ment generally; if, therefore, a member of a firm of solicitors misapplies money intrusted to him as a member of the firm by a client for investment in a particular mortgage, his partners, however innocent, are liable for such misapplication (Willett v. Chambers, 1778, Cowp. 814; distinguish British Homes Ass. Corp., Ltd. v. Paterson, [1902] 2 Ch. 404, where the client employed the partner individually and not as a member of the firm); but, in the absence of special circumstances, they are not liable if the money was received by him for investment generally (Harman v. Johnson, 1853, 2 El. & Bl. 61; see, too, Plumer v. Gregory, 1874, L. R. 18 Eq. 621). The distinction in question is also illustrated by the two cases of Cleather v. Twisden, 1883, 28 Ch. D. 340; and Rhodes v. Moules, [1895] 1 Ch. 236.

In order to bring a case within clause (b) of sec. 11, the money must have been received by the firm in the course of its business, and have been misapplied while still in the custody of the firm. Thus in Moore v. Knight, [1891] 1 Ch. 547, a firm of solicitors received from a client certain moneys for investment; the money was not invested, but was embezzled. The firm for many years rendered accounts to their client of the interest due to her in such form as to represent that the money had been invested, and paid her the interest. Under these circumstances, the estate of a deceased partner, who was not party or privy to the fraud, was held liable to repay the moneys with interest (see also Blair v. Bromley, 1847, 2 Ph. Ch. 354; 41 E. R. 979; 78 R. R. 114; and as to the application of the Statutes of Limitations to such cases, see [1891] 1 Ch. 547). Again, in Devaynes v. Noble, Baring's Case, 1816, 1 Mer. 611; 35 E. R. 767; 15 R. R. 169, the firm was held liable for stock of one of its customers wrongfully sold out by the partner in whose name such stock was standing. The stock had been bought by the customer through the firm, and had been transferred with his assent, and in accordance with the custom of the firm, into the name of one partner, and the produce of the sale of the stock had been received by the firm (see, too, Clayton's Case, 1 Mer. 572; 35 E. R. 781; 15 R. R. 161). This case should be compared with that of Bishop v. The Countess of Jersey, 1854, 2 Drew. 143; 61 E. R. 673, in which case the innocent partners escaped liability on the ground that the transaction, in the course of which the client's money was misappropriated by one of the partners, was not a partnership transaction, and that the money, when it was misappropriated, had ceased to be in the custody of the firm (see, too, Tendring Hundred Waterworks Co. v. Jones, [1903] 2 Ch. 615, and cases collected, Lindley on Partnership, pp. 181 et seq.).

It is not sufficient, in order to fix innocent partners with liability for the misapplication of money belonging to a third party, merely to show that such moneys came into the custody of the firm; otherwise, all the members of a firm would in all cases be liable to those beneficially interested therein for trust moneys improperly employed by one partner in the business, or on account of the partnership. This, however, is not the case (Part. Act, 1890, s. 13); in order to fix the other partners with liability, notice of the breach of trust must be brought home to them individually; for, as a general rule in such cases, the money would not have come into the custody of the firm in the course of its business, and the knowledge of one partner would not affect the others, for the fact to be known would have nothing to do with the business of the firm. It is not within the scope of the implied authority of a partner to constitute himself a constructive trustee, and thereby subject his partners to liability in that character (Mara v. Browne, [1896] 1 Ch. 199).

Partners who are implicated in a breach of trust will be liable, though they may not have employed the trust moneys in the partnership business (Blyth v. Fladgate, [1891] 1 Ch. p. 354). The consideration of the circumstances under which persons who are not trustees may be liable for a breach of trust, and under which trust funds may be followed and recovered from the persons in whose hands the funds are, belongs to the law of trusts, and the reader is referred to the standard authorities on that subject (Lewin on Trusts; Godefroi on Trusts). And see article TRUSTS.

(4) Liability of Partners for Debts and Obligations of their Firm. (a) Nature of Liability.—In the absence of special circumstances, the liability of partners for the debts and obligations of their firm arising ex contractu is joint, and not joint and several (Part. Act, 1890, s. 9; Kendall v. Hamilton, 1879, 4 App. Cas. 504; and in the case of "holding out," see Scarf v. Jardine, 1882, 7 App. Cas. 345). A partner may, however, render himself separately liable by holding himself out to the creditor as the only member of the firm (Bonfield v. Smith, 1844, 12 Mee. & W. 405), or by the terms of the contract into which he has entered (Ex parte Harding, 1879, 12 Ch. D. 557).

