tion of the estates of partners, and under which partnership creditors are entitled to priority of payment out of the partnership assets, is an equitable doctrine, for the benefit and protection of the partners respectively. Partnership creditors have no lien upon partnership property. Their right to priority of payment out of the partnership assets over the individual creditors is always worked out through the lien of the partners. The fuller treatment of this subject is, however, reserved for a later chapter; and the effect of the old and new statutes against fraudulent conveyances will there be considered. § 187. Partner's right to contribution from copartners.-As will be seen hereafter,59 the obligation of those contractual debts and liabilities which are binding upon the firm is the joint obligation of all the partners and not the several obligation of any of them; they should therefore be borne by all the partners and not by one alone. So with regard to the torts for which the firm is liable: while the person injured may often sue the partners either jointly or severally,60 still, as between the partners themselves, the liability, when not caused by the culpable act or default of the partner seeking contribution,61 is usually one to be borne by all of them. It results, then, that if one partner pays or is compelled to bear more than his just share of such debts and liabilities, he is, when not himself culpably responsible for them, entitled to demand that his co-partners shall, for his relief, contribute their due proportion thereof.62 So if, in the conduct of the partnership affairs, one partner is called upon to advance money for partnership purposes, or fairly and in good faith incurs an obligation on the firm account, he is entitled to reimbursement from the firm for his 59 See post, § 308. 60 See post, § 312. 61 As to this, see ante, § 173. 62 See Forbes v. Webster (1829), 2 Vt. 58; Lyons v. Murray (1888), 95 Mo. 23, 8 S. W. 170, 6 Am. St. R. 17; Downs v. Jackson (1864), 33 Ill. 464, 85 Am. Dec. 289, Gilm. Cas. 436; Northen v. Tatum (1909), 164 Ala. 368, 51 So. 17; Brownell v. Steere (1889), 128 Ill. 209, 21 N. E. 3; Phillips v. Blatchford (1884), 137 Mass. 510; Logan v. Trayser (1890), 77 Wis. 579, 46 N. W. 877; Smith v. Ayrault (1888), 71 Mich. 475, 39 N. W. 724, 1 L. R. A. 311; Sperry v. Tulley (1915), 76 W. Va. 106, 84 S. E. 1067. outlay, and to be indemnified by the firm against such obligation.63 The partner's right to reimbursement or indemnity, however, will not arise if the demand, with respect of which he claims it, was one which by agreement he was to bear alone, or if it was not fairly and in good faith incurred, or if the necessity for it arose only through his own culpable negligence, bad faith or breach of duty.64 The Uniform Partnership Act provides that "The partnership must indemnify every partner in respect of payments made and personal liabilities reasonably incurred by him in the ordinary and proper conduct of its business, or for the preservation of its business or property." 65 This Act also has a special provision respecting contribution after dissolution, which will be referred to later. § 188. On illegal transactions. "There is a saying," remarks Mr. Justice Lindley,66 "that there is no contribution 63 See Wheeler v. Arnold (1874), 30 Mich. 304. 64 See McFadden v. Leeka (1891), 48 Ohio St. 513, 28 N. E. 874, Mechem's Cas. 280 (no contribution for debt incurred in violation of partnership articles); Thomas v. Atherton (1878), 10 Ch. Div. 185 (managing partner of a mine held not entitled to contribution where damages had been awarded against him for encroaching upon the adjoining property under circumstances characterized by the court as "rash or reckless" and as involving "very serious and culpable neglect on his part"); Clayton v. Davett (1897), 38 Atl. (N. J.) 308 (no contribution to payment of damages recovered against partner, who seeks contribution, because of his own fraud); Yorks v. Tozer (1894), 59 Minn. 78, 60 N. W. 846, 28 L. R. A. 86, 50 Am. St. R. 395, Mechem's Cas. 278 (no contribution toward payment made grossly negligently); In re Worcester Corn Exchange (1853), 3 DeG. M. & G. 180 (no contribution as to debts which were unauthorized); Loy V. Alston (1909), 96 C. C. A. 578, 172 Fed. 90 (partner who wrongfully excludes his copartner from all part in management not entitled to contribution for debts subsequently incurred). But the mere fact that the debt was unwisely incurred, there being no dishonesty or bad faith, is not enough to bar contribution: Charlton v. Sloan (1888), 76 Iowa 288, 41 N. W. 303, Gilm. Cas. 439. 65 Sec. 18, subd. b. 661 Lindley on Partnership (Ewell's 2d ed.), 378. Mr. Justice Lindley further says: "The case which presents most difficulty is one in which an unlawful act has been knowingly performed amongst wrong-doers; but this doctrine is certainly inapplicable to partners in the general form in which it is enunciated. It is true that, if a partnership is itself illegal, no member of it can, in respect of any transaction tainted with the illegality which infects the firm, obtain relief against any other member; but there is no authority for saying that if one of the members of a firm sustains a loss owing to some illegal act not attributable to him, but yet imputable to the firm, such loss must be borne entirely by him, and that he is not entitled to contribution in respect thereof from the other partners. The claim of a partner to contribution from his co-partners in respect of a partnership transaction cannot be