increased to 7507. if the business prospered; and when the accumulated surplus had reached 8,500l., and so remained for two years, then, thirdly, to reassign the money and profits to S. After the marriage this deed was acted on by B. and his co-trustee :-Held, that neither by the deed nor by any other proceeding had B. established such a relation between himself and S., in his business of underwriter, as to constitute 35 L. J., C. P. 105; L. R. 1 C. P. 86; 12 Jur. (N.S.) 247; 14 L. T. 72; 14 W. R. 338—Ex. Ch.

observe their orders; that all moneys received in the business were to be paid to the account of the trustees, and all moneys paid by their cheques; and that A. was to receive a weekly salary. The creditors also advanced a large sum of money to carry on the business. The business was carried on by A. for some time, his name being over the door at the place of business, and he had dealings with various persons as if he carried on the business on his own account; but on his neglect-him a partner. Bullen v. Sharp, 1 H. & R. 117; ing to observe the orders of the trustees, they determined his right to carry on the business, and he admitted in writing that they had a right Interests in partnership trade, under articles, to and did assume the possession of the stock-in- for widows of the partners for their respective trade. The trustees thereupon gave notice to the lives, and after the decease of the widows to be parties who had some of the horses, part of the equally divided among their respective children : stock-in-trade, that they belonged to them. Two-Held, not vested in children who died in life days after this notice A. committed an act of of mother on account of nature of the subject; bankruptcy. On an interpleader issue to try the primary object being to constitute a partnerwhose horses these were:-Held, that the deed ship and ascertain the succession, and a provision did not create a partnership between A. and the for the family being only a secondary object trustees; and that the trustees, by allowing A. through that medium. Balmain v. Shore, 9 Ves. to carry on the business in his own name, were 500. not estopped from denying the horses were A.'s. Price v. Groom, 2 Ex. 542; 17 L. J., Ex. 346.

A deed of assignment in the usual form to trustees for the benefit of creditors, which empowers the trustees to employ the debtor or other person in winding up his affairs, and in collecting and getting in his estate and in carrying on his trade if thought expedient, is a valid deed, and does not constitute a partnership between the creditors. Coate v. Williams, 7 Ex. 205; 21 L. J., Ex. 116.

A. and B. carried on business as ironmasters in partnership, and compounded with their creditors by means of an ordinary composition deed which conveyed the partnership property to trustees upon trust to carry on the business under the name of a company, and out of the profits, after payment of expenses, to divide the net income among the creditors of the partnership ratably:— Held, that a creditor who had executed the trust deed was not liable as a partner for debts contracted by the trustees in carrying on the trade. Cox v. Hickman, 8 H. L. Cas. 268; 9 C. B. (N.s.) 47; 30 L. J., C. P. 125; 7 Jur. (N.s.) 105; 3 L. T. 185; 8 W. R. 754.

f. Receipt of Annuities Payable out of Profits.

A person being the widow or child of a deceased partner, and receiving by way of annuity a portion of the profits made in the business in which the deceased person was a partner, is not, by reason only of such receipt, a partner in the business or liable as such. Partnership Act, 1890 (53 & 54 Vict. c. 39), s. 2 (3) (c).

Settlement of Business.]-In consideration of B. guaranteeing 5,000l. to S. in his business of an underwriter, until by such business he should acquire from the profits 5,000l. clear, S. promised that he would pay B. an annuity of 5007.; and if at the end of three years it should appear that one-fourth of the net annual profits amounted to more than 5007., S. further promised that he would increase the annuity to a yearly sum equal to one-fourth of such net annual profits. On his marriage, S. executed a deed of settlement, by which he conveyed all the proceeds of his underwriting business to trustees, of whom B. was one, in trust, first, to pay the annuity to B.; secondly, to pay S. an allowance of 500l. a year, to be

Reservation of Annuity.]-A. by his will (after declaring his intention to assign the lease of a hotel in which he carried on business, and the effects therein and the business thereof, in trust for his son and daughter, in consideration of an annuity to be paid to him for life) bequeathed the residue of his personal estate and effects to his son and daughter in equal shares. The testator died without having effected the purpose declared in his will. The daughter, being executrix, carried on the business until she married in 1819. In the following year, the son filed a bill praying an account of the profits of the business from the death of the testator until 1819, and that half the profits and half the assets might be paid to him as residuary legatee and partner. The vice-chancellor and lord chancellor decided that a partnership existed from the death of the testator to the marriage of the daughter. Against this decree the defendants appealed to the house of lords, and insisted that an issue should be directed to try whether a partnership existed. The house affirmed the decree, on the ground that it was then too late to ask for such an issue. Burnand v. Nerot, 2 Bli. (N.S.) 215; 4 Russ. 247; 6 L. J. (0.s.) Ch. 81.

g. Receipt of Profits for Sale of Goodwill.

