ner be insolvent, the effects in the hands of the representatives of the deceased partner are liable, in equity, for the partnership debts; and it is no objection to the claim that the

creditor has not used due diligence in prosecuting the *58 surviving partner before *his insolvency; for the debt is joint and several, and equally a charge upon the assets of the deceased partner, and against the person and estate of the survivor.a

(3.) By the insanity of a partner.

Insanity does not work a dissolution of partnership, ipso facto. It depends upon circumstances under the sound discretion of the court of chancery. But if the lunacy be confirmed and duly ascertained, it may now be laid down as a general rule, notwithstanding the decision of Lord Talbot to the contrary, that as partners are respectively to contribute skill and industry, as well as capital, to the business of the concern, the inability of a partner, by reason of lunacy, is a sound and a just cause for the interference of the court of chancery to dissolve the partnership, and have the accounts taken, and the property duly applied.b (1)

1 Swanst. Rep. 480. Crawshay v. Maule, ibid. 506. Murray v. Mumford, 6 Cowen, 441. 16 Johns. Rep. 493.

Hamersley v. Lambert, 2 Johns. Ch. Rep. 508. Miss Sleech's Case, in Devaynes v. Noble, 1 Merivale's Rep. 539. The creditors of the firm may sue the surviving partner, and the representatives of the deceased partner, for payment out of the assets of the deceased, and without showing that the surviving partner was insolvent. Wilkinson v. Henderson, 1 Mylne & Keene, 582. A surviving partner may set off a debt of the partnership against a demand against him in his own right, for he has the exclusive control and settlement of the business. Slipper v. Lane, 5 Term R. 493. Craig v. Henderson, 2 Barr Penn. R. 261. b Wrexham v. Huddleston, cited in 1 Swanst. Rep. 514. note. Sayer v. Bennet, 1 Cox's Cas. 107. Waters v. Taylor, 2 Ves. & Bea. 301. Jones v. Noy, 2 Mylne & Keene, 125. Milne v. Bartlett, Atkin & Wyatt's Rep. April, 1839. See vol. ii. lec. 41. an finem. The general rule mentioned by Spencer, J., in 15 Johns. 57, that insanity works a dissolution of a partnership, must be taken with the limitations in the text. Story on Partnership, 423-427.

(1) A decree of dissolution on the ground of lunacy, will not have a retrospective effect; not even to the time of filing the bill. Besch v. Frolick, 1 Phillips' Ch. R. 172.

An inquisition of lunacy found against a partner, per se, dissolves the firm. Isler v. Baker, 6 Humph. R. 85.

(4.) By bankruptcy of a partner.

Bankruptcy or insolvency, either of the whole partnership or of an individual member, dissolves a partnership; and the assignees become, as to the interest of the bankrupt or insolvent partner, tenants in common with the solvent partners, subject to all the rights of the other partners; and a community of interest exists between them, until the affairs of the company are settled. The dissolution of the partnership follows necessarily, under those statutes of bankruptcy which avoid all the acts of the bankrupt from the day of his bankruptcy, and from the necessity of the thing, as all the property of the bankrupt is vested in *his assignees, *59 who cannot carry on the trade.a A voluntary and bona fide assignment by a partner of all his interest in the partnership stock, has the same effect, and dissolves the partnership. This is upon the principle that a partnership cannot be compelled by the act of one partner to receive a stranger into an association which is founded on personal confidence. Socii mei socius, socius meus non est. The dissolution takes place and the joint tenancy is severed, from the time that the partner, against whom the commission issues, is adjudged a bankrupt, and the dissolution relates back to the act of bankruptcy. The bankruptcy operates to prevent the solvent partner from dealing with the partnership property as if the partnership continued ; (1) but, in respect to the past transactions, he has a lien on the joint funds for the purpose of duly applying them in liquidation and payment of the partnership debts, and is entitled to retain them until the partnership accounts

Fox v. Hanbury, Cowp. 445. Lord Eldon, ex parte Williams, 11 Vesey, 5. Wilson v. Greenwood, 1 Swanst. Rep. 482. Marquand v. N. Y. Man. Co. 17 Johns. Rep. 525. Gow on Partnership, 304—306.

