partner in the partnership, or any penalty is incurred, the partnership is liable therefor to the same extent as the partner so acting or omitting to act." 41

§ 304. Liability of firm for partner's breach of trust.Breaches of trust or misappropriation by one partner in respect of funds or property which come into the possession of the partnership in the course of its business will make the partners responsible; 42 but they will not be responsible, as for breach of trust, because one partner wrongfully employs in the partnership business funds of which he alone was trustee, if his partners were ignorant of the source of the money or of his want of title to it, though they would be so liable if they had such knowledge.44

43

The question of following and recovering the fund as a trust fund, if still extant and traceable, involves different considerations; 45 as does the question whether the other partner who had in good faith put in his capital against the first partner's contribution out of the trust fund, would be considered a purchaser for value.46

§ 305. The Uniform Partnership Act provides that "The partnership is bound to make good the loss:

41 Sec. 13.

42 See Todd v. Jackson (1881), 75 Ind. 272; Monmouth College v. Dockery (1911), 241 Mo. 522, 145 S. W. 785; Harman v. Johnson (1853), 2 El. & Bl. 61, Gilm. Cas.

399.

43 See Englar v. Offutt (1889), 70 Md. 78, 16 Atl. 497, 14 Am. St. Rep. 332, Mechem's Cas. 398; Gilruth v. Decell (1894), 72 Miss. 232, 16 So. 250, Burd. Cas. 351, Gilm. Cas. 401; Shaffer v. Martin (1898), 25 N. Y. App. Div. 501, 49 N. Y. S. 853; Jaques v. Marquand (1826), 6 Cow. (N. Y.) 497; Payne v. Dexter (1912), 211 Mass. 1, 97 N. E. 77. Neither are they liable as debtors:

Englar v. Offutt, supra. The knowledge of the guilty partner is not imputed to his partners: Gilruth v. Decell, supra; Bienenstok v. Ammidown (1898), 155 N. Y. 47, 49 N. E. 321; Palmer v. Scott (1880), 68 Ala. 380 holds firm responsible without knowledge.

44 See Guillou v. Peterson (1879), 89 Pa. 163; Penn v. Folger (1899), 182 Ill. 76, 55 N. E. 192; Carter v. Lipsey (1883), 70 Ga. 417; Hutchinson v. Smith (1837), 7 Paige (N. Y.) 26.

45 See Englar v. Offutt, supra. 46 See Hollenback v. More (1878), 44 N. Y. Super. 107.

(a) Where one partner acting within the scope of his apparent authority receives money or property of a third person and misapplies it; and

(b) Where the partnership in the course of its business receives money or property of a third person and the money or property so received is misapplied by any partner while it is in the custody of the partnership." 47

47 Sec. 14,

CHAPTER XII.

OF THE LIABILITY OF THE FIRM FOR THE ACTS OF ITS AGENTS AND SERVANTS.

§ 306. Firm liable like other princi

pals for acts of its servants

and agents.

§ 306. Firm liable like other principals for the acts of its servants and agents. It seems desirable to call attentionnot for the purpose of discussion but that it may not be overlooked to the liability of the firm for the acts of its ordinary servants and agents. The discussion of the preceding chapter was devoted to the acts of the partner as agent of the firm, but the firm may, as has been seen, employ all the agents and servants, who are not partners, that the business may demand. For the acts of these agents and servants, whether in contract or in tort, the firm is liable in the same cases and upon the same conditions as any other principal or master.

The discussion of this liability belongs, therefore, to treatises upon the law of agency and master and servant; with the former of which, at least, it is assumed that the student is already familiar.

307. In general.-The question of the liability of partners involves both the nature of that liability and its extent. subjects, therefore, will be separately considered.

I. OF THE NATURE OF PARTNERSHIP OBLIGATIONS.

These

§308. Partnership obligations when arising on contract are joint. The obligation of those contracts which are binding upon the partnership is, at common law, the joint obligation of all the partners and not the several obligation of any of them.1

1 See Haralson V. Campbell (1879), 63 Ala. 278, Mechem's Cas. 430. Taking judgment against each

partner separately, for substantially the same amount, instead of taking a joint judgment against all of them, is only an irregularity. Judd

One partner may, as has been seen, bind himself only; but if he binds the partnership, he binds all members of it jointly and not severally.

It is sometimes said that, while partnership contracts are thus joint at law, they are joint and several in equity; but this seems to be true as respects the remedy only.2

This doctrine that the contractual obligations of partners are joint has several important consequences. It affects the question of parties to actions; it results in the rule that a judgment against part, or a release to part, ordinarily releases the others; and it materially affects the remedies of the creditor after the death of one of the partners.5

In some States, statutes have expressly changed the rule in partnership cases.6 In several States, statutes have, in general terms, attempted to make all joint obligations joint and several. In some of the States, these general statutes have been interpreted as applying to partnership cases as well as others; 7 in other States, they have been held not to apply to partnership debts.8

The Uniform Partnership Act enacts substantially the common law rule.9

Oil Co. v. Hubbell (1879), 76 N. Y. 543, Mechem's Cas. 431, Gilm. Cas. 311.

2 See post, § 411. And see the opinions in Kendall v. Hamilton (1879), 4 App. Cas. 504, Gilm. Cas. 293. See Article by Professor Burdick, 11 Columbia Law Review 101. 3 See post, § 324.

4 See post, §§ 309-311. 5 See post, § 411.

6 E. g., in Alabama, Arkansas, District of Columbia, Iowa, Kansas, Maryland, Minnesota, Mississippi, Missouri, New Mexico, North Carolina, West Virgina. In some of these it is "for purposes of suit."

7 See Hamilton v. Buxton (1845), 6 Ark. 24; Ryerson v. Hendrie Mech. Part.-18

273