A person receiving by way of annuity or otherwise a portion of the profits of a business, in consideration of the sale by him of the goodwill of the business, is not, by reason only of such receipt, a partner in the business or liable as such. Partnership Act, 1890 (53 & 54 Vict. c. 39), s. 2 (e), renacting Bovill's Act, 1865 (28 & 29 Vict. c. 86), s. 4.

Cases before 1865.]-N., being proprietor of a newspaper, entered into an agreement with L. for the sale to him of the paper for 1,5007, which was agreed to be paid, with interest, by annual instalments, extending over a period of seven years. By the agreement, N. undertook to guarantee to L. the clear yearly profit of 1507. over and above the annual payments of the 1,5007. and interest; and in consideration of such guarantee, L. agreed to pay all surplus profits over and above 150l. a year to N., until the same surplus profits should amount to 500%

If such surplus profits should amount to 5001., L. was to pay, above the purchase-money and the 500%. profit, the then present liabilities; but if not to 5001., then N. was to pay such liabilities-Held, that, under this agreement, N. was a partner with L. in the concern as regarded third persons. Barry v. Neesham, 3 C. B. 641; 16 L. J., C. P. 21 ; 10 Jur. 1010.

A. sold to B. his interest in the profession and practice of a surgeon and apothecary, carried on by him in Park-street, for 9007.; 5007. to be paid on the execution of the deed, and 4007. at the expiration of a year. A. covenanted not to exercise the profession within three miles of his then place of business, and, also, that during one year from the date of the deed, he should continue to reside in Park-street, and to carry on and attend to the profession and practice as he had hitherto done, and that he would to the utmost of his power, introduce B. to his patients, and do every reasonable act for promoting the interest of the concern. And B. covenanted to allow A., during the year, a moiety of the clear profits of the concern, to be paid at the expiration thereof-Held, that the parties were not thereby constituted partners during the first year, and, therefore, that B. might sue A. for moneys received by him from their patients during that year. Rawlinson v. Clarke, 15 M. & W. 292; 15 L. J., Ex. 171.

2. STATUTE OF FRAUDS.

Partnerships relating to Lands.]—An agreement to become partners in a colliery which was to be demised upon royalties, and the royalties to be divided in certain proportions, is an interest in land within the Statute of Frauds, 29 Car. 2, c. 3, and must be in writing, signed by the parties. Caddick v. Skidmore, 3 Jur. (N.S.) 1185; 6 W. R. 119.

Receipts signed by the party sought to be charged, which partly disclosed the nature of the agreement, held not sufficient to take the case out of the statute. Ib.

A partnership agreement between A. and B. that they shall be jointly interested in a speculation for buying, improving for sale, and selling lands, may be proved without being evidenced by any writing signed by, or by the authority of, the party to be charged therewith, within the statute of frauds, and such an agreement being proved, A. or B. may establish his interest in land, the subject of the partnership, without such interest being evidenced by any such writing. Dale v. Hamilton, 5 Hare, 369; 16 L. J., Ch. 126; 11 Jur. 163. And see S. C. on appeal, 2 Ph. 266; 16 L. J., Ch. 397; 11 Jur. 574.

3. COMMENCEMENT OF PARTNERSHIP. No Time Fixed.]-Where no time is fixed for the commencement of a partnership in an agreement between the parties, it must be taken to have commenced on the date of the agreement. Williams v. Jones, 5 B. & C. 108; 7 D. & R. 549; 29 R. R. 181.

In May, 1839, A., a creditor of the firm of B. & S., proposed to become a partner with them, the terms of the intended partnership being, that A. should bring in 1,0007. in money and 1,0007. in goods, and should be entitled to one-third of the profits, and be a dormant partner: the name of the firm was to be changed to B., S. & Co., and the partnership was to date from the 1st April, 1839, but A. reserved to himself the option of determining, at any period within twelve months from that day, whether he would become a partner. The name of the firm was altered accordingly, and a new banking account was opened in the name of B., S. & Co.; and A. advanced the 2,000l. to the firm; but within the twelve months he declared his determination not to enter into the partnership:-Held, that A. was not liable for goods supplied to the firm after May, 1839, for that he never became a complete partner. Gabriel v. Erill, 9 M. & W. 297; Car. & M. 358; 11 L. J., Ex. 371. S. P., Turquand, Ex parte, 2 Mont. D. & D. 337.