The estate of a deceased partner is also severally liable, in a due course of administration, for the debts of his firm, subject, however, to the prior payment of his separate debts (Part. Act, 1890, s. 9; Hills v. M'Rae, 1851, 9 Hare, 297, and infra). A creditor of the firm has concurrent remedies against the deceased partner and the surviving partners, and it makes no difference which remedy he pursues first; but in proceedings against the estate of the deceased partner, the surviving partners must be present at taking the accounts of such estate, and the partnership creditor must not come into competition with the separate creditors of the deceased partner (In re Hodgson, 1885, 31 Ch. D. 177 ; in the case of a foreign firm, see In re Doetsch, [1896] 2 Ch. 836). The several liability of a deceased partner may be excluded by the special terms of the contract under which the creditor claims (Sumner v. Powell, 1816, 2 Mer. 30; 35 E. R. 852; 16 R. R. 136; Turn. & R. 423; 37 E. R. 1163; 16 R. R. 136; Clarke v. Bickers, 1845, 14 Sim. 639).

The liability of partners for loss occasioned by any wrongful act or omission, or for the misapplication of money or property for which the firm is liable, is joint and several (Part. Act, 1890, s. 12). As also is their liability for any breach of trust imputable to the firm (Blyth v. Fladgate, [1891] 1 Ch. p. 353).

(b) Extent of Liability.—The extent of the liability of a partner to third parties, in respect of the liabilities of his firm is unlimited. Moreover, if a judgment is obtained against a firm, the judgment creditor is under no obligation to levy execution against the property of the firm before proceeding against the separate property of the partners. He may (subject to the provisions of the Rules of the Supreme Court, Order 48 A, r. 8, in cases in which the judgment has been obtained in the firm name) levy execution against any one or more of the partners until his judgment is satisfied, leaving all questions of contribution to be settled afterwards between the partners themselves (see Abbott v. Smith, 1774, 2 Black. (W.) 949); and see EXECUTION, against Partners, Vol. V., at p. 539.

(c) Duration of Liability.-Commencement.-The agency of a partner to bind his firm and his copartners commences only with the commencement of the partnership. A person, therefore, who enters into partner

ship with another, or joins an existing firm, does not thereby become liable to the creditors of his partner or of the firm for anything done before he became a partner (Part. Act, 1890, s. 17 (1); Saville v. Robinson, 1792, 4 T. R. 720; Gabriel v. Evill, 1842, 9 Mee. & W. 297). Even if the incoming partner has agreed with his copartners that, as between themselves, the partnership shall be deemed to have commenced at an earlier date, or that the debts of the old firm shall be taken over by the new, this is not of itself sufficient to give creditors, who are no parties to the agreement, any right to sue the new partner for anything done before he in fact became a partner (Vere v. Ashby, 1829, 10 Barn. & Cress. 288; 34 R. R. 408); to give the creditors this right, there must be some agreement to that effect between the new partners and the creditors (Rolfe v. Flower, 1865, L. R. 1 P. C. 27). The Court appears to imply such an agreement somewhat readily if there be any evidence to support it (ibid., and Ex parte Jackson, 1790, 1 Ves. Jun. 131; 30 E. R. 265; 1 R. R. 91; Ex parte Williams, 1817, Buck, 13). An incoming partner will, however, be liable for new debts arising after he has joined the firm, under a continuing contract entered into with the firm before that time (Dyke v. Brewer, 1849, 2 Car. & Kir. 828), unless the person with whom the contract was entered into has dealt solely with the old partner and refused to deal with the new firm (British Homes Corporation, Ltd. v. Paterson, [1902] 2 Ch. 404).

Termination of Liability.-(i.) As to the Future.-Speaking generally, a person who deals with an agent, and knows that he has authority to act for his principal, is entitled to assume the continuance of that authority until he has notice of its revocation, unless such revocation. is caused by the death of the principal (Blades v. Free, 1829, 9 Barn. & Cress. 167; 32 R. R. 620). Consequently, with the exceptions hereafter mentioned, a partner, in order to terminate his liability for the future acts of his partners, must not only cease to be a partner, but must also give due notice of this fact (Part. Act, 1890, s. 36).

