there is on every side such abundant evidence of satisfactory progress and national prosperity, it would be unwise to interfere with principles which, in their judgment, have proved beneficial to the general industry of the country.

We humbly offer to Your Majesty's gracious consideration this our First Report.

APPENDIX

TO

Ꭱ Ꭼ Ꮲ Ꮎ Ꭱ Ꭲ,

11

Opinions of Lord Curriehill, Mr. Bramwell,
Mr. Anderson, Mr. Hodgson, and Mr. Slater.

OPINION OF LORD CURRIEHILL

According to the Common Law of this country all the partners of a mercantile company are liable jointly in payment of its debts. This liability arises from the nature of the transactions by which the debts are contracted; because when parties united in partnership acquire the funds of others upon credit, by purchase, loan, or otherwise, they are truly joint contractors in the transaction by which the funds are so acquired, and are also joint owners of these funds; and consequently, they are joint debtors for the price, or borrowed money. Theoretically in the law of Scotland the partnership itself, although it be not incorporated, is held to be the contracting party, and the owner of the partnership funds; yet this is merely a convenient theory, and accordingly in that country, as well as in the other parts of the United Kingdom, the partners are in effect the owners of the funds so acquired, and they are jointly and severally liable for the company's debts.

It is of course competent to the Legislature to dispense with this unlimited liability in exceptional cases; and Parliament, accordingly, does exercise this dispensing power in cases in which this is required for the good of the public. And in cases, in which rights of property are not to be interfered with, but the public welfare appears to require a restriction of the liability of the common law, the Crown, and also the Board of Trade, acting under statutory authority, can competently exercise such a dispensing power. Whether or not this dispensing power might advantageously be transferred to a different tribunal, is perhaps not a matter which we are called upon to consider; but there can be no doubt that such a dispensing power should be entrusted to the wise discretion of some proper tribunal.

Moreover, there does not appear to be, in our existing laws, any rule to prevent a company in its contracts with other parties, to stipulate that some or all of its partners, and their funds, other than those embarked in the partnership as its stock, shall not be liable for the debts incurred by the partnership under these contracts. If a partnership should prevail on other parties to contract with it on such a footing, there is no reason why such a condition of the contracts should not be effectual. Nor would the validity of such a stipulation depend upon one of the contracting parties being a partnership; there being no reason why parties, agreeing to such an immunity in favour of even an individual customer, should not be bound by their contracts. If contracts of this kind be rarely heard of, this is not because they require legislative interference to render them legal, but because few persons will sell, lend, or otherways dispose of their funds on such terms.

Many of the gentlemen, who have favoured us with their opinions, and whose great experience and intelligence eminently qualify them to judge of this matter, strongly deprecate any immunity from this legal liability of partners, as being inimical to the interests of our commerce; while many others of them, similarly qualified, as strongly urge the adoption of certain proposals for authorizing such immunity. These opinions being so conflicting, we cannot exonerate ourselves of the duty we have undertaken by referring to authority; and we must encounter the difficult task of analysing the able and ingenious reasoning upon both sides, in order to ascertain which of these opinions is well founded. Having endeavoured to execute this task, with much anxiety and all the attention in my power, I have arrived at the conclusion that these proposals cannot safely be adopted; and I shall now state the grounds on which this opinion is founded.

One of these suggestions is that the existing rule of the common law should be entirely reversed, by an enactment that in no case should partners be liable for partnership debts beyond the amount of the shares of stock contributed, or . agreed to be contributed, by them respectively. The number of supporters of

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this sweeping proposal is very few. And, I think, that it, at all events, is inadmissible. Were it adopted, then either on the one hand partnerships would seldom be able to obtain credit, in consequence of no one being personally bound to pay their debts; or, if they should obtain credit, they would drive out of the market all individual traders (as there is no proposal to confer such a privilege upon them), and the temptation of the privileged class to embark in hazardous speculations would be very dangerous.

The proposal, which has mainly created the difference of opinion, is of a different kind. Its object is to enable the partners of any mercantile company, without obtaining the authority of Parliament, or of the Crown, or of any other tribunal, and merely by making certain arrangements among themselves, and making certain publications thereof,-to confer upon one or more of their number an immunity from liability for the debts of the partnership. Arrangements of this kind, under the name of partnerships en commandite, have been authorized by the laws of France and other countries on the continent of Europe, and also (during the last twenty or thirty years) of several of the states of America. Partnerships of this kind, with some modifications, were authorized in Ireland by an Act of the Irish Parliament in 1782. But this kind of partnership has never thriven well in Ireland, and of late years it appears to have almost fallen into disuse.

According to the laws of all the countries in which partnership en commandite has been authorized, the parties to it are, on the one hand, one or more partners called Gerants or General Partners, who exclusively manage the business, and are liable universally for the debts of the partnership; and, on the other hand, one or more partners called Commanditaires or Special Partners, who contribute a certain amount of funds to the stock of the company, but take no ostensible part in its management, and are no farther liable for any of its debts, and consequently can lose no more than the in-put stock contributed or agreed to be contributed by them respectively, although the company should become insolvent. But in order to ensure this privilege to a commanditaire several conditions must be complied with, the more important of which are:

That the contract of partnership be in writing, and specify the name of the company, the nature of the business,-the name of the general or managing partner or partners, the amount of the sum to be contributed by the special or commanditaire partner or partners,-and the dates of the commencement and termination of the partnership.

That that document be advertised in certain newspapers, and placarded in certain public offices; and that all alterations on, or renewals of, the contract be also so published.

That no special partner act ostensibly in the management of the business, either as partner of, or as agent for, the company,-although he may give his advice and counsel to the general partner, and may call him to account for his management, and may, even by judicial proceedings, restrain him from misapplying the funds to purposes other than those of the partnership.

That the profits, if there be any, be divided at stated times during the period of the subsistence of the partnership.

That the partnership shall not be dissolved before the termination of that stipulated period.

And that in the event of any of these conditions being contravened, either by what is forbidden being done, or by what is directed to be done by any of the partners being omitted, the special partner shall, after all, forfeit his immunity, and be liable without limitation in payment of all the debts of the company.

This is a general outline of the constitution of a partnership en commandite. The question which we have to consider is, whether the general interests of our commerce would be advanced, or injured, by the introduction into it of such a system? The consideration of this question will be facilitated by, first of all, examining somewhat more closely the true nature and character of the privilege acquired by a commanditaire or special partner, and of its advantages and disadvantages. And it is the more necessary to do this, as it appears to me that many of the gentlemen who have stated their opinions to us, have too hastily taken up imperfect views of this subject; and that, to this cause, may be traced much of the difference already referred to, in their reasonings and conclusions.