§ 167. Bona fide purchaser from partner having legal title.— Partnership lands, therefore, when found to be such, may be subjected to the claims of the partnership creditors, and the latter take precedence over the creditors of an individual partner in whose name the legal title stands, and over a transfer by such partner of the legal title to any one not a bona fide purchaser. But a bona fide purchaser or mortgagee of partnership lands, in ignorance that they were such, from the partner having the legal title of record, will be protected as against both the other partners and creditors.51

$168. -Notice from possession by the firm.-Whether, in such a case, the fact that the firm is in possession of the land is notice of its rights, is a question upon which there seems to be some difference in opinion. Where the possession does not appear to be in accord with the state of the title, e. g., where the title seems to be in a third person or in less than the entire number of partners, there the possession seems to give notice. Where, however, the possession and the title appear to be in accord, as where all of the partners have the title apparently as tenants in common, it has been held in some cases that there is no notice.52 On the other hand, it is said in an English case that even in such a case the possession of the firm as such,-as where the land is the seat of the firm's business,-is notice of some arrangement with the apparent owners and therefore is notice of whatever kind of an arrangement it may turn out to be, as, for example, that the land is held as partnership property.53

51 See Norwalk Nat. Bank V. Sawyer (1882), 38 Ohio St. 339; McNeil v. Congregational Society (1884), 66 Cal. 105; Seeley v. Michell (1887), 85 Ky. 508, 4 S. W. 190, 9 Ky. L. R. 86; Tarbell v. West (1881), 86 N. Y. 280; Kepler v. Savings & Loan Co. (1882), 101 Pa. 602. See, also, National Union Bank v. National Mechanics' Bank (1895), 80 Md. 371, 30 Atl. 913, 27 C. R. A. 449, 45 Am. St. R. 250,

§ 169. Interest of surviving partner in firm realty.—Upon the dissolution of the partnership by death, the entire legal title to all the partnership personalty vests, as will be seen hereafter,54 in the survivor. With respect of the partnership realty, however, a somewhat different rule prevails. The real estate, though treated as personalty in the United States for many purposes, retains its character as realty so far as the exigencies of the partnership affairs will permit. The legal title to it— unless it had been vested for the firm in the name of one partner only who chances to be the survivor-descends, as has been seen, 55 to the heirs but subject to the partnership needs; the lien of the survivor still exists, and an equitable title vests in the surviving partner for the purpose of paying the firm debts and settling up the partnership affairs in substantially the same manner that the legal title to the personal assets vests in him. As such survivor he may, therefore, convey, when necessary, the equitable title to part or all of the partnership realty, and the court will then require the heirs or other holders of the legal title to convey that legal title to the person who has purchased the equitable title from the surviving partner.56 If he happens to be vested with the entire legal title, as for example where the land was originally conveyed to him alone for the firm, or where during the partnership the partner since deceased conveyed the legal title to the one who now survives in trust,57 he may convey the entire legal title. He may do so also where by the provisions of the deceased partner's will a testamentary

fect: Bergeron v. Richardott (1882), 55 Wis. 129, 12 N. W. 384; Duryea v. Burt (1865), 28 Cal. 569; Churchill v. Proctor (1883), 31 Minn. 129, 16 N. W. 694.

54 See post, §§ 402, 403.

55 See ante, § 163.

56 See Shanks v. Klein (1881), 104 U. S. 18, 26 L. Ed. 635, Mechem's Cas. 211; Dyer v. Clark (1843), 5 Metc. (Mass.) 562, 39 Am. Dec. 697, Ames' Cas. 251, Gilm. Cas. 196; Walling v. Burgess (1889), 122 Ind. 299, 22 N. E. 419, 23 N. E.

1076, 7 L. R. A. 481; Tillinghast v. Champlin (1856), 4 R. I. 173, 67 Am. Dec. 510; Buffum v. Buffum (1861), 49 Me. 108, 77 Am. Dec. 249; Delmonico v. Guillaume (1845), 2 Sand. Ch. (N. Y.) 366, Burd. Cas. 161; Hartnett v. Stilwell (1904), 121 Ga. 386, 49 S. E. 276, 104 Am. St. R. 151. /7/262.

