partner. A secret partner is one who is not known to third parties as a partner, but who has an interest in the business and takes an active part in it. A nominal partner is a person who is known as a partner, but who has no real interest in the business. Such a person, however, may be liable for the firm debts.

389. Commercial and legal views distinguished.The commercial conception of a partnership is that it is a legal entity like a corporation. This view is held by Mr. Justice Lindley:1

Commercial men and accountants are apt to look upon a firm in the light in which lawyers look upon a corporation, i. e., as a body distinct from the members composing it, and having rights and obligations distinct from those of its members. Hence, in keeping partnership accounts, the firm is made debtor to each partner for what he brings into the common stock, and each partner is made debtor to the firm for all that he takes out of that stock. In the mercantile view, partners are never indebted to each other in respect of partnership transactions, but are always either debtors to or creditors of the firm. The partners are the agents and sureties of the firm: its agents for the transaction of its business; its sureties for the liquidation of its liabilities so far as the assets of the firm are insufficient to meet them. The liabilities of the firm are regarded as the liabilities of the partners only in case they cannot be met by the firm and discharged out of its assets. But this is not the legal notion of a firm. The firm is not recognized by lawyers as distinct from the members composing it.

390. Tests of the relation.-Formerly, merely sharing in the profits of a business was held to be sufficient to make one liable to third parties as a partner. This test, however, was overruled in England in 1860.2 It

1 Lindley on Partnership (Ewell's 2nd Amer. ed.), Vol. I, p. 110.

2 Cox v. Hickman, 8 H. L. Cases, 268. See also the recent cases: Francis v. McNeal, 228 U. S. 695, 33 Sup. Ct. Rep. 701; In re Samuels & Lesser, ex parte Quinn, 207 Fed. 195.

has been recognized in this country, but at present it is almost obsolete.

The true test of the partnership relation is the legal intention of the parties. This may differ, however, from their actual intention. When the parties are joint owners of the profits, and each acts as principal for himself and as agent for the other, the partnership relation exists.1

391. Partnership property.-The property of a firm comprises all property which belongs to the partners as a firm. It includes that originally contributed by the partners and that subsequently acquired by the firm. It may be either real or personal.

Not only all the goods and merchandise properly so called but all chattels bought by the partnership, or otherwise coming to them, as their furniture, books, etc., are partnership property; and so also all bills of exchange and notes, or other evidence of debts, and all debts or accounts or balances, or other claims; and all shares in companies, or scrip bought with partnership funds, or otherwise assigned to the partnership and not transferred to the individual partners and charged in their accounts, would be regarded as partnership property.2

Whether a particular piece of property belongs to the firm, or to one or more of the partners as individuals, depends upon the intention of the partners; and this intention may be inferred from the circumstances surrounding the transaction. Thus, the legal title to a piece of firm realty may be in the name of one of the partners, or even in the name of a stranger. This was recognized by Justice Magruder:

Nor is real estate necessarily the individual property of the members of a firm because the title is held by one member, or 1 Meehan v. Valentine, supra.

2 Parsons on Partnership, sec. 177.

by the several members in undivided interests. Whether real estate is partnership or individual property depends largely upon the intention of the partners. That intention may be expressed in the deed conveying the land, or in the articles of partnership; but when it is not so expressed the circumstances usually relied upon to determine the question are the ownership of the funds paid for the land, the uses to which it is put, and the manner in which it is entered in the accounts upon the books of the firm.1

392. Title to firm property.—Title to firm personalty, both choses in possession and choses in action, may be acquired, held and transferred in the firm name. Thus, chattel mortgages, promissory notes, bills of sale, etc., may be in the firm name even when it is a fictitious

one.

At common law, however, the legal title to firm realty cannot be acquired, held or transferred in the firm name. This is owing to the fact that the law does not recognize a firm as a legal entity. When a conveyance of real property is made to a partnership in the firm name the legal title does not pass to the firm. If the firm name is a fictitious one the title does not pass at all. If, however, the firm name is a personal one, as, for example, John Brown & Co., the legal title passes to John Brown who holds it in trust for the firm.

393. Partnership realty.-Under the English rule, partnership realty is treated in all respects as partnership personalty; no dower interest attaches to it, and upon the death of a partner his interest descends to his personal representative and not to his heir. But under the American rule firm realty retains its character as such, except in so far as it may be needed to pay firm debts. Under this rule the widow of a deceased partner

1 Robinson Bank v. Miller, 153 Ill. 244, 38 N. E. R. 1078.

is entitled to dower in his share of the surplus after the firm debts are paid.

394. Bona fide purchaser's rights.-When the legal title to firm realty is held in trust for the firm by one of the partners, the firm creditors are given priority over his separate creditors. But when a partner who holds the legal title of record to firm realty conveys it to a bona fide purchaser, the latter has priority over the other partners and the firm creditors; a bona fide mortgagee is likewise entitled to priority.

395. Nature of a partner's interest.-A partner's interest in firm property, both personal and real, is a peculiar one. A partner is neither a joint tenant nor a tenant in common. His interest in the firm property is merely his share in the surplus after the firm debts are paid. It follows, therefore, that he cannot transfer an undivided interest in any specific article of the firm.

396. Rights of surviving partners.-When a firm is dissolved by the death of one of the partners the right to settle up the firm's business belongs wholly to the surviving partner. The representative of the deceased partner has merely the right to an accounting.

In settling up the business of the firm the surviving partner may sell partnership realty, the legal title of which is in another. In such a case courts of equity are empowered to enforce a transfer of the legal title to the purchaser.

EXAMPLES

384. A and B are partners. B dies. In suing a firm creditor the action should be brought by A alone, as plaintiff, and not by A and B's representative. The legal title to an obligation against a firm debtor survives.

385. A and B are partners. The firm name is "The Cham

paign Hardware Company." A deed to a piece of land is made

to the firm in the firm name.

The firm is not a legal entity.

386. A and B are partners.

Title to the land does not pass.

The firm name is "Wm. Price

& Company." A deed to a piece of land is made to the firm in the firm name. The legal title passes to Wm. Price who

holds the land in trust for the firm.

387. A and B are partners. The firm becomes financially embarrassed and turns over the business to trustees appointed by the firm creditors. The trustees carry on the business under a new firm name, and divide the net profits among the firm creditors; the agreement provides that the firm property is always to be considered the property of A and B, and also that when the creditors are paid the property is to be restored to them. X sells goods to the trustees on credit and seeks to hold the creditors liable for them. The creditors are not liable as partners of the trustees. The business is carried on in behalf of A and B. The mere fact that the creditors participate in the profits of the business does not make them liable as partners.1

397. Firm name.-A partnership usually has a firm name. It is not, however, a necessary incident, owing to the fact that a firm, in legal contemplation is not a separate and distinct entity. In the eye of the law it is a collection of individuals. A firm name is a convenient symbol to designate the partners taken as a whole. It may contain one or more names of partners or it may be wholly fictitious. When a firm name has been adopted it should be used in all firm transactions except in conveyances of real property. At common law the members of a firm may adopt as a firm name any name they see fit. In some states, however, the use of firm names is regulated by statute.

Mr. Justice Lindley says, "The name by which a firm 1 Cox v. Hickman, 8 H. L. Cases, 268.