§ 474. Opening and restating accounts.-When once a partnership account has been settled, it will not be easily disturbed, particularly if much time has elapsed. Still, even after long acquiescence, an account may be reopened and corrected if fraud was practiced in the first accounting; and, within a reasonable time, an account may be reopened for the correction of errors or omissions. The fraud, however, must be clearly stated and proved, and the mistake or omission must be as to some matter not known to the complaining party at the time it was committed.20

20 See Claflin v. Bennett (1892), 51 Fed. 693; Valentine v. Wysor (1890), 123 Ind. 47, 23 N. E. 1076, 7 L. R. A. 788, Mechem's Cas. 500, Merriwether v. Hardeman (1879), 51 Tex. 436; Varner's Appeal (1888), 2 Monaghan (Pa.) 228, 16 Atl. 98; Cobb v. Cole (1890), 44 Minn. 278, 46 N. W. 364; King v. White (1890), 63 Vt. 158, 21 Atl. 535, 25 Am. St. R. 752.

A partner who has been defrauded into making a private settlement with his partner may institute a suit for accounting without rescinding the settlement and restoring the fraudulent partner to statu quo: Daniel v. Gillespie (1909), 65 W. Va. 366, 64 S. E. 254; Oliver v. House (1906), 125 Ga. 637, 54 S. E. 732.

CHAPTER XXII.

OF LIMITED PARTNERSHIPS.

§ 475. Of the nature of such partnerships.

476. Must be authorized by statute.

477. The usual statutory requirements.

478. Necessity for complying with requirements.

$479. Who may form them.
480. For what business.
481. Conduct of business.
482. Withdrawal of capital.

483. Special partner as a creditor.
484. Renewal.

485. Dissolution and notice.

§ 475. Of the nature of such partnerships. Something has been already said in relation to these partnerships, but they require a little fuller consideration. The purpose of such organizations is to permit the formation of partnerships in which some of the partners, who manage the business, shall have the general personal liability of ordinary partners, while other of the partners, who take no part in the management, may contribute a given amount of capital and assume no liability beyond the amount so contributed. The former are usually designated as general partners, and the latter as special partners.

§ 476. Must be authorized by statute.-Partnerships of this nature can be organized only when permitted by statute, but statutes have been enacted for this purpose in the majority of the states.

After many years, England adopted a limited partnership act in 1907. A Uniform Limited Partnership Act has also been prepared by the Commissioners on Uniform State Laws and recommended to the States for enactment. It will be found in the Appendix. It contains many provisions not usually included in the older acts.

The demand for such a statute is felt less in States which

1 Ante, $89, 10.

have liberal incorporation statutes. In many of the States it is practically as easy to form a corporation in which all of the associates have a limited liability as it is to form a limited partnership in which only part of the associates would have such an exemption.

Only a very general sketch of this form of partnership will here be undertaken.

§ 477. The usual statutory requirements.-The statutory provisions are not entirely uniform, but they are substantially so. They require usually the execution of a certificate which shall set forth who the partners are, with their residence; who are to be the general partners, and who the special partners; the name under which the partnership is to do business; the amount of capital actually contributed by the special partners; the business to be conducted, and the date at which the partnership is to begin and end.

This statement or certificate is to be published for a designated period, and is also to be recorded in some specified public office.

The names of all the general partners must usually appear in the firm name (though the statutes are not uniform on this point), but the names of the special partners must not appear.2 Where the names of all the general partners are required to be in the firm name, there must usually be no such addition as "& Co.," indicating that there are other general partners. They are sometimes required to add the word "limited" to the firm name.

The contribution of the special partners is usually required to be in cash, and when this is the requirement the courts have been very strict in refusing to recognize anything but cash as sufficient, though a more liberal interpretation has been made in more recent cases.4

2 See as to this Buck v. Alley (1895), 145 N. Y. 488, 40 N. E. 236, Burd. Cas. 624; Groves v. Wilson (1897), 168 Mass. 370, 47 N. E. 100, Burd. Cas. 630.

3 See Lineweaver v. Slagle (1885), 64 Md. 465, 2 Atl. 693, 54 Am. Rep.

775, Gilm. Cas. 619; In re Allen (1889), 41 Minn. 430, 43 N. W. 382; Durant v. Abendroth (1877), 69 N. Y. 148, 25 Am. Rep. 158, Mechem's Cas. 706.

4 The controversy here has been chiefly over attempted payment by

In a few States the contribution may be either in cash or other property, but usually at its cash value.

As will be observed, the Uniform Limited Partnership Act contains a variety of provisions not usually contained in the older acts, but it has not been thought necessary here to point out the changes.

§ 478. Necessity for complying with requirements. — Inasmuch as the effect of such organizations is to restrict the ordinary liabilities of certain of the partners, it is held that there must be at least a substantially full and exact compliance with the statutory requirements.5

And since it is only by force of the statute that the limited liability is secured, it follows that a failure to comply with the statutory requirements will render the special partners liable to third persons like general partners. As is said in one case,7

"prima facie, a firm transacting business is a general partnership. A limited partnership that has not complied with the law of its creation is not a limited partnership at all. It is, however, a partnership in which all the members are liable as at common law."

§ 479. Who may form them.-Competency to become a member of a limited partnership is, in general, the same as in the case of an ordinary partnership. Thus, unless the statute otherwise provides, infants and married women are competent to the same extent as they have been seen to be in such partnerships.9

As to number, the statutes usually require "one or more" of each class, though a few statutes require two or more general partners at least, or two or more of each class.

§ 480. For what business authorized.—In many of the states no restrictions are placed upon the kind of business that may be carried on by a limited partnership; in others certain kinds of business, usually insurance and banking, are excepted.

§ 481. Conduct of business.-The general partners alone represent the firm and carry on its business. If the special partner takes part in its management, or if his name is used with his consent, he ordinarily loses irretrievably his limited liability and becomes liable as a general partner.10 Contracts must therefore be made by and in the name of the general partners, and suits must be brought by and against them.11

a general partner, is, nevertheless, held not to thereby become a general partner in fact, so that he would be liable like one if he withdrew without giving notice. Tilge v. Brooks (1889), 124 Pa. 178, 16 Atl. 746, 2 L. R. A. 796, Gilm. Cas. 627. Contra: Haviland v. Chace (1860), 39 Barb. (N. Y.) 283.

8 Some statutes require all the parties to be "of full age".

9 See Continental Nat. Bank v. Strauss (1893), 137 N. Y. 148, 553,

32 N. E. 1066, Burd. Cas. 619 (infant); Benard V. Packard (1894), 12 C. C. A. 123, 64 Fed. 309, Burd. Cas. 623.

10 See Buck v. Alley (1895), 145 N. Y. 488, 40 N. E. 236, Burd. Cas. 624; Groves v. Wilson (1897), 168 Mass. 370, 47 N. E. 100, Burd. Cas. 630;. Farnsworth V. Boardman (1881), 131 Mass. 115; Strang v. Thomas (1902), 114 Wis. 599, 91 N. W. 237.

11 See Columbia Land and Cattle