No such notice is necessary to terminate his liability for the future in the case of his death, or of his bankruptcy, or if he be a "dormant" partner, that is, a person not known to be a partner (ibid., s. 36 (3)). When a dormant partner ceases to be a member of the firm, the real authority of his copartners to bind him is thereby withdrawn, and as ex hypothesi no one knows of the authority, no one is entitled to rely upon its continuance (Carter v. Whalley, 1830, 1 Barn. & Adol. 14; 35 R. R. 199; Heath v. Sansom, 1832, 4 Barn. & Adol. 172; 38 R. R. 237). If, however, a person not generally known to have been a partner is known to have been a partner to certain individuals, he is not a dormant partner as to them, and notice of his retirement must be given them (Part. Act, 1890, s. 13 (3); Farrar v. Deflinne, 1843, 1 Car. & Kir. 580).

When notice is necessary, an advertisement in the Gazette is sufficient as to persons who have had no dealings with the firm (s. 36 (2)); but old customers are entitled to more specific notice (Graham v. Peake, 1792, 1 Pea. 208; 3 R. R. 671). If in any case notice, in point of fact, is established, it will be sufficient (see Rooth v. Quin, 1819, 7 Price, 193; 21 R. R. 744; Barfoot v. Goodall, 1811, 3 Camp. 147).

Any partner may give notice of the dissolution of the firm, or of his retirement therefrom, and may require his copartners to concur for that purpose in all necessary or proper acts which cannot be done without their concurrence (Part. Act, 1890, s. 37; Hendry v. Turner,

1886, 32 Ch. D. 355; Troughton v. Hunter, 1854, 18 Beav. 470; 52 E. R. 185).

As a general rule, a partner is not liable for the acts of his former partners after the dissolution of his firm, or his retirement from it, and due notification (when necessary) of the fact (Ex parte Central Bank of London, [1892] 2 Q. B. 633; Abel v. Sutton, 1800, 3 Esp. 108; 6 R. R. 818). The recent case of Court v. Berlin, [1897] 2 Q. B. 396, in which a solicitor, retained by a firm to bring an action for the recovery of a partnership debt, recovered from retired partners costs incurred after their retirement, is not inconsistent with this rule; for the liability in that case was really incurred before their retirement, namely, when the solicitor was retained (see, too, the costs of the detinue action in In re Wingfield and Blew, [1904] 2 Ch. 665; and cp. the converse case, Dyke v. Brewer, 1849, 2 Car. & Kir. 828).

If a partner has, notwithstanding the dissolution, given his partners authority to act for him, he will be bound by anything done by them within the limits of such authority (as in Burton v. Issitt, 1821, 5 Barn. & Ald. 267; Smith v. Winter, 1838, 4 Mee. & W. 454; 49 R. R. 609; and see Lindley on Partnership, p. 246).

Moreover, after a dissolution, the authority of each partner to bind the firm, and the other rights and obligations of the partners, continue, notwithstanding the dissolution, so far as may be necessary to wind up the affairs of the partnership, and to complete transactions begun but not finished at the time of the dissolution, but not otherwise (Part. Act, 1890, s. 38). Thus, after a dissolution a partner can sell the partnership assets (Fox v. Hanbury, 1776, Cowp. 445), or pledge or mortgage them for the purpose of completing a transaction already commenced (Butchart v. Dresser, 1853, 4 De G., M. & G. 542; 43 E. R. 619), or of securing a debt already incurred (In re Clough, 1885, 31 Ch. D. 325); or an overdraft of the partnership account (In re Bourne, Bourne v. Bourne, [1906] 2 Ch. 427). This authority does not extend to a bankrupt partner, for a firm is in no case bound by the acts of a bankrupt partner (Part. Act, 1890, s. 38; Craven v. Edmonson, 1830, 6 Bing. 734; 31 R. R. 529; and Bank. Act, 1883, s. 49 (a); Dickins v. Cross, 1830, 1 Barn. & Adol. 343), though any person who has after the bankruptcy represented himself, or suffered himself to be represented, as a partner of the bankrupt, may be liable for his acts (Part. Act, 1890, s. 38; Lacy v. Woolcott, 1823, 2 Dow. & Ry. K. B. 458).

