authority insurance written upon the life of one who has not consented thereto is contrary to public policy and void." 2

"29

The Reasons Why Such Insurance Is Desirable.

The practical arguments in favor of the validity of corporation insurance are forceably set forth by Mr. Charles W. Scovel in his article referred to above. What the courts have said on the subject of the desirability of such insurance is shown in the quotations made above where the legality of such insurance as applied to corporations was discussed. It will be noticed that the courts have recognized such insurance to be advantageous.

The reasons why creditor's insurance is desirable are too obvious to require much comment. It secures a direct, specific, existing debt. It subserves the same purpose as a mortgage. And, in those states where the creditor is allowed to keep the policy alive even after the debt has been paid and is allowed to collect and retain the whole face of the policy, it possesses an additional and legitimate speculative advantage.

Every reason which may be advanced for taking out corporation insurance applies with equal or greater force to partnership insurance. In addition, there are many arguments in favor of the latter insurance which apply not at all to the former. This difference arises from the difference in the nature of the two forms of business organization.

A corporation has two main characteristics which make the business world look upon it with much favor. The first is the non-liability of the stockholders in any personal way for the corporation's obligations. The second is the continued existence of the corporation in spite of the death or withdrawal of its stockholders or officers. All may die, the stock may change hands any number of times, but the corporation is in legal theory a distinct entity, a legal person, and it continues to live.

On the other hand, a partnership possesses neither of the above characteristics. Although, for business purposes, the partners often look on the partnership as something distinct and apart from the individuals composing it, yet, in the eyes of the

29

Vance On Insurance, p. 145. To same effect see Note in 56 L. R. A. 585, in which the writer admits the paucity of direct authority, but takes the view that consent should be held necessary on grounds of public policy. Some States require consent by statute. See Vol. 3 Va. Code, p. 610, requiring "knowledge or consent."

law, this is not so. The law knows no such person, or entity, as a partnership. The name is simply a convenient designation for a coöperative and intimate form of business relationship in which there exists a mutuality of ownership, a community of interest, and a oneness in responsibility. Each partner is the agent of the other, with power to place upon the other obligations, with power to wreck the business. So, during the life of the partnership, there is an element of personal trust, personal reliance, and business intimacy about the relation which does not exist with respect to corporations. For example, not only the partnership assets, but every cent of the private individual property of each partner, is liable to the partnership creditors, and this though the obligation may have been contracted by one of the partners only without the other's knowledge or consent. Then, again, a partnership is automatically brought to a close by operation of law upon the happening of certain common and inevitable events. It can only live as long as all of the partners live. Its existence ceases if a partner, while alive, sells his stock and withdraws. And there is no way to keep a partner from quitting if he wishes to do so. It is true that by an agreement between the partners, or by the will of one of the partners, it may be provided that the business shall go on after a death. But, in legal contemplation, this is in every case a new partnership. It is thus seen that every partnership is necessarily and inevitably a creature of short life. It has only as long to live as all partners keep alive. It may meet its death at any time by the act of one in selling out, by his misconduct rendering a further continuance of the business impossible, his bankruptcy, his lunacy, or because the object for which the partnership was formed has become impossible.

Of course, the main embarrassments incident to a dissolved partnership arise when one of the partners dies. But the necessary readjustment which must follow upon the withdrawal of a living partner may prove to be a serious inconvenience and loss. A new partnership must be formed. This may be done in a mutually agreeable manner if there is no friction between the remaining members of the firm and the outgoing partner. On the contrary, if the retiring partner sells his interest to some person who does not care to have the business go on and to participate in it, such purchaser may call for an accounting and have the business wound up. Insurance on the life of a partner in such a case will not yet have matured. He is yet alive. But,

even then, it may be a valuable asset, and according to the weight of authority it will not lapse but the remaining partners may keep it up and collect it as firm assets whenever the insured dies. They had an insurable interest in the insured's life when they took the policy out, and the subsequent loss of interest does not invalidate the insurance. But the most frequent event which causes trouble and loss to a partnership is the death of one of the partners. And this is the case where, if there is insurance on that partner's life, it is at once collectable and realizable as an asset, as ready money, to keep off trouble and to prevent loss.

