CHAP. VIII.

PARTNERSHIP IN COLLIERIES.

Ir would carry this treatise beyond its intended limits to go fully into the law of partnership. But as it is designed to be a help to private individuals concerned in collieries, it may be useful to insert a sketch of the legal rules and doctrines which govern the relation of partners.

Partnership is a contract, by which two or more persons join together their money, goods, or labour, for carrying on some business or undertaking in common, upon an agreement that the gain or loss shall be divided proportionably between them. Although the partners' shares need not be equal, they must be joint.

Public trading companies, established by Letters Patent, or Act of Parliament, or registered under the Limited Liability Act (to be hereafter noticed), do not, for the most part, fall under the general law of partnership, by which each individual partner is personally liable for the whole of the debts of the partnership.

The community of profit is the criterion whereby to ascertain whether a contract be really one of partnership. For one partner may stipulate to be free from

loss, and that stipulation will hold good as between himself and his companions, but it will not diminish his liability to others. So one partner may contribute all the money, all the stock, and all the labour necessary for the purposes of the firm; but if there be not a community of profit there is no real partnership. On the other hand, where that community of profit exists, each of the sharers in it is, and may be treated by the creditors of the whole body as, a partner, though he may have stipulated with his companions not to be responsible for the engagements entered into by them with strangers, to whom he will, nevertheless, be liable. And justly so; for by taking part of the profits, he takes part of that fund from the creditors which is their security for the payment of their debts.

It is also a rule that to constitute such a community of profit as is here intended, a partner must share in the profits of his companions as a principal. That is, he must not be a mere agent, factor, or servant, receiving in lieu of wages a sum proportioned to the profit gained by his employers. The distinction is fine. For if a servant or agent stipulate for a share in the profits, and so entitle himself to an account of them, he is a partner as to strangers, though he may not be so as between himself and his employers.

Nominal Partners. Though partnership is, as between the partners themselves, the result of a contract, yet a man may, without a contract, impose upon himself the liabilities of a partner with regard to third persons. The law considers that he who lends his name and credit to a firm, or holds himself out to the world as a partner in it, is liable to its

engagements, whether he has any real interest in it or not. Such a man is called a "nominal partner." A sleeping partner is the converse of the nominal one. The sleeping partner has an actual interest in the concern although his name does not appear, while the name of the nominal partner appears although he has no interest in the partnership property.

Partnership how formed.-To constitute an ordinary partnership no charter or licence is necessary, nor anything more as affects the world than the bare consent of the parties intending to combine. There is usually some deed of copartnership entered into, but it is not one of those contracts which the law requires even to be in writing; and may therefore be concluded by mere words, or inferred from the acts of the parties.

Rule as to the Succession to Share of a Deceased Partner.-Partners are jointly, and (in the absence of evidence to the contrary) are taken to be equally interested in the partnership stock and effects, subject to the application of a well-known maxim, "Jus accrescendi inter mercatores locum non habet." The ordinary rule of law governing the case of two or more persons who are jointly possessed of property is this, that the entire right to it, on the decease of any of them, remains to the survivors, and finally to the last survivor. This is called the "jus accrescendi." But to this rule there is an exception in the case of partners in trade. It is laid down in Coke upon Littleton, 132 A, that "the wares, merchandize, debts, or duties, which they have as joint merchants or partners, shall not survive, but shall go

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to the executors of him that deceaseth; and this is by the law merchant, which is part of the laws of the realm, for the advancement and continuance of commerce and trade." Of the existence of this exception there is no doubt. But it has been questioned whether it can be enforced in Courts of Common Law. It seems to be admitted on all hands, that if real property be held in joint tenancy for the purpose of trade, its exemption from the common rule relating to survivorship can be enforced only in Equity. The only doubt, therefore, on the exception relates to the enforcement of it as regards personal property. As to real property, however, held in partnership, there is no doubt that the exemption of it from the ordinary rule of survivorship can only be enforced in Equity. But a question sometimes arises whether the separate share of each partner is to be considered as real or as personal property, when such property has always been personal in its enjoyment, though freehold in its nature. The rule now is that all property of whatever nature bought with the cash and for the purposes of a trading partnership, must in Equity be looked upon as personal; and that as there can be no right of survivorship in it, a partner's share will on his death pass, not to the surviving partners, nor to his heir, but to his personal representative. The surviving partners will, indeed, be the owners of such property in the eye of the Common Law, and hold the legal estate, but in Equity they will hold it in trust for the benefit of the personal representative. If the partners have stipulated that freehold lands purchased by them shall

not be subject to the application of this equitable doctrine, but follow the ordinary rules respecting property of this kind, or if they so act that such an agreement may be reasonably inferred from their conduct, in such a case the rule of Equity yields to the ordinary course of law, coupled with the intention of the parties.*

Duration and Dissolution of Partnership.-It often happens that when a partnership is formed, the parties agree that it shall last only for a stated period. There are also cases in which, without any express provision, an implied contract as to its duration may arise. For instance, partners may purchase leasehold interests of such a description as to raise a fair presumption that they intended to continue the partnership so long only as those leases 'should endure. If a limit, express or implied, to the term of partnership be thus defined, the contract will of course be dissolved on its arrival. It may also be terminated by mutual consent, and Courts of Equity will put an end to it by decree, in cases where the partnership undertaking turns out to be impracticable, or where one of the partners becomes an incurable lunatic, or is guilty of gross misconduct, such as refusing to account for his receipts. If no limit was fixed, it is called a partnership at will, and may be dissolved at a moment's notice, at the individual pleasure of either party. In all cases it is dissolved by the bankruptcy of any one of the partners, followed by adjudication, or by his outlawry, or attainder of treason or felony. The death of one of

* Smith's Mercantile Law, 13.