The dissolution of a partnership does not affect the liability of the partners for former debts,1 but in general, prevents the incurring of a new joint liability.
1 Nor will a dissolution prevent liability on a firm contract only partially performed. Swire v. Redman, 1 Q. B. D. 536; Ayres v. Chicago, etc. Ry. Co. 52 Ia. 478; Jones v.
However it takes place, dissolution terminates altogether the power of a partner to carry on the business concerns of the partnership, in a way to bind former partners by any contract whatever. The former partners are partners no longer, but tenants in common; and where there is no agreement to the contrary, each partner, after dissolution, possesses the same authority to adjust the affairs of the firm, by collecting its debts and disposing of its property, as before the dissolution; but they can no longer bind each other, even to the extent of varying the form of existing obligations. (d)1 No partner can indorse a note of the firm, even to pay a prior debt of the firm. (e) It is said in England, that a retired partner may authorize, even by parol, a remaining partner to indorse bills in the name of the firm, which will hold him;(f) but then, in fact, he is scarcely a retired partner. We should say, that a general authority to a partner, to settle the affairs of the firm, whether it be an express authority, or the authority given by law to a surviving partner, would not give any power of this kind. (g)
It is important to know what makes a dissolution. If the partnership be for a time certain, one partner may maintain an * action at law against another for a breach of the articles in dissolving before the period therein limited; and the action may be brought before the expiration of the time for which the partnership was limited. The damages would be the profits which would have accrued to the plaintiff from the continuation of the partnership business.(A) Where a partnership is not to endure for a time certain by the articles of copartnership, or where that time has expired, it may undoubtedly be dissolved at the pleasure of any partner. (i)1 But the dissolution should be made with due notice to the other partner or partners, and at such time and in such manner as would not cause unnecessary injury to them; nor would the law sanction fraud in this matter. (ii) Whether, when the partnership is by articles which stipulate its continuance for a specified period, one partner may dissolve it within that period, is not, perhaps, quite certain. By the civil law, such dissolution is permitted, on the ground that it would be useless and mischievous to hold reluctant partners together. (j) In England the weight of authority is decidedly opposed to such dissolution, as a breach of contract; (k) still it is difficult to deny that one may assign his interest, and this would operate a dissolution; or he might contract a debt, and let his interest be taken in execution. A court of equity might interfere to prevent such assignment; but would not, in case of debt, unless there was collusion, or the creditor's interest could not otherwise be secured. (l) And even if the partnership by the articles be dis(d) Torrey v. Baxter, 13 Vt. 452; Woodworth v. Downer, id. 522; Robbing v. Fuller, 24 N. Y. (10 Smith) 570. See post, p. * 200.
(e) Humphries v. Chastain, 5 Ga. 166; Glasscock v. Smith. 25 Ala. 474; Fellows v. Wyman, 33 N. H.351. Perhaps some doubt is thrown on this conclusion, by Fowle v. Harrington, 1 Cush. 146, and Temple v. Seaver, 11 Cush. 314.
(f) Smith v. Winter, 4 M. & W. 454.
(g) Long v. Story, 10 Mo. 636; Parker, v. Cousins, 2 Gratt. 372; Lusk v. Smith, 8 Barb. 570; Hurst v. Hill, 8 Md. 399; Palmer v. Dodge,4 Ohio (n. S.) 21; Hamilton v. Seaman, 1 Cart. (Ind.) 185; Fowler v. Richardson, 3 Sneed, 508; Merritt v. Pollys, 16 B. Mon. 355. But see Kemp v. Coffin, 3 Greene (Ia.), 190.
Foster, 67 Wis. 296. See Johnson v. Hartshorne, 52 N. Y. 173. Nor justify the other contracting party in abandoning the contract. Dickson v. Indianapolis, etc. Co. 63 Ind. 9; Palmer v. Sawyer, 114 Mass. 1. But if the contract calls lor, or is made in reliance on, the personal skill or credit of a particular partner, his death excuses nonperformance of the contract on both sides. Stevens v. Benning, 1 K. & J. 168; National Bank v. Hall, l01 U. S. 43; Redheffer v. Leathe, 15 Mo. Ap. 12: Hiatt v. Gilmer, 6 Ired. L. 450; Fulton v. Thompson, 18 Tex. 278.
1 The liability of former partners for debts inclined during the existence of the partnership continues unless by a novation the creditors agree either expressly or impliedly to discharge the old debtors and look to others, usually a new firm succeeding the former partnership, for payment, such others in turn agreeing to assume the Old debts. Hart v. Alexander, 2 M. & W. 484; Regester v. Dodge, 19 Blatch. 79; Bucklin v. Bucklin, 97 Mass. 256.
(h) Solomon v. Kirkwood, 55 Mich. 256, 259; Bagley v. Smith, 10 N. Y. (6 Seld.) 489.
(i) Griswold v. Waddington, 15 Johns. 82. - But notice should be given to the other partner. Nerot v. Bernand, 4 Russ. 260; Peacock v. Peacock, 16 Ves. 50. - This should be a reasonable notice where the articles are totally silent upon the subject, and where, without such notice, injury would be inflicted, or fraud indicated. Howell v. Harvey, 5 Ark. 280. - The duration may be gathered from the terms of the articles, although not expressly provided for. Wheeler v. Van Wart, 2 Jur. 252. See also Crawshay v. Collins, 15 Ves. 227; Wilson v. Greenwood, 1 Swanst. 480; Washburn v. Goodman, 17 Pick. 519. - In the case of Sanderson v. The Milton Stage Co. 18
Vt. 107, it was held, - where one partner gave the other notice that the copartnership was dissolved, but this was not assented to by the other, and the parties did not afterwards act upon it, - that it did not operate as a dissolution of the firm.
(ii) See Stemmer's Appeal, 58 Penn. St. 168.
(j) Vinnius in Ins. 3, 26, 4; Ferriere in Id. tome V. 156; Dig. 17, 2, 14; Domat, b. 1, tit. 8, § 5, art. 1-8, by Strahan.