Sec. 365.

Liability of Incoming Partners.

In Babcock vs. Stewart, 58 Pa., 179 (1868), it was held that an incoming partner is not liable on the contracts of the firm made before he became a member.

That was a case of an oil producing partnership, certain members of which were sued by Stewart for services rendered, upon a contract made with Babcock as managing partner, before they obtained their interSaid SHARSWOOD, 7., delivering the opinion of

the court:

"Nothing is better settled than that an incoming partner is not liable on the contracts and engagements of the firm entered into before he became a member of it. Collyer on Partnership, Sec. 520. The plaintiff in error was, therefore, entitled to have his second point affirmed. The court below did affirm it, but accompanied the affirmance with an explanation, which entirely destroyed its effect. They said: 'Babcock could not bind one who was not a joint owner when the plaintiff began work or afterwards, but he could bind those who came in while the work was being performed, or who had only parted with a portion of his interest before it began or during its progress.' From what follows we may conclude that the court considered that owing to the manner in which oil interests were sold, divided and subdivided while work was going on, a different rule was applicable to partnerships in that region. In this there was error. As was said by Lord Kenyon in Shirreff vs. Wilks, 1 East, 48: It is hard enough for one partner in any case to be able to bind another without his knowledge or consent; but it would be carrying the liability of partners for each other's acts, to a most unjust extent, if we suffered a new partner to be bound in this manner for an old debt incurred by other persons.' When a man purchases an interest in a firm he can inform himself as to what are its assets and the then condition of its works. He is not bound to inquire whether all its property in possession has been paid for. Those who have sold or delivered goods, or done work on the credit of the original partners, having by law no lien, have parted with all their interest in the effects, and can look only personally to those with whom.

they have contracted. The credit of the new member of the firm did not enter into their consideration in making the contract, and it would be manifestly unjust to hold him liable to them. The ground of liability of one partner for the acts of the others, is that of an implied general agency within the scope of the partnership. The law of partnership is but a branch of the law of principal and agent. As was said by Lord Cranworth, in Cox vs. Hickman, 8 H. L. Cas., 268: The real ground of liability (as a partner) is that the trade has been carried on by persons acting on his behalf (that is, of the person sought to be made liable), so that he would stand in the relation of principal towards the persons acting ostensibly as the traders, by whom the liabilities have been incurred, and under whose management the profits have been made ' : Bullen vs. Sharp, 1 Law Rep., C. P., 86; Feigley vs. Sponeberger, 5 W. & S., 564. If, therefore, any one of the defendants was not a member of the firm when the contract was made, it is evident this ground of liability does not exist. There can be no pretence or implication that the contracting party was then his agent."

Sec. 366. Rights of Tenant in Common Not Joining in Assignment.

Several co-tenants of an oil lease assigned the lease to an operator who was to deliver to them part of the product. One of the joint owners did not join in the assignment, and notified the assignee not to deliver any oil to his co-tenants. Held, (1) that the party not joining in the assignment was not entitled to his share of the oil without proving that his co-tenants had received more than their share; (2) that, if he chose to affirm it, he must take his share with the others upon a distribution of the royalty, after deducting all proper charges and expenses; (3) that, if he did not affirm the lease, he had no claim to any share of the royalty, and could only look to the lessee as a co-tenant who had not acquired his title. Enterprise Oil, etc., Co. vs. Transit Co., 172 Pa., 421 (1896).

Sec. 367. The Value of the Oil in the Tank the Measure of Damages of Tenant in Common Fraudulently Deprived of His Share.

A tenant in common who has been tortiously deprived by the fraud of his co-tenant of his interest in an oil leasehold is entitled, in a suit brought for his share of the oil produced and converted by the co-tenant while in possession, to recover as damages the value of the oil in the tank, without deduction for the expenses of production. Foster vs. Weaver, 118 Pa., 42 (1888).

