agent's contract in part and reject it in part ; he must adopt it
as a whole or not at all.

If the principal's name is disclosed at the time of making
the contract he is the one to sue upon the contract. This is
true even if he be a resident of another State than that in
which the agent resided and made the contract.

Agent's Liability. As a general rule an agent is not per-
sonally liable. He becomes liable in the following instances:
i. When he transcends his authority or departs from its pro-
visions. 2. When he expressly pledges his own liability, and



396 THE LAW OF BUSINESS.

in this case he is liable even if he describe himself as agent.
3. When he conceals his character as agent. 4. When he so
conducts himself or his agency as to render his principal inac-
cessible or irresponsible. 5. When he acts in bad faith.

If an agent's acts are open to two constructions, one of
which would bind himself and the other the principal, the law
prefers that construction which binds the principal.

If a party deals with an agent and knows him to be such,
and knowing that the principal is bound, yet takes the agent's
individual note, the principal is discharged.

If a person sign as agent of a company which has no ex-
istence he is personally liable.

If an agent acts without authority he is personally liable.

The case where an agent acts without authority but hon-
estly believes that he has authority may be involved in some
doubt. The test of his personal liability will probably be
found in his means of knowing the facts in the case. If he
could have known, but did not through his negligence or fault
of his own, then he will be held personally liable. Of this
there can be no reasonable doubt. How about the case where
he could not possibly know but what his authority was good,
as in the case of a forged letter of instructions which he could
not detect? He deals with a third party who is also entirely
innocent and a loss occurs. Who is to bear it? This is a
hard case. We believe, however, that it will still fall upon the
person who supposes he is acting as agent, although there are
decisions holding otherwise. The loss must fall between him
and the innocent third party, as it is well settled that the sup-
posed principal, whose name was forged to the letter giving
the authority, can not be held. It seems only just that the
loss should fall upon him who innocently yet falsely assumed
this authority.

The question still remains whether the supposed agent can



EFFECT OF AGENT'S MISCONDUCT. 397

be held on the contract which he may make with a party under
the impression that he has the authority to do so. And it has
been decided that he can be held, but we think that this is
carrying the principle too far and incline to the view of Par-
sons, that the better and more equitable opinion would be that
the contract is wholly void.

Revocation of Authority. Authority may be revoked at
any time, unless the agent have an interest in the business or
the authority is given for a valuable consideration. In case of
a special agent notice of revocation is not necessary, but when
the authority of a general agent is revoked, the principal will
be bound by the further acts of the agent done with third
parties accustomed to dealing with him in that capacity, unless
he make the revocation as notorious as was the fact of the
agency. This is usually done by advertising. Third parties
who never dealt with such agent before the revocation, but
who had reason to believe as a part of the general community
that such agency existed, and had no means of knowing of
the revocation, may hold the principal liable for the acts of the
agent after revocation.

Revocation may be affected expressly, or by some action
relative to the subject-matter that is irreconcilable with the
continuation of the agency. The death of the principal al-
ways revokes the agency unless the agent has an interest in
the property on which his power is to be exercised. The
death of the agent also revokes the authority. If a firm be
agent and one member of the firm die, his estate can not be held
for subsequent misuse of the authority by the surviving partner

Effect of Agent's Misconduct. A principal can not benefit
by the fraudulent misrepresentation of his agent, even if he
be entirely innocent and ignorant of the practice of the fraud,
and if the party dealing with the agent suffer from the fraud
the principal must make compensation.



398 THE LAW OF BUSINESS.

The principal can not take advantage of a better bargain
which his agent has obtained by falsely representing matters
peculiarly within his or his principal's knowledge, although
he be innocent and there be no actual fraud, but the third
party may rescind the contract and recover back money paid
to the principal by reason of such misrepresentation.

Notice to an agent is notice to the principal respecting any
matter distinctly within the scope of the agency, if given
before the transaction begins. Knowledge obtained by the
agent in the course of that particular transaction is notice.

