SECTION IX. MANAGEMENT OF THE PARTNERSHIP. BRITISH LAW. All partners All the partners have equal rights and equal duties to perentitled to management. form in the management of the partnership, and in the absence of special agreement each partner has an equal deliberative voice in all the affairs of the concern, and has a right to be consulted respecting them. No partner can be deprived of this right unless he himself has renounced it in favour of others (a). Majority rule All questions relating to the administration of the partnerthe minority. ship, and unprovided for by the articles of partnership, are subject to the decision of the majority of partners, and the majority, acting fairly and bond fide, have a right to conduct the business notwithstanding the dissent of the minority. No change in essential conditions except by all the partners. No change, however, can be made in the essential conditions of the partnership except by the unanimous consent of all the partners. So it would not be competent for the majority in a company constituted to construct a railway between two places to decide to make a railway between two other places, or for the majority in a company constituted for fire and life insurance to undertake marine risks also; nor is it competent for the majority in case of dispute to give the choice to the dissentient party to accept or retire (b). FOREIGN LAWS. France.-Every partner has an equal right to the administration of partnership affairs, and he cannot be deprived of this right unless he himself wishes to entrust it to others in his stead. Every partner has a deliberative voice. The votes are taken by head and not in proportion to the property invested, and the majority will bind the minority. But this power of the majority extends only to administrative questions. The majority (a) Domat's Civil Law, 1. 1, tit. viii. 6; Oldaker v. Lavender, 6 Sim. 239; Code Napoléon, § 1859. (b) Bagshaw v. The East Union Railway Company, 9 Hare, 326; Bugon v. Metropolitan Saloon Omnibus Com pany, 3 De Gex & J. 123; Australia 390. could not change the primary or constitutory basis of the partnership. There must be unanimity among all the partners, in order to change any clause of the deed which was itself the work of all the parties in the transaction. In partnerships in collective name the partners often agree to entrust the whole management to one or more partners, who are called gérants. When the powers of the gérant are not determined, he may, according to the object of the partnership, purchase and sell, freight ships, insure, and do everything necessary for the existence of the partnership; but he cannot go beyond his administrative capacity. Thus, in a manufacture, the gérant might purchase merchandise, and sign bills for them. He might sell the manufactured articles, and even the raw material purchased to manufacture them, because in some cases the same may be resold for a profit; and he has the right to recover the sums due to the partnership. But the sale, without the authority of his copartners, of the house and warehouses. where the trade or manufacture is carried on, would be null as regards third parties, who can never think that his powers extend to the sale of the establishment itself. It would be the same as regards the mortgage of real estates belonging to the partnership, though the gérant would not violate this rule by selling an estate which was purchased for the purpose of resale. The gérant could not alone consent to a cession of all partnership property in favour of its creditors. And as the gérant can only bind the partnership in virtue of the powers conferred upon him, it follows that he can bind the partnership towards third persons only for what he has done in his capacity of gérant; though third parties would be bound for their engagements towards the partnership. The gérant properly stands in the capacity of agent for the partnership. A partner expressly nominated as gérant cannot substitute another in his stead without the formal consent of all the partners. Where a gérant has been appointed, the copartners have no right to interfere in the management. They have only a right to watch over the gérants, and to inspect the books (a). Germany. The management of the partnership may be con- All the part fined by the deed to one or more partners; and if one or more VOL. I. (a) Pardessus, Droit Commercial, tom. iii., § 1013. ners have management. equal right of partners have been appointed for the purpose, they cannot be deprived of their special right without a rightful cause. Where no one is specially appointed, all the partners have equal right to carry on the business of the partnership. For anything which is not within the limits of the partnership the consent of all the partners must be obtained. Unanimity is also required in the appointment of the gérant, or managing partner (a). Authority of managing partner. Rights of copartners restricted when manag ing partners are appointed. Portugal.