the individuals composing the partnership, but if he attempts to collect the debt out of the private assets of a partner his right is secondary to the right of personal creditors of that partner. Just as a partnership creditor has the right to demand that the firm assets be applied to the payment of his debt before they may be used to satisfy the personal debts of a partner, so have the personal creditors of a partner the right to insist upon being paid first out of the private assets of their debtor. EXAMPLES C obtained a judgment 1. A and B were partners in a trading firm. against A individually and an execution was issued. The sheriff could seize the entire property of the firm, and after an accounting between the partners had been had to determine their respective shares, could sell enough of A's property to satisfy the debt. Branch vs. Wiseman, 51 Ind. 1; Clark vs. Cushing, 52 Cal. 717. 2. A, B, and C were sued for a partnership debt, and judgment was obtained against them. The creditor could then levy either upon the partnership property or upon the private property of either of the partners, unless the latter's personal creditors intervened and insisted that the firm assets be first devoted to the payment of the debt. Much vs. Allen, 17 N. Y. 300; Fisher vs. Syfers, 109 Ind. 514. 3. A, a member of the firm of A & B, became a bankrupt. C, a creditor of the firm, sought to file his claim as a creditor of A and to secure a share of A's personal assets. This he was unable to do, as the private creditors of A were entitled to be paid first. Brock vs. Bateman, 25 Ohio St. 609; Halsey vs. Norton, 45 Miss. 703. REVIEW QUESTIONS 1. Hodge, Twitchell, and Rubey, who were partners, decided to purchase a lot on which to erect a building, for $2500, a fair price. Unknown to his partners Twitchell went to the owner who agreed that if Twitchell could secure him a purchaser for $2400 he would pay Twitchell $90. Twitchell reported to his partners the fact that the lot could be purchased for $2400, which purchase was made and the seller of the land paid Twitchell $90. On learning the entire transaction had Hodge and Rubey any further rights? What? 2. A did business under the firm name of A & B, with B's consent, but the property used and held out as firm property really belonged to A. A and B both became bankrupt. There were private creditors of both A and B. and creditors of the apparent firm of A & B. What were the rights of the three classes of creditors against the property held out as firm property? 3. A and B formed a partnership for three years to conduct an illegal gambling house. At the end of the time, all the money acquired in the busi ness was in the hands of A, who refused to pay over any of it to B. Could B recover his share from A? 4. Insley & Shire were partners. Insley attended to the details of the active business, while Shire looked into the affairs of the concern once a month, examining the books. Shire recommended the employment of Milligan as a bookkeeper. Milligan, by false entries in the books, embezzled $10,000, in the course of six months. During that period Insley had neglected his own supervision of the business and Shire, relying upon Milligan's honesty, had taken a trip to Europe. Milligan's fraud was so clever, however, that had both the partners devoted their attention to the business it was doubtful whether they would have discovered the fraud. Each partner sued the other for damages for carelessness and negligence. Which could recover? Why? CHAPTER XXXIX DISSOLUTION OF PARTNERSHIP 341. When Liability Begins and Ends. The liability of partners begins when the partnership is formed, which may be either when an express agreement of partnership is made, or when third persons extend credit upon the strength of the apparent relationship which parties allow to be inferred from their conduct. If a person enters a partnership which is already in existence, he is not liable for debts incurred before his admission to the firm, unless he expressly or impliedly agrees to assume such liability. After a member retires from a firm he is not liable for future debts incurred after his withdrawal, except to former creditors who have not been notified of the change in the firm. On account of this condition, by which the dissolution of a firm may relieve partners of further liability, other than for debts already incurred, it is of the greatest importance to determine the manner in which the dissolution of a firm may be effected. 