pro tanto extinguish his right of claiming the salary. Therefore, in a case which was recently before the House of Lords, in which it appeared that the appellant was engaged as manager of the Glasgow Glass-work Company at an annual stipend, and that, for the purpose of creating an addition to his stipend, and thereby of securing his skill and industry, he was also to have a share of the profits, to be calculated according to a proportion of capital and stock not advanced by him, but assigned by way of nominal interest; it was determined that he was not a partner subject to loss in account with the other partners. And in that case it was also considered that the manager was not liable for loss, although it was expressed in the articles of partnership that the partners (not excepting the manager) were to be subject to profit and loss, and although the manager signed the partnership books, joined in securities given by the partnership, and in most other partnership acts, including the advertisement for a dissolution; because it appeared, from the general structure, and all the provisions of the contract taken and construed together, as well as from the transactions between the parties and the conduct of the other partners, that the provision, as to profit and loss, was not intended to apply to the manager (a).

We will now consider what constitutes a partnership, as regards persons dealing or contracting with parties standing in the relation of joint traders; and, in this investigation, the question, what constitutes a partnership inter se, will both directly and incidentally arise. But it may be premised, that,

(a) Geddes v. Wallace, 2 Bligh, 270. The partnership was dissolved in 1792, and no demand was made of the losses until 1807, although in the intermediate time the parties were engaged in a protracted litigation, which furnished occasion to make the claim, if the right existed; and it was decided that although the partnership articles and the transactions of the partners might have supplied unequivocal proof of the liability of the manager to loss, yet that the laches of the respondents would have so weakened and destroyed that proof, as that a court could not have acted upon the effect of it. Id. ibid.

wherever the existence of a partnership, as to third persons, is established, the presumption of law is, that a partnership exists between the parties themselves (b).

The question, to whom the character and denomination of partner, with respect to third persons, attaches, will, in the manner we propose to examine it, admit of consideration under three different heads: In the first place, we will inquire what constitutes. an actual ostensible partner; secondly, what satisfies the appellation of a secret or dormant partner; and thirdly, we will state what is sufficient to fix upon a party the character of a nominal partner. An actual ostensible partner is a party who not only participates in the profits and contributes to the losses, but who appears and exhibits himself to the world as a person connected with the partnership, and as forming a component member of the firm. A dormant partner is likewise a participant in the profits and a contributor to the losses of the trade; but his name being suppressed and concealed from the firm, his interest is consequently not apparent. A nominal partner has not any actual interest in the trade or its profits, but, by allowing his name to be used, he holds himself out to the world as, apparently, having an interest.

An actual ostensible partner, quà partner, is clearly answerable for the debts and engagements of the partnership. In his person all and more than is necessary to entail liability is concentrated. He is entitled to a proportionate share in the distribution of the profits, and his name is likewise, with his own. consent, introduced as composing a constituent part of the firm. Either his right to a share of the profits, or the permitted exhibition of his name as partner, would be sufficient to render him responsible. The former would subject him to liability, because strangers or third persons, in the considera

(b) Peacock v. Peacock, 2 Campb. 45.

tion of the law, give credit and trust to the general profits of the trade, and consequently to each and all of the persons participating or concerned in the profits, as if they were partners: and the latter would be equally effective against him in that respect, since third persons, dealing with the firm, have a right to conclude that a party who, by his own acts, identifies himself with the partnership, in the character of partner, does actually and in fact sustain that character with which he represents himself to be clothed. There can be no doubt, indeed, but that such a person fills the relation of partner with respect to strangers. We will therefore proceed to examine in what cases a party partaking of the profits of a trade, but whose name is not suffered to appear in the co-partnership firm, is considered as superinducing a liability as partner, in respect to the fulfilment of the engagements of the partnership. This inquiry will, in a great measure, have for its object the ascertainment of what constitutes a dormant partner, since, except in the instance of such a partner, the question but seldom arises.