-Every partner is held to be a managing partner unless otherwise provided for by the deed. When in conformity with the deed the partners have confided to one of themselves the management of the partnership, they are at liberty to extend or restrict his authority. The managing partner may do all that belongs to the administration of the partnership notwithstanding the opposition of other partners. But if the managing partner abuses his authority, the other partners may nominate another to inspect his management, or demand a dissolution of the partnership (b). Spain. Unless otherwise provided, all the partners have the right to concur in the general administration of the partnership. When some of the partners have been specially entrusted with the management of the partnership, those who do not possess such authority cannot counteract their orders or interfere with their management. The management of the business cannot be withdrawn from the partners appointed by the deed, except upon a valid cause (c). Capital stock absolute property of all the partners. What is capital stock. SECTION X. INTEREST OF PARTNER IN THE CAPITAL STOCK. BRITISH LAW. Whatever is brought by each partner into the joint stock must be brought absolutely and unconditionally, and not as a loan or for the temporary use of the partnership. The partnership property consists of the original stock, whether personal or real property, or both; and of all the additions made to it in (a) German Code, §§ 99-104. (c) Spanish Code, §§ 304-307. the course of trade (a). The good-will of a mercantile establishment forms part of the partnership stock (b); and so a trade mark (c). All the partners have a joint and mutual interest in all the stock and effects of the partnership, including all that each partner has brought into it, and all that may have been acquired during the continuation of the partnership (d). But no partner has an exclusive right over any part of the joint effects until a balance of accounts be struck between him and his copartner (e). Property, although used and risked for common profits of the partners, may still remain the private property of one of them. The profits accruing from it may be divided, and yet not the ownership of property (f). A community of profit and loss does not necessarily carry with it a community in the capital stock; but in the absence of express contract to the contrary, such community will always be presumed (g). So an agreement between an author and a publisher, by which the publisher agreed to publish the work at his own expense and risk, and after deducting all charges and expenses, and a per-centage on the gross amount of the sale, for commission and risk of bad debts, the profits remaining to be equally divided, would not constitute a partnership in the unsold copies of the work, but. only in the profits of the sale (h). Each partner has a specific lien on the stock. Each partner has a specific lien on the partnership stock, not only for the amount of his share, but for all he may have advanced beyond that amount for the use of the partnership; partnership and also for what may have been abstracted by his co-partner beyond the amount of his share (i). So the surviving partner has a lien on the share of the deceased partner for the payment of the debts of the partnership (k). Notwithstanding the joint tenancy in the partnership stock, No survivor (a) Crawshay v. Collins, 2 Russ. 339; Nerot v. Burnard, 4 Russ. 247; Bone v. Pollard, 24 Beav. 283; Forster . Hale, 5 Ves. 308. (b) Kennedy v. Lee, 3 Meriv. 441; Shackle v. Baker, 14 Ves. 468. (e) Hine v. Lart, 10 Jur. 106. (d) West v. Skigs, 1 Ves. 242. (e) Lingen v. Simpson, 1 Sim. & Stu. 600; Fox v. Hanbury, Cowp. 445; Garbett v. Veale, 5 Q. B. 408. (f) Ex parte Hamper, 17 Ves. 404; (g) Reid v. Hollinshead, 4 B. & C. 446. ship in mercantile partnership. Real estate is converted into personal estate. Real estate not purchased with partner ship fund not so converted. Real estates devised to partner not partnership property. Partners joint tenants. no survivorship takes place in mercantile partnerships; in case of death of one of the partners, the property vests in the representatives of the deceased partner (a). In the absence of a specific agreement to the contrary, real estates purchased with partnership funds, for partnership purposes, is converted into personal estate (b). But real estate purchased with partnership property, but not for partnership purposes, is not converted into personalty (c). Real estate brought into partnership by a partner, under an agreement that during the partnership, and, if necessary, for partnership purposes, after the expiration of the partnership should be considered as personal estate, but not purchased with partnership fund, and not required to be sold for partnership debts, or for any of the other purposes of the partnership, is not converted into personal estate as between heirs and personal representatives (d). Real estates devised to partners is not partnership property, though used for partnership purposes (e). Though partners purchase with partnership funds, the equity of redemption of mortgages devised to them, the equity of redemption follows the mortgage, and does not become partnership property. FOREIGN LAWS. France. Each partner must guarantee to his co-partner the property or the use of the funds he has invested. United States of America.-Partners are joint tenants in their stock in trade, but without the jus accrescendi or right of survivorship. On the death of one partner, his representatives become tenants in common with the survivor; and with respect to choses in action, survivorship so far exists at law, that the remedy to reduce them into possession vests exclusively in the survivor for the benefit of all the parties in interest. But no partner has an exclusive right to any part of the joint stock until a balance of accounts be struck between him and his (a) Jackson v. Jackson, 9 Ves. jun. Rep. Ch. 591. (b) Townsend v. Devaynes, 1 Mont. Partn. 97; Morris v. Kearsley, 2 Y. & Col. 139; Broom v. Broom, 3 My. & K. 443; Bissett on Partnerships, p. 56; Houghton v. Houghton, 11 Sim. 491; Thornton v. Dixon, 3 Bro. C. C. 199. (c) Randall v. Randall, 7 Sim. 271; Phillips v. Phillips, 1 My. & K. 649; Holroyd v. Holroyd, 28 L. J. Ch. 902. (d) Cookson v. Cookson, 8 Sim. 529. (e) Phillips v. Phillips, 1 My.& K.649. |