b Inst. 3. 26. 8. Dig. 17. 2. 20. Id. 50. 17. 47. Pothier, Traité de Société, Nos. 67. 91. Marquand v. N. Y. Man. Co. 17 Johns. 525. Ex parte Barrow, 2 Rose, 255. Murray v. Bogart, 14 Johns. 318. Mumford v. M'Kay, 8 Wendell, 442. Kingman v. Spurr, 7 Pick. 235. Crawshay v. Maule, 1 Swanst. Rep. 509 Rodrigues v. Hetternan, 5 Johns. Ch. Rep. 417. Ketchum v. Clarck, 6 Johns. R. 144. Story on Partnership, 390. 438, 439. Supra, 52. n.

(1) Bankruptcy puts an end to the right of one partner to bind the firm by an acknowledgment of a firm debt. Atwood v. Gillett, 2 Doug. (Mich.) R. 206.

a

be taken. If all the interest of a partner be seized and sold on execution, that fact will likewise terminate the partnership, because all his share of the joint estate is transferred, by act of law, to the vendee of the sheriff, who becomes a tenant in common with the solvent partners. I have not met with any adjudication upon the point in the English law, though it is frequently assumed ; but it follows, as a necessary consequence, from the sale of his interest, and it is equivalent, in that respect, to a voluntary assignment. It was also a rule of the civil law, that the partnership was dissolved by the insolvency of one of the members, and an assign*60 ment of his property to his creditors, *or by a compulsory sale of it by judicial process on behalf of his credit

ors.d

(5.) By judicial decree.

We have seen that the partnership may be dissolved by the decree of the court of chancery, in the case of insanity. It may also be dissolved at the instance of a member, and

Harvey v. Crickett, 5 M. & Selw. 336.

Barker v. Goodair, 11 Vesey, 78. Dutton v. Morrison, 17 Vesey, 193. The doctrine in equity, apart from any statutes of bankruptcy, is, that upon insolvency of a firm, the effects are considered a trust fund for the payment of partnership debts, ratably, and either party may apply to have the funds so appropriated. A bill filed for an account and dissolution, and the appointment of a receiver, by a partner, is in equity equivalent to an actual assignment, and the appointment of a receiver arrests the power to give preferences, which remains until then. Egbert v. Wood, 3 Paige, 521. Waring v. Robinson, 1 Hoffman's Ch. R. 524.

b.So stated, arguendo, in Sayer v. Bennet, 1 Montagu on Part. note 16. Gow on Partnership, 310.

• Mr. Justice Story (on Partnership, 442-445,) considers it to follow, of course, that by the sale the partnership is dissolved to the extent of the right and interest levied on and sold. The sale subrogates the purchaser to the rights of the debtor partner, and he becomes a tenant in common, and not a partner.

Dict. du Digest, par Thevenot, Dessaules, art. Société, Nos. 56. 70. A discharge of one partner under a bankrupt commission is no discharge of the other, and the creditor can sue the other partner for the balance of his debt, notwithstanding he proves his debt under the bankrupt commission. 2 Mau. & Selw. 25. 444. Mansfield, Ch. J., in 4 Taunton, 328. Even a release to one partner will not deprive the creditor of his remedy against the other, if attended with a proviso that it should not affect his remedy against the other. Solly v. Forbes & Ellerman, cited by Bayley, J., in Twopenny & Boys v. Young, 3 Barnw. & Cress. 208. Though an absolute technical release of one joint debtor releases all, yet a mere covenant, not to sue one, does not so operate. 7 Johns. Rep. 207. 4 Greenleaf's Rep. 421.

against the consent of the rest, when the business for which it was created is found to be impracticable, and the property invested liable to be wasted and lost. It may be dissolved when the whole scheme of the association is found to be visionary, or founded upon erroneous principles. So, if the conduct of a partner, as by habitual drunkenness or other vices, be such as renders it impracticable to carry on the business, or there be a gross abuse of good faith between the parties, the court of chancery, on the complaint of a partner, may, in its discretion, appoint a receiver, and dissolve the association, notwithstanding the other members object to it.c But the court will require a strong case to be made out, before it will dissolve a partnership, and decree a sale of the whole concern. It may restrain a single partner from doing improper acts in future, or enforce the due observance of negative duties and obligations;d but the parties, as in another kind of partnership, enter into it for better and worse, and the court has no jurisdiction to make a separation between them for trifling causes, or for fugitive or temporary grievances, involving no permanent mischiefs, or because one of them is less good tempered or accommodating than the other. The conduct must amount to an exclusion of one partner from his proper agency in the house, or be such as renders it im

