The Uniform Partnership Act protects one who had known of the partnership prior to its dissolution where he had "no knowledge or notice" 19 of the dissolution, and "the fact of dissolution had not been advertised in a newspaper of general circulation in the place (or in each place if more than one) at which the partnership business was regularly carried on." 20 § 395. Same subject-Knowledge-Constructive notice.—As is pointed out in the preceding section, it is not always necessary that any notice should expressly be given. The party concerned may already know it from other sources, or he may have knowledge of such other facts so related to the case that formal notice of the dissolution may be deemed unnecessary. This latter is sometimes termed a case of "constructive notice." The draftsmen of the Uniform Partnership Act criticise this last expression, and suggest a sharp distinction between knowledge and notice. Unfortunately their definition of "knowledge" is awkward, though their meaning can be gleaned. They say "A person has 'knowledge' of a fact within the meaning of this act not only when he has actual knowledge thereof, but also when he has knowledge of such other facts as in the circumstances shows bad faith." 21 On the other hand, "A person has 'notice' of a fact within the meaning of this act when the person who claims the benefit of the notice (a) states the fact to such person, or (b) delivers through the mail, or by other means of communication, a written statement of the fact to such person or to a proper person at his place of business or residence. As stated in the note to the preceding section there may be ciency of these facts must ordinarily be left to the jury: Dickinson v. Dickinson (1874), 25 Gratt. (Va.) 321, Mechem's Cas. 477. "Reputation or notoriety in the community is not itself notice. But it may be considered by the jury, with the other evidence, in determining whether an inference of notice to the person sought to be charged with it should be drawn"; Bush v. McCarty, supra. See, also, Werner v. Calhoun (1904), 55 W. Va. 246, 46 S. E. 1024. Notice to Dun's and Bradstreet's commercial agencies, plaintiff not being a subscriber to either, is not of itself enough. Citizens Nat. Bank v. Weston, supra. Bank v. Weston, supra. 19 These terms are defined by the Act. 20 Sec. 35 (1) (b) (II). many situations in which the kind of "knowledge" here referred to may be present, and dispense with the necessity of giving the "notice" otherwise requisite. § 396. Who should give notice-Actual and ostensible partners. Notice of the dissolution may be given by either partner, and where the partnership is dissolved by mutual consent all of the partners usually unite in giving it. Each partner who withdraws from a firm is interested in giving notice, for, as will be seen,22 where notice is required, a partner who retires, whether by sale of his interest or any other similar means, will, until notice is duly given, continue liable as a partner for future debts to those otherwise entitled to rely upon him as a partner. If the partner desiring to give notice is prevented by his copartners from exercising that right, they may be compelled to do what may be necessary to enable notice to be given, as to sign advertisements or join in notices to former customers.23 The persons most obviously interested in giving notice are, of course, the actual and ostensible partners; but a merely nominal partner also, if he wishes to withdraw the appearance of partnership, will be interested in taking such steps as will accomplish that purpose. § 397. -Dormant and secret partners.-A dormant partner, i. e., one both secret and passive,24 is, it is said, not bound to give notice of his withdrawal, for no one of the public knew of his connection with the firm, and no one, therefore, could have relied upon it; 25 but a mere secret partner is bound to 22 See post, § 398. 