It may be laid down as a clear and well-established principle of law, founded upon reasons of policy, that whoever has a right to share in the profits of a trade, or particular adventure, or has a specific interest in the profits themselves, as profits, becomes chargeable as a partner to third persons, in respect of transactions arising out of the trade or particular adventure, in the profits of which he is to participate (a). The reason why such a person becomes, by implication and operation of law, clothed with the character of partner is, that by the effect of the agreement for a participation, the party participant takes from the creditors a part of that fund which

(a) Metcalf v. Royal Exch. Ass. Company, Barnard, 343. Grace v. Smith, 2 Blacks. 998. Ex parte Hamper, 17 Ves. 404. Ex parte Langdale, 18 Ves. 301. Ex parte Gellar, I Rose, 297. Fromont v. Coupland, 2 Bingh. 170.

is the proper security to them for the satisfaction of their debts, and upon which they rely for payment (a). Another reason assigned for subjecting a dormant partner to responsibility is, that if he were exempted he would receive usurious interest for his capital, without its being attended with any risk (b). The general principle was recognised in a modern case, where an agreement, which did not constitute a partnership between the parties to it, was nevertheless held to subject them to responsibility, in the character of partners, to third persons. In that case (c), A., having neither money nor credit, proposed to B., that if he would order, with him, certain goods to be shipped upon an adventure, if any profit should arise from them, B. should have one half for his trouble; and B. having acceded to this proposition, it was decided that he was liable as a partner to creditors, although the contract did not constitute a partnership between A. and B., but was merely an agreement for a compensation for trouble and credit. And it has been determined, that an agreement between a merchant and a broker, that the latter should purchase goods for the former, and, in lieu of brokerage, should receive for his trouble a certain proportion of the profits arising from the sale, and should bear a proportion of the losses, did not vest in the broker any share in the property so purchased, or in the proceeds of it, although it rendered him liable as a partner to third persons (d). The same principle was acted upon in another case (e). There a merchant in London recommended consignments to a merchant abroad, and it was agreed, that the commission on all sales of goods recommended by one house to the other should be equally divided, without allowing any deduction for expenses; and it was determined,

(a) Per De Grey, C. J., Grace v. Smith, supra. Hoare v. Dawes, 1 Dougl. 371. (d) Smith v. Watson, 2 B. and C. 401.

(b) Per Lord Mansfield, (c) Hesketh v. Blanchard, 4 East, 143. (e) Cheap v. Cramond, 4 B. and A.

663.

that as this was a participation in profit, it constituted a partnership between the parties. So, where the clerk of an attorney, living in a town distant from the residence of the attorney, transacted business in the name of the latter for his own benefit, but made an allowance of one third of the profit to the attorney, by way of remuneration to him for his occasional superintendence of the business, Mr. Justice Richardson was of opinion, that such a division of the profits, notwithstanding its illegality, amounted to a partnership (a). Even the executors of a deceased partner, whose names are not added to the trade, but who continue his share of the partnership property in the concern, for the benefit of his infant child, and who, on a division of the profits and loss, carry the same to the account of the infant, and take no part of the profits themselves, are liable as dormant partners, because, by embarking the property in trade in the first instance, they contract a responsibility in a court of law, which their subsequent application of the profits to purposes not of personal benefit cannot vary (b). Nor can the responsibility attaching upon a participator in the profit be varied or altered by any private arrangement or stipulation. As regards his own individual interest, with reference to himself and his co-partners, he may stipulate and provide for a contracted responsibility; such as, that he is not to be liable for losses, or that he is merely to sustain his own, or to bear only a proportionate amount of the losses; but a stipulation or provision of such a description will not, in any manner, affect or limit his liability to persons dealing with the firm. The covenant or agreement of the partners cannot be binding upon their creditors, but only upon themselves (c). In questions with third persons, as was remarked by

(a) Hopkinson v. Smith, 1 Bingh. 13. S. man v. Townroe, 1 Mau. and Selw. 412. 202, 421. Co. B. L. (7th ed.) 74. Lord Craven v. Widdows, 2 Ch. Ca. 139.

C. 7 B. Moore, 237. (b) Wight See also Ex parte Richardson, Buck, (c) Waugh v. Caiver, 2 H. Bl. 235,

C