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property in existence, or to the exclusion of the property of other partners.

37. How may a firm be dissolved?

A common method is that of mutual assent and this plan may be used whether the partnership agreement was for a definite or an indefinite time.

If the partnership be for an indefinite period one partner may withdraw at any time or dispose of his interest even against the wishes of his partners. It should be observed that a partnership formed for a certain purpose, as the erection of a building, is indefinite as to time, but not a partnership at will and from such a firm one would not be permitted to withdraw at pleasure.

The dissolution may be by a decree of court where reasonable cause may be shown, as the inability of a copartner through sickness or insanity, the fraud or misconduct of a partner, continued quarreling, drunkenness or where the enterprise is not a successful one.

The death of a partner ordinarily works a dissolution, yet this may be provided against by a clause in the articles of agreement stating who shall succeed to his interest.

An assignment by the firm or of a partner assigning all his property, including his interest in the firm, the completion of the object for which the firm was created, the purchase and sale of a partner's interest, all work a dissolution.

Insolvency or bankruptcy also operates as a dissolution of the firm.

38. What is necessary on the dissolution of a firm?

To give proper notice of the dissolution. As to third parties a firm is not dissolved until notice is given.

39. What would be a proper notice?

To notify directly those with whom the firm has had dealings and to call attention of the public by advertisement in some paper of general circulation in the locality where the business has been carried on.

40. When is notice not necessary?

If the firm be dissolved by a decree of court or by operation of law, such as death or bankruptcy, no notice need be given. One who had not been known to the public, as a

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secret or dormant partner, could retire from the firm and thus work a dissolution and yet not make it necessary to give any notice.

41. What are the powers of a partner after dissolution?

After dissolution the power of a partner to create new contracts ceases. But in general all the partners have a right to share in the closing up of the affairs of the concern. The legal representative of a deceased partner has no right to participate in the closing, only the surviving partners may do that.

Each has the right to receive payments and to pay debts and to compromise a debt, but in no case to make these a thing of personal interest to himself.

42. Can a partner borrow money or make or endorse negotiable paper after dissolution?

The borrowing of money or the making of a new note, or even the indorsing of an old note, would probably not bind the remaining partners. This would certainly apply if the endorsee or lender had notice of the dissolution.

43. What is the rule in the payment of firm debts and individual u

upo on dissolution That firm debts shall first be paid from the firm assets and each partner's individual debts from such partner's private property.

After the payment of firm debts a remaining interest of a partner may be taken for a private debt, and the reverse of this is equally true as to a firm debt unpaid.

The rule has been thus stated: “Firm to firm; separate to separate; surplus to each."

44. How should partners share in property remaining after firm debts are all paid?

Each partner should first have refunded to him any advances to the firm that were not investments, then receive the capital invested, and if after paying the above there were any profits remaining he should receive his share of those profits.

45. How shall the distribution be if one invests money and the other skill?

If the cash capital remain intact, the partner investing it is entitled to the whole amount invested. If there be a diminution of the money capital through loss, the one contributing skill must share that loss by paying in a sufficient

sum of money. 12 46. Upon the death of a copartner what becomes of his

interest in the copartnership?

The title and the possession of the entire copartnership property vests in the surviving copartner or copartners for the purpose of winding up the firm business, and after payment of the firm debts and the adjustment of the equities of the members of the firm as between themselves, to account and distribute the firm assets between the copartners or their representatives according to their respective interests.

47. What is a limited partnership?

A limited partnership is one authorized by statute in which the liability of certain partners is limited to the amount of their investment.

48. What is necessary in every limited partnership?

That there be one or more general partners. Partners who are responsible for firm debts even to the full extent of their separate property.

49. What is the object of such partnerships?

To enable the person of means to invest such amounts as he may choose in business enterprise and yet not involve his separate property in the payment of firm debts.

50. What is one of the purposes of the statute authorizing such partnerships?

To call the attention of the public to the peculiar features of such an organization and thus afford protection and safety to those who may deal with the firm.

51. How is this purpose attained? By the execution, filing and recording of a certificate which shall set forth the names of the partners, who are general and who special, their places of residence, the firm name, the time during which the partnership is to continue, the investment of the special partners and the business to be carried on.

The above are some of the most usual requirements.

52. What form of investment must the special partner make?

It is an almost universal requirement that the investment of a limited partner be cash actually paid in before the time of commencing the business.

53. What are some restrictions imposed as to the use of a firm name?

The names of the special partners are not usually permitted to appear in the firm name, the term “Limited” or “Ltd." is used with the firm name.

54. What members of the firm are permitted to transact business?

Only the general partners. If the special partners par.' ticipate in the conduct of the business, their responsibility usually becomes that of a general partner.

55. In what kinds of business may a limited partnership engage?

Generally in almost any legitimate business except banking and insurance.

56. How may a limited partnership be dissolved?

In practically the same manner as a general partnership and in the closing up of the affairs of the firm the special partners may participate.

CORPORATIONS

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The charter is the measure of corporate authority.” 1. What is a corporation?

A corporation is a succession of individuals comprising an unchanging unity, duly formed for a particular purpose, having independent existence, rights and liabilities.

The corporation for most purposes has an existence entirely separate from the individuals composing it.

2. What kinds of business are carried on by corporations?

Generally those that require large capital and have a great variety of interests, such as railroads, steamship lines, insurance, banking and large manufacturing concerns.

3. How is a corporation formed? Only by an act of legislature.

4. In what two ways may a legislature form a poration?

First by special act or charter. This is usually brought about by the parties who wish to form a corporation applying to the legislature of the state where they are to be incorporated for a special act authorizing them to organize as such.

5. How are corporations formed by general law?

By the enactment of a statute by the legislature which provides a general plan of organization for any persons who wish to exercise a corporate privilege and by strict compliance with this statute a corporation is as fully formed as if given a special grant or charter.

6. What is the first step in forming a corporation ?

To secure a number of interested persons who must be of full age and at least two-thirds of whom must be citizens of the United States and one of them a resident of the state where the corporation is incorporated, who will subscribe for a sufficient amount of the capital stock of the proposed organization.

In New York State, by legal enactment, three or more persons may form a corporation for business purposes under the general laws of the State without special authority from the legislature.

NOTE

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