231 Lindley on Partnership (Ewell's ed.), 214; Troughton v. Hunter (1854), 18 Beav. 470; Hendry v. Turner (1886), 32 Ch. Div. 355. 24 For definitions of who is a dormant partner, see Elmira RollingMill Co. v. Harris (1891), 124 N. Y. 280, 26 N. E. 541, Mechem's Cas. 987, Burd. Cas. 398, Gilm. Cas. 349; Rowland v. Estes (1899), 190 Pa. 111, 42 Atl. 528. 25 See Elmira Rolling Mill Co. v. Harris, supra; Elkinton v. Booth (1887), 143 Mass. 479, 10 N. E. 460; Austin v. Appling (1891), 88 Ga. 54, 13 S. E. 955; Nussbaumer v. Becker (1877), 87 Ill. 281, 29 Am. Rep. 53; Lieb v. Craddock (1888), 87 Ky. 525, 9 S. W. 838; Pitkin v. Benfer (1892), 50 Kan. 108, 31 Pac. 695, 34 Am. St. R. 110, Mechem's Cas. 383; Brown v. Foster (1894), 41 S. C. 118, 19 S. E. give notice of his withdrawal to those who knew of his connection with the firm, though not to those who had no knowledge of it.26 A retiring dormant partner would also be liable to one 299; Milmo Nat. Bank v. Bergstrom (1892), 1 Tex. Civ. App. 151, 20 S. W. 836, Mechem's Cas. 481. Burden of proof that a partner was a dormant one is on him who seeks to escape on that ground. Rowland v. Estes (1899), 190 Pa. 111, 42 Atl. 528. The mere fact that it is agreed among the partners that the relationship of one of them shall not be mentioned, does not make him a dormant partner; Elmira Rolling Mill Co. v. Harris, supra. The mere fact that a creditor does not know who the partners are, does not make them, as to him, dormant partners. He may well have relied upon their credit, although he had never ascertained their names; Elkinton v. Booth, supra; Deford v. Reynolds (1860), 36 Pa. 325. The mere fact that a partner's name does not appear in the firm name does not make him a dormant partner. When a partnership is formed and an artificial name is adopted, e. g., "Titusville Savings Bank," it must, it is said, "be regarded as an invitation to give credit not to the empty name but to the individuals who compose the association thus designated, and hence none of the partners can properly claim to be dormant partners. Clark v. Fletcher (1880), 96 Pa. 416; Shamburg v. Ruggles (1876), 83 Pa. 148; Elkinton v. Booth, supra. But see Hornaday v. Cowgill (1913), 54 Ind. App. 631, 101 N. E. 1030; Carter v. Whalley (1830), 1 B. & Ad. 11, contra. Where A and B as partners do business under the name of A & Co., B is not thereby a dormant partner; Edward v. McFall (1850), 5 La. Ann. 167; Deering v. Flanders (1870), 49 N. H. 225; Podrasnik v. Martin (1887), 25 Ill. App. 300; Elmira Rolling Mill Co. v. Harris, supra; Deford v. Reynolds, supra. But see Heath v. Sansom (1832), 4 B. & Ad. 172; Warren v. Ball (1865), 37 Ill. 76; Kennedy v. Bohannon (1850), 50 Ky. (11 B. Mon.) 118; Grosvenor v. Lloyd (1840), 42 Mass. (1 Metc.) 19, contra. Compare Benjamin v. Covert (1879), 47 Wis. 375, 2 N. W. 625. But where A and B do business under the name of A alone, B may be a dormant partner. See Pitkin v. Benfer (1892), 50 Kan. 108, 31 Pac. 695, 34 Am. St. R. 110, Mechem's Cas. 383; Milmo Nat. Bank v. Bergstrom (1892), 1 Tex. Civ. App. 151, 20 S. W. 836, Mechem's Cas. 481; Nussbaumer v. Becker (1877), 87 Ill. 281, 29 Am. Rep. 53; Kelley v. Hurlbut (1826), 5 Cow. (N. Y.) 534; Brown v. Foster (1896), 41 S. Car. 118, 19 S. E. 299. So where A, B and C do business in the name of A and B alone, C may be a dormant partner. See Gorman v. Davis (1896), 118 N. Car. 370, 24 S. E. 770. 26 See Lieb v. Craddock, supra; Milmo Nat. Bank v. Bergstrom, su pra; Edwards v. McFall, supra. who knew of his existence, and who was not given notice of his withdrawal.27 This exemption of the dormant partner from the necessity of giving notice, however, is not always to be relied upon. The supposedly dormant partner may find that he has in fact been discovered or disclosed, perhaps by his own partner and in violation of their agreement; and, while he would doubtless in such a case have a remedy against his partner, he would also be liable to the creditor.28 There is, moreover, much difference of view as to who is to be deemed a dormant partner within the rule, though the weight of authority in this country supports the rule as stated in the first paragraph of this section. The Uniform Partnership Act seems to take the same view, though the language is somewhat obscure.29 § 398. Effect of not giving notice.