopkins, 20 Misc.
Major v. Hawkes, 12 Ill. 298; Gor- 259, 45 N. Y. S. 797 (affd. 40 App.
don v. Freeman, 11 Ill. 14; Hansen Div. 367, 57 N. Y. S. 961) ; Burstall
v. Miller, 44 Ill. App. 550 (affd. 145 v. Baptist, 21 Wkly. Rep. 485.
Ill. 538, 32 N. E. 548) ; Wilder v. Mor- 56 Brunson v. McLendon, 98 Ala.

ris, 7 Bush (Ky.) 420; Gannett v.
Cunningham, 34 Maine 56; Gillilan
v. Sun Mut. Ins. Co., 41 N. Y. 376;
Robbins v. Fuller, 24 N. Y. 570;
Huntington v. Potter, 32 Barb. (N.
Y.) 300; Ward v. Barber, 1 E. D.
Smith (N. Y.) 423; McRae v. Mc-
Kenzie, 22 N. Car. 232; Feigley v.
Whitaker, 22 Ohio St. 606, 10 Am.
Rep. 778; Lamb v. Saltus, 3 Brev.
(S. Car.) 130; Ayer v. Ayer, 41 Vt.
346.
54
Hawn v. Seventy-Six Land &c.
Co., 74 Cal. 418, 16 Pac. 196; Mc-
568, 13 So. 523; Cannon v. Lindsey,
85 Aa. 198, 3 So. 676, 7 Am. St. 38;
Lees v. Laforest, 14 Beav. 250, 51
Eng..Reprint 283; Pritchard v. Dra-
per, 1 Russ. & M. 191.
57 Granger v. McGilvra, 24 Ill. 152;
Lemiette v. Starr, 66 Mich. 539, 33
N. W. 832.
58 Kirk v. Hiatt, 2 Ind. 322; Kutz
v. Naugle, 7 Pa. Super. Ct. 179.
5 Rootes v. Wellford, 4 Munf.
(Va.) 215, 6 Am. Dec. 510; Niemann
v. Niemann, 43 Ch. D. 198.
795 DISSOLUTION § 603

to collect them." But where one partner has assumed the firm
debts, the creditors have not lost their right to enforce their
claims against the other partners." If by agreement one partner
is given power to liquidate firm affairs, none of the others have
power to compromise firm debts." Nor has a partner who has
surrendered to the other members of a partnership his interest
in a partnership claim, authorization to settle it." Unless one
partner is given such power, each has equal power in the col-
lection or payment of debts and many honest compromises or
releases by a partner after dissolution have been sustained by the
courts."I
§ 603. Power to make new contracts.-The rule is uni-
versal that a partner has no implied authority to bind his co-
partners to new contracts after dissolution." Nor does a part-
ner who by agreement is given the power to liquidate firm af-
60 Barnes v. Northern Trust Co., 64 Scott v. Atlanta Wood & Iron
169 Ill. 112, 48 N. E. 31 (affg. 66 Ill. Novelty Works, 12 Ga. App. 216, 76
App. 282); Woody v. Haworth, 24 S. E. 1082; Nickels v. Mooring, 16
Ind. App. 634, 57 N. E. 272; Hanks Fla. 76; Gordon v. Albert, 168 Mass.
v. Flynn, 108 Iowa 165, 78 N. W. 150, 46 N. E. 423; Bass v. Taylor, 34
839; Woodworth v. Downer, 13 Vt. Miss. 342; Napier v. McLeod, 9
522, 37 Am. Dec. 611. Wend. (N. Y.) 120; Sims v. Smith,
61 See ante § 557 et seq., on change 11 Rich. L. (S. Car.) 565; Union
of membership where subject of as- Bank v. Hall, Harp. (S. Car.) 245;
sumption was more fully discussed; Weir Plow Co. v. Evans (Tex. Civ.
Fowler v. Coker, 107 Ga. 817, 33 S. App.), 24 S. W. 38 (1893); Thrall
E. 661; Weirick v. Graves, 73 Ill. v. Seward, 37 Vt. 573; Brayley v.
App. 266; McLoughlin v. Bieber, 41 Goff, 40 Iowa 76.
App. Div. 561, 58 N. Y. S. 790; 65 Louisiana Purchase Exposition
Rowand v. Fraser, 1 Rich. Law (S. Co. v. Mueller (Mo. App.), 155 S.
Car.) 325. W. 881; Bell v. Morrison, 1 Pet. (U.
62 Roberts v. Strang, 38 Ala. 566, S.) 351, 7 L. ed. 174; Lockwood v.
82 Am. Dec. 729; Hodge v. Whitall, Comstock, 4 McLean (U. S.) 383,
15 La. 503; Chace v. Higgins, 1 Fed. Cas. No. 8449; Wilson v. Tor-
Thomp. & C. (N. Y.) 229; Burhans bert, 3 Stew. (Ala.) 296, 21 Am. Dec.
v. Burhans, 48 Hun 619, 1 N. Y. S. 632; First International Bank of Por-
37, 16 N. Y. St. 520; Gram v. Cad- tal v. Brown, 130 Minn. 210, 153 N.
well, 5 Cow. (N. Y.) 489. W. 522; Grafton v. Paine, 7 App.
63 Scott v. Atlanta Wood & Iron Cas. (D. C.) 255 (appeal dismissed
Novelty Works, 12 Ga. App. 216, 76 168 U. S. 704, 18 S. Ct. 942, 42 L. ed.
S. E. 1082. 1212) ; McGee v. Potts, 87 Ga. 615, 13
§ 603 LAW OF PARTNERSHIP 796

