for liquidated damages where a member of the firm is guilty of misconduct. These articles usually come for consideration before courts of equity, whose province it is to adjust the mutual accounts of partners and compose their strifes; and their provisions are regarded with much favor, and upheld even to the silent renewal of a partnership at the close of the stipulated period for its continuance; the presumption being that a partnership is renewed on the same terms as before, unless something can be shown to the contrary.2 Partners may make new terms or new arrangements at any time on mutual concurrence; and the substantial rights of each partner, though not expressly defined, are to be sedulously regarded. As already intimated, the provisions in such articles bind only parties to the instrument and third parties having notice; and their interpretation should be in connection with the general law of partnership.* § 184. Time when a Partnership begins. The time when a partnership begins is usually to be determined by the terms of the contract or mutual agreement; and if no date is established by written articles, the date of their execution will be presumed. Where the law infers a partnership from the conduct of parties over certain joint transactions, and there is no express agreement to this effect, written or oral, between them, the date of the transaction or of the agreement to enter into the transaction will be taken, as circumstances may justify.5 1 Story Partn. §§ 187-215; Pars. Partn. §§ 159-174, and notes; Greddles v. Wallace, 2 Bligh, 295; Wood v. Scoles, L. R. 1 Ch. 369; Livingston v. Ralli, 5 E. & B. 132; Patterson v. Silliman, 28 Penn. St. 304; L. R. 19 Eq. 599. 2 Crawshay v. Collins, 15 Ves. 218; Bradley v. Chamberlin, 16 Vt. 613. In various ways, equity upholds rights under such contracts. But special and unusual provisions will not, by a strict construction, be considered as in force after the term stated has expired. Clark v. Leach, 8 L. T. N. s. 40; Noonan v. McNab, 30 Wis. 277. See Harvey v. Varney, 98 Mass. 118. While equity will, under strong circumstances, decree a specific performance of a copartnership contract, it usually refuses to do so. Scott v. Rayment, L. R. 7 Eq. 112. But one partner may be enjoined from engaging in business prejudicial to the firm. Marshall v. Johnson, 33 Ga. 500. See also Hayes v. Fish, 36 Ohio St. 498. A mere executory agreement does not establish a partnership. Beckford v. Hill, 124 Mass. 588; 17 Fed. 726. 3 England v. Curling, 8 Beav. 129; Pars. Partn. § 160. 4 Pars. Partn. §§ 160, 161. 5 Pars. Partn. § 12; Fox v. Clifton, § 185. Rights and Duties of Partners; Rights in Partnership Property. Secondly. As to the rights and duties of partners to themselves and to the public. What most immediately concerns us, in the present connection, is the consideration of their rights in the partnership property. By partnership property is meant whatever belongs to a partnership, whether personal or real; the latter kind of property being, however, treated in a measure as personal under the operation of peculiar rules. The personal property of a partnership chiefly consists in what is known as the goods and merchandise or stock in trade; and this, where the business is that of selling and buying, must be often of great as well as especial value; the horses and carriages of a firm; furniture, books, safes, and all other chattels bought by the partnership with partnership funds and for partnership purposes; outstanding accounts, debts, and claims, whether with or without security, and whether evidenced by writing or not; cash in hand and balances at the bank; also shares in companies or scrip bought or turned into the partnership, and not belonging to the individual partners or placed to their separate accounts.1 All such partnership property is owned not by the individual partners but by the firm; and the title should stand or be transferred accordingly.2 The "good-will" of a prosperous partnership is a valuable interest; but it seems to be recognized as of pecuniary importance only when referred to the place where the partnership business has been carried on; for, as Lord Eldon says, "the good-will of a trade is nothing more than the probability that the old customers will resort to the old place." Good-will 6 Bing. 776; Murray v. Richards, 1 Wend. 58; Aspinwall v. Williams, 1 Ohio, 38; Gardiner v. Childs, 8 Car. & P. 345. This might not be until the property with which they were to do business was obtained. 79 Ala. 452; 14 Col. 335. But where joint action is to begin at once, the partnership begins at once. 55 Mich. 167; 91 U. S. 134; 150 U. S. 524. 1 See Pars. Partn. §§ 177-183; Story Partn. § 98. is the benefit which results from good reputation and connections where the business has been built up. Courts are sometimes disposed to disregard the claim of a deceased partner's personal representatives in the good-will of a business as against surviving partners; but where the interest is really valuable, as it often must be, the better opinion is that equity will order it sold with the other effects for the common benefit.1 The good-will of professional partnerships is rarely important in such a sense, since those dealing with lawyers, physicians, and artists, regard personal qualifications as of far greater consequence than the place where they do business. Good-will is firm property, and a sale of all interest in a business or its assets transfers it as an incident.3 The rights of partners to the partnership property are much like those of joint owners: that is, they are jointly interested therein; but they have not inter se that right of survivorship which is the peculiar characteristic of joint tenancy.* In the absence of evidence to the contrary, partners are deemed to be equally interested in the partnership stock and effects and the profits; yet the members may agree to own in any proportions; skill may be contributed by one, and capital in money by another; and partnership combinations are constantly formed among persons whose interests are manifestly made unequal. So long, indeed, as the com 1 Ib.; Dougherty v. Van Nostrand, 1 Hoff. Ch. 68; 3 Kent Com. 64; Crawshay v. Collins, 15 Ves. 224. See Sheldon v. Houghton, 5 Bl. C. C. 285. 