INTRODUCTION In general.-In a rather general way, what we call the law may be said to consist of the rules which prescribe and determine the legal form and effect of human relationships and activities. Inasmuch as, in a general way, one may frequently act either alone or in conjunction with others, a rather obvious though somewhat loose classification may be made into (1) the law of individual activity, and (2) the law of associated activity. The latter body of law, which may be called the law of associations, could be divided into two fields, namely, (1) The law of incorporated associations (meaning by "incorporated" that they have received some special charter or franchise from the State to exist or act as an associated body), and (2) The law of unincorporated associations (sometimes though erroneously called "voluntary" associations). Of each there would be many classes, but one classification would be into those which were created to carry on a business, as distinguished from those whose purpose was social, political, religious, educational, or the like. We might thus have unincorporated associations organized for the purpose of carrying on a business with a view to pecuniary profit. When we have reached that point we have arrived, as will be more fully seen from the discussion which will follow, pretty nearly if not quite at the modern law of Partnership. Historical.-Partnership is of ancient origin. It was known to the Romans and rather highly developed. It was adopted and regulated by statutes in the commercial cities of Europe, and was thence engrafted upon the English common law. Since its incorporation into the latter system it has lost many of its former characteristics and has acquired others which were entirely unknown to it in its origin. The following comparison of the English and the Roman Law of Partnership will be of interest: "The English Law of Partnership," says Mr. Scrutton,1 "is derived from three sources, the Common Law, the Lex Mercatoria, and the Roman Law. Of the Lex Mercatoria we need only say here that it appears in itself to have been at least partly based on Roman law. Mr. Justice Story has made an elaborate and detailed investigation of the relations of the Common to the Roman Law, and finds great similarity between them. Both laws recognize the difference between a partnership and a community of interest, and provide that no new partner can be introduced without the concurrence of the original partners. But the Common law has refused to follow the Roman law in holding invalid an agreement that the personal representative of a partner should succeed him in the partnership. Both laws require a partnership to be in good faith and for a lawful purpose; and that all partners must contribute something, whether property or skill, to the common stock. Both require community in profits among the partners and, to a more limited extent, community in losses. In the absence of express agreement both laws require an equal division of profits. The Common law formerly went beyond the Roman law in making persons who share the profits of a trade liable by operation of law to third persons as partners, but this rule was overthrown in Cox v. Hickman.2 Both laws recognize a division into universal, general, and special partnerships, though the chief Common law division is into public and private partnerships.3 Both regulate the duration of the partnership by the consent of the partners, but the Roman law went further than the English, and prohibited partnerships extending beyond the life of the parties. No particular forms for the constitution of a partnership were required by either law. By the Roman law, the mere partnership relation conferred less extensive powers of disposition of the partnership property than are given by the Common law. A Roman partner could not bind the firm by debts, nor alienate more than his share 1 The Influence of the Roman Law on the Law of England, by Thomas Edward Scrutton, Select Essays in Anglo-American Legal History, vol. 1, p. 220. For a further account of the "law merchant,'' see 1, of Professor 3 But see as to this classification, post, § 3. of the partnership property. But in the absence of express stipulation, and with some limitations, each partner of an English partnership may be taken, by outsiders, as having an equal and complete power of administra tion over the whole of the partnership affairs. Both laws admit a discharge of a debt to or by one partner to be good for or against the whole firm. In the Common law, within the scope of the partnership, the majority have a right to govern, but in the Roman law the express or implied assent of all the partners is required. Both laws make partners liable to each other for negligence or fraud, and require a withdrawal from the partnership to be in good faith. Both laws consider a partnership for no certain period as dissoluble at the will of any partner; but the Roman law went further than the Common law in requiring that the dissolution should not take place at an unseasonable time. Both laws allow the court to dissolve the partnership in case of positive or meditated abuse of it by a partner, or when its objects are no longer attainable, as in the case of a partner's insanity. By both laws, the assignment of his interest by one partner, contrary to the will of the others, dissolves the partnership. Both laws dissolve the partnership by death; and many of the provisions in both laws for taking an account and winding up a partnership are similar, though the English sale is more convenient than the Roman division. Whilst English partners are liable to third parties in solido, by the Roman law they were only liable pro parte. "This enumeration shows a sufficient agreement between the two systems to justify the assertion that while the method of the introduction of so much Roman law in early times is not clear, in later times most of its leading principles have become incorporated into the Common law of Partnership." Perhaps one further quotation may be justified: "During the Middle Ages," says Mr. Mitchell,4 "contracts of partnership were common, and at their close companies with freely alienable shares had come into existence. In the early centuries the most common form of partnership was the 'commenda.' This was a partnership in which one of the parties supplied the capital, either in the shape of money or goods, without personally taking an active part in the operations of the society, while the other party supplied none or only a smaller fraction of the capital and conducted the actual trade of the association. This form of partnership was especially used in maritime trade and was often confined to single ventures. Its popularity was due to the fact that it enabled the capitalist to turn his money to good account, without violating the canonical laws 4 Early Forms of Partnership, by William Mitchell, Select Essays in Anglo-American Legal History, vol. 3, p. 183. against usury, and enabled the small merchant or shipper to secure credit and to transfer the risk of the venture to the capitalist. * * * * * "But side by side with the commenda there existed throughout the Middle Ages a closer kind of partnership in which the partners were normally coördinate members of the association with the same privileges and responsibilities. The usual expression for this type of society was 'compagnia' or 'societas,' and the firm was generally designated by the name of one of its members with the addition of the phrase 'et socii,' or the like. It became an essential feature of this form of partnership that the partners were all of them responsible individually for the debts of the firm. At no time in Italy was the power of partners to bind by contract their fellow partners in practice denied. But though a single partner could thus represent the firm, originally it was, as a rule, only in virtue of special procuration that he was privileged so to do. In the medieval contracts of partnership the partners often gave one another by procuration the right to represent and bind the firm. In the absence of such clauses in the contract, creditors of the firm for a debt contracted by an individual partner could in some places only make good their claim against the firm as a whole, if the debt had been recognized as a debt of the firm, as by entry in the firm's book, or employment of the money or goods for the Simply in his capacity as partner a merchant had not everywhere in the early centuries of the Middle Ages a right to bind his copartners. common purposes of the firm. * * * 營 "A third type of partnership, that of joint stock companies with the capital in the shape of freely alienable shares, with a liability limited to the amount of capital represented by the share, and with an administrative governing body composed of shareholders in which the majority decided, was in process of formation during the Middle Ages. It was in Genoa that the first joint stock companies arose. that joint-stock companies took their rise owing to colonial expansion in Italy at the close of the Middle Ages, and had spread to Holland, France and England by the 17th century." * * It would seem Bibliographical.-Partnership has been treated by many writers among English writers by Archbold, Bisset, Collyer, Dixon, Fox, Gow, Lindley, Pollock, Stark, and Watson; and among American writers by Bates, Parsons (Theophilus), Parsons (James), Rowley, and Story. There have been several American editions of Lindley. Of books primarily for students, there are those of Professor Burdick, Professor Gilmore, Mr. Shumaker, and others. Of cases for the use of students, there are, among several, collections |