fairs have authority to create new liabilities," except in a few

jurisdictions." In the course of settling firm affairs, however,
some obligations may naturally arise out of dealings previous
to the dissolution by which the partners will be bound, such as
liability to a surety, on an appeal bond for appeal from a judg-
ment against the firm, who was compelled to pay the judgment,"
or liability for an excess of money paid to one partner on a
firm debt," or liability for compensation for driving logs inter-
mingled with another's logs,"o or for compensation to an ac-
countant who was engaged by one partner to audit the firm
books.7 One partner may do what is necessary to complete
S. E. 746; Milwaukee Harvester Co. App.), 46 S. W. 858 (1898) ; Com-
v. Newell, 65 Ill. App. 612; Hayden mercial Nat. Bank of Salt Lake City
v. Cretcher, 75 Ind. 108; Gard v. v. Brinton (Utah), 145 Pac. 42; Pratt
Clark, 29 Iowa 189; Montague v. v. Page, 32 Vt. 13; Harris v. Zier, 43
Reakert, 6 Bush (Ky.) 393; Bacon Wash. 573, 86 Pac. 928; McDonald
v. Hutchings, 5 Bush (Ky.) 595; v. McKeen, 28 Nova Scotia 329.
Richard v. Monton, 109 La. 465, 33 66 Chase v. Kendall, 6 Ind. 304;
So. 563; Clarke v. Jones, 1 Rob. Hamilton v. Seaman, 1 Ind. 185,
(La.) 78; Lane v. Tyler, 49 Maine Smith 129; Perrin v. Keene, 19
252; Ellicott v. Nichols, 7 Gill (Md.) Maine 355, 36 Am. Dec. 759; Hurst
85, 48 Am. Dec. 546; Boyle v. Mus- v. Hill, 8 Md. 399, 63 Am. Dec. 705;
ser, 77 Minn. 153, 79 N. W. 664; Os- Gilmore v. Ham, 142 N. Y. 1, 36 N.
born v. Wood, 125 Mo. App. 250, 102 E. 826, 40 Am. St. 554; Palmer v.
S. W. 580; Bennett v. Buchan, 61 N. Dodge, 4 Ohio St. 21, 62 Am. Dec.
Y. 222 (affg. 53 Barb. (N. Y.) 578, 5 271; Speake v. White, 14 Tex. 364;
Abb. Pr. (N. S.) 412); Payne v. Woodson v. Wood, 84 Va. 478, 5 S.
Smith, 28 Hun (N. Y.) 104; Kirby E. 277.
v. Hewitt, 26 Barb. (N. Y.) 607; Sut- 67 Prudhomme v. Henry, 5 La. Ann.

ton v. Dillaye, 3 Barb. (N. Y.) 529;
Roots v. Kilbreth, 10 Ohio Dec. 20,
18 Wkly. L. Bul. 58; Beaumont v.
Sharpless, 45 Pa. Super. Ct. 575; At-
lantic Refining Co. v. Mengel, 6 Pa.
Dist. 223; Veale v. Hassan, 3 McCord
(S. Car.) 278; White v. Union Ins.
Co., 1 Nott & McC. (S. Car.) 556, 9
Am. Dec. 726; Williams v. Whitmore,
9 Lea (Tenn.) 262; Jones' Case, 1
Overt. (Tenn.) 455; Lee v. Stowe, 57
Tex. 444; Haddock v. Crocheron, 32
Tex. 276, 5 Am. Rep. 244; Baptist
Book Concern v. Carswell (Tex. Civ.
700; Jack v. McLanahan, 191 Pa. St.
631, 43 AtI. 356; Garretson v. Brown,
185 Pa. St. 447, 40 Atl. 293; Brown
v. Clark, 14 Pa. St. 469; In re Davis,
5 Whart. (Pa.) 530, 34 Am. Dec.
574.
68 Gard v. Clark, 29 Iowa 189.
6 Williams v. Whitmore, 9 Lea
(Tenn.) 262.
70 Boyle v. Musser, 77 Minn.
153,
79 N. W. 664.
71 Lichenstein v. Murphree (Ala.
App.), 62 So. 444.
797 DISSOLUTION § 604

transactions and contracts unfinished at the time of dissolution."

