certain proportions. If they do this, the incidents or consequences follow, that the acts of one in conducting the partnership business are the acts of all; that each is agent for the firm and for the other partners; that each receives part of the profits as profits, and takes part of the fund to which the creditors of the partnership have a right to look for the payment of their debts; that all are liable as partners upon contracts made by any of them within the scope of the partnership business; and that even an express stipulation between them that one shall not be so liable, though good between themselves, is ineffectual as against third persons. And participating in profits is presumptive, but not conclusive, evidence of partnership.' § 98. Same subject.-Notwithstanding these differences of opinion as to the test of mutual agency, it is entirely clear that the old rule that sharing profits as profits made one a partner is overthrown. It seems also to be true that the real test is that suggested by the definition given in the first section, namely, that there must be a community of interest-a co-ownershipa joining as principals, in carrying on a business for their joint profit. This community of interest as principals in the transaction necessarily excludes mere servants or agents who are to share profits by way of contingent compensation; lenders who are to share in the profits merely by way of contingent interest; landlords who are to take a share of the profits merely by way of rent; and any other class of creditors whose interest is not in the business itself, who have no common ownership of the business, its capital or its stock in trade, who do not own the profits, if there are any, who have no voice or part in controlling the management of the business, but who are simply entitled to be paid out of the profits, if there are any, some claim or demand which they have against the real principals in the business.33 33 See, also, Parchen v. Anderson (1885), 5 Mont. 438, 5 Pac. 588, 51 Am. Rep. 65; Vinson v. Beveridge (1879), 3 MacArth. (D. C.) 597, 36 Am. Rep. 113; Sodiker v. Applegate (1884), 24 W. Va. 411, 49 Am. Rep. 252, Gilm. Cas. 5; Waggoner v. First Nat. Bank (1894), 43 Neb. 84, 61 N. W. 112; Boston Smelting Co. v. Smith (1880), 13 R. I. 27, 43 Am. Rep. 3; Culley v. Edwards (1884), 44 Ark. 423, 51 Am. Rep. 614; Jeter v. Burgwyn (1893), 113 N. Car. 157, 18 S. E. 113; Shepard As has been seen,34 the Uniform Partnership Act is entirely in accord upon this point.35 It is apparent that the subdivision now under consideration is not properly to be deemed a ground for the creation of a quasi-partnership. It remains, therefore, to consider the other, already mentioned, namely 2. Of Holding Out as a Partner-Nominal Partner-Estoppel. § 99. Person may become liable as a partner by holding himself out as one.-A person who is not actually a partner may render himself liable as though he were one, by so conducting himself as to reasonably induce third persons to believe that he is a partner and to act upon that belief. This rule is based upon the same principle as that which has been discovered in the law of Agency, that a person may become liable for the acts of another who was not really his agent, if he has so conducted himself as to lead others reasonably to believe that such person was his agent. It is a case in which the principle of estoppel applies. Estoppel is that which stops, bars, or prevents. More specifically, for our purposes, it is that principle of the law which operates to prevent a man, who, by some express or implied representation, has led another reasonably and in good faith to rely upon the existence of a certain state of facts, from afterwards denying, to the prejudice of such other, that such a state of facts did exist. In the law of partnership it is commonly spoken of as a liability incurred by holding oneself out or permitting oneself to be held out as a partner. § 100. It involves some express or implied representation by the person in question that he is a partner, in reasonable and bona fide reliance upon which the person now seeking to hold him liable as such has extended a credit, or otherwise changed his position, in such a manner that he will now be prejudiced if the representation be denied. v. Pratt (1876), 16 Kan. 209; Beard v. Rowland (1905), 71 Kan. 873, 81 Pac. 188; Weiland v. Sell (1910), 83 Kan. 229, 109 Pac. 771; Wade v. Hornaday (1914), 92 Kan. 293, 140 Pac. 870. 34 See ante, § 80. The representation must ordinarily be one, not of matters of law or of opinion merely, but of fact,-in this case, the assumed fact that the person sought to be held was a partner as he was represented to be. The representation may be either that the person in question is a partner in an actually existing firm, or that he is a partner with one or more persons where no partnership between any of them actually exists. § 101. Same subject.-The Uniform Partnership Act declares the rule as follows: "When a person, by words spoken or written, or by conduct, represents himself, or consents to another representing him to any one, as a partner in an existing partnership or with one or more persons not actual partners, he is liable to any such person to whom such representation has been made, who has, on the faith of such representation, given credit to the actual or apparent partnership, and if he has made such representation or consented to its being made in a public manner he is liable to such person, whether the representation has or has not been made or communicated to such person as giving credit by or with the knowledge of the apparent partner making the representation or consenting to its being made." 36 § 102. Same subject-What facts must exist? In order to the existence of this liability, two main facts must be found: 1. The condition or thing relied upon as evidence of the holding out must have been caused either by the party to be charged as partner, in