that a binding and definite extension of time to the partner who has thus become the principal debtor, or a substantial change of terms, or a neglect or refusal on request to collect of the principal debtor while he was solvent, or a release of securities 9 will release the other; and if the latter pays the debt he is entitled to the benefit of the securities which the creditor held against the principal debtor.10

On the other hand there is a considerable number of cases which emphatically deny that it is within the power of the partners by any arrangement between themselves alone to alter the relation in which they stood when the obligation was incurred or to impose upon the creditor any limitations or obligations which were not an incident to the original relation.11

The Uniform Partnership Act adopts substantially the view first stated.12

Folmar (1906), 145 Ala. 176, 39 So. 913, 117 Am. St. R. 31; Fernald v. Clark (1892), 84 Me. 234, 24 Atl. 823.

6 Smith v. Sheldon, supra; Brill v. Hoile, supra; Leithauser v. Baumeister, supra; Campbell v. Floyd, supra; Preston v. Garrard, supra. Mere forbearance is not enough: Powers v. Silberstein (1888), 108 N. Y. 169, 15 N. E. 185.

7 See Porter v. Baxter, supra.

8 Where the right to make such a demand is recognized as part of the law of principal and surety. Colgrove v. Tallman, supra.

9 See Bell v. Hall (1846), 5 N. J. Eq. 477. Compare First Nat. Bank v. Cheney (1896), 114 Ala. 536, 21 So. 1002; Johnson v. Jones (1913), 39 Okla. 323, 135 Pac. 12, 48 L. R. A. (N. S.) 547.

10 See Johnson v. Young (1882), 20 W. Va. 614. Compare Sands v. Durham (1901), 99 Va. 263, 38 S. E. 145, 54 L. R. A. 614, 86 Am. St. R. 884.

11 See Barnes v. Boyers (1890), Mech. Part.-24

369

34 W. Va. 303, 12 S. E. 708, Mechem's Cas. 589; McCoy v. Jack (1899), 47 W. Va. 201, 34 S. E. 991; National Cash Register Co. v. Brown (1897), 19 Mont. 200, 47 Pac. 995, 37 L. R. A. 515, 61 Am. St. Rep. 498; Grotte v. Weil (1901), 62 Neb. 478, 87 N. W. 173, Mechem's Cas. 592; Dean v. Collins (1906), 15 N. Dak. 535, 108 N. W. 242, 9 L. R. A. (N. S.) 49, 125 Am. St. R. 610, 11 Ann. Cas. 1027; McAreavy v. Magirl (1904), 123 Iowa 605, 99 N. W. 193, Gilm. Cas. 330; Clinchfield Fuel Co. v. Lundy (1914), 130 Tenn. 135, 169 S. W. 563, L. R. A. 1915 B 418; Shapleigh Hardware Co. v. Wells (1896), 90 Tex. 110, 37 S. W. 411, 59 Am. St. R. 783; Rawson v. Taylor (1876), 30 Ohio St. 389, 27 Am. Rep. 464.

12 Sec. 36 (3): "Where a person agrees to assume the existing obligations of a dissolved partnership, the partners whose obligations have been assumed shall be discharged from any liability to any creditor of the partnership who, knowing of the

§ 429. Creditor's assent to arrangement. - An assent, however, by the creditor to the assumption by one partner of the firm's debt to such creditor, and an agreement by the creditor to look to such partner alone for payment, if upon a sufficient consideration, will amount to a novation and discharge the retiring partner. Such assent must be actual, though it need not be express or formal. It may be inferred from words or conduct reasonably justifying the conclusion that he had released the retiring partner and accepted the continuing one in his stead.18 It will not ordinarily be inferred from mere silence.14 And unless there is a sufficient consideration, the agreement of the creditor to release the retiring partner and look only to the others will not be binding,15 but the acquisition of the separate indebtedness of one partner would ordinarily furnish a sufficient consideration for the discharge of the joint obligation of all.16 Not so, however, where the partnership obligation was already several as well as joint.17

agreement, consents to a material alteration in the nature or time of payment of such obligations."

13 See First National Bank v. Green (1884), 40 Ohio St. 431, Mechem's Cas. 1031; York v. Orton (1885), 65 Wis. 6, 26 N. W. 166; Thompson v. Percival (1834), 5 B. & Ad. 925; Hart V. Alexander (1837), 2 M. & W. 484; First Nat. Bank v. State Savings Bank (1902), 130 Mich. 332, 89 N. W. 941; Johnson v. Jones, supra; Hall v. Jones (1876), 56 Ala. 493, Gilm. Cas. 339; Kirwan v. Kirwan (1834), 2 C. & M. 617, Burd. Cas. 384; Walstrom v. Hopkins (1883), 103 Pa. 118.

The Uniform Partnership Act is to the same effect. Sec. 36: “(2) A partner is discharged from any existing liability upon dissolution of the partnership by an agreement to that effect between himself, the partnership creditor, and the person or partnership continuing the business;

and such agreement may be inferred from the course of dealing between the creditor having knowledge of the dissolution and the person or partnership continuing the business.''

14 Eagle Mfg. Co. v. Jennings (1883), 29 Kan. 657, 44 Am. Rep. 668, Mechem's Cas. 1035.

15 Collyer v. Moulton (1868), 9 R. I. 90, 98 Am. Dec. 370; Eagle Mfg. Co. v. Jennings, supra.

16 See Thompson V. Percival, supra; Lyth v. Ault (1852), 7 Exch. 669, Burd. Cas. 385, Gilm. Cas. 336; Ludington v. Bell (1879), 77 N. Y. 138, 33 Am. Rep. 601; Motley v. Wickoff (1897), 113 Mich. 231, 71 N. W. 520, Burd. Cas. 293, Gilm. Cas. 337; Grubbe v. Pierce (1914), 156 Wis. 29, 145 N. W. 207, 37 Ann. Cas. 1199, 51 L. R. A. (N. S.) 358.

