most appropriate classification of the subject for our purpose is probably that used in Agency, namely, the liability-1. In contract. 2. In tort.

I. IN CONTRACT.

§ 285. All partners bound by authorized contracts.-It has been seen in an carlier chapter that each partner is ordinarily the agent of the partnership with authority conferred, either expressly or impliedly, to bind the partners as their agent. It follows, therefore, that whenever a partner makes a contract for the partnership and in the partnership name, within the limit of his express or implied authority as a partner, he binds all the members of the partnership upon it. It is immaterial, in this connection, whether the other partners knew of the act or not; or, in the case of implied powers, whether they had previously consciously consented to it or not; or, if it was within the scope of the business, whether it was, or was not, a violation of their private agreement between themselves. The only question, so far as the liability of the partners to a third person, ignorant of their private agreements, is concerned, is whether the contract was, in contemplation of law, within the authority of the partner; if it was, then every partner is bound by it.1

§ 286. But while each partner is thus bound to answer, and out of his individual estate if necessary, for the non-performance of the partnership contracts, it does not follow that, in becoming a party to a partnership contract, he, at the same time, enters into a separate individual contract in identical terms. A partnership contract to employ a particular person does not result in a separate contract by each partner individually to employ that person; and a contract by which a partnership, upon a sale of its business, agrees not to resume business within a certain period, has been held not to bind an individual partner to refrain from doing so, though it would be

1 See Sweet v. Wood (1893), 18 R. I. 386, 28 Atl. 335, Mechem's Cas. 332; Farmers' Ins. Co. v. Malone (1895), 45 Neb. 302, 63 N. W. 802.

Fehleisen

2 See Streichen V. (1900), 112 Iowa 612, 84 N. W. 715, 51 L. R. A. 412. A similar holding has been made in corporations: Hall's Safe Co. v. Herring-Hall

otherwise if the contract in terms covered both the partnership and the several members thereof. It is for the partnership obligation only that each partner usually assumes liability.

§ 287. Dormant, secret and nominal partners bound also.This liability involves every one who was, at the time of the contract, either actually or nominally a partner in the firm. A nominal partner is, of course, liable to those who relied upon him, having been held out as a partner; and if one were then actually a partner he is likewise liable though the other party did not then know of it, or though such partner has since retired from the firm. A secret or dormant partner is therefore liable, when discovered, upon partnership contracts, to the same extent as though he had been an ostensible partner. The fact that the other party dealt with the ostensible partner or partners, and gave credit to them in ignorance of the existence of the secret or dormant partner, is not an election to hold the ostensible partners only, when the dormant or secret partners are afterwards discovered. And the dormant or secret partners are bound not only by those acts which were actually authorized, but also, like other partners, by those acts which were apparently authorized, or were within the scope of the business as actually carried on.5

Marvin Safe Co. (1906), 76 C. C. A. 495, 146 Fed. 37, 14 L. R. A. (N. S.) 1182.

3 See Pittsburg V. F. & C. Co. v. Klingelhofer (1904), 210 Pa. 513, 60 Atl. 161, where the agreement was "The said parties further agree that they will not, nor shall any member of said parties concerned, engage in a similar business to that now carried on by said parties,'' etc.

4 As to the liability of the nominal partner, or liability by estoppel, see ante, § 99 et seq.

5 See Winship v. United States Bank (1831), 5 Peters (U. S.) 529, 8 L. ed. 216, Gilm. Cas. 356; Brooke v. Washington (1852), 8 Gratt.