If the survivors buy out the interest of the dead partner, this takes ready money. If they have not this money, then the only alternative is to wind up the partnership. The reason for this is that the dead partner did not own any specific part of the firm property which might be turned over to his representatives. His interest is only what remains as his share in money after the firm debts have been paid, the accounts between the partners and the firm settled, and the stock sold.

Moreover, such sale would ordinarily have to be a public sale. The remaining partners would usually not be permitted to buy in his share privately. The courts will, under some circumstances, permit this, but there must first be a full accounting and settlement to determine just what the interest of the dead man is, and an agreement by his administrator or executor to sell; and the courts will scrutinize such transactions with jealous care. Suppose, again, that the firm has entered into a contract. It may have relied primarily upon the dead partner to perform the contract. His death makes this impossible. Yet his death does not absolve the surviving partners from the obligation to perform the contract. So, a partnership, and each member thereof, is liable for a tort committed by any member of the partnership in the partnership business, and if one of the partners dies that does not keep the surviving partners from being responsible, even though the dead man is the one who actually committed the tort.

The death of the partner does not put off for any period the right of his administrator or executor to sue the survivors for an accounting, nor the right of the firm creditors to at once go against the surviving partners for any debt that is due. But generally, by statute, no debt is required to be paid by the administrator or executor of the deceased partner until a more

or less extended period has elapsed after his qualification as such administrator or executor.

Upon the dissolution of the partnership by death of a partner, title to the personal assets vests in the surviving partners as trustees to wind up the business. It is the surviving partners' duty to collect all claims and pay all debts and dispose of the firm property to the best advantage, either as a whole, or in parcels, as he deems best; and it is both his right and duty to wind up the business as soon as possible, and, though he may continue it for a short time to enable him to dispose of the firm property, he cannot continue it indefinitely without the consent of the representatives of the deceased partner. He is strictly accountable for the firm property. He is not entitled to compensation for ordinary services in winding up the partnership business, though he is entitled to reimbursement for necessary expenses.30

All of the above considerations constitute strong practical reasons for holding partnership insurance valid, as well as a demonstration of its desirability as a prudent business investment.

TAMPA, FLORIDA.

R. W. WITHERS.

Didlake v. Roden Grocery Co., 160 Ala. 484, 49 So. 384.

THE TRUST PROBLEM IN THE LIGHT OF

SOME RECENT DECISIONS

The unusual amount of hostile criticism that followed the publication of the decision in the International Harvester Case was surprising. Reference is not made to the reviews in various legal publications, for either favorable or unfavorable analysis of an opinion of such a character might be more or less anticipated. But that the daily press at large and the weekly and monthly publications of the country should rush to the defense of a corporation, one of the largest and most powerful in the country, and that their comment should have been unsparing in finding fault with the reasons and conclusions of a federal court in attempting to destroy such an organization, was at least unexpected. There had been so much popular acclaim during the last decade as decision after decision has been handed down giving interpretation to the Sherman Act and through such interpretation decreeing the breaking up and dissolution of holding companies and so-called trusts and big business in general, that it must have made a casual observer pause and wonder why there was such a sudden change. After all, the daily press instead of attempting to guide the public, endeavors to ascertain what public sentiment is, and that once found, it cautiously caters to it. If a large section of the press of the country approves or disapproves of any particular act we may take it for granted that the reason for such approval or disapproval is because it believes that the public itself possibly in a subconscious manner has first approved or disapproved of the very act. So one is led to believe that the criticism in the press relating to the Harvester decision must have gone deeper and must have been more than merely the expression of a few handfuls of men writing in the seclusion of their editorial offices; that it reflected, in fact, the feelings or views of that part of the country at large which had given thought to the commercial, economic and legal problems that this decision presented.

To believe for a moment that a decision of this character is merely an analysis of a legal problem would be a fundamental error. Indeed the country at large is concerned but little with the legal intricacies and judicial ingenuity that may be shown by the court. The public realizes, however, that a decision of