2 Hoyt v. Holley, 39 Conn. 326; Farr v. Pearce, 3 Madd. 78. The trade name or trade mark appears often a valuabie interest in connection with the "good-will," and on various considerations it cannot be used by one carrying on the business, regardless of the interests of a retiring or deceased partner. McGowan v. McGowan, 22 Ohio St. 370; Hookham v. Pottage, L. R. 8 Ch. 91; Pars. Partn. § 182. See Levy v. Walker, 10 Ch. D. 436. Under certain circumstances "good-will" is not a partnership asset susceptible of valuation. Steuart v. Gladstone, 10 Ch. D. 626. See also 45 L. T. 303; Leggott v. Barrett, 15 Ch. D. 306. 3 Hoxie v. Chaney, 143 Mass. 592; Merry v. Hooper, 111 N. Y. 415; Cruess v. Fessler, 39 Cal. 336; Wallingford v. Burr, 17 Neb. 137. 4 Story Partn. §§ 88-91; Pars. Partn. 168, 258, 259; Lindley Partn. 573; 3 Kent Com. 36, 37; Aultman v. Fuller, 53 Iowa, 60. And see preceding chapter. 5 Pars. Partn. 168, 258, 259. See Story Partn. § 24, n.; Thompson v. Williamson, 7 Bligh, N. s. 432; Farr v. Johnson, 25 Ill. 522; Stewart v. Forbes, 1 Macn. & G. 137, 146. munity in profit or loss exists as to the enterprise, it is held that each partner may retain by special agreement the exclusive ownership of the things contributed by him to the partnership use,1 and one may be partner without being partner or part-owner in the property with which the enterprise is carried on. And in equity a partner may even be found indebted to the concern, since partners may buy or borrow from the firm, and the firm from each partner.3 Where a partnership is dissolved by the death of some member of the firm, the case is peculiar; for here the representatives of the deceased partner become tenants in common with the survivor; while in the collection of outstanding debts and the general winding up of the partnership business, survivorship so far exists at law that the surviving partners have exclusive possession and management; not, however, for their own exclusive benefit, but as trustees for all concerned, for themselves, for the creditors of the firm, and for the representatives of their late fellow-partner. § 186. The Same Subject; Rights in Real Estate. It was formerly deemed that partners could not, as such, own real estate, nor indeed transact business in lands at all. But the law in this respect has changed with the wants of trade. Not only does a partnership find real estate suitable for the purposes of investment, but lands and buildings are frequently desired for stores, warehouses, and factories, in immediate connection with the partnership pursuits; and, besides, real estate mortgaged to secure debts to the firm, or attached, may come into the hands of the partners as such, by foreclosure or sale on execution. The English and American rule, as now established, is that real estate purchased with partnership funds and held as partnership property is to be so viewed in equity; it is subjected to all the partnership incidents, and treated as personalty so far as 1 Champion v. Bostwick, 18 Wend. 183; McCrary v. Slaughter, 58 Ala. 230. Cf. Stumph v. Bauer, 76 Ind. 157. 8 Story Partn. § 91; Pars. Partn. 258, 259. 4 3 Kent Com. 37, and cases cited; Pars. Partn. 440-442; Story Partn. 2 Hankey v. Becht, 25 Minn. 212; § 177; post, as to dissolution. Where 22 Pick. 151. a firm transfers all its assets to a cor the partnership necessities make this proper.1 And as to whether real or personal property was so purchased, actual intention must prevail in equity over external appearances.2 § 187. Right of Partner to bind the Firm as to the Public. As to the acts by which one partner may bind the firm, Chancellor Kent finds that the books abound with numerous and subtle distinctions. It is the extent of one partner's legal authority to make all liable to the public which produces so much mischief; for so close is a partnership combination, that one rogue may in this respect ruin many innocent associates. In general, the act of each partner, in transactions relating to the partnership, is considered the act of all, and binds all. If one makes an admission, acknowledgment, or representation, with respect to the firm business, his partners are generally bound by it. And where notice is given by or to one partner respecting the partnership business, it is equivalent to notice given by or to all. This vast power is not confined to buying or selling, but extends, as concerns the public, to all acts and contracts which poration, and each partner receives corporate stock in proportion to his share in the concern, the stock is the individual property of each partner; for a new relation is created. Singer v. Carpenter, 125 Ill. 117. 1 See Bright. Fed. Dig. 602; 3 Kent Com. 38-40, and n.; Story Partn. § 93; Ashton v. Robinson, L. R. 20 Eq. 25; Wilcox v. Wilcox, 13 Allen, 252; Bowker v. Smith, 48 N. H. 111; Pars. Partn. §§ 263-278, and cases cited; Fairchild v. Fairchild, 64 N. Y. 471; Sherwood v. St. Paul, &c., 21 Minn. 127; 145 U. S. 512. This topic does not properly fall within the limits of this treatise; but we may add that Wilcox v. Wilcox, supra, limits the extent to which partnership real estate ought to be considered as personal property. Prof. Parsons, citing various equity authorities, concludes that the English rule goes beyond the American in giving to real estate, purchased with partnership funds, the es sential incidents of personal property. Pars. Partn. § 270, and cases cited; Essex v. Essex, 20 Beav. 442. But where tenants in common, who owned land, treated it throughout as real estate in carrying on a quarrying business, the land is held to remain realty. Steward v. Blakeway, L. R. 4 Ch. 603. Cf. 7 L. R. Ir. 428. Though the legal title to partnership real estate stands in the name of one, equity will treat the property as partnership personalty so far as may be just. Shanks v. Klein, 104 U. S. 18; Causler v. Wharton, 62 Ala. 358. If a partner has the firm land in his own name, equity gives the firm the benefit. A partnership, as such, cànnot, however, in the firm name, take the legal title to real estate. Tidd v. Rines, 26 Minn. 201. See further, Pars. Partn. § 265, and latest citations. 2 See 30 N. J. Eq. 176. |