derivative cannot prevent it, that it is not fraudulent for the partners to apply their property, including firm property, to the payment of their separate debts, but at most a preference, that generally partners may do as they please with the firm assets while not yet in bankruptcy unless they act in "actual fraud;" and what actual fraud is one cannot say, but it would seem, according to these courts, that it is not actual fraud to pay separate debts or to put the firm property in such a situation that separate creditors will have a priority therein, although firm creditors are thereby hindered. It is submitted that these results are unsatisfactory and at variance with the accepted principles of right and justice which give priority in firm assets to firm creditors whenever the assets fall into the hands of a court of equity or bankruptcy for distribution. This seems to have been the opinion of the draftsman, for in an earlier draft of the Act the matter was thoroughly and satisfactorily dealt with by a section entitled "Fraudulent Conveyances."

" 87

The section on Fraudulent Conveyances does not appear in the present draft because, as the writer is informed, it was felt that it pertained rather to another branch of the law and was out of place in a partnership code. But there would be little left of the present Act if everything pertaining to agency, property, bankruptcy, evidence 88 and other recognized departments of the law

87 Seventh Draft. Sec. 21. (Fraudulent Conveyances.) (1) Every conveyance or encumbrance of partnership property by a partner made or given voluntarily and without a present and fair consideration to the partnership, as distinguished from a consideration to the individual members, when the partnership is or will be thereby rendered insolvent or in contemplation of insolvency, shall be void as against the partnership creditors, except as to purchasers in good faith and for a present fair consideration.

(2) Every conveyance or encumbrance of partnership property, every obligation incurred and every judicial proceeding taken by any partner, with intent to hinder, delay, or defraud any partnership creditor, or other person, of his demand against the partnership or which will have this effect, is void as against the partnership creditors, except as to purchasers in good faith and for a present fair consideration.

(3) Under the provisions of this section every conveyance or encumbrance of partnership property by any partner, to any partner made when the partnership or the assignee partner is insolvent, is void as against the partnership creditors, whether such insolvency be known to the partners or not.

88 Sec. 3. (Interpretation of Knowledge and Notice.) (1) A person has “knowledge" of a fact within the meaning of this act not only when he has actual knowledge thereof, but also when he has knowledge of such other facts as in the circumstances shows bad faith.

were removed.89 89 The question under discussion turns on the nature of the partnership and the relation of its assets to the partnership and to the partners, which are decidedly questions of partnership law. In omitting to deal with this subject, the Act leaves unanswered questions as to which there has been probably greater conflict of authority than on any other point of partnership law, and the Act herein signally fails of its avowed purpose to make uniform the law of partnership.

It does not seem to the writer that Sec. 41 90 disposes of the

(2) A person has "notice" of a fact within the meaning of this act when the person who claims the benefit of the notice,

(a) States the fact to such person, or

(b) Delivers through the mail, or by other means of communication, a written statement of such fact to such person or to a proper person at his place of business or residence.

89 See Seymour's comment on this. "The Uniform Partnership Act, An Appreciation," LEG. INTELL., Feb. 19, 1915.

90 Sec. 41. (Liability of Persons Continuing the Business in Certain Cases.) (1) When any new partner is admitted into an existing partnership, or when any partner retires and assigns (or the representative of the deceased partner assigns) his rights in partnership property to two or more of the partners, or to one or more of the partners and one or more third persons, if the business is continued without liquidation of the partnership affairs, creditors of the first or dissolved partnership are also creditors of the partnership so continuing the business.

(2) When all but one partner retire and assign (or the representative of a deceased partner assigns) their rights in partnership property to the remaining partner, who continues the business without liquidation of partnership affairs, either alone or with others, creditors of the dissolved partnership are also creditors of the person or partnership so continuing the business.

(3) When any partner retires or dies and the business of the dissolved partnership is continued as set forth in paragraphs (1) and (2) of this section, with the consent of the retired partners or the representative of the deceased partner, but without any assignment of his right in partnership property, rights of creditors of the dissolved partnership and of the creditors of the person or partnership continuing the business shall be as if such assignment had been made.

