authorizes the trade to go on. It would appear, from various late authorities, that, ordinarily speaking, one cannot sue the estate of a deceased partner directly for a partnership debt; he must first resort to the surviving partner.2 But if the surviving partner has paid more than his proportion of the firm debts, he can claim repayment from the estate of the deceased. No notice need be given by the representatives of the deceased to avoid future liabilities; nor as a rule are surviving partners required to give notice of such dissolution of the firm. Whatever powers may have been given by will to an executor to carry on the trade of the deceased, whether to become a partner, or, as a partner, to conduct the business for the benefit of the representatives of the deceased, - must be strictly construed; and under ordinary circumstances an executor who undertakes to carry on the testator's business after his death, though only on behalf of the persons interested in the testator's estate, will make himself liable, both in person and estate, for its engagements; yet he incurs no such hazardous risk by merely leaving the decedent's property in the concern." § 195. General Conclusions as to the Ownership of Personal Property as Partners. For combining successfully the wealth and labor of individuals in the transaction of extensive business operations, we find, then, that the partnership relation presents some decided advantages over that of joint or common ownership, which is adapted rather to mere beneficial investment. A large capital well bestowed and skilfully 1 Ib. And see Schoul. Ex'rs, §§ 287; Burwell v. Mandeville, 2 How. 325, 326. 560; Downs v. Collins, 6 Hare, 418. 2 Wallace v. Fitzsimmons, 1 Dall. 248; Richards v. Heather, 1 B. & Ald. 29; Smyth v. Hawthorn, 2 Rawle, 355; Voorhis v. Childs, 17 N. Y. 359. But modern statutes are found to change this rule, and equity disregards the strict rule of preference, all rights being adjusted finally. Schouler Ex'rs, § 379. 8 Busby v. Chenault, 13 B. Monr. 554. 5 Pars. Partn. § 355; Ex parte Garland, 10 Ves. 119; Story Partn. § 106; Alsop v. Mather, 8 Conn. 587; Schouler Ex'rs, § 326. As to the rights of a deceased partner's estate, where the surviving partner carries on the business and the concern fails, see Hoyt v. Sprague, 103 U. S. 613. 6 Pars. § 356, notes; Willis v. Sharp, 113 N. Y. 586; Mattison v. 4 Marlett v. Jackman, 3 Allen, Farnham, 44 Minn. 95; 59 Miss. 305; managed may produce wonderful results in creating, developing, and enlarging a business; and with an increased hazard comes the hope, if successful, of larger aggregate gains. But there remains this decided drawback to putting personal property into partnership: that the more extensive the common operations, the greater must be the individual liability; while each partner, moreover, is too much in the power and at the mercy of his associates as concerns the public. And, besides, there are those of means who wish to invest where they need not be under the necessity of exercising a constant vigilance; who desire to embark in trade, manufacture, and commerce essentially, while leaving the active management to others and confining their own risk to the capital they have contributed. To obviate such disadvantages, we find other modes contrived for enabling the owners of capital to combine for business operations and to invest in a common and convenient fund which may be actively employed in some well-defined pursuit of gain; yet without incurring, for the most part, a hazard of loss beyond the amount of their respective investments, and with better facilities afforded for entering or leaving the common concern at individual choice. These combinations we shall consider at length in the next two chapters.1 CHAPTER X. MEMBERS OF LIMITED PARTNERSHIPS, AND OF JOINT-STOCK COMPANIES, AND SHIP-OWNERS. § 196. Limited Partnerships; Their Origin and Nature.I. The doctrine of limited partnerships was imported into the United States within a comparatively recent period from Avery v. Myers, 60 Miss. 367; 48 1 Upon the general subject of Partnership, see at length the latest edi tions of Prof. Theophilus Parsons and Mr. Justice Story on that subject, or of Sir N. Lindley's (English) work, as edited with American notes. Continental Europe. By the ordinance of 1673, France first established partnerships of this sort, under the name of La Société en Commandité; and New York was the earliest of the American States to set up a similar system; this being, as Chancellor Kent observes, the first instance in the history of its legislation where the statute law of any other country than that of Great Britain has been closely imitated and adopted.1 There is now scarcely an important State under our federal government where limited partnerships are not recognized; and although it is the policy of legislation in some parts of this country to prevent them from being formed for the transaction of banking, insurance, or other special kinds of business, yet the combination of persons as limited partners in the ordinary pursuits of trade is almost everywhere favored and protected in America. In England the limited partnership principle is not adopted as to individuals; but within the last quarter of a century we find it frequently applied with reference to joint-stock companies.2 Wherever limited partnerships have been permitted, the system is found to have worked well and to have given universal satisfaction. The main purpose of a limited partnership, as may be inferred from what we said at the close of the last chapter, is to aid and encourage trade and commerce, by inducing those to embark their wealth or a portion of it in business pursuits, who would shrink from encountering the risks which attend the ordinary partnership combinations. The new system relieves such persons from partnership liability beyond the extent of the capital furnished by each to the concern. And a limited partnership, in our modern sense, may therefore be defined as one in which one at least of the partners is a partner in the ordinary sense as to rights and liabilities, while at least one other person invests in the business and is liable to the extent of his investment, and no farther. 