He may charge the partners for expenses reasonably incurred in
preserving firm property."
§ 604. Powers as to negotiable paper.-Following notice
of dissolution a partner can not, in general, in the absence of
any element of ratification or estoppel, issue negotiable paper,
even in settlement of a debt of the firm, 7" even of a renewal char-
72 Page v. Wolcott, 15 Gray Tolbert, 113 Mich. 486, 71 N. W.
(Mass.) 536; Asbestos Mfg. & Supply 849; Bryant v. Lord, 19 Minn. 396;
Co. v. Lennig-Rapple Engineering Co., Maxey v. Strong, 53 Miss. 280; Seu-
26 Cal. App. 177, 146 Pac. 188; West- fert v. Gille, 230 Mo. 453, 131-S. W.
ern Stage Co. v. Walker, 2 Iowa 504, 102, 31 L. R. A. (N. S.) 471n; Fel-
65 Am. Dec. 789; Rust v. Chisolm, 57 lows v. Wyman, 33 N. H. 351; Farm-
Md. 376; Hplmes v. Shands, 27 Miss. ers' &c. Bank v. Green, 30 N. J. L.
40; Armstrong v. Henley, 182 Mo. 316; Lusk v. Smith, 8 Barb. (N. Y.)
App. 320, 170 S. W. 402. 570, 4 How. Pr. 418; Graves v.
7 Conrad v. Buck, 21 W. Va. 396. Merry, 6 Cow. (N. Y.) 701, 16
74 Lockwood v. Comstock, 4 Mc- Am. Dec. 471; Lansing v. Gaine,
Lean (U. S.) 383, Fed. Cas. No. 8449; 2 Johns. (N. Y.) 300, 3 Am. Dec.
Draper v. Bissell, 3 McLean (U. S.) 422; Mitchell . v. Ostrom, 2 Hill
275, Fed. Cas. No. 4068; Fraser v. (N. Y.) 520; National Bank v. Nor-
Wolcott, 4 McLean (U. S.) 365, Fed. ton, 1 Hill (N. Y.) 572; Bristol v.
Cas. No. 5065. See Cunningham v. Sprague, 8 Wend. (N. Y.) 423; Payne
Bragg, 37 Ala. 436; Burr v. Williams, v. Slate, 39 Barb. (N. Y.) 634 (affd.
20 Ark. 171; Curry v. White, 51 Cal. 29 N. Y. 146) ; Gardner v. Conn, 34
530; New Haven County Bank v. Ohio St. 187; McCowin v. Cubbison,
Mitchell, 15 Conn. 206; First Nat. 72 Pa. St. 358; Galliott v. Planters' &
Bank v. Ells, 68 Ga. 192; Humphries Mechanics' Bank, 1 McMul. (S. Car.)
v. Chastain, 5 Ga. 166, 48 Am. Dec. 209, 36 Am. Dec. 256; Heckheimer v.
247; Bank of Montreal v. Page, 98 Allen, 89 S. Car. 452, 71 S. E. 1033;
Ill. 109; Floyd v. Miller, 61 Ind. 224; Isler v. Baker, 6 Humph. (Tenn.)
Van Valkenburg v. Bradley, 14 Iowa 85; Funck v. Heintze (Tex. Civ.
108; Linn v. Valz, 11 Ky. L. 846; Mul- App.), 23 S. W. 417; Woodworth v.
lins v. Simpkinson, 10 Ky. L. (ab- Downer, 13 Vt. 522, 37 Am. Dec. 611;
stract) 280; Bank of Monroe v. Drew Commercial Bank v. Miller, 96 Va.
nv. Co., 126 La. 1028, 53 So. 129, 32 357, 31 S. E. 812; Roots v. Mason
L. R. A. (N. S.) 255n; Commercial City Salt & Mining Co., 27 W. Va.
Bank v. Perry, 10 Rob. (La.) 61, 43 483. And compare Jones v. Thorn, 2
Am. Dec. 168; Dodd v. Bishop, 30 La. Mart. (N. S.) (La.) 463; Temple v.
Ann. 1178; Perrin v. Keene, 19 Maine Seaver, 11 Cush. (Mass.) 314; Gould
355, 36 Am. Dec. 759; Ecker v. First v. Horner, 12 Barb. (N. Y.) 601;
Nat. Bank, 59 Md. 291; Hurst v. Hill, Robinson v. Taylor, 4 Pa. St. 242;
8 Md. 399, 63 Am. Dec. 705; Potter v. Myers v. Huggins, 1 Strob. (S.
§ 604 LAW OF PARTNERSHIP 798

acter," in the firm name so as to bind his former associates, nor

can he bind them by indorsing such paper." If after the dissolu-
tion of a firm by the retirement of one of the partners, a bill
or note is re-executed in the firm name by the remaining partner
or partners in the usual course of business, the retiring partner
can not set up in defense to an action thereon by a holder for
value and without notice, the fact that the firm has been dis-
solved, since the authority and obligation of the partners con-
tinue until legal notice of the dissolution has been given."
"When a partnership has once existed, the presumption is that
it still exists until its dissolution is made known, and, until this
is done, the public have the right to presume on its continued
existence, and when a former member contracts a debt in its
Car.) 473; White v. Tudor, 24 White v. Union Ins. Co., 1 Nott &
Tex. 639, 76 Am. Dec. 126. See also McC. (S. Car.) 556, 9 Am. Dec. 726;
3 Elliott Ev., § 2572. Dickerson v. Wheeler, 1 Humph.
75 Brown v. Bamberger, 110 Ala. (Tenn.) 51; Tarver v. Evansville
342, 20 So. 114; Bank of Monroe v. Furniture Co., 20 Tex. Civ. App. 66,
Drew Inv. Co., 126 La. 1028, 53 48 S. W. 199; Woodson v. Wood, 84
So. 129, 32 L. R. A. (N. S.) Va. 478, 5 S. E. 277; Abel v. Sutton,
255n; Lumberman's Bank v. Pratt, 3 Esp. 108, 6 Rev. Rep. 818; Kilgour
51 Maine 563; Moore v. Lackman, v. Finlyson, 1 H. Bl. 155.
52 Mo. 323; Wilson v. Forder, 20 77 Marsh v. Wheeler, 77 Conn. 449,
Ohio St. 89, 5 Am. Rep. 627; Foltz 59 Atl. 410, 107 Am. St. 40; Ewing
v. Pourie, 2 Desaus. (S. Car.) 40 v. Trippe, 73 Ga. 776; Holtgreve v.
Brown v. Chancellor, 61 Texas 437; Wintker, 85 Ill. 470; Stall v. Cassa-
Lange v. Kennedy, 20 Wis. 279. dy, 57 Ind. 284; Merrit v. Pollys, 16
76 Dean v. Savage, 28 Conn. 359; B. Mon. (Ky.) 355; Goddard v. Pratt,
Bogereau v. Gueringer, 14 La. Ann. 16 Pick. (Mass.) 412; Wagner v.
478; Carr v. Woods, 11 Rob. (La.) Freschl, 56 N. H. 495; Buffalo City
95; Rudy v. Harding, 6 Rob. (La.) Bank v. Howard, 35 N. Y. 500; Van
70; Nott v. Douming, 6 La. 684, 26 Eps v. Dillaye, 6 Barb. (N. Y.) 244;
Am. Dec. 491; Poignand v. Liver- Hammond v. Aiken, 3 Rich. Eq. (S.
more, 5 Mart. (N. S.) (La.) 324; Car.) 119; Davis v. Willis, 47 Tex.
Walker v. McMicken, 9 Mart. (0. 154; Clement v. Clement, 69 Wis. 599,
S.) (La.) 192; Lumbermen's Bank 35 N. W. 17, 2 Am. St. 760. Com-
v. Pratt, 51 Maine 563; Parker v. pare Gale v. Miller, 54 N. Y. 536;
Macomber, 18 Pick. (Mass.) 505; Mc- Woodford v. Dorwin, 3 Vt. 82, 21
Daniel v. Wood, 7 Mo. 543; Fellows Am. Dec. 573; Parker v. Southern
v. Wyman, 33 N. H. 351; Sanford v. Ruralist Co. (Ga. App.), 83 S. E.
Mickles, 4 Johns. (N. Y.) 224; Rice 158; Horton v. Smith, 12 Ga. App.
v. Goodenow, Tapp. (Ohio) 94; 232, 77 S. E. 9.
799 DISSOLUTION '§ 605