(4) When all the partners or their representatives assign their rights in partnership property to one or more third persons who promise to pay the debts and who continue the business of the dissolved partnership, creditors of the dissolved partnership are also creditors of the person or partnership continuing the business.

(5) When any partner wrongfully causes a dissolution and the remaining partners continue the business under the provisions of section 38 (2b) either alone or with others, and without liquidation of the partnership affairs, creditors of the dissolved partnership are also creditors of the person or partnership continuing the business. (6) When a partner is expelled and the remaining partners continue the business either alone or with others, without liquidation of the partnership affairs, creditors of the dissolved partnership are also creditors of the person or partnership continuing the business.

matter, for that applies only in case the business as a whole is assigned to a partner, or to a third person or persons who assume the debts and continue the business. Moreover under this Act not only are new creditors let in on a parity with the old creditors, but if the assets are assigned to one person, his separate creditors, including those who became such before the assignment, come in on a parity with the creditors of the old partnership. It is therefore submitted that the section on Fraudulent Conveyances which was deleted from the previous draft should be restored to the Act.

One objection which has been made to declaring the partnership a legal person is that such a course would result in confusing it with the corporation. This objection has been especially urged in view of the definition of a corporation contained in several of our state constitutions, whereby the corporation is defined substantially as "any association or joint stock company having any of the powers or privileges not possessed by individuals or partnerships." "1 This objection ought not to deter us from the attempt to draft a scientific code of partnership law, if the law on this subject is to be codified. The fact, if true, that some states would be embarrassed by their constitutions or by other statutes in adopting

(7) The liability of a third person becoming a partner in the partnership continuing the business, under this section to the creditors of the dissolved partnership shall be satisfied out of partnership property only.

(8) When the business of a partnership after dissolution is continued under any of the conditions set forth in this section the creditors of the dissolved partnership, as against the separate creditors of the retiring or deceased partner or the representative of the deceased partner, have a prior right to any claim of the retired partner or the representative of the deceased partner against the person or partnership continuing the business, on account of the retired or deceased partner's interest in the dissolved partnership or on account of any consideration promised for such interest or for his right in partnership property.

(9) Nothing in this section shall be held to modify any right of creditors to set aside any assignment on the ground of fraud.

(10) The use by the person or partnership continuing the business of the partnership name, or the name of a deceased partner thereof, shall not of itself make the individual property of the deceased partner liable for any debts contracted by such person or partnership.

91 Ala., art. 12, § 241; Cal., art. 12, § 4; Kan., art. 12, § 6; Idaho, art. 11, § 16; La., art. 268; Mich., art. 12, § 2; Minn., art. 10, § 1; Miss., art. 7, § 199; Mo., art. 12, § 11; Mont., art. 15, § 18; N. C., art. 8, § 3; N. D., art. 7, § 144; Pa., art. 16, § 13; S. D., art. 17, § 19; S. C., art. 9, § 1; Utah, art. 12, § 4; Va., art. 12, § 153; Wash., art. 12, § 5.

such a code ought not to deprive other states of the best code that can be drafted. The desirability of framing a code which all states can adopt with the least inconvenience is a consideration to which too much weight can be given. Uniformity is not the only thing to be sought. But whatever the above objection amounts to, it seems that it may be urged against the Act in its present form. The partnership is by this Act empowered to acquire and convey the title to real estate in the partnership name.92 This is a power or privilege not heretofore enjoyed by partnerships or individuals. 93 The partnership is by this Act made into such an association as to come within the constitutional definition of corporation which has been referred to. It is probably only a corporation for the purpose of being submitted to the provisions regarding corporations contained in these constitutions.94 Each state constitution should be examined from this point of view.

In the interests of the title searcher the adoption of the provision contained in Sec. 8 (3) should be accompanied by such amendments of the laws regulating the acknowledgment and registration of deeds as are necessary to make it appear on the record that the person executing the deed in the partnership name is a partner and is authorized to convey.