1 Coope v. Eyre, 1 H. Bl. 48; Pothier Partn. n. 60; Pars. Partn. 4th ed. § 421 et seq.; 3 Kent Com. 35, 36; Troubat Lim. Partn. § 39. 2 Lethbridge v. Adams, L. R. 13 Eq. 547; Stats. cited Pars. Partn. § 421 n. Our latest tendency is to treat limited partnerships with still increasing favor. White v. Eiseman, 134 N. Y. 101. 8 Pars. Partn. § 422; Collyer Partn. b. 1, c. 1, §§ 3, 99; 3 Kent Com. 34. With us, this class of partnerships is usually allowed by general statute; but in England, rather by charter. In such a combination, those partners whose liability is unrestricted are called general partners; and those with limited liability, special or limited partners.1 Of course there is danger that, when partnership liability is relaxed, an adequate check to speculation will be wanting. This danger it is the aim of our legislation to guard against. Another danger appears in the temptation thus afforded to measure liabilities by the limited partnership standard after gaining undue credit with those who supposed themselves dealing with ordinary partners. This, too, the law seeks to prevent. Precautions are thus imposed by local statutes, to which all who propose doing business on the limited partnership plan are bound to conform. § 197. The Same Subject. "That the statutes on limited partnership in the various States should be in substance identical," says Mr. Troubat, "is perfectly natural; inasmuch as the common source, the commercial code of France, the work of the jurists of the Empire, has been largely borrowed from by them all."2 The statutes of the various States widely differ in text; and yet in leading details they are quite similar. There is usually a certificate to be recorded at the outset, this more especially by way of caution to the public; and such certificate is to be published in some newspaper. Whenever the partnership is renewed or continued beyond the time originally agreed upon, a new certificate must be recorded and published in like manner. Provisions are also made as to the manner in which the partnership shall be conducted. And a public record of the fact of dissolution, with printed notice in the newspapers, is also requisite to make the dissolution effectual as against the world. Such are the principal features of our statutes of limited partnership.3 In some States there are no restrictions imposed, appar 13 Ib. "Limited" partnership is sometimes styled "special" partnership. 2 Troubat Lim. Partn. § 39. 8 See e.g. Mass. Pub. Sts. (1882) c. 75. ently, concerning the purposes for which individuals may enter into a limited partnership; but in others the kinds of business to be thus pursued are distinctly enumerated by statute. And in New York, Massachusetts, and the New England and Middle States generally, together with Ohio, California, Tennessee, Georgia, and numerous other Western and Southern States, the business of banking is specially excepted, as well as insurance, or at all events, one of these two classes; the reason, doubtless, being that pursuits of this kind, involving large hazards, requiring considerable capital, and exercising a potent influence upon society, are thought to be unsuitable to partnerships with a diminished responsibility, if indeed they should be conducted by partnership combinations at all.1 Banking and insurance business is for the most part in this country monopolized by chartered corporations. The legal existence of a limited or special partnership does not depend upon the public notice of its formation: the practical effect of failure to publish as the statute requires being that the partnership becomes a general one as concerns the public;2 though a person may still remain a special partner towards his copartners.3 § 198. Limited Partnership; Preliminaries; Certificates, etc. -The preliminary certificate of a limited partnership is, in general, to be signed by all the parties to the combination; to specify the name or firm under which the partnership is to be conducted; to give the name and residence of each general or special partner, distinguishing who are general and who are special partners; to state the amount of capital which each special partner has contributed to the common stock, the nature of the business to be transacted, and the time when the limited partnership is to commence and when it is to terminate. This certificate must be acknowledged before a magistrate and recorded with the public records, in the place where the parties reside, or where the firm is to do 1 Pars. Partn. §§ 421-430. As to the Louisiana partnership in commendam, under the Code, which is essentially a limited partnership, of similar French derivation, see 32 La. Ann. 2 Tracy v. Tuffly, 134 U. S. 206. |