A partner, after his retirement, may become liable for the acts of his former partners, under the doctrine of holding out (see ante, p. 416).

The estate of a deceased partner may be liable for debts incurred after his death, at the suit of the surviving partners, if there was any agreement to that effect between them. Moreover, if the deceased partner has authorised his executors to carry on his business in partnership with his former partners, and appropriated a part of his estate for that purpose, and his executors do go into partnership, creditors of the firm subsequent to his death will be able to get payment of their debts out of such part of his estate, by availing themselves of the executor's right of indemnity thereout (Dowse v. Gorton, [1891] A. C. 190; In re Johnson, 1880, 15 Ch. D. 548); but the creditors have no such right unless a portion of his estate has been so appropriated (Strickland v. Symons, 1884, 26 Ch. D. 245; In re Evans, 1887, 34 Ch. D. 597). If all the executors are in default the creditors can obtain nothing until the executors have made good what they owe, but the rights of the creditors

will not be affected by the default of some only of the executors (see Dowse v. Gorton, [1891] A. C. 190; In re Frith, Newton v. Rolfe, [1902] 1 Ch. 342).

(ii.) As to the Past.-With regard to a partner's liability for past acts, a partner who retires from a firm does not thereby cease to be liable for the partnership debts and obligations incurred before his retirement (Part. Act, 1890, s. 17 (2)). Nor will death release the estate of a deceased partner from liabilities incurred during his life (see ante, p. 427), except such as arise from mere torts, to which the maxim actio personalis moritur cum persona applies (see article thereon); this maxim does not apply to breaches of trust or negligence in performing a duty arising out of a contract (Smith v. Blyth, [1891] 1 Ch. 366; Sawyer v. Goodwin, 1867, 36 L. J. Ch. N. S. 578; Lindley on Partnership, pp. 654, 655). It is necessary, therefore, to consider shortly the more important ways by which a partner or the estate of a deceased partner may be freed from such liability.

Bankruptcy. The bankruptcy of a partner and his subsequent discharge will, subject to the exceptions in the Bankruptcy Acts (see Bank. Act, 1883, s. 30), release him from his liabilities as a partner (Ex parte Hammond, 1873, L. R. 16 Eq. 614), but the bankruptcy and discharge of his copartners only will not have this effect (ibid., s. 30 (4)).

Payment.-An obligation, whether it be joint or joint and several, is discharged if performed by any one of the persons obliged (see Beaumont v. Greathead, 1846, 2 C. B. 494); therefore payment of a partnership debt by any one partner will discharge all the rest, unless, indeed, the partner who pays the debt pays it out of his own moneys and in such a way as to show his intention to keep the debt alive as against the firm (M'Intyre v. Millar, 1845, 13 Mee. & W. 725).

In considering discharge by payment, attention must be paid to the general rules relating to the appropriation of payments (see article on APPROPRIATION OF PAYMENTS, and Lindley on Partnership, pp. 255 et seq.), and especially to the rule in Clayton's Case, 1816, 1 Mer. 572; 35 E. R 781; 15 R. R. 161, which is that where there is one single open current account (Cory Brothers & Co. v. Owners of the Mecca, [1897] A. C. 286; Smith v. Betty, [1903] 2 K. B. p. 323) between two parties, every payment which cannot be shown to have been made in discharge of some particular item, is imputed to the earliest item standing to the debit of the payer at the time of payment. The application of this rule will discharge from liability the estate of a deceased partner (Clayton's Case, ubi supra) and a retired partner, whether known (Hooper v. Keay, 1875, 1 Q. B. D. 178) or dormant (Brooke v. Enderby, 1820, 2 Brod. & B. 70; 22 R. R. 653; Newmarch v. Clay, 1811, 14 East, 239). The discharge, being a discharge by payment, does not depend on the knowledge of the creditor of the change in the firm (see ibid.).

The rule in Clayton's Case applies against the debtor as well as in his favour, so that a debtor who has made a general payment in respect of a single current account cannot subsequently apply those payments in discharge of the later instead of the earlier items in the account, consequently the assets of a new firm may, by the application of the rule, be appropriated to the payment of the debts of an old firm (Beale v. Caddick, 1857, 2 H. & N. 326); but this cannot be done to the prejudice of a new partner without his consent, express or tacit (Burland v. Nash, 1861, 2 F. & F. 687).