defeated on the ground of illegality unless the partnership is itself an illegal partnership; or unless the act relied on as the basis of the claim is not only illegal, but has been committed by the partner seeking contribution when he knew or ought to have known of its illegality. In any of these cases he can obtain no assistance against his co-partners, and must abide the consequences of his own wilful breach of the law.67 * But if the partnership is not itself illegal, by all the partners, so that all are in pari delicto. There is a dictum of Lord Cottenham to the effect that in such a case each partner must bear all the loss he may happen to sustain, and that he cannot require his copartners to share that loss, (Attorney General v. Wilson, Cr. & Ph. 1); but, on the other hand, there is a decision which goes far to show that the loss ought to be apportioned between all the partners, unless the illegal act in question is a pure tort, or a direct violation of some statute, or unless the contract of partnership is itself void on the ground of illegality. It is apprehended that if all the members of a firm were equally guilty of a breach of trust, and one of the firm alone had made it good out of his own money, he would be allowed, in taking the and if the partner claiming contribution has not himself been personally guilty of a breach of the law, his claim will prevail, although the loss in respect of which it is made may have arisen from an unlawful act. § 189. Upon what basis determined.-Partners may and should and not infrequently do expressly agree upon the ratio in which the profits, losses and expenses of the business are to be shared. Where such an agreement exists, it is ordinarily conclusive.68 Where no such agreement is found and no other determining data appear, the presumption will be that they are to share equally in the gains and burdens of the business.69 This will be so even though their respective contributions to the firm capital may be unequal.70 The rule of the Uniform Partnership Act will be found in the footnotes. § 190. How enforced.-Whether one partner has really paid more than his just proportion on the partnership account is often, if not usually, a question requiring some investigation of the whole partnership accounts to determine. If one partner (1870), 66 Pa. 218, 5 Am. Rep. 368; 69 See Stein v. Robertson (1857), 30 Ala. 286; Griggs v. Clark (1863), 23 Cal. 427; Roach v. Perry (1854), 16 Ill. 37; Warring v. Arthur (1895), 98 Ky. 34, 17 Ky. L. R. 605, 32 S. W. 221, Burd. Cas. 518, Gilm. Cas. 441; Randle v. Richardson (1876), 53 Miss. 176; Worthy v. Brower (1885), 93 N. Car. 344; Eilers Music House v. Reine (1913), 65 Oreg. 598, 133 Pac. 788; Logan v. Dixon (1889), 73 Wis. 533, 41 N. W. 713. 70 See Lindley on Partnership (7th ed.), p. 385. Uniform Partnership Act, sec. 18(a), subject to any agreement between them, "Each partner shall be repaid his contributions, whether by way of capital or advances to the partnership property, and share equally in the profits and surplus remaining after all liabilities, including those to partners, are satisfied; and must contribute towards the losses, whether of capital or otherwise, sustained by the partnership, according to his share in the profits." has done so upon one occasion, it may be that his co-partner upon some other occasion has paid as much or more under similar circumstances for which he also has a claim against the firm; and how the final balance will stand may be a matter of some uncertainty, which it will require a general accounting to make clear. As will be seen in a later chapter,71 courts of law are not usually an appropriate forum for taking such an account, and the parties are required to go into a court of equity. The result, therefore, is, that a partner's claim for contribution or reimbursement is usually one to be enforced only in a court of equity.72 It is not, however, always so. The claim may arise in respect of some isolated transaction; 78 it may be that the other partner has recognized its validity and expressly promised to pay his share without reference to a partnership accounting; 74 it may be that the demand did not arise until after an accounting or a dissolution and accounting: 75 in these and like cases, as will be seen in the chapter referred to, the objection to legal proceeding may be removed, and a court of law rather than of equity may take jurisdiction. A distinction of importance may depend upon whether the action for contribution is at law or in equity: at law, ordinarily, each can be held only for his numerically pro rata share, while in equity the insolvent ones and those out of the jurisdiction are not counted.76 § 191. Right of other partners to indemnity for losses caused by a partner's misconduct.-Contradistinguished from a right 71 See post, Chap. IX. 72 See Lawrence v. Clark (1840), 9 Dana (Ky.) 257, 35 Am. Dec. 133; Kennedy v. McFaddon (1811), 3 H. & J. (Md.) 194, 5 Am. Dec. 434; Murray v. Herrick (1895), 171 Pa. 21, 32 Atl. 1125; Bishop v. Bishop (1886), 54 Conn. 232, 6 Atl. 426; McDonald v. Holmes (1892), 22 Oreg. 212, 29 Pac. 735; Crossley v. Taylor (1882), 83 Ind. 337; Warring v. Arthur, supra. 73 See Dorwart v. Ball (1904), 71 Neb. 173, 98 N. W. 652. 74 See post, §§ 211, 212. 75 See Logan v. Trayser (1890), 77 Wis. 579, 46 N. W. 877; Sears v. Starbird (1889), 78 Cal. 225, 20 Pac. 547; Fry v. Potter (1880), 12 R. I. 542, Mechem's Cas. 882; Clarke v. Mills (1887), 36 Kan. 393, 13 Pac. 569, Mechem's Cas. 884. 76 Seg Whitcomb V. Converse (1875), 119 Mass. 38, 20 Am. Rep. |