(Va.) 248, 56 Am. Dec. 142, and note, Gilm. Cas. 318; Richardson v. Farmer (1865), 36 Mo. 35, 88 Am. Dec. 129, Gilm. Cas. 322; Gavin v. Walker (1885), 82 Tenn. (14 Lea) 643; Callender v. Robinson (1880), 96 Pa. 454; Mohawk Nat. Bank v. Van Slyck (1883), 29 Hun (N. Y.) 188, Burd. Cas. 396; Grosvenor v. Lloyd (1840), 1 Mete. (Mass.) 19, Gilm. Cas. 348; Elmira Iron Rolling Mill Co. v. Harris (1891), 124 N. Y. 280, 26 N. E. 541, Mechem's Cas. 987, Burd. Cas. 398, Gilm. Cas. 349; Pitkin v. Benfer (1892), 50 Kan. 108, 31 Pac. 695, 34 Am. St. R. 110, Mechem's Cas. 383; Bromley v. Elliott (1859), 38 N. H. 287, 75 Am.

Dormant and secret partners will also be bound by the acts of the ostensible partners, even in those cases wherein the consent of all partners is necessary, if the other party was ignorant of their existence and acted in good faith. Interests in and claims upon the common property, fairly acquired in good faith upon the basis that it was the sole property of the ostensible partner or partners, will ordinarily be effective against the dormant partners also, since they have caused or permitted it to so appear.

§ 288. Liability of the firm upon contracts made by one partner in his own name.-As has been seen, when a firm name has been adopted, it ought always to be used in partnership transactions; but, through inadvertence or error, contracts may be made in the individual name of one partner which were designed by one or both parties to be the contracts of the firm. The question, therefore, arises, when may a contract in the name of one partner be shown to be the contract of the firm? The solution of this question is affected both by the nature of the transaction and by the intention of the parties. Thus:

1. The contract may be, (a) a simple contract not negotiable, (b) a negotiable instrument, or (c) a contract under seal.

2. The existence of the partnership may, at the time of making the contract, have been (a) known, or (b) unknown by the other party.

3. The parties, or one of them, may have intended to bind

Dec. 182; Swan v. Steele (1806), 7 East 210, Ames' Cas. 500; Robinson v. Wilkinson (1817), 3 Price 538, Burd. Cas. 396; Bisel v. Hobbs (1843), 6 Blackf. (Ind.) 479, Gilm. Cas. 321. Not so, where the dormant partner had withdrawn and the partnership had been dissolved before the contract in question was made. Pitkin v. Benfer, supra..

6 See Locke v. Lewis (1878), 124 Mass. 1, 26 Am. Rep. 631, Ames' Cas. 584 (sale by ostensible partner in payment of his own debt); Reid

v. Hollinshead (1825), 4 B. & Cress. 867, 7 Dow. & Ry. 444, Ames' Cas. 29 (pledge by the ostensible partner); Willey v. Bank (1904), 141 Cal. 508, 75 Pac. 106 (set-off of firm claim against claim of ostensible partner); Callender v. Robinson (1880), 96 Pa. 454 (execution levy by creditor who relied in giving the credit on apparent ownership of ostensible partner). See, also, Warren v. Martin (1888), 24 Neb. 273, 38 N. W. 849.

(a) the individual partner, or (b) the firm. The two latter groups are subsidiary, and may be considered under the first.

§ 289. Same subject-Known partnership-Simple contracts in name of one partner.-Where a person is known to be acting as partner for a known partnership, the presumption is that he intended to bind the partnership and not himself only, and where such was the intention the partners and not the single partner will be bound. This presumption, however, may be rebutted, and if it appears that the other party has knowingly dealt with the partner as an individual, and that the latter has pledged his individual credit, the partner alone will be bound and not the firm. And if the transaction were really an individual one, the firm does not become liable because it afterwards received the benefit of the transaction. Thus, if money were loaned or goods sold to one partner as an individual, the firm does not become liable to the lender or the seller simply because the money or the goods came to the use of the firm. The liability of the firm is to the partner upon whose credit the money or goods were obtained, and that partner must answer to those from whom they were obtained. Whether the credit was extended to the partnership as such, or to the partner individually, is a question to be determined in view of all of the facts and circumstances of the case.7

§ 290.