17 As by statute in several states. See Eagle Mfg. Co. v. Jennings, supra; Early v. Burt (1886), 68 Iowa 716, 28 N. W. 35.

§ 430. In general.-Something has been already said regarding the right of each partner to insist that the partnership assets shall be applied to the payment of the partnership debts; and it has been noticed that the right is often spoken of as the partner's lien. Before taking up the subject of the application of the assets and the final accounting, a little further consideration of this subject seems desirable. In dealing with this matter, the language of Mr. Justice Lindley will be largely adopted.2

§ 431. Nature of the right.-In order to discharge himself from his liabilities as a partner, every partner has a right to have the property of the partnership applied in payment of the partnership debts. In order, also, to secure a proper division of the surplus assets, he has a right to have whatever may be due to the firm from his copartners, as members thereof, deducted from what otherwise would be payable to them in respect of their shares in the partnership. In other words, each partner may be said to have a sort of equitable lien on the partnership property for the purpose of having it applied in payment of the partnership debts; and also a similar lien upon the surplus assets for the purpose of having them applied in payment of what may be due to the partners respectively, after deducting what may be due from them as partners, to the firm.3

1 See ante, § 184.

2 See 1 Lindley on Partnership (Ewell's 2d ed.), 352 et seq.

3 See 1 Lindley, supra; Pearson v. Keedy (1845), 6 B. Mon. (Ky.) 128, 43 Am. Dec. 160; Bardwell v.

§432. Same subject-When it becomes important. This "right, lien, quasi lien, or whatever else it may be called," to use Mr. Justice Lindley's expression, does not exist for any practical purpose until the affairs of the partnership have to be wound up, or the share of a partner has to be ascertained; nor has any partner thereby, as has been seen, a right to insist that firm creditors shall exhaust the firm assets before having recourse to the partners as individuals. But when partnership accounts have to be taken, or the shares of the partners have to be ascertained, the lien of the partners on the firm assets and on each other's shares becomes of the greatest importance. If, for example, a partner attempts to transfer, or his separate creditors attempt to seize, his interest in the partnership property, the right of the other partners to insist that nothing shall be withdrawn for this purpose until after the partnership claims are satisfied, is obviously of consequence. In many cases it is said that the rights of partnership creditors are to be worked out through the liens of the partners. Nevertheless, a proper conception of the partnership tenure and of the nature of each partner's interest in the partnership property, renders the development of the partner's lien superfluous.

The Uniform Partnership Act quite fully recognizes this view.6

§ 433. To what the lien attaches.-During the continuance of the partnership the lien attaches to everything which can be considered partnership property. It is not lost by substitution of new stock for old, and on the death or bankruptcy of a partner his lien continues in favor of those who represent him until his share has been ascertained and provided for by the other partners. After the partnership has been dissolved, however, the lien is confined to what was partnership property at the time of the dissolution, and does not extend to what may have been subsequently acquired by those who continue to carry on the business.

Perry (1847), 19 Vt. 292, 47 Am.
Dec. 687.

4 See ante, § 314.

5 See e. g., Case v. Beauregard

(1878), 99 U. S. 119, 25 L. ed. 370, Mechem's Cas. 596, Ames' Cas. 246, Gilm. Cas. 226.

6 Sec. 25.

As the lien extends only to that which is firm property, if the partnership be one in the profits only, the lien can attach to the profits alone and not to the means by which those profits were produced. And as it is an incident of partnership, it does not exist where there is really no partnership but only a joint adventure, in respect of which each retains the title to his own. goods and their proceeds.

§ 434. Against whom lien exists.-The lien óf each partner exists not only as against the other partners, but also against all persons claiming through them or any of them. It is available, therefore, against their executors, execution creditors and assignees or trustees in bankruptcy.10 While, however, it exists against the share of each partner and against a person who purchases that share from him, it would defeat the purposes of the partnership to enforce it against the purchaser of firm property in the ordinary course of business; and a person, therefore, who in good faith and for value purchases from one partner in the course of the business specific chattels belonging to the firm, acquires a good title thereto notwithstanding the liens which the other partners might have had prior to the sale.11

§ 435. What the lien secures.-The lien of the partners is intended to secure whatever is due to or from the firm by or to the members thereof as such.12 It does not extend to debts incurred between the firm and its members otherwise than in their capacity as partners, and in case of the bankruptcy of a partner his assignees may claim his share without regard to such a debt;

7 See ante, § 82.

81 Lindley, 353 (Ewell's 2d. ed.). 91 Lindley, 354 (Ewell's 2d ed.). 10 See Kirby V. Schoonmaker (1848), 3 Barb. Ch. (N. Y.) 46, 49 Am. Dec. 160.

11 See 1 Lindley, ubi supra. 12 For example, it secures the repayment of one partner's advances to the firm, as against the other partner's transferees or attaching

creditors who seek to reach his interest: Divine v. Mitchum (1844), 4 B. Mon. (Ky.) 488, 41 Am. Dec. 241, Mechem's Cas. 626. Or reimbursement for firm credit extended to one partner as against a mortgagee of his interest, Warren v. Taylor (1877), 60 Ala. 218, Mechem's Cas. 1081, Burd. Cas. 580, Gilm. Cas. 446.