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PARTNERSHIP - Liabilities of Partners To Outsiders, Liabilities of…

- - - - Outsider omit any partner name as defendant = waived right of action against the partner
        Kendall v Hamilton
        F: Ptf gave loan to X,Y (partners in trading firm). P took action to X,Y when they cannot pay loan. Subsequently, X,Y have been declared bankrupt. Later, Ptf found D is a wealthy person and also a secret partner to X,Y. Ptf initiated a proceeding against D.
        H: Ptf have right to sue D legally. But application dismissed.
        D: Once action has been completed against the firm, no one can be made liable for a same action in a different proceeding.
      - Regardless partner is active/passive in business
        Osman B. Haji Mohamed Usop v Chang Kang Swi
        F: A partnership formed by 6 partners including App. 3 of them borrowed loan RM10,000 from 3rd party by effecting a promisory note. The loan was guaranteed by Resp (CKS). Later, firm failed to pay the debt. Resp was called to pay debt on his own account. Resp initiated action against 6 partners for recovery of his money. 5 partners accepted liability, except App.
        H: The debt was a firm's debt - obtained for purpose of partnership. Partners who signed the promissory note had ACTED FOR THE FIRM and they were AUTHORISED TO DO SO. Firm/6 partners liable.
- - - - Liability of others partners/firm for wrongful acts of a partner
        Hamlyn v Houston & Co
        F: A partner in D's firm bribes a clerk in a rival firm - purpose of obtaining private and confidential information relating to legal matter. The rival firm suffered losses because of the particular information. The rival firm sued D.
        H: D's firm is liable for bribing. Though act was done by one partner.
        D: Partner's wrongful act was in the ordinary course of business / made for purpose of business - to obtain information about a trade rival.
      - Chittick v Maxwell
        F: C agreed to build house on a land belongs to their daughter and Maxwell's son. There's agreement that the parents should've right to occupy the house until their deaths when it would pass to Maxwells/their children. Mr M, solicitor, drew up the agreement but it was defective as it did not protect the Cs' right to possession against 3rd parties. Plus, M repeatedly mortgaged land without disclosing Cs occupation of it. The mortgages successfully enforced an order for possession and Cs were forced to leave. Cs sued Mr M's partners for his negligence in drafting the agreement.
        H: Claim by Cs rejected. Though the firm were Cs' regular solicitors and the work was of a type normally done by solicitors - facts and circumstances showed Mr M was doing something on his account. C had not requested the services, he simply accepted the doc and signed it at Ms' house.
        D: Where an outsider intended to deal with the partner exclusively and not with him as a member of the firm - such personal dealing will not be regarded as taking place in the ordinary course of firm's business.
- - - - British Home Assurance Corporation Ltd v Paterson
        F: Ptf company appointed Atkinson, a solicitor of firm 'Atkinson&Atkinson' to act for mortgage of transactions. on 5Feb Atkinson gave notice to company that he has taken Paterson into partnership. The partnership's name changed to 'Atkinson&Paterson'. 28Feb the company sent Atkinson a cheque payable to 'A&A' for purpose of completing to mortgage. The cheque was misappropriated. Company sued Paterson for loss.
        H: Paterson not liable. Company had credit with Atkinson in his personal capacity and not that of a partner in a firm.
        D: S 13 not apply when the defaulting partner though acting within scope of his authority, had not entered into contract as a member of the firm / in his capacity as a partner in the firm.
    - - Firm will not held liable - property not received in ordinary course of firm's business
        Rhodes v Moules
        F: Rhodes wished to obtain loan to raise money so, he mortgaged his property. A partner in a solicitor firm told him that the lenders wanted additional security. So he handed over to the solicitor some share warrants. The solicitor misappropriated them. Rhodes sued the firm for the loss.
        H: Firm liable.
        D: The warrants had been received in the ordinary course of firm business and also within the apparent authority of the partner.
      - Property will not be in custody of firm if it is in custody of an individual partner in his own private capacity
        
        Tendering Hundred Waterworks Co v Jones
        F: The company employed a firm of solicitors, Garrard and Jones - to negotiate a purchase of land. G was the company secretary, his fees regarded as partnership income. Company arranged for the land to be conveyed into G's name and the vendors gave him the title deeds. G used the deeds to raised money by way of mortgage. The company sought to make Jones liable for G's misappropriation.
        H: Firm not liable. The deed were not in firm's custody, they were in G's as a private individual.
        D: The deed given to G was not in his capacity as company secretary/partner, but as private individual who was named in the conveyance as a legal owner.