Actions brought by third parties for money paid to an
agent to which the principal has color of right should be
brought against the principal.

If an agent depart from instructions and the principal ac-
cept the results of his act he thus discharges the agent from
personal liability for such deviation.

If a principal proposes to repudiate the act of an agent
who has deviated from instructions he must do so at once and
unequivocally as soon as he is fully acquainted with the cir-
cumstances. If he delay to see whether he may have a
chance of making a profit, or if he exercise acts of owner-
ship over the property, he will be held to have accepted and
confirmed the act of his agent.

An agent can not in general delegate his power to another
unless he is specially empowered to do so.

An agent is bound to exercise such care and diligence in
the management of his principal's business as a reasonable
man under similar circumstances would take of his own.

An agent may not dispute his principal's title unless such
title were obtained by fraud.

An agent must not place himself adverse to the interests
of his principal.

An agent must keep a correct account of all money trans-



POWER OF ATTORNEY. 399

actions and render the same to his principal when called upon
or at proper times, and if he so mix his own and his prin-
cipal's property that he can not render an exact account the
whole of what is thus undistinguishable is held to belong to
the principal. All profits made by an agent belong to the
principal, except the agent's proper compensation. If an
agent perform his services well and truly, according to in-
structions and the principal repudiate and refuse to accept,
the agent may recover from the principal the stipulated price
for his services.

POWER OF ATTORNEY.

An attorney is an agent for a special purpose. A Utter or
power of attorney is authority in writing by which one or
more persons give to one or more other persons power to
transact a particular lawful business for them. The rules of
law governing attorneys acting under special letter of author-
ity are the same as previously recited for agents.

FORM OF GENERAL POWER OF ATTORNEY.

Know all Men by these Presents, That I, Charles
Jolley, of Hebbardsville, Athens Co., O., have constituted, or-
dained and made, and in my stead and place put, and by these
presents do constitute, ordain and make, and in my stead and
place put Elmer Dent, of New Haven, Connecticut, to be my
true, sufficient, and lawful attorney for me and in my name
and stead and to my use, to ask, demand, levy, require, re-
cover, and receive of and from all and every person or persons
whomsoever the same shall or may concern, all and singular
sum and sums of money, debts, goods, wares, merchandise, ef-
fects, and things whatsoever and wheresoever they shall and
may be found due, owing, payable, belonging, and coming
unto me the constituent, by any ways and means whatsoever.

Giving and Hereby Granting Unto Elmer Dent, said



400 THE LAW OF BUSINESS.

attorney, my full and whole strength, power and authority in
and about the premises; and to take and use all due means,
course, and process in the law for the obtaining and recovering
of the same; and of recoveries and receipts thereof, and in my
name to make, seal and execute due acquittance and discharge ;
and for the premises to appear, and the person of me the con-
stituent to represent before any governor, judges, justices, of-
ficers and ministers of the law, whatever, in any court or
courts of judicature, and there on my behalf to defend, answer
and reply unto all actions, causes, matters and things whatso-
ever relating to the premises. Also, to submit any matter in
dispute to arbitration or otherwise ; with full power to make
and substitute one or more attorneys under him, said attorney,
and the same again at pleasure to revoke. And generally to
say, do, act, transact, determine, accomplish, and finish all
matters and things whatsoever relating to the premises as
fully, amply and effectually, to all intents and purposes, as I,
the said constituent, if present,' ought or might personally, al-
though the matter should require more special authority than
is herein comprised, I, the said constituent, ratifying, allowing
and holding firm and valid all and whatsoever Elmer Dent,
said attorney, or his substitutes shall lawfully do, or cause to
be done in and about the premises, by virtue of these presents.
In Witness Whereof, I have hereunto set my hand and
seal this 18th day of September, A. D. 1889.

CHARLES JOLLEY. [L,. S.]
Signed, sealed and delivered in
presence of John Vorhes.

FORM OF SPECIAL POWER OF ATTORNEY.