name, to allow a retired member to escape liability from its pay-

ment would be to allow the perpetration of a fraud. * * *
Until notice of the dissolution of a firm is given, the public, who
has no such knowledge, may treat the firm as in existence, and
a note given by one member of such firm is binding upon all the
other members, notwithstanding such dissolution."" So where,
after the dissolution of a partnership, a note is given by one of
the members in the firm name in payment of a firm debt to one
who has had no notice of the dissolution, the firm will be held lia-
ble thereon." But there can, it seems, be no recovery against a
firm on a note given by one of the partners in the firm name after
dissolution where the payee knew that it was given for the prat-
ner's private debt, and also knew or, what amounts to the same
thing,.was chargeable with notice of the dissolution.o
§ 605. Authorization of giving of negotiable paper.-Au-
thority to bind the firm by issuing or indorsing negotiable paper
after dissolution may be given by the other partners, either before
or after diss6lution." It is generally held such authority must
78 Ewing v. Trippe, 73 Ga. 776. A. (N. S.) 471; Knaus v. Givens, 110
79 Long v. Garnett, 59 Tex. 229; Mo. 58, 19 S. W. 535; Osborn v.
Bluff City Lumber Co. v. Bank of Wood, 125 Mo. App. 250, 102 S. W.
Clarksville, 95 Ark. 1, 128 S. W. 58; 580; Holt v. Simmons, 16 Mo. App.
Burr v. Williams, 20 Ark. 171; Bur- 97; Graves v. Merry, 6 Cow. (N. Y.)
son v. Stone, 135 Ga. 115, 68 S. E. 701, 16 Am. Dec. 471; Bristol v.
1038; Mims v. Brook, 3 Ga. App. Sprague, 8 Wend. (N. Y.) 423;
247, 59 S. E. 711; Hicks v. Russell, Johanning v. Wilson, 86 N. Y. S. 7;
72 Ill. 230; Jansen v. Grimshaw, 26 Chemung Canal Bank v. Bradner, 44
Ill. App. 287 (affd. 125 Ill. 468, 17 N. N. Y. 680; Anderson v. Weston, 6
E. 850) ; Iddings v. Pierson, 100 Ind. Bing. N. Cas. 296, 4 Jur. 105, 9 L.
418; Buchanan v. Buckler, 8 Ky. L. J. C. P. 194, 8 Scott 583; Lamb v.
(abstract) 617; Nott v. Douming, 6 Singleton, 2 Brev. (S. Car.) 490;
La. 684, 26 Am. Dec. 491; Lowe v. Clement v. Clement, 69 Wis. 599, 35
Penny, 7 La. Ann. 356; Taylor v. Hill, N. W. 17, 2 Am. St. 760.
36 Md. 494; Whitman v. Leonard, 3 80 Lansing v. Gaine, 2 Johns. (N.
Pick. (Mass.) 177; Pitcher v. Bar- Y.) 300, 3 Am. Dec. 422.
rows, 17 Pick. (Mass.) 361, 28 Am. 81 Brown v. Bamberger, 110 Ala.
Dec. 306; Pecker v. Hall, 14 Allen 342, 20 So. 114; Burr v. Williams,
(Mass.) 532; Hall v. Heck, 92 Mich. 20 Ark. 171; New. Haven County
458, 52 N. W. 749; Seufert v. Gile, Bank v. Mitchell, 15 Conn. 206; Bank
230 Mo. 453, 131 S. W. 102, 31 L. R. of Montreal v. Page, 98 Ill. 109;
§ 605 LAW OF PARTNERSHIP 800

