This section is from the book "Popular Law Library Vol8 Partnership, Private Corporations, Public Corporations", by Albert H. Putney. Also available from Amazon: Popular Law-Dictionary.
If a partnership is formed for the purpose of smuggling or gambling, the law will not aid the partners in the division of profits or return of capital, or in the enforcement of any of the terms of the partnership contract; yet innocent parties furnishing supplies to the partners may hold them liable; and a person to whom they loan the profits or to whom they sell the goods smuggled, cannot resist payment on the ground cf the illegality of the partnership, or on account of the taint that attaches to the goods or money. The parties in a suit will fail whenever to support their case they must rely upon an illegal contract or transaction to which they were parties; but no other issues are involved than those directly concerning the contract or transaction in question, and if these are legal, it is immaterial that other and disconnected transactions have been immoral or that the general object of the partnership is illegal. In other words, the general moral character of a partnership in a suit at law based on a particular transaction is no more in issue than would be the character of an individual or the nature of his business. Partnership acts, from the standpoint of illegality, are looked upon as acts of persons are, on the merits of the acts, not on the merit of the actors. So, if A buys liquor of B, which is a lawful transaction, the fact that B, to the knowledge of A, intends to dispose of it contrary to law is immaterial, provided A does nothing in furtherance of B's illegal object. Packing the goods in a manner to deceive and circumvent the officers of law would taint the transaction with illegality. A knowledge that a crime was intended to be committed against an individual by means of an instrument sold would be another matter, inasmuch as concealment would be a distinct violation of public law subjecting the offender to a penalty. The act of sale and concealment in such a case would be giving countenance to the perpetration of the crime by violation of a duty. The cases where concealment or silence is innocent relate to statutory prohibitions against acts not amounting to crimes against persons in which the goods to be used contrary to the prohibitions are such as are on the open market, as silks that may be smuggled, fishing nets that may be used out of season, guns that may be used in killing forbidden game, and liquors that may be disposed of contrary to law, acts that are mala prohibita, but not mala in se; but one could not sell goods whose use was absolutely prohibited, as gambling instruments or counterfeiting outfits; for, if the purchaser can make no rightful use of the goods, the vendor has no right to sell or keep such goods for sale. So a sale to a class forbidden to purchase or to have in possession, would make the sale illegal, even though the statute did not expressly forbid the sale. But it is sufficient to say in regard to all matters of illegality in transactions with third persons, that partners are bound by the same law as individuals not partners. And the act of one partner is the act of all if done with actual or implied authority. But one partner cannot be bound by the crime of another, committed without his sanction, though to promote the firm's interest, and no authority is implied to commit any wrongful act outside of the scope of or even in connection with the business, if not in furtherance of its profits and success, but wilful and malicious. Such wilful and independent acts, involving personal malice only, render no one but the actor responsible, though committed against a patron of the firm in the course of transacting firm business. It is the excess or wrong committed in the performance of a partnership transaction by a member or agent of the firm that renders the firm liable in an action of tort. As where a partner having the right to eject a drunken or disorderly person from the firm premises does so with excessive force or careless indifference to the person's safety. On the other hand, a political discussion between a partner and a patron on the firm premises leading to an assault would not involve the firm. So a malicious prosecution for an alleged theft, of partnership goods directed by one partner would give no cause of action against another partner who had no hand in it, while an attachment or capias sued out maliciously for the purpose of securing a firm debt might give cause of action against all the partners.
 
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