Know all Men by these Presents, That I, Peter Hib-
bard, of Hebbardsville, Athens Co., O., hereby constitute and
appoint Albert Lawson, of St. Louis, Mo., to be my true and



PARTNERSHIP. 401

lawful attorney for me, and in my name and stead to (here
state the special power to be given), hereby granting unto him.
said attorney, full power and authority, in my name and be-
half, to sign, seal, acknowledge and deliver any and all deeds,
or other instruments in writing, which he may deem neci
or proper in the premises, and otherwise to act in and con-
cerning the premises as fully and effectually as I might do if
personally present.

In Witness Whereof, I have hereunto set my hand and
seal the 18th day of September, A. D. 1889.

PETER HIBBARD, [L. S.]
Signed and sealed in presence
of John J. Coe.

PARTNERSHIP.

A partnership consists of the combination of two or more
persons in business for common profit, each one contributing
his property, money, labor and skill, or one or all of these.

A partnership may be formed by oral or written agree-
ment. It is always best whatever the other relation of the
parties may be to have the partnership agreement clearly eel
forth in writing.

Persons competent to transact business on their own ac-
count may enter into partnership, the disabilities of infancy,
lunacy, coverture, etc., applying equally in both cases.

The members of the partnership are called partners.

An ostensible partner is one whose name is published to
the world as such, and who usually takes an active part in
the business.

A nominal partner is one in name only.

A silent or dormant partner is one really a partner but who
strictly takes no share in the transaction or control of the
partnership business.

A secret partner is one not openly declared to be a partner.
26



402 THE LAW OF BUSINESS.

Dormant and secret partners are liable equally with other
members of the firm when discovered.

Partners must share losses in the same ratio in which they
share profits unless 'there is a written contract to the contrary.

All kinds of property may be held in partnership, and
when real estate is purchased with partnership funds, for
partnership purposes, it will be treated as partnership prop-
erty, and held like personal property, chargeable with the
debts of the firm. A widow of a member of a firm has no
dower in partnership real estate until all the firm debts are
paid. These personal incidents of partnership real estate
cease as soon as the debts of the firm are paid, and all remain-
ing real estate has all the incidents of real property as to
conveyance, inheritance, dower, etc. The firm debts to be
settled before real property assumes its proper character in-
clude debts due from one partner to the other.

A partnership must be voluntary. No partner or majority
of partners can introduce a new member into the firm with-
out the consent of all the others. If one partner sells out his
interest either to a remaining partner or to an outside party it
works a dissolution of the partnership all must agree to
renew it. An employe who receives for his services a stipu-
lated share of the profits is not a partner.

A person who loans money to another to assist him in his
business upon the agreement that he is to receive lawful in-
terest for the use of it and in addition a share of the profits of
business, may, under some circumstances, be considered a
partner, as if a third party who is a creditor of the borrower,
upon a debt which has arisen in the same business which this
money was lent to assist, should sue the lender as a partner
and claim that he took away profits of the business that
might have been used to pay this debt. He will be held as a
partner and he can not set up the defense that the contract



PARTNERSHIP. ^q-j

was usurious, for that is unlawful and he can not rest his de-
fense on his own wrong.

In general, one partner can not bring suit at law against
another concerning any matters growing out of partnership
affairs. These differences must usually ' be referred to courts
of equity. But a partner may sue a co-partner on an agree-
ment to do an act that does not involve partnership account* ;
or on a promise made before the partnership was entered into
to make certain advances of capital to the firm ; or on his
partner's note for advances made to him ; or for damage done
to his private property which the firm had used ; or for a bal-
ance after all their accounts are settled up.

If a man is a member of two firms the firms can not be
parties to a suit, because this person would then be both plain-
tiff and defendant of record in the same action.

If a partner retire from a firm but continue to receive a
share of the profits he is liable, but not if he receive an annuity
or a definite sum not depending in any way upon profits.
When a partner retires from a firm notice should be given by
public advertisement or by letters to the customers of the
firm, or both.