be express,82 although it has also been held that it may be in-

ferred from circumstances." General authority to a partner to
settle or liquidate firm affairs after dissolution does not give him
power to issue or renew notes and bind the firm." The con-
Hamilton v. Seaman, 1 Ind. 185,
Smith 129; Conklin v. Ogborn, 7 Ind.
553; Van Valkenburg v. Bradley, 14
Iowa 108; Carr v. Woods, 11 Rob.
(La.) 95; Johnson v. Marsh, 2 La.
Ann. 772; Lowe v. Penny, 7 La. Ann.
356; Durkee v. Price, 11 La. Ann.
333; Meyer v. Atkins, 29 La. Ann.
586; Rudy v. Harding, 6 Rob. (La.)
70; Perrin v. Keene, 19 Maine 355,
36 Am. Dec. 759; Eaton v. Taylor,
10 Mass. 54; First dommercial Bank
v. Talbert, 103 Mich. 625, 61 N. W.
888, 50 Am. St. 385; Richardson v.
Moies, 31 Mo. 430; Long v. Story,
10 Mo. 636; Williston v. Camp, 9
Mont. 88, 22 Pac. 501; Graves v.
Merry, 6 Cow. (N. Y.) 701, 16 Am.
Dec. 471; National Bank v. Norton,
1 Hill (N. Y.) 572; Lusk v. Smith,
8 Barb. (N. Y.) 570, 4 How. Pr.
418; Palmer v. Dodge, 4 Ohio St.
21, 62 Am. Dec. 271; Haven v.
Goodel, 1 Disney (Ohio) 26, 12
Ohio Dec. 465; White v. Union Ins.
Co., 1 Nott & McC. (S. Car.) 556,
9 Am. Dec. 726; Myers v. Huggins,
1 Strob. (S. Car.) 473; Martin v. Kirk,
2 Humph. (Tenn.) 529; Fowler v.
Richardson, 3 Sneed (Tenn.) 508;
McElroy v. Melear, 7 Coldw. (Tenn.)
140; White v. Tudor, 24 Tex. 639, 76
Am. Dec. 126; Brown v. Chancellor,
61 Tex. 437; Douglass v. Hall, 22
Vt. 451.
82 Brown v. Bamberger, 110 Ala.
342, 20 So. 114; Burr v. Williams, 20
Ark. 171; New Haven County Bank
v. Mitchell, 15 Conn. 206; Rudy v.
Harding, 6 Rob. (La.) 70; Carr v.
Woods, 11 Rob. (La.) 95; Johnson
v. Marsh, 2 La. Ann. 772; Lowe v.
Penny, 7 La. Ann. 356; Durkee v.
Price, 11 La. Ann. 333; Meyer v. At-
kins, 29 La. Ann. 586; Long v. Story,
10 Mo. 636; National Bank v. Nor-
ton, 1 Hill (N. Y.) 572.
83 Graves v. Merry, 6 Cow. (N. Y.)
701, 16 Am. Dec. 471.
84 Lockwood v. Comstock, 4 Mc-
Lean (U. S.) 383, Fed. Cas. No.
8449; Hamilton v. Seaman, 1 Ind. 185,
Smith 129; Van Valkenburg v. Brad-
ley, 14 Iowa 108 (overruling Kemp v.
Coffin, 3 G. Greene (Iowa) 190);
Palmer v. Dodge, 4 Ohio St. 21, 62
Am. Dec. 271; White v. Union Ins.
Co., 1 Nott & McC. (S. Car.) 556, 9
Am. Dec. 726; Hatton v. Stewart, 2
Lea (Tenn.) 233; White v. Tudor, 24
Tex. 639, 76 Am. Dec. 126; Brown v.
Chancellor, 61 Tex. 437. See also
Perrin v. Keene, 19 Maine 355, 36 Am.
Dec. 759; Myatts v. Bell, 41 Ala. 222;
Conklin v. Ogborn, 7 Ind. 553; Bank
of Montreal v. Page, 98 Ill. 109; Pot-
ter v. Tolbert, 113 Mich. 486, 71 N.
W. 849; Long v. Story, 10 Mo. 636;
Lusk v. Smith, 8 Barb. (N. Y.) 570,
4 How. Pr. 418; Galliott v. Planters
Bank, 1 McMul. (S. Car.) 209, 36
Am. Dec. 256; McElroy v. Melear,
7 Coldw. (Tenn.) 140; Fowler v.
Richardson, 3 Sneed (Tenn.) 508;
Martin v. Kirk, 2 Humph. (Tenn.)
529; Parker v. Cousins, 2 Grat.
(Va.) 372, 44 Am. Dec. 388. "The
third and last contention of the
learned counsel for the bank is
that, conceding that the firm was
dissolved, and that the bank knew
it, the note was still good, because
801 DISSOLUTION § 605