342. Dissolution, How Effected. A partnership may be dissolved in any of the following ways: I. By agreement II. By act of one party III. By degree of court IV. By operation of law 343. Dissolution by Agreement. The contract of partnership is a voluntary one, and unless a definite time is set for its expiration, it may be terminated at any time by any partner. If, however, a time be set in the contract of partnership, it terminates accordingly, unless all the partners make a further agreement, express or implied, to continue it. If the partnership is formed to accomplish a particular object, it is terminated when the object is accomplished. Notice of dissolution should be given to all the creditors. EXAMPLE Hollander & Kirkwood became partners in the jewelry business for a period of one year from August first, and carried on the business until October of the year following. Kirkwood became dissatisfied, closed the store, and gave public and private notice that the firm had been dissolved. Later Hollander bought goods in the name of the firm and the creditors sought to hold Kirkwood liable. Kirkwood had the right to terminate the partnership and notice which was given to parties dealing with the partnership was sufficient. Solomon vs. Kirkwood, 55 Mich. 256. 344. Dissolution by Act of One Party. The other partners may demand a dissolution if one partner refuses to act with them, or if he engages in other business against their wishes. A dissolution is also effected if one partner sells or assigns his interest in the partnership. The other partners are not obliged to accept the purchaser or assignee as a new partner, because they may have strong objections to making him an agent of the partnership or entrusting its affairs in his hands, which would be the result if he was accepted as a partner. If such a purchaser or assignee is not accepted as a partner, he becomes a tenant in common with the others in the property of the partnership and is entitled to an accounting of the property, and a payment over to him of his interest. * Should a partner sell or assign his interest in, or otherwise terminate, a partnership created for a fixed period, before the agreed time of termination and without cause, he is guilty of breach of contract, and may be called upon to pay damages to the remaining partners for any injury caused them. EXAMPLE Harvey and Howell were partners in a retail store. Howell went to a wholesale house in Philadelphia and bought a line of goods at a very low price. On his return to his home, he discovered that prices in that line of merchandise were rapidly advancing, and gave notice to Harvey of the dissolution of the partnership, retaining possession of the goods and taking in his son as a partner. The prices continued to advance and he made a large amount of money. In an accounting between Harvey and Howell, Howell offered to pay Harvey the value of one-half the merchandise at the time of the notice of dissolution. Harvey, however, was entitled to damages for the termination of the partnership to the amount of one-half of the profits occasioned by the advance in price of goods, the dissolution not having been in good faith. Howell vs. Harvey, 5 Ark. 270. 345. Dissolution by Degree of Court. A court of equity will, for just and reasonable causes, decree a dissolution of a partnership, upon the petition of a member. When such a dissolution is decreed, a receiver is usually appointed, who takes charge of the firm's business, collects all debts due to it, pays its obligations, converts the assets of various kinds into money, and divides the balance according to the interest of each partner. EXAMPLE Gerard and Gateau were partners in the manufacture of zinc roofing. Gerard brought suit asking for a dissolution of the partnership on the grounds that Gateau was quick-tempered, was insolent and over-bearing to customers, had made overcharges for work which injured the reputation of the firm, and had employed as a salesman his nephew, whose work had caused the firm losses and finally necessitated his discharge. These grounds were held insufficient to prevent co-operation between reasonable men, and as the business was profitable and the period of ten years for which it had been formed had not elapsed, the court refused to decree a dissolution. Gerard vs. Gateau, 84 Ill. 121. ness. The grounds for granting a decree of dissolution are, in general, that it has become impracticable to continue the busiOne of the partners may be unable to carry out his part fully, or the undertaking may be visionary; one of the partners may be so intemperate or immoral or unreliable as to imperil the success of the business, or he may have wrongfully excluded the others from their share in the management of the business, or may deny them access to books of account; and these wrongful acts will justify a court in ordering a dissolution of the firm and a distribution of its assets. EXAMPLE The firm of Groth and Payment was unable to succeed financially because one of the partners devoted a large part of his time to gambling and drinking, frequently staying away from the business for several days at a time, and frequently drawing large sums from the firm's account, to the detriment of the business. The other partner could secure a dissolution of the firm, even though the period for which it had been created had not elapsed, by a proceeding in a court of equity. Groth vs. Payment, 79 Mich. 290. 346. Dissolution by Operation of Law. Any change in the legal status of a partner, so that he is incapable of acting for |