Chapter LIX.
Partnership.
§1. A partnership is an association formed by contract between two or more persons, for joining their money, labor, or skill, in lawful business, the profits to be divided and the loss to be borne by the partners in certain proportions. It is a partnership if one furnishes the funds and the other performs the labor; or if, when no money is necessary, each agrees to do his share of the labor. A partnership or association of this kind is denominated a firm, or house.
§2. The act of any one of the firm is considered the act of all, and binds all; and either of them is liable for all the debts. But if a bill or note is drawn by one partner in his own name only, without appearing to be on partnership account, he alone is bound, though it were made for a partnership purpose. A partner buying goods on his own account for his individual use, is alone liable; but if they afterward go to the use of the partnership, all become responsible.
§3. Sometimes a person agrees to receive, by way of rent, a portion of the profits of a farm, a tavern, or a manufactory; or an agent or a clerk receives a share of the profits for his labor. But as there is in these cases no partnership, the persons who buy the stock and hire the labor are alone responsible.
§4. All the partners must unite in suing and being sued. One who should conceal his name so as not to be known when the debt is contracted, may be sued when discovered to be a partner, if he shares in the profits of the trade.
§5. A partner cannot sell his interest to another person, who is to take his place in the partnership, without the consent of all the partners: nor can a partner, without such consent, withdraw when he pleases, and dissolve the partnership, except in cases in which the partnership is without any definite term. A partnership is dissolved by the death, insanity, bankruptcy, or other inability of one of the parties.
§6. When a partnership is dissolved by the withdrawal of any of the partners, notice of dissolution ought to be duly published, or a firm may be bound by a contract made by one partner in the usual course of business and in the name of the firm, with a person who contracted on the faith of the partnership, and who had no notice of the dissolution. The same notice is necessary to protect a retiring partner from continued responsibility. And even if due notice is given, yet, if he willingly suffers his name to continue in the firm, or in the title of the firm over the door of the shop or store, he may in certain cases be liable.
§7. In some of the states, a partnership may be formed by a number of persons, some of whom are to be responsible only to a limited amount; and their names are not to be used in the firm. Before a partnership of this kind can do business, a writing and certificate signed by the parties stating the terms of partnership, and the amount for which the special partners (as they are called) are to be responsible must be recorded. The terms of partnership must also be published in a newspaper.
§8. In these limited partnerships, as they are termed, the special partners are liable only to the amount stated in the terms of partnership. The other partners, called general partners, whose names only are used, and who transact the business, are liable for all the debts contracted, as in ordinary partnerships. If such partnership is to be dissolved by act of the parties before the expiration of the term for which it is formed, notice of dissolution must be filed and recorded, and published in a newspaper. Such is the law in the state of New York; and it is presumed to agree, in its most essential provisions, with the laws of the other states in which these partnerships are authorized.