trary rule, however, has been asserted in Pennsylvania." In a Wis-

consin case where one partner retired from the firm and notified the
plaintiff bank not to loan any more money to the partnership,
according to their regular method of doing business the obliga-
tions incurred between November 15 and December 1 were
paid by check on December 15, and the remaining partner issued
firm checks for firm obligations between December 1 and Decem-
ber 15, which would have overdrawn the account if he had not
borrowed $400 from the bank on a note given in the firm name,
and it was held the retiring partner was liable on this note, for
the reason that since he acquiesced in the liquidation by his co-
partner, and was liable on the indebtedness for which the checks
were drawn by his partner, therefore, the recovery on the note
was substantially on the original indebtedness, and the partnm
was not harmed by a recovery nominally on the note." This
case in its holding approximates the old Pennsylvania rule. The
giving or indorsing of negotiable paper in the firm name by a
partner after dissolution may be ratified by the other partners."
Blanks was authorized to make it in 38 Am. Dec. 768; In re Davis'
his capacity as liquidator. We think Estate, 5 Whart. (Pa.) 530, 34 Am.
not. He had no other authority, as Dec. 574.
liquidator, than such as was con- 86 Antigo v. Larsen (Wis.), 132 N.
ferred on him, expressly or impliedly, W. 610.
by his copartners, and that did not 87 Silas v. Adams, 92 Ga. 350, 17
include the authority to bind them S. E. 280; Easter v. Farmers' Nat.
by the giving of a note." Bank of Bank, 57 Ill. 215; Whitworth v. Bal-
Monroe v. Drew Inv. Co., 126 La. lard, 56 Ind. 279; Murray v. Ayer,
1028, 53 So. 129, 32 L. R. A. (N. S.) 16 R. I. 665, 19 Ati. 241. See also
255. See also Houser v. Irvine, 3 Draper v. Bissel, 3 McLean (U. S.)
Watts & S. (Pa.) 345, 38 Am. Dec. 275, Fed. Cas. No. 4068; Sanborn v.
768. Contra: Meyran v. Abel, 189 Stark, 31 Fed. 18; Brown v. Bam-
Pa. St. 215, 42 Atl. 122, 69 Am. St. berger, 110 Ala. 342, 20 So. 114;
806. Roberts v. Barrow, 53 Ga. 314;
85Meyran v. Abel, 189 Pa. St. 215, Chamberlain v. Stone, 24 Ga. 310;
42 Atl. 122, 69 Am. St. 806; Sieg- Carter v. Pomeroy, 30 Ind. 438;
fried v. Ludwig, 102 Pa. St. 547; Conklin v. Ogborn, 7 Ind. 553; Van
Lloyd v. Thomas, 79 Pa. St. 68; Valkenburg v. Bradley, 14 Iowa 108
Ward v. Tyler, 52 Pa. St. 393; Rob- (overruling Kemp v. Coffin, 3 G.
inson v. Taylor, 4 Pa. St. 242; Petri- Greene (Iowa) 190) ; Fowle v. Har-
kin v. Collier, I Pa. St. 247; Houser rington, 1 Cush. (Mass.) 146; Eaton
v. Irvine, 3 Watts & S. (Pa.) 345, v. Taylor, 10 Mass. 54; Randolph
51-Row. oN PARTN.-VCL. 1
§ 606 LAW OF PARTNERSHIP 802

Such ratification may take place by consenting to the note,"'

either at the time of its execution," or afterward," by an express
promise to pay it," by an express adoption of the note,92 or by
making a payment on it," but not by mere recognition of the
debt." It is often held that a partner after dissolution may in-
dorse firm paper without recourse, in selling it as part of the
firm property."
§ 606. Note given after dissolution as discharge of debt.
-Notes given in the firm name after dissolution, in the absence
of agreement, do not discharge the original debt." The same
rule applies to the note of one partner taken after dissolution
of the firm, and neither the original debt nor the liability of the
maker of the note on such debt is discharged by the note, in the
absence of agreement." Unless there is an agreement to that

v. Peck, 1 Hun (N. Y.) 138; Wil-
son v. Forder, 20 Ohio St. 89, 5 Am.
Rep. 627; Hatton v. Stewart, 2 Lea
(Tenn.) 233; McElroy v. Melear, 7
Coldw. (Tenn.) 140.
88 Sanborn v. Stark, 31 Fed. 18;
Randolph v. Peck, 1 Hun (N. Y.)
138.
89 Brown v. Bamberger, 110 Ala.
342, 20 So. 114.
9o Silas v. Adams, 92 Ga. 350, 17
S. E. 280.
91 Chamberlain v. Stone, 24 Ga.
310; Wilson v. Forder, 20 Ohio St.
89, 5 Am. Rep. 627; Waite v. Foster,
33 Maine 424.
92 Carter v. Pomeroy, 30 Ind. 438;
Whitworth v. Ballard, 56 Ind. 279.
9 Eaton v. Taylor, 10 Mass. 54.
94 Conklin v. Ogborn, 7 Ind. 553.
95 Milliken v. Loring, 37 Maine
408; Temple v. Seaver, 11 Cush.
(Mass.) 314; Parker v. Macomber,
18 Pick. (Mass.) 505; Lewis v.
Reilly, 1 Q. B. 349.
96 First Nat. Bank v. Newton, 10
Colo. 161, 14 Pac. 428; Rayburn v.
Day, 27 Ill. 46; McConnell v. Stet-
tinius, 7 Ill. 707; Turnbow v. Broach,
75 Ky. 455; Perrin v. Keene, 19
Maine 355, 36 Am. Dec. 759; Parham
Sewing Machine Co. v. Brock, 113
Mass. 194; Goodspeed v. South Bend
Chilled Plow Co., 45 Mich. 237, 7
N. W. 810; Vernam v. Harris, 1
Hun (N. Y.) 451, 3 Thomp. & C.
483; Gardner v. Conn, 34 Ohio St.
187; Parker v. Cousins, 2 Grat. (Va.)
372, 44 Am. Dec. 388.
ofAnderson v. Henshaw, 2 Day
(Conn.) 272; Leabo v. Goode, 67 Mo.
126; Powell v. Blow, 34 Mo. 485;
Yarnell v. Anderson, 14 Mo. 619;
Fry v. Patterson, 49 N. J. L. 612, 10
Atl. 390; Smith v. Rogers, 17 Johns.
(N. Y.) 340; Herring v. Sanger, 3
Johns. Cas. (N. Y.) 71; Waydell v.
Luer, 3 Denio (N. Y.) 410; Luding-
ton v. Bell, 77 N. Y. 138, 33 Am.
Rep. 601 (revg. 11 Jones & S. 557);
First Nat. Bank v. Green, 40 Ohio
St. 431; Keating v. Sherlock, 13
Ohio Dec. 536, 1 Cin. S. Ct. 257;
Kean v. Dufresne, 3 Serg. & R. (Pa.)
803 DISSOLUTION § 607

