partner only in the partnership, as by attachment or execution sale, mortgage or assignment, does not thereby become a partner with the solvent partner,-the delectus personae prevents that,— nor does he thereby acquire the right to join with the solvent partner in continuing or closing up the business.66 He does, however, acquire the right to demand that the solvent partner shall close up the affairs of the partnership with reasonable despatch under the terms of the partnership and account to him for what remains, if anything, of the pro rata share of the partner whose interest was so acquired. If the partnership were entirely insolvent, he would, of course, get nothing. His remedy to ascertain and secure his interest would ordinarily be by a bill for an accounting against the settling partner.67 Some of the cases speak of him as a tenant in common with the other partner,68 but that is not a wholly accurate designation. While he has thus a right to secure whatever share may be Coming to him, he would not, merely by acquiring the interest, 66 The Uniform Partnership Act, which provides [Sec. 25 (2) (b)] that "a partner's right in specific partnership property is not assignable except in connection with the assignment of the rights of all the partners in the same property," also provides (Sec. 27) that “A conveyance by a partner of his interest in the partnership does not of itself dissolve the partnership, nor, as against the other partners, in the absence of agreement, entitle the assignee, during the continuance of the partnership, to interfere in the management or administration of the partnership business or affairs, or to require any information or account of partnership transactions, or to inspect the partnership books; but it merely entitles the assignee to receive, in accordance with his contract, the profits to which the assigning partner would otherwise be entitled." 67 See Claggett V. Kilbourne (1861), 66 U. S. (1 Black) 346, 17 L. ed. 213; Lothrop v. Wightman (1861), 41 Pa. 297; Barrett v. McKenzie (1877), 24 Minn. 20; Farley v. Moog (1885), 79 Ala. 148, 58 Am. Rep. 585. Under the Uniform Partnership Act, Sec. 27 (2), if the assignment results in a dissolution, "the assignee is entitled to receive his assignor's interest, and may require an account from the date only of the last account agreed to by all the partners."' 68 See Murray v. Murray (1821), 5 Johns. Ch. (N. Y.) 60, Burd. Cas. 451, Gilm. Cas. 578 (bankruptcy case); Halsey v. Norton (1871), 45 Miss. 703, 7 Am. Rep. 745, Mechem's Cas. 447, Gilm. Cas. 583 (bankruptcy case). become liable for any deficiency in assets to pay partnership debts to which the partner, whose interest he acquired, might have been liable. As has been already seen, the Uniform Partnership Act gives the purchaser of a partner's interest, in a partnership terminated or determinable at will, the right to apply to a court for a dissolution.60 § 418. Other causes. Similar rules would doubtless be applied where the dissolution results from marriage, insanity, and the like, leaving part of the partners legally competent and the other incompetent. The legally competent would doubtless be ordinarily authorized and permitted to act in closing up the business. 3. Dissolution by Judicial Decree. § 419. Receivership usually results. Where the partnership is dissolved by judicial decree,-a matter considered in an earlier section,70 there will frequently if not usually be a receiver appointed," under whose control the partnership affairs will be closed up. Such an appointment will ordinarily supersede the administration of partnership affairs by the partners themselves. 4. Dissolution by Other Causes. § 420. Rights and liabilities of partners after dissolution— In general. Attention must next be given to the cases wherein the partnership is dissolved by lapse of time, mutual consent, the act of one partner, or other acts or events which do not affect the existence, status, liberty or capacity to act, of any of the partners. Whatever rights have then vested in and accrued to the partners remain undestroyed by the dissolution. Their property is still theirs; their rights in action are still enforceable. Only those rights which depend upon the continuance of the partnership will be affected. 69 Sec. 32 (2). 70 Ante, §§ 373, 374. 71 See ante, § 231. Existing liabilities, of course, will not be discharged. Continuing contracts will usually be affected only where the continuance of the partnership was an express or implied condition.72 § 421. Authority of firm, as agent for third persons, after dissolution. In accordance with the rule referred to in an earlier section,78 it is held that where a firm has, as a partnership, been appointed agent for a third person, the dissolution of the partnership will ordinarily terminate the agency.74 § 422. Rights of partners after dissolution under Uniform Partnership Act-Effect of wrongful dissolution.