The partner has under this Act authority to bind the partnership by any act "for apparently carrying on in the usual way the business of the partnership of which he is a member." 95 This may be taken to mean an act within the apparent course of business as carried on by his particular firm. It has been generally held that not only the course of business of his firm may be relied on as evidence of his authority, but the course of business of other firms in the same locality engaged in the same general line of business.96

92 Sec. 8. (3) Any estate in real property may be acquired in the partnership name. Title so acquired can be conveyed only in the partnership name.

93 Holmes v. Jarrett, Moon & Co., 7 Heisk. (Tenn.) 506 (1872); Tidd v. Rines, 26 Minn. 201, 211, 2 N. W. 497 (1879); Riddle v. Whitehill, 135 U. S. 621, 633 (1889); 30 Cyc. 431. But see Byam v. Bickford, 143 Mass. 31 (1885); Walker v. Miller, 139 N. C. 448, 52 S. E. 125 (1905).

94 Great Northern Fire Proof Hotel Co. v. Jones, 177 U. S. 449 (1899); Att'y General v. McVichie, 138 Mich. 387, 389, 101 N. W. 552 (1904). Compare Keystone Bank v. Donnelly, 196 Fed. 832 (1912). In Missouri a similar definition of corporation appears in the statutes. I Rev. Stats. (1909), § 2963.

95 Sec. 9. See n. 66.

96 Woodruff v. Scaife, 83 Ala. 152, 154, 3 So. 311 (1887); Standard Wagon Co.

It is submitted that a narrower rule imposes an undue burden on the third person to learn the habits of the particular firm, and because this Act is susceptible of a narrow interpretation the language of the English Act, "any act for the carrying on in the usual way business of the kind carried on by the firm," should be substituted.

Sec. 1697 is believed by the draftsman to overrule Thayer v. Humphrey.98 In that case there was a holding out of A as partner of B, but no real partnership. The court held that creditors of the ostensible firm were entitled to priority in distribution of the insolvent estate of B, the real sole proprietor of the business. This result was based on the ground of estoppel, and on the authority of In re Rowland 99 and Ex parte Hayman.100 But, as clearly shown by the opinion in the latter case, both these cases rest on the statutory doctrine of reputed ownership,101 which does not

v. Few & Co., 119 Ga. 293, 295, 46 S. E. 109 (1903); Smith v. Collins, 115 Mass. 388, 399 (1874); Buckley v. Wood & Co., 4 Pa. Sup. Ct. 391 (1897); Irwin v. Villiar, 110 U. S. 499, 505 (1883).

97 Sec. 16. (Partner by Estoppel.) (1) When a person, by words spoken or written or by conduct, represents himself, or consents to another representing him to any one, as a partner in an existing partnership or with one or more persons not actual partners, he is liable to any such person to whom such representation has been made, who has, on the faith of such representation, given credit to the actual or apparent partnership, and if he has made such representation or consented to its being made in a public manner he is liable to such person, whether the representation has or has not been made or communicated to such person so giving credit by or with the knowledge of the apparent partner making the representation or consenting to its being made.

(a) When a partnership liability results, he is liable as though he were an actual member of the partnership.

(b) When no partnership liability results, he is liable jointly with the other persons, if any, so consenting to the contract or representation as to incur liability, otherwise separately.

(2) When a person has been thus represented to be a partner in an existing partnership, or with one or more persons not actual partners, he is an agent of the persons consenting to such representation to bind them to the same extent and in the same manner as though he were a partner in fact, with respect to persons who rely upon the representation. Where all the members of the existing partnership consent to the representation, a partnership act or obligation results; but in all other cases it is the joint act or obligation of the person acting and the persons consenting to the representation.

98 91 Wis. 276, 64 N. W. 1007 (1895).

99 L. R. 6 Ch. App. 421 (1866).

100 L. R. 8 Ch. Div. 11 (1878).

101 English Bankruptcy Act 1883, Sec. 44.