A. and B. agreed to become partners from a subsequent day, upon certain terms, which were to be embodied in a deed, to be executed on such subsequent day. The deed was executed on a day later than that appointed :-Held, that B. was bound by the contract of A., entered into in the name of the firm, between the day appointed for the execution of the deed and that on which it was actually executed. Battley v. Bailey or Lewis, 1 Scott (N.R.) 143; 1 Man. & G. 155; 4 Jur. 537. And see Wilson v. Lewis, 2 Man. & G. 197, and Ellis v. Ward, 21 W. R. 100.

E. experimented in sewage, B. in yeast. and W. supplied both of them with money for the purpose. The three traded ostensibly as partners under the names of Stuart & Co., Ward & Co., and Hofmann & Co., and ultimately under that of Hofmann, Bowing, Ellis & Co. Prior to 1869, the terms of the ostensible partnership subsisted in parol only, the two businesses being speculative and hazardous; but in 1869, success in the yeast manufacture appearing to have been at last attained, a draft deed of partnership was prepared, but before its execution a rupture occurred, among the partners or intending partners, and the deed remained unexecuted. B. and W. expelled E. forcibly from the premises, and subsequently took out a patent for the yeast invention in their own names. E. filed a bill claiming to be restored to the partnership and to have the benefit of the patent, and an injunction and an account. It was proved that no yeast had ever been sold:-Held, that these circumstances showed no partnership between E. and W. and B. Ellis v. Ward, 21 W. R. 100.

An agreement between B. and C. was communicated by one of the parties to A. After applications in writing from A., for the signature of the other parties to a memorandum, expressing his interest as a partner in the transaction relating to the land, the subject of the agreement, the court held that the agreement so communicated must be taken, not as an original proposal, but as an acknowledgment of A covenant by B. to admit a nominee of C. as a pre-existing right in A., and that A. might a partner with him, will not of itself create a avail himself of the acknowledgment, notwith-partnership between them. Davies, Ex parte, standing the agreement between B. and C. was Harris, In re, 4 De G. J. & S. 523; 32 L. J., res inter alios acta, and notwithstanding A. Bk. 68; 9 Jur. (N.S.) 859; 8 L. T. 745. objected to some of the terms in that agreement,

as not truly expressing his partnership contract. 4. DURATION, AS TO.

Ib.

See ARTICLES, infra,

col. 410.

5. CONTRACTS INDUCED BY MISREPRESENTATION AND FRAUD.

Setting Aside.]—Misrepresentation of material facts is a ground for setting aside a partnership contract. Rawlings v. Wickham, 1 Giff. 355; 4 Jur. (N.S.) 990; 6 W. R. 509. Affirmed, 3 De G. & J. 304; 28 L. J., Ch. 188; 5 Jur. (N.S.) 278; 7 W. R. 145.

What Amounts to Misrepresentation.]-B. and W., who were partners in a bank, agreed to take R. into partnership with them. W., who took no actual part in the business, and was known to R. not to do so, joined with B. in producing to R. during the negotiation, as a true account of the affairs of the bank, a paper stating the amount in which it was indebted to customers to be 11,000l., the amount being in fact 20,000l. R. entered into the partnership without examining the books, and continued in it for four years, taking no part in the business, and never examining the books. At the end of that time the bank turned out to be insolvent. R. then filed a bill against B. and the executors of W., asking to have the agreement for partnership rescinded, and to have an indemnity against the debts of the concern :-Held, that the delivery of the paper to R. as a true account of the state of the bank was such a misrepresentation as entitled R. to have the contract rescinded.

Ib.

Held, that the case as regarded W. was not varied by the facts that W. took no part in the affairs of the bank, and was known by R. not to do so, and did not know the representation to be untrue. Ib.

A representation made by a party, not knowing that it is false, is binding upon him; and if the other party enters into a contract on the faith of its truth, the court will set aside the same altogether, and not merely rectify it. Though the other party does not examine the books for four years during which the partnership continued, it not being his duty to do so, it will not bar him of relief on the score of negligence or acquiescence. Ib.

