regards only the individuals who occupy the relation; though by statute in many states the partnership itself is regarded by

the law as a distinct entity for a few special purposes, as in the case of taxing acts, acts providing for the filing of chattel mortgages, and, occasionally, acts permitting process to run against the partnership as such.18 In most other cases, when the partnership is spoken of as a separate, legal entity, having its own property, creditors and the like, little more is meant as a legal proposition than that the partners as such have special rights and liabilities which are worked out through their partnership relation.19

It is true that there are points in the law of partnership at which the adoption of the entity theory, or the rule of corporation law, would simplify the problem, and it is this fact which has made that theory so attractive. The general adoption of that theory, however, would amount practically to the abolition of partnerships and the substitution of a more or less crude type of corporations. The English Partnership Act does not adopt it, and the American Uniform Partnership Act has wisely been framed upon the common law theory.

In general, it is true in our law that natural persons cannot transform themselves into, or create from themselves, a juristic or legal person by their own act alone and without the declared authority or consent of the state.

The United States Bankruptcy Act of 1898 does undoubtedly to a limited extent treat the partnership as an entity, but the somewhat extreme views, as to the effect of this statute, announced by some of the circuit and district courts have been disapproved by the United States Supreme Court.20

§7. Same subject-The commercial conception of partnership. The ordinary commercial conception of a partnership is undoubtedly different from that of the common law. "Commercial men and accountants," says Mr. Justice Lindley, "are apt to look upon a firm in the light in which lawyers look upon a corporation, i. e., as a body distinct from the members composing it, and having rights and obligations distinct from those of its members. Hence, in keeping partnership accounts, the firm is made debtor to each partner for what he brings into the

But see People v. Coleman (1892), 133 N. Y. 279, 31 N. E. 96, 16 L. R. A. 183; Matter of Peck (1912), 206 N. Y. 55, 99 N. E. 258, 31 Ann. Cas. 798, 41 L. R. A. (N. S.) 1223; Jones v. Blun (1895), 145 N. Y. 333, 39 N. E. 954, Gilm. Cas. 150.

See also Professor Drake's article in 15 Michigan Law Review, 609, as to this dictum of Sir George Jessel. 20 See Francis v. McNeal (1913), 228 U. S. 695, 33 Sup. Ct. 701, 57

L. ed. 1029 (aff'g 108 C. C. A. 459, 186 Fed. 481), expressing the preference of that court for the views of Vaccaro v. Security Bank of Memphis (1900), 43 C. C. A. 279, 103 Fed. 436, over those of In re Bertenshaw (1907), 85 C. C. A. 61, 157 Fed. 363, 17 L. R. A. (N. S.) 886, 13 Ann. Cas. 986, where the majority of the court emphasized the entity theory.

common stock, and each partner is made debtor to the firm for all that he takes out of that stock. In the mercantile view, partners are never indebted to each other in respect of partnership transactions, but are always either debtors to or creditors of the firm. • The partners are the agents and sureties of the firm: its agents for the transaction of its business; its sureties for the liquidation of its liabilities so far as the assets of the firm are insufficient to meet them. The liabilities of the firm are regarded as the liabilities of the partners only in case they cannot be met by the firm and discharged out of its assets. But this is not the legal notion of a firm. The firm is not recognized by lawyers as distinct from the members composing it." 21 Though the legal and the mercantile views are thus distinct, there is in many quarters a tendency to incorporate the mercantile conception in the legal theory as largely as the inherent nature of the partnership will permit. When not carried be

21 Lindley on Partnership (Ewell's 2d Am. ed.), vol. I, p. 110.

The

But there is great practical difficulty in completely adopting the mercantile theory. Thus in Ex parte Beauchamp (1894), 1 Q. B. 1, where a receiving order in bankruptcy had been made against a firm composed of an adult and an infant, Kay, L. J., said: receiving order is made against the firm, and the case has been argued as though the firm had a separate existence as distinguished from the individual members of the firm; in other words, as if it were a corporation having a separate existence from the individuals which compose it. It is no such thing, and the rules (permitting proceedings in the firm name) do not mean anything of the kind. Under the rules, facilities have been given for proceeding against a firm in the firm name, for this simple reasonthat it is not always easy to find

out who are the partners in a firm.” (See, also, Ex parte Corbett (1880), 14 Ch. D. 122; Drucker v. Wellhouse (1888), 82 Ga. 129, 8 S. E. 40, 2 L. R. A. 328; Harris v. Visscher (1876), 57 Ga. 229; Chambers v. Sloan (1855), 19 Ga. 84; Adams v. Church (1902), 42 Oreg. 270, 70 Pac. 1037, 95 Am. St. R. 740, 59 L. R. A. 782; Wiggins v. Blackshear (1894), 86 Tex. 665, 26 S. W. 939.) So in a late case in New York-Jones v. Blun (1895), 145 N. Y. 333, 39 N. E. 954-the court, notwithstanding what was said in Bank of Buffalo v. Thompson, supra, points out that it is only for certain purposes that the partnership may be regarded as an entity. See, also, Matter of Peck (1912), 206 N. Y. 55, 99 N. E. 258, 41 L. R. A. (N. S.) 1223, and the remarks of Holmes, J., at the end of his opinion in Hallowell V. Blackstone Bank (1891), 154 Mass. 359, 28 N. E. 281, 13 L. R. A. 315.

yond the bookkeeping aspect the tendency is harmless enough, and though the practical consequences of the changed conception are usually not pronounced, it often aids in a clearer conception of the relative rights and powers of the partners collectively and the partners as individuals.

So in recent case before the Supreme Court of the United States, 22 it was said by Justice Holmes: "Since Cory on Accounts was made more famous by Lindley on Partnership the notion that the firm is an entity distinct from its members has grown in popularity, and the notion has been confirmed by recent speculations as to the nature of corporations, and the oneness of any somewhat permanently combined group without the aid of law. But the fact remains as true as ever that partnership debts are debts of the members of the firm, and that the individual liability of the members is not collateral like that of a surety, but primary and direct, whatever priorities there may be in the marshalling of assets. The nature of the liability is determined by the common law."

§ 8. How a partnership differs from a corporation.-A partnership differs in material respects from a corporation.

A partnership is a voluntary, unincorporated association of individuals whose legal relation is based upon their agreement, and needs no special statutory authority to give it force and effect. They continue to act in this relation as individuals. In the absence of a statute, they sue and are sued only in their individual names. The death of one operates usually to terminate the relation. The transfer of the interest of one has usually the same effect, and operates, not to introduce the transferee into the relation, as a party to it, but merely to give him such share as his transferrer would have upon a dissolution. Each partner is, in general, personally and directly responsible for all the debts of the partnership, notwithstanding that he has fully paid in his agreed contribution.

A corporation, on the other hand, is a distinct legal entity,

22 Francis V. McNeal (1913),

228 U. S. 695, 33 Sup. Ct. 701, 57

L. ed. 1029.