effect, the note of a surviving partner does not discharge a firm

debt." And a note of one partner or in the firm name taken
without knowledge of the dissolution of a partnership, will not
discharge the original debt."
§ 607. Liquidating partner.-The inherent general agency
of a member of a going partnership' becomes in a liquidating, as
in a surviving partner,2 a limited and restricted one,' an express
delegation being necessary in order that he may possess authority
in excess of that commonly reposing in each of the one-time
233; Mason v. Wickersham, 4 Watts 2 See post ch. 20.
& S. (Pa.) 100; In re Davis' Estat- 3"The dissolution having been by
5 Whart. (Pa.) 530, 34 Am. Dec. agreement, and the appellant being
574; Nightingale v. Chafee, 11 R. in possession of the assets for the
I. 609, 23 Am. Rep. 531; White v. purpose of realizing upon them, dis-
Boone, 71 Tex. 712, 12 S. W. 51; charging liabilities and distributing
Seward v. L'Estrange, 36 Tex. 295; surplus, he has the same right as,
White v. Tudor, 24 Tex. 639, 76 Am. and occupies a position analogous to
Dec. 126; Rosseau v Cull, 14 Vt. that of, a surviving partner." Ad-
83; Evans v. Drummond, 4 Esp. 89; ams v. Carmony, 44 Ind. App. 291,
Thompson v. Percival, 5 Barn. & Ad. 87 N. E. 708, 89 N. E. 327. "The
925, 3 Nev. & M. 167, 3 L. J. K. B. duty imposed upon the liquidator is
(N. S.) 98, 19 Eng. Rul. Cas. 728; one of agency. He becomes the sole
Bedford v. Deakin, 2 Barn. & Ald. authorized agent of the partnership
210, 2 Starkie 178. for the single purpose of winding
98 In re Clap, 2 Lowell (U. S.) 226, up and finally settling its affairs.
Fed. Cas. No. 2784; Thompson v. There are elements of trust in his
Briggs, 28 N. H. 40; Titus v. Todd, position and duty which lead so often
25 N. J. Eq. 458; National Bank v. to regard and describe him as a trus-
Bigler, 83 N. Y. 51; Mebane v. Spen- tee for the creditors on the one
cer, 28 N. Car. 423; Leach v. Church, hand or the retiring partner on the
15 Ohio St. 169; Collier v. Leech, 29 other, and the description is not in-
Pa. St. 404. appropriate so long as it does not
o Norton v. Paragon Oil Can Co., mislead us into the error of regard-
98 Ga. 468, 25 S. E. 501; Adler v. ing the position and duty of the liqui-
Foster, 39 Mich. 87; Hill v. Marcy, dator as that belonging to a direct
49 N. H. 265; Fry v. Patterson, 49 trust. His authority is not such. No
N. J. L. 612, 10 Atl. 390; Heroy v. new authority is given to him. What
Van Pelt, 4 Bosw. (N. Y.) 60; First he has is, a restricted and narrowed
Nat. Bank v. Morgan, 73 N. Y. 593; part of that which the partnership
Wait v. Brewster, 31 Vt. 516. See conferred. That continues and sub-
also Parker v. Canfield, 37 Conn. 250, sists to the extent necessary for a
9 Am. Rep. 317. settlement of the business, and is not
1 See ante § 411 et seq. a new authority or a direct trust.
 § 607 LAW OF PARTNERSHIP 804

partners.' Moreover, the appointment of a member of the dis-

solved firm to liquidate its affairs does not, it seems, in the ab-
sence of notice, affect the power of his former associates to bind
Kane v. Bloodgood, 7 Johns. Ch. (N. Palmer v. Dodge, 4 Ohio St. 21, 62
Y.) 90, 11 Am. Dec. 417; Adams Am. Dec. 271. See further Myatts
v. Taylor, 14 Ark. 62. The liqui- v. Bell, 41 Ala. 222; Brown v. Bam-
dator becomes the agent for the part- berger, 110 Ala. 342, 20 So. 114; Bass
nership for the one specific purpose. Dry Goods Co. v. Granite City Mfg.
His duty is to collect and adjust the Co., 116 Ga. 176, 42 S. E. 415; Jose-
debts due to the firm, to turn the as- love v. Bohrman, 119 Ga. 204, 45 S.
sets into money, to pay and discharge E. 982; Bank of Montreal v. Page,
the outstanding liabilities, and then 98 Ill. 109; Hamilton v. Seaman, 1
to pay over to the other partner his Ind. 185, Smith 129; Van Valkenburg
just share of the remaining surplus." v. Bradley, 14 Iowa 108; Parker v.
Gilmore v. Ham, 142 N. Y. 1, 36 N. Macomber, 18 Pick. (Mass.) 505;
E. 826, 40 Am. St. 554. Smith v. Shelden, 35 Mich. 42, 24 Am.
4 "Appended to the notice of dis- Rep. 529; Hayes v. Heyer, 4 Sandf.
solution signed by the partners, and Ch. (N. Y.) 485; Hilton v. Vander-
published in this case, is this clause: bilt, 82 N. Y. 591; Stirnermaun v.
'The remaining unsettled business of Cowing, 7 Johns. Ch. (N. Y.) 275;
the firm will be adjusted by E. Short, Gilmore v. Ham, 142 N. Y. 1, 36 N. E.
who is hereby authorized to close all 826, 40 Am. St. 554; Smith v. Pros-
business transactions of the late firm.'key, 82 App. Div. 19, 81 N. Y. S.
This notice is good evidence of the 424 (revd. 177 N. Y. 526, 69 N. E.
agreement of the parties, and con- 1131); Mauney v. Coit, 80 N. Car.
clusive in favor of third persons who 300, 30 Am. Rep. 80; Parker v. Cous-
have dealt with Short, relying upon ins, 2 Grat. (Va.) 372, 44 Am. Dec.
it.' But no one could or had a right 388; Conrad v. Buck, 21 W. Va. 396.
to understand it as authorizing Short And compare Star Wagon Co. v.
to do more than to adjust and settle Swezey, 52 Iowa 391, 3 N. W. 421, 59
the unfinished business, and close up Iowa 609, 13 N. W. 749; Waite v.
the transactions of the firm. This Foster, 33 Maine 424; Casco Bank v.
power he had without the agree ment; Hills, 16 Maine 155; Seldner v. Mt.
it added nothing to the authority Jackson Nat. Bank, 66 Md. 488, 8 Atl.
which the law gave, and took noth- 262, 59 Am. Rep. 190; Napier v. Mc-
ing from it. * * * There is not Leod, 9 Wend. (N. Y.) 120; In re
a word in it to indicate an intention Davis' Estate, 5 Whart. (Pa.) 530,
to confer upon him the authority to 34 Am. Dec. 574; Whitehead v. Bank
create new obligations. He is there- of Pittsburgh, 2 W. & S. (Pa.) 172;
fore remitted to his power as a part- Jack v. McLannahan, 191 Pa. St. 631,
ner, and, considered in that light, it 43 Atl. 356; Meyran v. Abel, 189 Pa.
is very clear he possessed no such St. 215, 42 Atl. 122, 69 Am. St. 806;
authority. The elementary books Siegfried v. Ludwig, 102 Pa. St. 547;
and adjudged cases speak an almost Fulton v. Central Bank, 92 Pa. St.
uniform language upon the subject." 112; Lloyd v. Thomas, 79 Pa. St. 68;
 DISSOLUTION § 608