Balance Sheet Prepared by Vendor's Accountant.]-A person agreed to purchase a share in a partnership business, on the footing of a balance sheet prepared by an accountant employed by the vendor, which all parties believed (with the exception of slight errors) to be, and was treated as, generally correct. It turned out to be grossly inaccurate in regard to the existing liability. The court set aside the contract. Charlesworth v. Jennings, 34 Beav. 96; 11 L. T. 439.

liable for the payment of the goods purchased, and B. was to supply A. with a share of the money by a fixed time, so as to enable A, to meet this liability. At the time fixed, A. applied to B. for the money, but B. failed to supply it. In consequence of this, and after some negotiation on the subject, A. offered to allow B. to withdraw from the adventure altogether, and this offer was ultimately accepted. Down to the time when A. applied to B. for the money, A. had communicated to B. all the information which he possessed relative to the adventure and to its chances of success, which then appeared very doubtful; but while the negotiation was going on, A. received two letters from his correspondents in China, through whom the business was managed, the contents of which he did not communicate to B. :-Held, in a suit impeaching the arrangement by which B. gave up his share of the adventure, that, considering the relative situation of the parties, there was no obligation on the part of A. to communicate to B. the letters in question; and that, there being no proof of misrepresentation by A., the arrange ment could not be set aside merely on the ground of the non-communication of the letters. M'Lure v. Ripley, 2 Macn. & G. 274.

Exaggerating Value of Business.]—B., a practising surgeon, took C. into partnership, having represented to him that his practice produced about 7001. a year. C. paid a premium. It was afterwards discovered that the practice did not amount to more than half the amount stated, and also that B. had, the year previously to the partnership, made a return to the commissioner of the property tax that his income amounted only to 3501. per annum. The master of the rolls ordered a dissolution of the partnership, and that B. should repay C. half the premium he had paid :-Held, that sufficient misrepresenta tion had been proved to uphold the decree. Jauncey v. Knowles, 29 L. Ĵ., Ch. 95 ; 1 L. T. 116; 8 W. R. 69.

respon

Restitutio in integrum.] The dent was induced by misrepresentations made without fraud by the appellants to become a partner in a business which either belonged to them or in which they were partners and which was in fact insolvent. The business having afterwards, owing to its own inherent vice, entirely failed with large liabilities:Held, that the respondent was entitled to rescission of the contract and repayment of his capital, though the business which he restored to the appellants was worse than worthless, and that the contract being rescinded the appellants could not recover against him for money lent and goods sold by them to the partnership. Concealment of Accounts-Purchase at Adams v. Newbigging, 57 L. J., Ch. 1066; 13 Undervalue.]-A partner, who superintended App. Cas. 308; 59 L. T. 267; 37 W. R. 97— exclusively the accounts of the concern, agreed | H. L. (E.) to purchase his co-partner's share of the business, for a sum which he knew, from accounts in his possession (but which he concealed from his copartner), was an inadequate consideration. The agreement was set aside. Maddeford v. Austwick, 1 Sim. 89. Affirming, 2 Myl. & K. 279.

Non-communication of Letters.]-A. and B. entered into a joint adventure for the purchase of goods to be shipped to China, to be there sold, and the proceeds of the sale invested in a homeward cargo. A. was to render himself

Lien on Assets.]-The plaintiff was induced by the fraud of the defendant to purchase a share of his business, and to enter into partnership with him. Judgment being given for the rescission of the agreement, and the dissolution of the partnership:-Held, that the plaintiff was entitled, in respect of the purchase-money which he had paid, to a lien on the surplus of the partnership assets after satisfying the partnership debts and liabilities, and that, in respect of any sums which he had paid or might pay in satis.

Fraud in Former Partnership.] It is no answer to an action for breach of an agreement to enter into partnership with the plaintiff that, after the agreement, and before breach, the defendant discovered that the plaintiff had, before the agreement, acted with fraud and dishonesty towards a former partner of the plaintiff in the Ex. Ch. conduct of the partnership business, which had been carried on by the plaintiff and such partner, and that such fraudulent and dishonest acts were unknown to the defendant at the time of his entering into the agreement. Andrews V. Garstin, 10 C. B. (N.S.) 444; 31 L. J., C. P. 15; 7 Jur. (N.S.) 1124; 4 L. T. 580; 9 W. R. 782.