Where the contract was originally made with one partner only, there might later be an express or implied nova

7 See Tyler V. Waddingham

(1890), 58 Conn. 375, 20 Atl. 335, 8 L. R. A. 657; Peterson v. Roach (1877), 32 Ohio St. 374, 30 Am. Rep. 607, Gilm. Cas. 314; Adams v. Hardware Co. (1887), 78 Ga. 485, 3 S. E. 430; Thornton v. Lambeth (1889), 103 N. C. 86, 9 S. E. 432; National Bank v. Cringan (1895), 91 Va. 347, 21 S. E. 820; Brown v. Fresno Raisin Co. (1894), 101 Cal. 222, 35 Pac. 639; Hubenthal v. Kennedy (1888), 76 Iowa 707, 39 N. W. 694; Goodenow v. Jones (1874), 75 Ill. 48; North Penn. Coal Co.'s ApMech. Part.-17

257

peal (1863), 45 Pa. 181, 84 Am. Dec. 487. The firm is not liable upon a note given by one partner for his share of the capital. National Bank v. Cringan, supra. Same effect: Bannister v. Miller (1895), 54 N. J. Eq. 121, 701, 32 Atl. 1066, 37 Atl. 1117; McLinden v. Wentworth (1881), 51 Wis. 170, 8 N. W. 118, 192. So where one partner borrows money on his own note to reimburse another partner for money advanced to the firm, the firm is not liable. Redenbaugh V. Kelton (1895), 130 Mo. 558, 32 S. W. 67.

tion, or what is sometimes loosely called "adoption" of it, which would substitute the liability of the partnership for that of the single partner who made it. So, if the contract, though in writing, (not under seal or negotiable) was originally made for and by the authority of the partnership, the partnership, by the weight of authority, could still be held upon it, the fact that it was made in the name of one partner only not being conclusive evidence of an intention to bind him alone.9

§ 291.

Note of one partner. Similar questions arise where a creditor takes the note or other similar obligation of one partner for a partnership debt.

If, at the time the debt is contracted, the note or other obligation of one partner is taken, and credit given exclusively to him, the firm will not be bound; 10 but if credit were given to the firm, the note or other obligation (if not given as the note of the partnership 11) will be deemed to have been taken as collateral security or otherwise, and the firm may still be held, not upon the note 12 but upon the original claim. To whom the credit was given is here, as in the preceding section, a question of fact to be determined in view of all the circumstances.18

Swain

8 See the discussion of a somewhat similar question under corporations not yet organized, in 1 Mechem on Agency (2d ed.), § 382. In partnership, see Reynolds v. (1839), 13 La. 193; Penn v. Kearny (1869), 21 La. Ann. 21; Marks v. Chumos (1910), 82 Kan. 562, 109 Pac. 397 (which goes on theory that partner in whose name a lease was taken would be a trustee for the partnership and the other partner would be liable upon it); Bodey v. Cooper (1896), 82 Md. 625, 34 Atl. 362 (which goes upon ground that assent of other partner would bind him for rent under a lease under seal made by one partner only but in firm name).

9 See 2 Mechem on Agency (2d ed.), §§ 1712-1716.

10 See Holmes v. Burton (1837), 9 Vt. 252, 31 Am. Dec. 621, Gilm. Cas. 312.

11 See post, § 296.

12 See Farmers Bank v. Bayless (1865), 35 Mo. 428.

13 See Hoeflinger v. Wells (1879), 47 Wis. 628, 3 N. W. 589; Maffet v. Leuckel (1880), 93 Pa. 468, Gilm. Cas. 317; Smith v. Collins (1874), 115 Mass. 388; Mills v. Riggle (1911), 83 Kan. 703, 112 Pac. 617, Ann. Cas. 1912 A 616; Beckwith v. Mace (1905), 140 Mich. 157, 103 N. W. 559. In Hoeflinger v. Wells, supra, where the question was whether plaintiff could recover of