the partnership.5 Interest and profits are not, apparently, assess-

able against a liquidating partner to any further extent than in
the case of a surviving one.'
§ 608. Holding out as partner after dissolution.-Al-
though a partner has retired from the firm he is not relieved from
liability as a partner until he has given proper notice, and this
liability is sometimes said to arise from his holding himself out
as a partner.' Even after giving notice a partner may by his
conduct cause others to believe that he is liable as a partner and
will be held bound to persons who have relied on such apparent
liability in giving credit," as by permitting the use of the old firm
name." In such cases it is a question of fact whether there was
a holding out as a partner."
McCowin v. Cubbison, 72 Pa. St. W. 17; Thatcher v. Allen, 58 N. J. L.
358; McCoon v. Galbraith, 29 Pa. St. 240, 33 Ati. 284; Bank of Mononga-
293; Brown v. Clark, 14 Pa. St. 469; hela Valley v. Weston, 172 N. Y. 259,
Robinson v. Taylor, 4 Pa. St. 242; 64 N. E. 946; Davis v. Willis, 47 Tex.
Dundass v. Gallagher, 4 Pa. St. 205; 154; Amidown v. Osgood, 24 Vt. 278,
Houser v. Irvine, 3 Watts & S. (Pa.) 58 Am. Dec. 171.
345, 38 Am. Dec. 768. 8 Gammon v. Huse, 100 Ill. 234;
5 Gillilan v. Sun Mut. Ins. Co., 41 Shapard Grocery Co. v. Hynes, 3 Ind.
N. Y. 376; Clark v. Reed, 31 Leg. Int. Ter. 74, 53 S. W. 486; Casco Bank v.
(Pa.) 413. See further Casco Bank Hills, 16 Maine 155; Garbett v. Ged-
v. Hills, 16 Maine 155. ney, 15 Misc. 440, 37 N. Y. S. 200, 72
6 Buckley v. Kelly, 70 Conn. 411, 39 N. Y. St. 780; Metz v. Commercial
Atl. 601; Randolph v. Inman, 172 Ill. Bank, 45 S. Car. 216, 23 S. E. 13;
575, 50 N. E. 104; Macready v. Wait v. Brewster, 31 Vt. 516; Farm-
Schenck, 43 La. Ann. 479, 9 So. 470; ers' Bank v. Smith, 26 W. Va. 541;
Dunlap v. Watson, 124 Mass. 305; Wausan First Nat. Bank v. Conway,
Fithian v. Jones, 12 Phila. '(Pa.) 201; 67 Wis. 210, 30 N. W. 215; Ex parte
In re Brown's Appeal, 89 Pa. St. 139. Cooper, 5 Jur. 10.
See further Klotz v. Macready, 39 9 Dreher v. Connolly, 9 N. Y. S.
La. Ann. 638, 2 So. 203. 365, 16 Daly 106, 30 N. Y. St. 674;
7 Richards v. Hunt, 65 Ga. 342; In Norquist v. Dalton, 11 N. Y. S. 351,
re Morse, Fed. Cas. No. 9854; Meyer 32 N. Y. St. 240; Speer v. Bishop,
v. Krohn, 114 Ill. 574, 2 N. E. 495; 24 Ohio St. 598.
Stall v. Cassady, 57 Ind. 284; Spears 1o Boyd v. McCann, 10 Md. 118;
v. .Toland, 1 A. K. Marsh. (Ky.) 203, Reed v. Frazer, 37 Minn. 473, 37 N.
10 Am. Dec. 722; Goddard v. Pratt, W. 269; Barkley v. Beckwith, 90 App.
16 Pick. (Mass.) 412; Morrill v. Bis- Div. 570, 86 N. Y. S. 128; Cook v.
sell, 99 Mich. 409, 58 N. W. 324; Penrhyn Slate Co., 36 Ohio St. 135,
Curtis v. Sexton, 201 Mo. 217, 100 S. 23 Am. Rep. 568.