Profits of Office in Exchequer Court.]-Quære | partnership for a period of five or seven years, B. whether a legal partnership could exist in the to pay into the partnership 10,000l. at such profits of the offices of a sworn clerk or side clerk dates as might be agreed upon. If B. failed to of the court of exchequer, as those offices were carry out his agreement, he was to lend to A. formerly constituted, or whether such a partner- 5,0007. at a certain rate of interest. Demurrer ship can at present exist in the profits of the to a bill by A. for specific performance allowed, office of clerk of the rules of that court. Where with costs. Sichel v. Mosenthal, 31 L. J., Ch. a personal office or employment is purchased 386; 8 Jur. (N.S.) 275; 5 L. T. 784; 10 W. R. with the partnership funds for the benefit of the 283. partnership, the partner in whose name it is purchased is not necessarily a trustee of the profits of the office for the other partners, after the term-The court will entertain a bill to compel of the partnership has expired. Clarke v. Richards, 1 Y. & Coll. 351 ; 4 L. J., Ex. Eq. 49.

Solicitors-Dissolution-Keeping Names in Business. Upon the dissolution of partnership between H. and A., solicitors, it was agreed that H., continuing the business on his own account, should grant to A. an annuity, and be at liberty to continue his name in the firm, guaranteeing him against all liability by reason thereof :Held, that such an agreement is not void as being against public policy. Aubin v. Holt, 2 Kay & J. 66; 25 L. J., Ch. 36; 4 W. R. 112.

Company with Shares Assignable at Discretion of Holders.]-A joint-stock company, formed for working gold mines in North America, the shares of which might be increased to an unlimited extent, and were made assignable at the discretion of the holders, was held to be illegal and fraudulent, and a demurrer to a bill filed by one of the shareholders against the others, for the purpose of carrying into effect a dissolution of the company, was allowed. Blundell v. Windsor, 8 Sim. 601; 6 L. J., Ch. 364; 1 Jur. 589.

7. SPECIFIC PERFORMANCE.

Not as a Rule Decreed.]-As a general rule, the court will not decree specific performance of a contract for partnership. Scott v. Rayment, 38 L. J., Ch. 48; L. R. 7 Eq. 112.

Where the plaintiff's appropriate remedy is an action, where there are no legal difficulties in his way which the court can remove, and where there has been no part performance, the court will not decree specific performance of a contract for partnership. In a case in which, before Lord Cairns' Act (21 & 22 Vict. c. 32), the court would not have interfered, it will not, since that act, assess damages. Ib.

A bill does not lie for specific performance of a partnership agreement, where the sole relief sought is the payment of a sum of money, for which there is a remedy by action. Bagnell v. Edwards, Ir. R. 10 Eq. 215.

Agreement between A. and B. to enter into

Keeping Partners to their Agreement.]

partners to act according to the provisions of instruments into which they have entered, and where it will interfere for that purpose, will take care that the decree shall not be defeated by anything done in the meantime. Thus where, in 1812, the then proprietors of Covent Garden Theatre executed a deed, by which they cove nanted and agreed that the profits of the theatre should be exclusively appropriated to particular purposes, and that the treasurer, for the time being, should be irrevocably directed so to apply the profits; and in 1822, parties then entitled under the former proprietors to seven-eighths of the theatre, entered into an agreement, which provided, in some respects, for a different application of the profits, and otherwise affected the rights of a party interested in the remaining eighth, who was not consulted on the subject; the court, upon a bill filed by that party, for the specific performance of the covenants and agreements contained in the deed of 1812, appointed a receiver. Const v. Harris, Turn. & R. 496; 24 R. R. 108.

Execution of Partnership Deed.] Agreement for a partnership decreed to be specifically performed by the execution of a proper partnership deed. England v. Curling, 8 Beav. 129.

Admission of Agreement - Performance in toto.]-Agreement, dated in March, 1840, for a dissolution of partnership, upon terms that the continuing partner should secure by his bond an annuity of 1007., payable quarterly for three years, from the 25th March, 1840, to the retiring partner, if he should so long live. A draft of the agreement was signed by both partners, and the retiring partner entered into possession of the partnership effects.

No accounts

were

rendered, or payment in respect of the annuity made, to the retiring partner, who died in February, 1843. Various accounts were afterwards rendered to the plaintiff as administrator of the retiring partner, and in June, 1847, the continuing partner professed his willingness to settle his part of the account on being released by the plaintiff. In February, 1849, the bill was filed against the continuing partner for the accounts, on the footing of the agreement of March, 1840, and for payment of the arrears due to the estate of the retiring partner in respect of the annuity. The defendant, by his answer, admitted the agreement of 1840, but submitted, that, as the annuity was not apportionable as between the grantor and the annuitant, the last payment in respect thereof had become due at Christmas, 1842, more than six years prior to the filing of the bill, and that the claim in respect of arrears was barred by the Statute of Limi tations:-Held, at the hearing, that the right to an account and to payment of the annuity formed part of the agreement, which was ad