-The Uniform Partnership Act provides that when the partnership is dissolved in any way, except in contravention of the partnership agreement, each partner shall have the right to have the debts. paid out of the assets and receive his share of the surplus in cash. But where the partnership is dissolved by the rightful expulsion of a partner, or any partner causes dissolution in contravention of the partnership agreement, the rights of such partner are much limited. In the former case, he is entitled "to receive in cash only the net amount due him from the partnership;" and in the other case, he is liable to his copartners for damages for the wrongful dissolution, and the other partners may, if they so desire, continue the business for the residue of the term and keep and use all the partnership property, upon giving him a bond to pay, or in fact paying, the value of his interest less these damages, and upon indemnifying him against all present and future partnership debts. His interest in the good will is not to be considered. If the other partners do not continue the business, he is entitled to receive his share less the damages.75 "Unless otherwise agreed, the partners who have not wrongfully dissolved the partnership have the right to wind up the partnership affairs."76 72 See Brace v. Calder [1895], 2 Q. B. 253. 73 See ante, § 401. 74 See Schlau V. Enzenbacher (1914), 265 Ill. 626, 107 N. E. 107, L. R. A. 1915 C 576; Holbert v. 75 Sec. 38. Appendix. § 423. Authority of partners after dissolution-Authority continues for the purpose of closing up the business.-Such a dissolution of the partnership terminates entirely the authority of each partner to continue to bind his partners by new contracts. The authority of each partner is thenceforward limited to closing up the partnership affairs, but for this purpose his authority is deemed to continue, with all the rights and incidents as before. Thus either partner may, after dissolution, receive payment of firm debts and give discharges therefor; sell partnership property; pay firm debts; complete unfinished but binding undertakings; accept or give proper notices respecting them; make, receive or waive incidental demands; or, generally, do any other act respecting the closing up of previous transactions which he might do if the partnership still continued."7 Unless they agree otherwise, each of the former partners has an equal right to the possession of the assets, and is under an 77 See Major v. Hawkes (1850), 12 Ill. 298, Gilm. Cas. 403; Heartt v. Walsh (1874), 75 Ill. 200; Ruffner v. Hewitt (1874), 7 W. Va. 585; Seldner v. Mt. Jackson Nat. Bank (1887), 66 Md. 488, 59 Am. Rep. 190; Perkins v. Butler Co. (1895), 44 Neb. 110, 62 N. W. 308; Western Stage Co. v. Walker (1856), 2 Iowa 504, 65 Am. Dec. 789; Davis v. Megroz (1893), 55 N. J. L. 427; Lapenta v. Lettieri (1899), 72 Conn. 377, 44 Atl. 730, 77 Am. St. R. 315; Page v. Wolcott (1860), 81 Mass. (15 Gray) 536; Gordon v. Albert (1897), 168 Mass. 150, 46 N. E. 27 423; Holmes v. Shands (1854), Miss. 40. In Butchart v. Dresser (1853), 4 DeG. M. & G. 542, 10 Hare 453, Ames' Cas. 563, Burd. Cas. 363, it was held that the mere fact that the two partners differed as to whether an existing contract should be performed or broken did not deprive one of his authority to perform it. Demand of payment to charge endorser of note may be sufficiently made of one of former firm of makers: Gates v. Beecher (1875), 60 N. Y. 518, 19 Am. Rep. 207, Mechem's Cas. 1020, Burd. Cas. 372. Waiver of demand made by one after dissolution will bind other partners: Darling v. March (1842), 22 Me. 184, Gilm. Cas. 409; Seldner v. Bank (1887), 66 Md. 488, 8 Atl. 262, 59 Am. Rep. 190. Notice of dishonor to one member of partnership dissolved by war is sufficient: Hubbard v. Matthews (1873), 54 N. Y. 43, 13 Am. Rep. 562. There being no assignment, in law or in fact, and no survivorship here, the general rules as to parties to action (ante, § 324, et seq.), are not ordinarily affected by the dissolution: See Fish v. Gates (1882), 133 Mass. 441; Mudd v. Bast (1864), 34 Mo. 465, equal duty to apply them to the discharge of partnership obligations.78 Where there are more than two partners, the majority have the same power to control the winding up of the business that they have to direct its conduct before dissolution.79 § 424. Within this narrow field of closing up the business there is here, unlike the case of the surviving partner,80 a real agency and not merely a right to incur expenses, binding himself only in the first instance, but with a right to contribution; the authorized acts of the partner impose direct contractual obligations upon his partners as they would have done before dissolution. Under the Uniform Partnership Act after dissolution each partner (with certain exceptions named 81) "can bind the partnership by any act appropriate for winding up partnership affairs or completing transactions unfinished at dissolution." 82 The mere fact that a partner is insolvent does not, it is held, per se disqualify him from acting; 83 but under the Uniform Partnership Act his bankruptcy would disqualify him.84 § 425. No authority to create new obligations. — But except for the closing up or completion of old transactions the authority of each partner after dissolution is ended. He cannot create new obligations, or vary the character, form or obligation of those already existing.85 Hence he cannot, after 78 Gray v. Green (1894), 142 N. Y. 316, 37 N. E. 124, 40 Am. St. R. 596. 79 Western Stage Co. v. Walker, supra. 80 Ante, § 402. 81 Not, where the business has become unlawful, by any act except one appropriate for winding up the affairs; not where the partner who assumes to act has become a bankrupt; not, where the agreements exclude him, except in certain cases wherein the person dealing with him had no notice or knowledge of his lack of authority. Sec. 35 (3). 82 Sec. 35 (1) (a). 83 See Heartt v. Walsh, supra. 84 Sec. 35 (3) (b). 85 Thus, for example, if negotiations pending had not ripened into a contract at the time of notice of the dissolution, there is no authority ordinarily to complete it afterward. See Goodspeed v. Plow Co. (1881), 45 Mich. 322, 7 N. W. 902, Gilm. Cas. 404. |