The circumstances of this case are interesting, and unfortunately, not of uncommon occurrence. The plaintiff and defendants became tenants in common of an oil lease. The plaintiff lived in New York. The defendants were oil operators and had charge of the drilling. Oil was found in paying quantities, but the defendants ordered the suspension of operations, and the well was reported a failure. Soon after, the defendants sent an agent to New York to purchase plaintiff's one-third interest. In this, by false representations as to the value of the well, he succeeded, securing the sale to himself for $500, which interest he conveyed in a few days to the defendants for $600. The lease was then further developed and good results obtained. The plaintiff, learning of this, tendered to defendants the $500 paid him by the agent, and demanded a reconveyance of his third interest and his share of all the oil produced, which was refused. The defendants offered to reconvey to plaintiff and pay his share of the oil, if he would pay his share of all the expenses of operating, and also one-third of the balance due on a leasehold mortgage they had given on this and other leases, the plaintiff's share of which

would amount to $200. This the plaintiff refused to do, and had the defendants and their agent arrested for conspiracy, whereupon a settlement was arrived at, the principal features of which were a reconveyance to him of his one-third; the payment by plaintiff to defendants of what they had paid the agent; the reference to a court of law of the right of defendants to deduct one-third of the expenses and costs of production from the proceeds of plaintiff's one-third of the oil. The conclusion reached was as above stated, Mr. Justice STERRETT, saying:

"Is the wrongdoer entitled in such a suit to recoup from the value of a mineral as a chattel, the expense of mining or producing it? The mere statement of the proposition in this form suggests the only answer that can be given, unless it is the policy of the law to make the way of the transgressor easy and secure. The relation of the parties to each other, as co-tenants of the lease, and the fact that two of them, after fraudulently dispossessing the other, may have continued to use the property as it would probably have been used if they had all remained in possession, does not mitigate the tort nor qualify the ordinary rule of damages. Co-tenants are bound to respect the rights of each other quite as much as if they were strangers in title."

Sec. 368. Leasehold Interest when Partnership Assets. An assignee of the undivided interest of a partner in a lease takes subject to partnership debts. Chamberlin vs. Dow, Sup. Ct. Pa., 16 W. N. C., 532 (1884).

The case, though an important one and frequently cited, is not given in the official reports. It is to be regretted that the court contented itself with a mere affirmance of the judgment of the lower court, the opinion of the learned judge of which, sustaining exceptions to a previous ruling of his own, while

concise, is not conclusive. The Supreme Court states that the case is ruled by Titusville Novelty Iron Works Appeal, 77 Pa., 103 (1875), which went off upon the validity of a levy upon a leasehold estate, held to be good because the leasehold was a chattel real, the court saying that if it had been of personal chattels, it would have been invalid. While the particular points in each of the cases mentioned are doubtless the law, yet the latter is far from "ruling" the former, and a fuller statement by the court of its reasons would have been of value to the profession.

Sec. 369. Liability in Pennsylvania of Joint Owners for Labor Done or Materials Furnished

Oil or Gas Wells-Act May 6, 1891, P. L.,

P. 41.

This act received careful consideration and construction in the case Murtland vs. Callihan, 2 Pa. Super. Ct. R., 340 (1896). The action was assumpsit by one co-tenant against one of his fellows to recover one-eighth of the cost of operating an oil lease. The act is as follows:

"SECTION 1. Be it enacted, etc., That from and after the passage of this act, any person or persons performing labor of any kind whatever, or furnishing materials for, upon or about any drilling, pumping or producing oil or gas well, shall have the right to bring suit in assumpsit against any joint owner, joint tenant or tenant in common holding an interest in and operating such drilling, pumping or producing oil or gas well, to recover from such joint owner, joint tenant or tenant in common the pro rata share due and owing by such joint owner, joint tenant or tenant in common for any labor done, or materials furnished in, upon or about such drilling, pumping or producing oil or gas well, and the interest of such joint owner, joint tenant or tenant in common shall be subject to levy and sale upon any execution issued to enforce