person, or by another with his knowledge and consent; 37 and 2. The party seeking to hold him liable as a partner must, in the exercise of reasonable prudence and good faith, have relied upon such condition or thing and been misled by it.38 The condition or thing relied upon may be an act or a representation or a mere failure to act. No particular form or ceremony is necessary. The appearance or condition relied upon need not have been caused by the party in person, but may have been caused by others with his knowledge and consent. It may consist in a mere omission to act under such circumstances as to reasonably lead the person who relied to believe that the person sought to be held assented to the representation.39 alleged act of holding out must have been done either by him or by his consent, and secondly, it must have been known to the person seeking to avail himself of it. In the absence of the first of these requisites, whatever may have been done cannot be imputed to the person sought to be made liable; and in the absence of the second, the person seeking to make him liable has not in any way been misled." See, also, Hahlo v. Mayer (1890), 102 Mo. 93, 13 S. W. 804, 22 Am. St. R. 753, Mechem's Cas. 179; Fletcher v. Pullen (1889), 70 Md. 205, 16 Atl. 887, 14 Am. St. R. 355, Mechem's Cas. 166, Gilm. Cas. 100; Morgan v. Farrel (1890), 58 Conn. 413, 20 Atl. 614, 18 Am. St. R. 282, Mechem's Cas. 171; Van Kleeck v. Hammell (1891), 87 Mich. 599, 49 N. W. 872, 24 Am. St. R. 182; Thompson v. First National Bank (1883), 111 U. S. 529, 4 Sup. Ct. 689, 23 L. ed. 507, Mechem's Cas. 771, Burd. Cas. 96, Gilm. Cas. 96; Lincoln v. Craig (1889), 16 R. I. 564, 18 Atl. 175; Cornhauser v. Roberts (1890), 75 Wis. 554, 44 N. W. 744; United States Wood Preserv. Co. v. Lawrence (1915), 89 Conn. 633, 95 Atl. 8. 39 Thus in Fletcher v. Pullen, supra, there was evidence that the defendant, to his knowledge, had been advertised in the newspapers as a partner with another person. Said the court: "Having knowledge of these advertisements, it was his duty to deny the partnership if he wished to escape liability. But what was he to do and how much? We do not say that he was under a legal obligation to publish a repudiation of the partnership in the same newspapers, or in any other, though this would seem to be a very obvious and the most efficient mode of proclaiming such denial, and the fact that he failed to do so was a circumstance to go to the jury. But we take it that the rule upon this subject stated by a very eminent jurist is reasonable and just: 'If one is held out as a partner, and he knows it, he is chargeable as one, unless he does all that a reasonable and honest man should do, under similar circumstances, to assert and manifest his refusal, and thereby prevent innocent parties from being misled.' Parsons on Partnership, 134." [The difficulty in Fletcher v. Pullen, is to find the connection between the acts which the plaintiff relied upon, but which the defendant did not know of, and the acts which the defendant knew of, but which the plaintiff neither knew of nor relied upon.] On the other hand, in Munton § 103. Same subject-Who may enforce liability.-It is not necessary that the condition or appearance shall have been known to persons generally; it is enough, but also essential, that it was known to the party deceived by it.40 The representation Rutherford (1899), 121 Mich. 418, 80 N. W. 112, where it was contended that Mrs. Rutherford had been advertised in a newspaper as a partner with a Mr. Beckwith, and the trial court had instructed the jury that it was her duty, if not a partner, to see that this advertisement was promptly and unmistakably denied, and that failing in this she would be estopped to deny the partnership, the supreme court said: "The instruction was erroneous. Mrs. Rutherford was under no legal or moral obligation to publish a denial of this newspaper story. Any one who saw fit to deal with Mr. Beckwith, relying on this item, did so at his peril. If she had been shown the article, had assented to it, and credit had been given on the strength of such assent, the rule of estoppel would have applied. There being no evidence that she authorized or assented to it, there is no room for the application of the rule." So where a wife's name was, without her authority, included in the list of partners on the letterheads of the firm in which her husband was a partner, and she complained to the partners about it and requested that it be discontinued and they promised her that it would be, it was held that no inference of her consent could be drawn where the partners continued the use of her name without her knowledge or consent and in violation of their (1880), 57 Miss. 697. Compare Anfenson v. Banks (1917), 180 Iowa 1066, 163 N. W. 608, L. R. A. 1918 D, 482. Diligence in ascertaining and denying a report that one is a partner cannot be insisted upon where there is no evidence that he knew anything about such a report. Campbell v. Hastings (1874), 29 Ark. 512. It surely cannot be true that a person is bound to heed or deny every idle and baseless statement or rumor that is circulated concerning him. The test must be whether, under all the circumstances, considering the time, place and person making the statement, the failure to deny it may fairly and reasonably be deemed to be evidence of an acquiescence in it. 40 Clearly the party cannot be held liable as a partner by estoppel except to those who knew of the holding out and relied upon it. Thompson V. First Nat. Bank (1884), 111 U. S. 529, 4 Sup. Ct. 689, 28 L. ed. 507, Mechem's Cas. 771, Burd. Cas. 96, Gilm. Cas. 96; Hahlo v. Mayer (1890), 102 Mo. 93, 13 S. W. 804, 22 Am. St. R. 753, Mechem's Cas. 179; Fletcher v. Pullen, supra; Webster v. Clark (1894), 34 Fla. 637, 16 So. 601, 43 Am. St. R. 217, 27 L. R. A. 126; Dubos v. Jones (1894), 34 Fla. 539, 16 So. 392; Knard v. Hill (1893), 102 Ala. 570, 15 So. 345; Wood v. Pennell |