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النشر الإلكتروني

SECTION 14. SHARE IN PROFIT AND Loss.

All partners are supposed to share equally in profit and loss whatever their contributions to the capital stock, unless other provisions are made. The reason for the rule depends on the mixed considerations of service, influence, knowledge, experience, and credit, as well as capital to be advanced, that together constitute the inducemnet to the formation of the partnership. But if shares in the profits are fixed according to the capital advanced or otherwise, the losses are presumed to be borne in the same fixed proportion. The fact that one partner has put nothing into the business but his services has no effect on his liability to his partners to share in the general loss. And although the capital advanced becomes the property of the firm yet its value constitutes a debt of the firm due the partners on dissolution.

But capital draws no interest or rent, services draw no salary, and the use of property contributed though the title to the property itself is reserved, draws no rent. This rule, of course, applies only when there are no specific stipulations. By agreement a person may be a partner and receive compensation for his services and interest on money either advanced as capital or as a loan. The general rule in all matters of partnership in which third parties are not interested is that the law is silent where the partnership contract speaks.

SECTION 15. FAILURE IN THE CONTRIBUTION OF CAPITAL.

When capital is paid in, the partners cannot withdraw it before dissolution; advances made to partners are loans, not withdrawals of capital If a partner

fails to pay all of his share of the capital, but a part is accepted and used, and the business launched, he is not liable to be excluded from the partnership, but he will be held bound to pay interest on the amount remaining unpaid.^ And if the losses are to be sustained in proportion to each member's share in the capital, the fact that a member fails to pay in all his capital will not lessen his share of the losses, and so if these losses consume a portion or the whole of the capital of the firm, he must make good his deficiency in capital."

SECTION 16. Loss OF THE PROPERTY WHOSE USE IS CONTRIBUTED.

If one partner contributes the use of a boat, team of horses, building, or machine or other property, the accidental destruction of this property will be his loss, since the title is in him. While in a few jurisdictions it has been held that the loss of money invested as capital was not to be shared by a partner who contributed only his skill or experience, the ruling evidently must be based on the ground of an implied contract. The loss of money in trade evidently is not "lost money" in the sense of the loss of a building by fire or the loss of a horse by accident or by robbery. So if one of many partners contributes expressly only the use of capital to the firm in money, and this is "lost" in trade, he is yet entitled to its return on dissolution of the firm. It is a trade loss from misfortune or mismanagement of the firm to which each member stands bound to contribute his share. If the use only of money is contributed, the contributor has lost his interest on the same and 4 • Krapp vs. Aderholt, 42 Kan., 247. Sangston vs. Hack, 52 Md., 173.

his opportunity to make profitable investments, while the other members have lost their labor and skill or rather their opportunity to employ them to advantage, and the courts will assume that these in equity balance or were supposed to when the parties made the contract, and the loss of the money capital, which is the loss by the firm of what has been property of the firm without limitation upon its disposition, should be shared by all alike who constitute the firm."

And in fact there can be no distinction between contributing the use of money and contributing the money itself except as to the time of repayment, which, if it is before dissolution, makes the advancement a loan. There is no way to keep and use money at the same time; the use of money is compensated by interest or a share in the profits, but the loan to and use by another constitutes a debt as to the principal sum as well as the interest or profit share, and no title, of course, can be retained in the money. It is only when money is deposited with another for safe keeping without right of use that the title is retained and no debt incurred. It is otherwise with goods, chattels, and lands. These may be either turned over absolutely into the hands of the firm subject to consumption, to sale or other disposition as property of the firm, and to be treated as money would be treated, or it is in the power of the owner to retain his title and contribute the use in specie only, in which latter case, he sustains the risk incident to the ownership. So if a partner is accidentally killed in conducting the partnership business his kin have no claim against the partnership. His skill and abilities are not a part of the firm capital.

• Juilliard vs. Orem, 70 Md., 465; Whitcomb vs. Converse, 119 Mass., 38; 20 Am. Rep., 311;

Vol. VIII.-8.

Woelfel vs. Thompson, 173
Mass., 301; but see Curd vs.
Ridgway, 9 Ky. L. Rep., 237.

SECTION 17. PROPERTY PURCHASED WITH FIRM

ASSETS.

All property bought with funds belonging to a firm is prima facie, at least, the property of the firm, though the title to such property be taken in the individual names of one or more of the partners.' Thus land bought with partnership funds is treated as partnership property. Where one partner puts his real estate at a fixed valuation into the partnership, it becomes a part of the partnership property without an actual conveyance by the owner, who thereupon holds the title as trustee for the firm. A bona fide purchaser for value without notice may, of course, rely on the record title while possession remains in the hands of the record owner.10

SECTION 18. NATURE OF A PARTNER'S INTEREST IN THE PROPERTY.

The partnership property belongs to the firm, and a partner has an interest in it depending on his share of the capital and his share of the profits, and the value of these shares depends on the relationship between the liabilities and assets of the firm. It is evident that this value is of a varying and uncertain character. Not till an account is taken can it be estimated, and not even then determined for purposes of division except by consent and agreement of all the partners. The property must be sold, debts collected, and creditors paid, and the whole partner

Bopp vs. Fox, 63 Ill., 540;
Holmes vs. Stix, 104 Ky., 351;
Williams vs. Gillies, 75 N. Y.,
197; Kruschke vs. Stefan, 83
Wis., 373.

8 Hammond vs. Hopkins, 143 U.
S., 224.

Wiegand vs. Copeland, 14 Fed.

Rep., 118; Riedburg vs.
Schmitt, 71 Wis., 644.

10 Robinson Bank vs. Miller, 153
Ill., 244; 46 Am. St. Rep., 883;
Hiscock vs. Phelps, 45 N. Y.,
97; Page vs. Thomas, 43 Ohio
St., 38; 54 Am. Rep., 788.

ship business wound up before a partner's share in the partnership property is legally fixed without his consent. For it is a rule of law that the property cannot be divided in specie unless by unanimous agreement of all the members, with the exception of land remaining after debts and capital have been paid. After all firm liabilities have been met the right of partition inheres in land not bought for speculation. The consequence is that when a partner sells his individual share, or it is sold on execution, the purchaser takes no right to individual property, but only the right to the proceeds that would accrue to the original owner of the share, and must take them as his representative in the same manner after the winding up and settlement of the partnership affairs. Nor does the purchase of the partner's share on voluntary or forced sale constitute the purchaser a partner, but does effect a dissolution of the partnership and entitles the purchaser, on the winding up of the affairs of the firm by the other partners, to an accounting, and this may be compelled by a bill in equity. Real estate bought and sold during the existence of a partnership is not subject to the dower rights of the wives of the partners, but on dissolution of the firm by death, if not otherwise, the real estate not necessarily sold to pay debts of the firm is subject to such rights. Nor could a partner avoid his wife's dower right by putting his individual real estate into the partnership as capital without her joining in the deed of conveyance, and it would seem that he ought not by his individual act, not in furtherance of the purposes of the partnership, dispose of his individual interest in the real estate of the firm, without his wife's joining in the deed to his interest in the land; in other

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