discharge of retiring partners from their liability, but wherever there is an express agreement that a creditor shall accept the liability of the retiring partner, instead of that of the remaining firm, the general rule is of course waived by the special agreement. (See Kirwan v. Kirwan, 2 Cr. & Mee. 623; and Thompson v. Percival, 2 B. & Adol. 927, 22 E. C. L. R.)

In Farrar v. Deflinne, 1 Car. & Kir. 580, 47 E. C. L. R., the defendant had been a dormant partner, but ceased to be so before the debts accrued for *which the action was brought. The [*257] plaintiff had known of the partnership, but the dissolution not having been advertised, he had no knowledge of it. Mr. Justice Cresswell said, in summing up the case, "The law stands thus: if there had been a notorious partnership, but no notice had been given of the dissolution thereof, the defendant would have been liable. If there had been a general notice, that would have been sufficient for all but actual customers; these, however, must have had some kind of actual notice. If the partnership had remained profoundly secret, the defendant could not have been affected by transactions which took place after he had retired; but if the partnership had become known to any person or persons, he would be in the same situation as to all such persons, as if the existence of the partnership had been notorious." (See also Evans v. Drummond, 4 Esp. 88, 90, per Lord Kenyon, C. J.)

Where bills are drawn by partners in trade, the general authority implied by the custom of merchants binds each partner: but not so where the partnership is not of a commercial nature, such as attor neys for instance, in which case it must be shown that the party accepting or drawing had special authority to do so, even where it is done in the name of the firm. (Hedley v. Bainbridge, 3 Q. B. 316, 43 E. C. L. R.; Levy v. Pyne, 1 Car. & Marsh. 453, 41 E. C. L. R.) Where one partner signs for the firm, he is not separately liable, but the firm alone. (Exparte Buckley in re Clarke, 14 M. & W. 469, overruling Hall v. Smith, 1 B. & Cr. 407, 8 E. C. L. R.)

Partners are not liable for the fraudulent contracts of a copartner, if they can prove the knowledge of the fraud by the plaintiff. (Musgrave v. Drake, 5 Q. B. 185, 48 E. C. L. R.) Neither are they bound where an express warning was given to the plaintiff by the partners sought to be charged.

For the rules of pleading in actions by and against partners, see 1 Saund, 291, b. et. seq.

CONTRACTS BY PUBLIC COMPANIES.

The peculiarities attending contracts to which public companies are parties, have acquired greatly increased importance from the tendency of commercial enterprise since these lectures were written, and it is requisite that the principles which govern them be

developed.

[*258]

Most joint stock companies formed since November 1, 1844, are now regulated by the 7 & 8 Vict. c. 110, and according to the 2d section.

Except where the provisions of this act are expressly applied to partnerships existing before the said first day of November, it shall be held to apply only to partnerships, the formation of which shall be commenced after that date: provided, nevertheless, that, except as hereinafter specially provided, this act shall not extend to any company for executing any bridge, road, cut, canal, reservoir, aqueduct, waterwork, navigation, tunnel, archway, railway, pier, port, harbour, ferry, or dock, which cannot be carried into execution without obtaining the authority of Parliament; provided, also, that except as hereinafter is specially provided, this act shall not extend to any company incorporated, or which may be hereafter incorporated, by statute or charter, nor to any company authorized or which may be hereafter authorized, by statute or letters-patent, to sue and be sued in the name of some officer or person."

Now under this act it is required that all companies shall be registered first provisionally, and afterwards completely registered. And before provisional registration (sect. 24), the promoters of a company are not to allot shares, issue scrip, or receive deposits, either absolutely or conditionally, or make any contract whatsoever in the name, or on the behalf of such intended company, under the penalty of a sum not exceeding twenty-five pounds, recoverable by any person by action of debt.

When provisionally registered the intended company may open subscription lists, allot shares, and receive deposits of not more than 10s. per cent. on every share; and also in companies executing any "railway" and other works by act of parliament, such further deposit as the standing orders require. But they are "not to make calls, not to purchase, contract for, or hold lands, nor to enter into contracts for any services, or for the execution of any work, or for the supply any stores, except such services and stores, or other things, as are

of

necessarily *required for the establishment of the company;

[*259] and except any purchase or other contract to be made con

ditional on the completion of the company, and to take effect after the certificate of complete registration, act of parliament, or charter, or letters-patent, shall have been obtained; and except, in the case of companies for executing such works as aforesaid, contracts for services in making surveys and performing all other acts necessary for obtaining an act of incorporation, or other act for enabling the company to execute such works."

All contracts, therefore, which do not fall within the pale of these sections are illegal and cannot be enforced.

When the company is completely registered, if it be not one which requires an act of parliament, it is fully empowered to act and contract like any other company, subject, however, to the proviso contained in section 44, which requires that "except contracts for the purchase of any article, the payment or consideration for which doth exceed the sum of fifty pounds, or for any service, the period of which doth not exceed six months, and the consideration for which doth not exceed fifty pounds, and except bills of exchange and promissory notes: be it enacted, that every such contract shall be in writing, and signed at least by two of the directors of the company, on whose behalf the same shall be entered into, and shall be sealed with the common seal thereof, or signed by some officer of the company on its behalf, to be thereunto expressly authorized by some minute or resolution of the board of directors applying to the particular case." All contracts under 507. are to be entered into by some officer authorized by the company, who is to report it to the secretary, under pain of forfeiting its amount.