57 See Darrow v. Calkins (1897), 154 N. Y. 503, 49 N. E. 61, 61 Am. St. R. 637, 48 L. R. A. 299, Mechem's Cas. 813, Gilm. Cas. 203.

power of sale has been vested in him; 58 and also, of course, where after the death the heirs of the deceased partner give him a power of attorney to convey the legal title vested in them.59

58 See Davis v. Smith (1887), 82 Ala. 198, 2 So. 897, Mechem's Cas. 821, Burd. Cas. 182.

59 See Southern Cotton Oil Co. v. Henshaw (1889), 89 Ala. 448, 7 So. 760.

§ 170. Duty to exercise good faith.-The relation of partners to each other is one of great confidence and trust, and the law demands from them the exercise of the highest integrity and good faith toward each other. Each one is bound to use the partnership property and exercise his partnership powers for the benefit of the firm and not for himself alone. Profits made in the course of the partnership belong to the firm, and one partner will not be permitted to make gain for himself at the expense of the firm. Secret commissions made by one partner

upon partnership dealings must be accounted for to the firm, and if one partner takes advantage of his position to acquire for himself that which it was his duty to acquire for the firm, he will be required to transfer it to the firm. So one partner will not be permitted, either directly or indirectly, to buy of or for himself or to sell to or for himself on the partnership account, without the knowledge and consent of the other partners; and in their dealings with each other, in relation to partnership matters, each is required to make a full disclosure of all facts within his knowledge affecting the transaction. This duty of good faith is intensified when one partner is conducting the business alone as managing partner.1

1 See Brooks v. Martin (1863), 2 Wall. (U. S.) 70, and Kimberley v. Arms (1888), 129 U. S. 512, 9 S. Ct. 355, 32 L. Ed. 764, as to the duties of a managing partner. See, also, Trego v. Hunt (1896), App. Cas. 7, Mechem's Cas. 247, Burd. Cas. 602.

See Hodge v. Twitchell (1885), 33 Minn. 389, 23 N. W. 547, Mechem's Cas. 862, and Newell v. Cochran (1889), 41 Minn. 374, 43 N. W. 84; Bloom v. Lofgren (1896), 64 Minn. 1, 65 N. W. 960, Burd. Cas. 501, as to secret commissions made by one partner; Caldwell V. Davis (1887), 10 Colo. 481, 15 Pac. 696, 3 Am. St. R. 599; Barnes v. Clark (1918), S. Dak. - 169 N. W. 527; Butler v. Prentiss (1899), 158 N. Y. 49, 52 N. E. 652; Harlow v. La Brum (1897), 151 N. Y. 278, 45 N. E. 859, Burd. Cas. 502, as to the duty to make full disclosure in dealings with each other; Johnson's Appeal (1886), 115 Pa. St. 129, 2 Am. St. R. 539, and Mitchell V. Reed (1874), 61 N. Y. 123, 19 Am. Rep. 252, Mechem's Cas. 864, Gilm. Cas. 419, that if one partner takes a renewal in his own name of an existing lease to the

firm, it inures to the benefit of the firm. This seems to be true even though there is to be a dissolution of the firm, because the chance of renewal is a firm asset. See also Knapp v. Reed (1911), 88 Neb. 754, 130 N. W. 430, 32 L. R. A. (N. S.) 869; Johnson's Appeal (1886), 115 Pa. 129, 8 Atl. 36, 2 Am. St. R. 539; Deutschman v. Dwyer (1916), 223 Mass. 261, 111 N. E. 877. Renewal of contract: Williamson v. Monroe (1900), 101 Fed. 322; National Wire Bound Box Co. v. Healy (1911), 110 C. C. A. 613, 189 Fed. 49. Same principle: Pike's Peak Co. v. Pfuntner (1909), 158 Mich. 412, 123 N. W. 19. See, also, to the effect that one partner who buys up a claim against the firm at a discount must give the firm the benefit: Easton v. Strother (1881), 57 Iowa 506; that one who buys in property belonging to the firm, as upon a sale on execution, must hold for the firm: Railsback v. Lovejoy (1886), 116 Ill. 442, 6 N. E. 504; Roby v. Colehour (1890), 135 Ill. 300, 25 N. E. 777; that purchase of firm property through a confederate will be set aside: