Chap. 365.—An ACT to make uniform the law relating to partnerships.
[S B 244]
Approved March 16, 1918.

Be it enacted by the general assembly of Virginia, as follows:
PART I.

PRELIMINARY PROVISIONS.

Section 1. Name of act.—This act may be cited as uniform
partnership act.

Sec. 2. Definition of terms.—lIn this act, “court” includes every
court and judge having jurisdiction in the case.

“Business” includes every trade, occupation or profession.

“Person” includes individuals, partnerships, corporations and
other associations.

“Bankrupt” includes bankrupt under the Federal bankruptcy
act or insolvent under any State insolvent act.

“Conveyance” includes every assignment, lease, mortgage, or
encumbrance.
; “Real property” includes land and any interest or estate in
and.

Sec. 3. Interpretation of knowledge and notice—(1) A per-
son has “knowledge” of a fact within the meaning of this act not
only when he has actual knowledge thereof, but also when he has

fnowledge of such other facts as in the circumstances shows bad
alth.

(2) A person has “notice” of a fact within the meaning of
this act when the person who claims the benefit of the notice.

(a) States the fact to such person, or

(b) Delivers through the mail, or by other means of com.
munication, a written statement of the fact to such person or to a
proper person at his place of business or residence.

ec. 4. Rules of construction—(1) The rule that statutes in
derogation of the common law are to be strictly construed shall
have no application to this act.

3) The law of estoppel shall apply under this act.

3) The law of agency shall apply under this act.

(4) This act shall be so interpreted and construed as to effect
its general purpose to make uniform the law of those States which
enact it.

(5) This act shall not be construed so as to impair the obliga-
tions of any contract existing when the act goes into effect, nor to
affect any action or proceedings begun or right accrued before this
act takes effect.

Sec. 5. Rules for cases not provided for in this act.—In any
case not provided for in this act the rules of law and equity, in-
cluding the law merchant, shall govern.

PART II.
NATURE OF PARTNERSHIP.

Sec. 6. Partnership defined—(1) A partnership is an associa-
tion of two or more persons to carry on as co-owners a business
for profit.

2) But any association formed under any other statute of this
State, or any statute adopted by authority, other than the authority
of this State, is not a partnership under this act, unless such as-
sociation would have been a partnership in this State prior to the
adoption of this act; but this act shall apply to limited partner-
ships except in so far as the statutes relating to such partnerships
are inconsistent herewith.

Sec. 7. Rules for determining the existence of a partnership.—
In determining whether a partnership exists, these rules shall
apply: a

art Except as provided by section sixteen persons who are not
partners as to each other are not partners as to third persons.

(2) Joint tenancy, tenancy in common, tenancy by the entire-
ties, joint property, common property, or part ownership does not
of itself establish a partnership, whether such co-owners do or do
not share any profits made by the use of the property.

(3) The sharing of gross returns does not of itself establish
a partnership, whether or not the persons sharing them have a joint
or common right or interest in any property from which the re-
turns are derived.
(4) The receipt by a person of a share of the profits of
business 1s prima facie evidence that he is a partner in the bus:
ness, but no such inference shall be drawn if such profits were re
ceived in payment:

(a) As a debt by installments or otherwise. -

(b) As wages of an employee or rent to a landlord.

(c) As an annuity to a widow or representative of a decease
partner.

(d) As interest on a loan, though the amount of payment var
with the profits of the business.

(e) As the consideration for the sale of the good-will of
business or other property by installments or otherwise.

Sec. 8. Partnership property.—(1) All property original]
Drought into the partnership stock or subsequently acquired, b
purchase or otherwise, on account of the partnership is partne)
ship property.

(2) Unless the contrary intention appears, property acquire
with partnership funds is partnership property.

(3) Any estate in real property may be acquired in tbe partne!
ship name. Title so acquired can be conveyed only in the partne:
ship name.

(4) A conveyance to a partnership in the partnership nam
though without words of inheritance, passes the entire estate of th
grantor unless a contrary intent appears.

PART III.

RELATION OF PARTNERS TO PERSONS DEALING WITH THE
PARTNERSHIP.

Sec. 9. Partner agent of partnership as to partnership bus
ness.—(1) Every partner is an agent of the partnership for th
purpose of its business, and the act of-every partner, including th
execution in the partnership name of any instrument, for ay
parently carrying on in the usual way the business of the partne:
ship of which he is a member binds the partnership, unless th
partner so acting has in fact no authority to act for the partnershi
in the particular matter, and the person with whom he is dealin
has knowledge of the fact that he has no such authority.

(2) An act of a partner which is not apparently for the carry
ing on of the business of the partnership in the usual way doé
not bind the partnership unless authorized by the other partner.

(3) Unless authorized by the other partners or unless the
have abandoned the business, one or more but less than all the par
ners have no authority to:

(a) Assign the partnership property in trust for creditors o
on the assignee’s promise to pay the debts of the partnership.

b) Dispose of the good-will of the business,

c) Do any other act which would make it impossible to carr
on the ordinary business of the partnership,

(d) Confess a judgment,
(e) Submit a partnership claim or liability to arbitration or
reference.

(4) No act of a partner in contravention of a restriction on
his authority shall bind the partnership to persons having know]-
edge of the restriction.

Sec. 10. Conveyance of real property of the partnership—
(1) Where title to real property is in the partnership name, any
partner may convey title to such property by a conveyance executed
in the partnership name; but the partnership may recover such
property unless the partner’s act binds the partnership under the
provisions of paragraph (1) of section nine, or unless such prop-
erty has been conveyed by the grantee or a person claiming through
such grantee to a holder for value without knowledge that the
partner, in making the conveyance, has exceeded his authority.

(2) Where title to real property is in the name of the partner-
ship, a conveyance executed by a partner, in his own name, passes
the equitable interest of the partnership, provided the act is one
within the authority of the partner under the provisions of para-
graph (1) of section nine.

(3) Where title to real property is in the name of one or more
but not all the partners, and the record does not disclose the
right of the partnership, the partners in whose name the title
stands may convey title to such property, but the partnership may
recover such property if the partners’ act does not bind the partner-
ship under the provisions of paragraph (1) of section nine, unless
the purchaser or his assignee, 1s a holder for value, without knowl-
edge.

eC) Where the title to real property is in the name of one or
more or all the partners, or in a third person in trust for the part-
nership, a conveyance executed by a partner in the partnership
name, or in his own name, passes the equitable interest of the
partnership, provided the act is one within the authority of the
partner under the provisions of paragraph (1) of section nine.

(5) Where the title to real property is in the names of all the
partners a conveyance executed by all the partners passes all their
rights in such property.

Sec. 11. Partnership bound by admission of partner.—An ad-
mission or representation made by any partner concerning partner-
ship affairs within the scope of his authority as conferred by this
act is evidence against the partnership.

Sec. 12. Partnership charged with knowledge of or notice to
partner.—Notice to any partner of any matter relating to partner-
ship affairs, and the knowledge of the partner acting in the par-
ticular matter, acquired while a partner or then present to his
mind, and the knowledge of any other partner who reasonably
could and should have communicated it to the acting partner,
operate as notice to or knowledge of the partnership, éxcept in
the case of a fraud on the partnership committed by or with the
consent of that partner.

Sec. 13. Partnership bound by partner’s wrongful act.—Where,
by any wrongful act or omission of any partner acting in the
ordinary course of the business of the partnership, or with the
authority of his co-partners, loss or injury, 1s caused to any person,
not being a partner in the partnership, or any penalty is incurred,
the partnership is liable therefor to the same extent as the partner
so acting or omitting to act.

Sec. 14. Partnership bound by partner’s breach of trust.—
The partnership is bound to make good the loss:

(a) Where one partner acting within the scope of his apparent
authority receives money or property of a third person and mis-
applies it; and

(b) Where the partnership in the course of its business receives
money or property of a third person and the money or property so
received is misapplied by any partner while it is in the custody of
the partnership.

$e 15. Nature of partner’s liability—All partners are liable

(a) Jointly and severally for everything chargeable to the
partnership under sections thirteen and fourteen.

(b) Jointly for all other debts and obligations of the partner-
ship; but any partner may enter into a separate obligation to
perform a partnership contract.

Sec. 16. Partner by estoppel—(1) When a person, by words
spoken or written or by conduct, represents himself, or consents to
another representing him to any one, as a partner in an existing
partnership or with one or more persons not actual partners, he is
liable to any such person to whom such representation has been
made, who has, on the faith of such representation, given credit to
the actual or apparent partnership, and if he has made such repre-
sentation or consented to its being made in a public manner he is
liable to such person, whether the representation has or has not
been made or communicated to such person so given credit by or
with the knowledge of the apparent partner making the representa-
tion or consenting to its being made.

(a) When a partnership liability results, he is liable as though
he were an actual member of the artnership.

(b) When no partnership liability results, he is liable jointly
with the other persons, if any, so consenting to the contract ot
representation as to incur liability, otherwise separately.

(2) When a person has been thus represented to be a partner
in an existing partnership, or with one or more persons not actua.
partners, he is an agent of the persons consenting to such representa
tion to bind them to the same extent and in the same manner a:
though he were a partner in fact, with respect to persons who rel}
upon the representation. Where all the members of the existing
partnership consent to the representation, a partnership act o1
obligation results; but in all other cases it is the joint act or obliga.
tion of the person acting and the persons consenting to the repre
sentation. :

Sec. 17. Liability of incoming partner.—A person admitted a:
a partner into an existing partnership is liable for all the obliga
tions of the partnership arising before his admission as though he
had been a partner when such obligations were incurred, except
that this liability shall be satisfied only out of partnership property.

PART IV.
RELATIONS OF PARTNERS TO ONE ANOTHER.

Sec. 18. Rules determining rights and duties of partners.—The
rights and duties of the partners in relation to the partnership shall
be determined, subject to any agreement between them, by the fol-
lowing rules:

(a) Each partner shall be repaid his contributions, whether by
way of capital or advances to the partnership property and share
equally in the profits and surplus remaining after all liabilities, in-
cluding those to partners, are satisfied; and must contribute towaris
the losses, whether of capital or otherwise, sustained by the part-
nership according to his share in the profits.

(b) The partnership must indemnify every partner in respect
of payments made and personal liabilities reasonably incurred by
him in the ordinary and proper conduct of its business, or for thie
preservation of its business or property.

(c) A partner, who in aid of the partnership makes any pay-
ment or advance beyond the amount of capital which he agreed to
contribute, shall be paid interest from the date of the payment or
advance.

(d) A partnership shall receive interest on the capital con-
tributed by him only from the date when repayment should lx
made.

(e) All partners have equal rights in the management and con-
duct of the partnership business.

(f) No partner is entitled to remuneration for acting in the
partnership business, except that a surviving partner is entitled to
reasonable compensation for his services In winding up the partner-
ship affairs.

(z) No person can become a member of a partnership wiath-
out the consent of all of the partners.

(h) Any difference arising as to ordinary matters connected
with the partnership business may be decided by a majority of the
partners; but no act in contravention of any agreement between
the partners may be done rightfully without the consent of all the
partners.

Sec. 19. Partnership books.—The partnership books shall b>
kept, subject to any agreement between the partners, at the prin-
cipal place of business of the partnership, and every partner shall
at all times have access to and may inspect and copy any of them.

Sec. 20. Duty of partners to render information.—Partners
shall render on demand true and full information of all things af-
fecting the partnership to any partner or the legal representative
of any deceased partner or partner under legal disability.

Sec. 21. Partner accountable as a fiduciary.—(1) Every partner
must account to the partnership for any benefit, and hold as trus
tee for it any profits derived by him without the consent of th
other partners from any transaction connected with the formation
conduct or liquidation of the partnership or from any use by hin
of its property.

(2) This section applies also to the representatives of a de
ceased partner engaged in the liquidation of the effairs of th
partnership as the personal representatives of the last survivin;
partner.

_ Sec. 22. Right to an account.—Any partner shall have th
nght to a formal account as to partnership affairs:

(a) If he is wrongfully excluded from the partnership busi
ness or possession of its property by his co-partners,

b) If the right exists under the terms of any agreement.

c) As provided by section twenty-one,

” d) Whenever other circumstances render it just and reason
able.