A nominal partner shares neither in profits or losses, but is
general^ held responsible for the debts of the partnership. If
he is not a partner but represents himself to be to certain per-
sons and they, upon this representation, give the firm credit,
he will be held liable as a partner.

The universal rule of law, both in Europe and this country.
is that the whole firm and all the members of a co-partnership
are bound by the acts and contracts of one partner with refer-
ence to partnership business and affairs the act of one is the
act of all. It is even held by good authority that one partner
may make a valid assignment of all the partnership property
to pay the debts of the firm. A partner may sell the whole



404 THE LAW OF BUSINESS.

stock in trade by a single contract, and then apply the pro-
ceeds fraudulently to the payment of his private debts and this
fact will not avoid the sale if the purchaser is wholly innocent
of the fraud. But if a partner dissent from a contract which
his co-partner is making and the third party have notice of
such dissent he could not hold the dissenting partner. A and
B are partners. C applies for credit. A is willing to extend
credit but B objects. A says he will take the risk and credits
C for one hundred dollars. C fails to pay. A must stand the
loss individually ; B can not be held liable.

If I loan money to a partner I can not, as a general rule,
recover from the firm, unless I can prove that the money was
actually applied to the firm's use. But if the partner who bor-
rowed it was apparently clothed with authority to borrow
money for the firm I may recover from the firm, even though
the money was not applied to the firm's use. If I know, or
have opportunity to know, that a partner who borrows money
for his own use and gives me a note in the name of the firm,
is exceeding his authority, I will probably lose the money, un
less the borrower is individually good, for the firm can not be
held on the note.

A purchase or a sale by one partner binds all the others,
no matter what fraudulent intentions the partner may have
had, unless it can be shown that there was collusion between
the partner and the third party, seller or buyer. The power
of one partner to sell is confined, however, to personal effects.
A partner can not mortgage or sell real estate in his own
name. The act of a partner must be within the scope of the
business of the firm in order to bind the firm ; or it must arise
out of and be connected with their usual business. But the
act of one partner in outside matters will bind all if it receives
the firm's or all the partners' sanction and confirmation.

If a firm owe a debt a partner may bind the firm for that



PARTNERSHIP. 405

debt by giving a partnership note, even against the wishes of
the other partners.

A person who buys partnership property from a partner,
knowing it to be a fraud upon the firm, may be held to be a
trustee for the firm.

A release by one partner is a release by all. A release to
one partner is a release to all.

The signature or acknowledgment of one partner, in part-
nership matters, binds the firm.

A notice to one partner is notice to all.

An incoming partner is not presumed to be liable for old
debts, but may be shown to have assumed them. But if a
person succeeds to the interest of a retiring partner and con-
tinues to transact the business as before with the other mem-
bers, he "becomes a member under the original articles of
partnership, unless there is positive evidence to prove the
contrary.

It is not positively determined whether the majority of the
partners can bind the minority against their will. The de-
cisions in favor of this position usually limit the exercise of
this power to matters of minor importance, or to the internal
concerns of the firm. The just rule will probably be found to
draw a distinction between partnerships made by articles and
not determinable at the pleasure of the partners and partner-
ships that may be dissolved at any time by mutual consent. The
majority should not be permitted to govern in the former
class because the minority would be left absolutely without
remedy, and could not even escape by dissolution. But in the
latter class where a dissenting partner may dissolve the part-
nership at will the majority should govern.

Dissolution of partnership does not affect the liability of
partners for former debts, but it prevents the incurring of any
new partnership liability. If a partnership is made for a time



406 THE LAW OF BUSINESS.

certain and one of the partners dissolve it before the expira-
tion of that time, the other may maintain an action against
him for damages, the measure of which will be the profits
that would have accrued to the plaintiff from a continuance of
the partnership business to the end of the time. If a partner-
ship is not to endure for a time certain it may be dissolved at
any time by either partner. It should be done with due
notice to other partners, and at such time as not to cause
damage or injury, and without fraud the law would not
sanction a fraud.