—Where a partnership is dissolved or a known member of the firm retires, under circumstances requiring notice, then, until the dissolution or retirement has been duly notified, the power of each partner to continue to bind the others by contracts within the scope of the business, made with third persons entitled to notice, remains unimpaired, although as between the partners themselves his authority may be at an end.30 27 See cases in preceding note. In Benjamin v. Covert (1879), 47 Wis. 375, 2 N. W. 625, it was held that where one who would normally be regarded as a dormant partner becomes generally known as a partner, and, after his withdrawal without notice, the reputation so formed that he is a partner still continues, a new customer who gives credit after such withdrawal but in reliance upon that continuing reputation may hold the retiring partner liable. 28 See Milmo Nat. Bank v. Bergstrom, supra; Elmira Rolling Mill Co. v. Harris, supra. 29 Sec. 35. (2) "The liability of a partner under paragraph (1b) Mech. Part.-22 shall be satisfied out of partnership assets alone when such partner has been prior to dissolution (a) Unknown as a partner to the persons with whom the contract is made, and (b) So far unknown and inactive in partnership affairs that the business reputation of the partnership could not be said to have been in any degree due to his connection with it." (Suppose, e. g., that an unknown and inactive partner keeps the firm in good standing by timely and judicious advances or loans, is he a "dormant" partner within this clause?) 30 See Morrill v. Bissell (1894), 99 Mich. 409, and note; Prentiss v. 337 The retiring partner, in the absence of notice, remains liable also, it has been said, for the torts committed subsequently by his late partners or their agents in the line of their former business; 31 but this can be true only of those torts which result from reliance upon the apparent continuance of the partnership.32 The partner who has given proper notice may, of course, nullify its effect as to particular persons by words or conduct reasonably inducing in them the belief that, notwithstanding the notice, he still continues as a partner.3 Sinclair (1831), 5 Vt. 149, 26 Am. Dec. 288, and note; Austin v. Holland (1877), 69 N. Y. 571, 25 Am. Rep. 246, Mechem's Cas. 464, Gilm. Cas. 343; Benjamin V. Covert (1879), 47 Wis. 375, 2 N. W. 625. 31 See 1 Lindley on Partnership (Ewell's ed.), 214, citing Stables v. Eley (1825), 1 Car. & P. 614-a case wherein the plaintiff was injured by the negligent driving of a cart which still bore the old firm name. But see Pollock's Digest of Partnership (6th ed.), 54, where this error was pointed out. See also Smith v. Bailey (1891), 2 Q. B. 403; Shapard v. Hynes (1900), 45 C. C. A. 271, 104 Fed. Rep. 449, 52 L. R. A. 675; Austin v. Appling (1891), 88 Ga. 54, 13 S. E. 955. 33 The mistake is corrected in later editions of Lindley on Partnership, e. g., the 7th at p. 79. 32 See Jewison V. Dieudonne (1914), 127 Minn. 163, 149 N. W. 20. Compare Sherrod v. Langdon (1866), 21 Iowa 518; Maxwell v. Gibbs (1871), 32 Iowa 32. 33 See ante § 106; In re Kreuger (1871), 2 Low. 66, Mechem's Cas. 183, (continuing name in firm name); Brown v. Leonard (1816), 2 Chitty 120, Ames' Cas. 141, (defendant told plaintiff he had retired but that his name was to continue to be used for a time). Compare In re Fraser (1892), 2 Q. B. 633, Mechem's Cas. 781, Burd. Cas. 108. |