dissolution, bind his partners by making, accepting, indorsing or renewing negotiable paper; 86 create a new or revive an old debt against them; remove the bar of the statute of limitations as to them; 87 or bind them by admissions or declarations not relating to the settlement of prior transactions; 88 provided, of course, in all cases, that due notice of the dissolution had been given.89

Subordinate and incidental expenses, necessary to the main purpose of winding up the business, e. g., clerical help, insurance of goods, storage, and the like, are not deemed new obligations within this prohibition.90

§ 426. Authority of settling or liquidating partner.—Instead of all the partners participating in the settlement of the partnership affairs after dissolution, as contemplated in the last section, the partners may, upon such dissolution, agree that one of the partners only shall proceed to liquidate the affairs of the firm. An express agreement to this effect is not indispensable; it may be shown by acquiescence.91 The effect of such an agreement is not to enlarge the authority of the settling partner, but to exclude the others from participation. Such an agreement could not, of course, affect third persons who had no notice of it, but if they have notice of special arrangements they will be subject to the equities of the partners if they do not deal only with the partner so specified.92

The liquidating partner is bound to be diligent and must not unreasonably prolong the settlement. If he does, equity may interfere. His duty of good faith and fair dealing is perhaps intensified by his position as sole administrator.

He has, like any other partner after dissolution, authority to wind up and complete partnership transactions only, and not

is, indeed, said that notice is not necessary, as the requirement of notice has reference to future dealings only; but see Clement v. Clement, supra; Sage v. Ensign (1861), 2 Allen (Mass.) 245. Compare Green v. Baird (1893), 53 Ill. App.

211.

90 See Conrad v. Buck (1883), 21 W. Va. 396; Stebbins v. Willard (1881), 53 Vt. 665.

91 See Wilson v. Waugh (1882), 101 Pa. 233, Mechem's Cas. 546.

92 See Gillilan v. Sun Mut. Ins.

Co. (1869), 41 N. Y. 376.

Under the Uniform Partnership

Act, the partnership is not bound by any act of a partner who has no authority to wind up partnership affairs, except by a transaction with one who had extended credit to the partnership prior to dissolution and had no knowledge or notice of his want of authority, or with one who had not extended credit prior to dissolution if he had no knowledge or notice of his want of authorityand if the fact of such want of authority had not been advertised as required for dissolution. Sec. 35 (3) (c).

93

to create new debts or obligations against his former partners; but for the purposes of winding up, collecting debts, discharging cbligations, and reducing the assets to an available and distributable form, all the powers of the partners are concentrated in him and may be exercised accordingly.94

93 See White v. Tudor, supra; Conrad v. Buck (1883), 21 W. Va. 396; Bank of Montreal v. Page, supra. Not authorized to give notes: Potter v. Tolbert (1897), 113 Mich. 486, 71 N. W. 849, Burd. Cas. 367. 94 See Palmer v. Dodge (1854), 4 Ohio St. 21, 62 Am. Dec. 271, Gilm. Cas. 405; Hilton V. Vanderbilt

(1880), 82 N. Y. 591; Gilmore v. Ham (1894), 142 N. Y. 1, 36 N. E. 826, 40 Am. St. R. 554. In Pennsylvania, see Estate of Davis (1840), 5 Whart. 530, 34 Am. Dec. 574; Fulton v. Central Bank (1879), 92 Pa. 112; Earon v. Mackey (1884), 106 Pa. 452; Wilson v. Waugh, supra.

§ 427. Agreements as to distribution of property or payment of debts.-It is not uncommon for the partners to agree at dissolution as to the distribution of the partnership property or the payment of the partnership debts. Thus, an agreement that the continuing partner shall assume and pay the partnership debts is often made, and, even though not expressly made, would often be implied. Thus, where one partner sells out to his co-partners under circumstances indicating that they are estimating and buying his interest over and above the amount of the indebtedness, there is held to be an implied assumption of the debts on their part, where nothing appears to the contrary. But where one partner sells out to a stranger who assumes the seller's obligations and forms a new partnership with the other partners to continue the business, an agreement by such other partners to assume the existing debts will, it is held, be implied only to the extent of the firm assets received by the continuing partners. It is not an agreement to answer

1 See Cobb v. Benedict (1900), 27 Colo. 342, 62 Pac. 222, Mechem's Cas. 557.

As to the effect of such a sale as an accounting and adjustment of partnership and individual claims, see Lesure v. Norris (1853), 65 Mass. (11 Cush.) 328; Wiggin v. Goodwin (1873), 63 Me. 389; Pierce v. Ten Eyck (1890), 9 Mont. 349, 23 Pac. 423.

2 See Hobbs v. Wilson (1865), 1 W. Va. 50; Peyton v. Lewis (1851), 12 B. Mon. (Ky.) 356, Mechem's Cas. 1028. See, also, LaMontagne v. Bank (1905), 183 N. Y. 173, 76 N. E. 33; Sheppard v. Bridges (1911), 137 Ga. 615, 74 S. E. 245.

Where certain members of a partnership with transferable shares (a "joint stock company'') sold and transferred their shares to persons

for the debt of another, and is therefore valid though, not in writing.3

Such agreements are entirely valid as between the partners themselves, but they do not bind the firm creditors unless the latter become a party to them. The liability of each partner for the payment of the partnership debts continues in solido after dissolution as before; and creditors cannot be cut off from their remedies by any agreement between the partners alone. They neither lose their right to proceed against the partner in whose favor the arrangement is made, nor are they required to first exhaust their remedies against the other.

The Uniform Partnership Act is to the same effect.

§ 428. Creating relation of principal and surety. Such an agreement, however, it has been held, in England and several of the States, creates the relation of principal and surety between the partners-the partner assuming the debts being the principal and the other the surety, and creditors who have notice of this arrangement have been held bound to respect the rights of the surety as in other cases.5 Thus, it has been held

who were accepted as members in their place, this (while not releasing the transferers from their liability to existing creditors) amounts to an undertaking by the association to assume and indemnify them against such liability, and therefore members of the association who have later paid those debts cannot recover contribution from the retired members: Savage v. Putnam (1865), 32 N. Y. 501.

3 See Hunt v. Rogers (1863), 7 Allen (Mass.), 469; Vanness v. Dubois (1878), 64 Ind. 338.

4 See sec. 36: "(1) The dissolution of the partnership does not of itself discharge the existing liability of any partner. (4) The individual property of a deceased partner shall be liable for all obligations of the partnership in

curred while he was a partner but subject to the prior payment of his separate debts."

5 See Oakley v. Pasheller (1836), 4 Cl. & F. 207, 10 Bligh (N. S.) 548; Rouse v. Bradford Banking Co. [1894], App. Cas. 586; Colgrove v. Tallman (1876), 67 N. Y. 95, 23 Am. Rep. 90; Campbell v. Floyd (1892), 153 Pa. 84, 25 Atl. 1033, 1038; Preston v. Garrard (1904), 120 Ga. 689, 49 S. E. 118, 102 Am. St. R. 124, Gilm. Cas. 334. See Smith v. Sheldon (1876), 35 Mich. 42, 24 Am. Rep. 529, Mechem's Cas. 583, Gilm. Cas. 332; Brill v. Hoile (1881), 53 Wis. 537, 11 N. W. 42; Leithauser v. Baumeister (1891), 47 Minn. 151, 49 N. W. 660, 28 Am. St. R. 336; Porter v. Baxter (1898), 71 Minn. 195, 73 N. W. 844. See, also, Tillis v.