There are similar provisions with respect to notes and bills of exchange, and every deed must be signed by two directors of the company. Ss. 45 and 46.

No contract, therefore, can be enforced which does not comply with these requirements. It is worthy of remark that these clauses will, in all probability, effect considerable change in the mode in which agreements are drawn to which companies are parties, and which ought not to be in the name of trustees, but according to [*260] the express terms of this section in that of two directors of the company. Such are the regulations respecting contracts which affect new joint-stock companies falling within the description given in the above cited section.

The act also provides with regard to the sale of scrip, that "until such joint-stock company shall have obtained a certificate of complete

registration, and until any such subscriber or person shall have been duly registered as a shareholder in the said registry office, it shall not be lawful for any such person to dispose, by sale or mortgage, of such share, or of any interest therein, and that every contract for, or sale or disposal of such share or interest shall be void, and that every person entering into such contract shall forfeit a sum not exceeding 107.

com

It has been decided by the Court of Exchequer, in the case still unreported, of Young v. Smith, on Jan. 26, 1846 [15 M. & W. 121], that this section does not relate to railway companies. In other panies within the scope of the act, all such sales are illegal and void; and, therefore, were any such sales effected, the vendee could not recover the purchase-money from the vendor upon the principles already fully discussed in treating of illegal contracts.

The case, however, is different where the sale of scrip has been legal, and where the undertaking having been abandoned, there is a failure of consideration. The right of action by the vendee to recover the purchase-money depends on two main points: first, whether the vendee had become a partner in the concern, in which case it is clear that no action will lie against his copartners; and if that be not so, then, secondly, whether the company have failed to carry out the terms of the prospectus, or other professions, on the faith of which the purchase was made.

The

Now the mere purchase of scrip will not constitute the purchaser a partner in the undertaking, unless he signs the subscribers' agreement or subscription contract, and thereby embarks in the concern. case of Fox v. Clifton, 6 Bing. 776, is a leading authority on this point, and it is there held that persons are not partners who have not been entitled at any time to demand a share *of profits, and where the conditions are not fulfilled upon which they subscribed, and where the matter has proceeded no farther than an offer to become partners in a projected concern which has proved abortive before the period at which the partnership was to com

mence.

[261]

And the judgment in that case limits partnership to "those subscribers, who, by executing the deed, have declared themselves partners, and to any who have by their subsequent conduct recognised and adopted the acts and contracts of the directors," thus holding themselves out as such.

These, as regards public companies, are the predicaments of partnership; and other cases have borne out this doctrine.

In Holmes v. Higgins, 1 B. & C. 74, several persons subscribed to

an undertaking for forming a railway and obtaining an act of parliament for that purpose. A bill was brought into parliament accordingly, but met with opposition, but was ultimately withdrawn. It was held that the persons so subscribing were an association of persons for a common purpose, and therefore partners in the undertaking.

The recent case of Lucas v. Beach, Bart., 1 M. & Gr. 417, was that of an inchoate partnership for the purpose of obtaining an act of parliament; the plaintiff was held to be a partner, having subscribed for two shares, and therefore disentitled to sue the committee for work and labour done. Holmes v. Higgins was cited and confirmed by Tindal, C. J., in the judgment.

In Maudsley v. Leblanc, 2 Car. & Pay. 409, Bayley, J., held that, though there was no evidence that the defendant had, according to the terms of the prospectus, executed the deed, "he should take it for granted that he had done so that he was liable as a partner, he was at the meetings of the directors acting from time to time, and went to see the works in progress and therefore it was impossible to say he was not a partner." See also Beech v. Eyre, 5 M. & Gr. 415.

In Bourne v. Freeth, 9 B. & Gr. 632, on the other hand, it was held that where a prospectus had been signed by the defendant merely *importing that a company would be formed, this was not [#262] sufficient alone to constitute a partnership, inasmuch as the defendant "had not thereby given authority to any person to carry on the business on his account." Dickenson v. Valpy, 10 B. & Cr. 141, to which we shall presently refer, is to the same effect. See also Meigh v. Clinton, 11 A. & E. 418; and Pitchford v. Davis, 5 M. & W. 2.

These cases fully establish that there must be some act, express or constructive, constituting a man a member of a company, to render him a partner at all.

If the purchaser of scrip be not a partner, the next question is, have the company failed to fulfil their implied contract, and to what extent they are liable in the event of failure.

This must necessarily depend in great measure, on the facts of each case. Where, however, the company have acted bona fide, and have not failed in efforts to carry out the undertaking and give effect to the contract with the scrip-holder, there is but one case which goes the length of deciding that they are liable, and it is submitted that that case cannot be sustained.

In Kempson v. Saunders, 4 Bing. 5, the defendant sold the plain