6 Taunton, 289. 9 Cowen, 37. A creditor may, therefore, unite in a petition for a discharge of one joint partner, under the insolvent acts in this country, without destroying his right of action against a solvent partner. A judgment against one partner, or a substitution of an obligation of a higher nature against a partner, extinguishes the partnership debt of an inferior degree. Moale v. Hollins, 11 Gill & Johnson, 11. (1)

Baring v. Dix, 1 Cox's Cas. 213.

b Buckley v. Cater, and Pierce v. Piper, referred to for that purpose by Lord Eldon, in 3 Ves. & Bea. 181. See, also, to the same point, Reeve v. Parkins, 2 Jacob & Walk. 390. In these cases of a bill in chancery, for the dissolution of a partnership, all the members, however numerous, must be parties to the bill, for they all have an interest in the suit. Long v. Youge, 2 Simon, 369.

• Gow on Partnership, 114.

& Collyer on Part. 233–240. Kemble v. Kean, 6 Simon, 333. Story on Part. 327, 328.

(1) A contract to discharge a retiring partner from a debt of the firm may be proved by express agreement, or by facts, from which an agreement may be inferred. Taking a new security is not of itself sufficient. Harris v. Farwell, 15 Eng. L. & E. R. 70.

*61 possible to carry on the business upon the *terms stipulated.a (1) A breach of covenants in articles which is important in its consequences, or when there has been a studied and continued inattention to a covenant, and to the application of the associates to observe it, will be sufficient to authorize the court to interfere by injunction to restrain the breach of the covenant, or under circumstances, to dissolve the partnership. The French law also allowed of a dissolution within the stipulated period, if one of the parties was of such bad temper that the other could not reasonably live with him, or if his conduct was so irregular as to cause great injury to the society. A mere temptation to abuse partnership property is not sufficient to induce the court to interfere by injunction; but when a partner acts with gross impropriety or folly, and there is a strong probability that the safety of the firm, and the rights of creditors, depend upon the interference of chancery, it forms a proper case for the protection of that jurisdiction to be thrown over the concern.d

In some instances, chancery will restrain a partner from an unreasonable dissolution of the connection, and on the same principle that it will interfere to stay waste and prevent an irreparable mischief; and such a power was assumed by Lord Apsley, in 1771, without any question being made as to the fitness of the exercise of it.e In the civil law, it was held by the civilians to be a clear point, that an action might be

Waters v. Taylor, 2 Ves. & Bea. 299. Goodman v. Whitcomb, 1 Jacob & Walk. 569. 592. Collyer on Part. 236. Story on Partnership, 329–331. 334. Gow on Partnership, 111, 112. 114. 116.

b Marshall v. Colman, 2 Jacob & Walk. 266.

• Inst. au Droit François, par Argou, tome ii. 249.

Glassington v. Thwaites, 1 Simon & Stu. 124. Miles v. Thomas, 9 Simon, 607. Tilghman, Ch. J., 11 Serg. & Rawle, 48. Story on Partnership, 331, 332. Lord Eldon, in Hood v. Aston, 1 Russ. R. 412. 415. Mr. Justice Story, 412. 420, and Collyer on Partnership, 195, 196, have summed up the whole doctrine on the causes proper for dissolution of partnership by a decree in equity.

e Clavany v. Van Sommer, cited in 3 Wood. Lec. 416, and 1 Swanst. Rep. 511, note.

(1) Blakeney v. Dufaur, 15 Eng. L. & E. R. 76.

It is usual to appoint a receiver, when the object of the suit is to dissolve the partnership; but where the object is to continue the partnership, the practice is not to appoint a receiver; though it might be done where the acts of the defendant were likely to destroy the partnership. Hall v. Hall, 8 Eng. L. & E. R. 191.