Death of any partner dissolves the partnership. In Eng-
land civil death, as attainder for treason or felony, would have
the same effect but not in this country.

Bankruptcy of the firm or of one partner dissolves the
firm at once.

After a dissolution no partner has a right to bind his
former partners by any new contract. When a partner dies
the partnership property goes to the other members of the
firm for the purposes of settlement. They have all the power
necessary for this particular purpose and no more.

Limited Partnership. Limited partnership is a modern
innovation and purely the creature of statutory enactment.
It may be defined as a partnership in which one or more of
the members put money into the stock of the firm and incur
responsibility and share profits in the proportion to the money
thus invested, and no more. It differs from common law
partnership in this that there every partner is liable for the
whole debts of the firm. The States have nearly all adopted
legislation providing for limited partnerships, and they are in
many cases very useful, enabling men of business capacity
who have only energy, skill, industry and integrity, to secure
capital necessary to carry on a business profitably. Under
the old plan the capitalist would not, in many instances, as-



ASSIGNMENTS. 407

sume the great risk of investing money in a partnership,
against another man's labor and skill, because considerable in-
debtedness might be incurred and he would be liable for the
whole.

The general provisions of these statutes, which differ con-
siderably in the different States, are as follows: 1. There
must be one or more who are genera/ partners, and one or
more who are special partners. 2. The special partners have
not all the powers and duties of active partners, nor do their
names appear in the firm. 3. The special partners must actu-
ally pay in the sum proposed to be contributed by them. 4.
The agreement must be in writing, setting forth the amount
paid in, the names of the partners, and other particulars, and
must be acknowledged before a magistrate or notary, and then
recorded and advertised, so as to give the public distinct
knowledge of the whole arrangement, whom they are dealing
with, the exact liability of each one, and to whom credit is given.

A special partner in a limited partnership must comply
strictly with the requirements of the statute in order to re-
lieve himself of liability for the firm's debts. Any disregard
of the law, or any mistake, even a mistake of the printer who
prints the advertisement, of which he is entirely innocent,
will deprive him of the benefit of the statute. He then be-
comes a partner at common law and liable in solido for the
whole debts of the firm.

ASSIGNMENTS.

An assignment is the transfer by writing of the whole of
any property, real or personal, in possession or in action, or of
any estate, right, title or interest therein. All the property
that a man can possess is assignable. An instrument is now
assigned by writing the following across the face of it : "I
hereby assign, transfer and set over to E. H. Baker, all my



408 THE LAW OF BUSINESS.

right, title and interest, in and to the within document. W.
M. Tugman."

GENERAL FORM OF ASSIGNMENT.

Know all Men by these Presents, That I, John
S. Andrews, for value received, by these presents do assign,
transfer, and set over unto L,. K. Torbet {here describe things
assigned}.

To have and TO hold the same unto the said L,. K. Tor-
bet, his executors, administrators and assigns, forever, to and
for the use of my wife, Tillie Andrews, hereby constituting
and appointing said L,. K. Torbet, my true and lawful attor-
ney irrevocably, in my name, place and stead, for the purposes
aforesaid, to ask, demand, sue for, attach, levy, recover and re-
ceive all such sums of money which now are, or may hereafter
become due, owing and payable for, or on account of, all or
any of the accounts, dues, debts and demands above assigned
to him giving and granting unto the said attorney full power
and authority to do and perform all and every act and thing
whatsoever requisite and necessary, as fully, to all intents and
purposes as I might, or could do if personally present, with
full power of substitution and revocation, hereby ratifying
and confirming all that the said attorney or his substitute
shall lawfully do or cause to be done by virtue hereof.

In Witness Whereof, I have hereunto set my hand and
seal the 20th day of September, A. D. 1889.

JOHN S. ANDREWS.

Executed and delivered in the
presence of J. R. P. Brown.

A note or check is assigned simply by writing the name
of the payee on the back, and this endorsement is a warranty
of the validity of the paper.



assignment deed. 409