Sec. 23. Continuation of partnership beyond fixed term.—(1
When a partnership for a fixed term or particular undertaking i
continued after the termination of such term or particular under
taking without any express agreement, the rights and duties o
the partners remain the same as they were at such terminatior
so far as is consistent with a partnership at will.

(2) A continuation of the business by the partners or suc
of them as habitually acted therein during the term, without an.
settlement or liquidation of the partnership affairs, is prima faci
evidence of a continuation of the partnership.

PART V.
Property RIGHTS OF A PARTNER.

Sec. 24. Extent of property rights of a partner.—The propert,
rights of a partner are: (1) His rights in specific partnership prog
erty, (2) his interest in the partnership, and (3) his right to par
ticipate in the management.

ec. 25. Nature of a partner’s right in specific partnershi
property.—(1) A partner is co-owner with his partners of specifi
partnership property holding as a tenant in partnership.

2) The incidents of this tenancy are such that:

i} A partner, subject to the provisions of this act and to an
agreement between the partners, has an equal right with his part
ners to possess specific partnership property for partnership pu
poses; but he has no right to possess such property for any othe
purpose without the consent of his partners.

(b) A partner’s right in specific partnership property is ne
assignable except in connection with the assignment of the right
of all the partners in the same property.

(c) A partner’s right in specific partnership property is nc
subject to attachment or execution, except on a claim against th
partnership. When partnership property is attached for a partner
ship debt the partners, or any of them, or the representatives of a
deceased partner, cannot claim any right under the homestead or
exemption laws.

(d) On the death of a partner his right in specific partner-
ship property vests in the surviving partner or partners, except
where the deceased was the last surviving partner, when his right
in such property vests in his legal representative. Such surviving
partner or partners, or the legal representative of the last surviv-
ing partner, has no right to possess the partnership property for
any but a partnership purpose.

(e) A partner’s right in specific partnership property is not
subject to dower, courtesy, or allowances to widows, heirs or next
of kin.

Sec. 26. Nature of partner’s interest in the partnership.—A
partner’s interest in the partnership is his share of the profits and
surplus, and the same is personal property.

Sec. 27. Assignment of partner’s interest.—(1) A conveyance
by a partner of his interest in the partnership does not of itself
dissolve the partnership, nor, as against the other partners in the
absence of agreement, entitle the assignee, during the continuance
of the partnership, to interfere in the management or administra-
tion of the partnership business or affairs, or to require any in-
formation or account of partnership transactions, or to inspect the
partnership books; but it merely entitles the assignee to receive in
accordance with his contract the profits to which the assigning
partner would otherwise be entitled.

(2) In case of a dissolution of the partnership, the assignee is
entitled to receive his assignor’s interest and may require an ac-
count from the date only of the last account agreed to by all the
partners.

Sec. 28. Partner’s interest subject to charging order.—(1) On
due application to a competent court by any judgment creditor of
a partner, the court which entered the judgment, order or decree.
or any other court, may charge the interest of the debtor partner
with payment of the unsatisfied amount of such judgment debt
with interest thereon; and may then or later appoint a receiver of
his share of the profits, and of any other money due or to fall due
to him in respect of the partnership, and make all other orders.
directions, accounts and inquiries which the debtor partner might
have made, or which the circumstances of the case may require.

(2) The interest charged may be redeemed at any time before
foreclosure, or in case of a sale being directed by the court may be
purchased without thereby causing a dissolution:

(a) With separate property, by any one or more of the part-
ners, or

(b) With partnership property, by any one or more of the
partners with the consent of all the partners whose interests are
not so charged or sold.

(3) Nothing in this act shall be held to deprive a partner of
his right, if any, under the exemption laws, as regards his interest
in, the partnership.
Sec. 29. Dissolution defined.—The dissolution of a partners
, the change in the relation of the partners caused by any part
asing to be associated in the carrying on as distinguished fr
le winding up of the business.

Sec. 30. Partnership not terminated by dissolution—On
lution the partnership is not terminated, but continues until
inding up of partnership affairs is completed.

Sec. 31. Causes of dissolution.—Dissolution is caused

(1) Without violation of the agreement between the partn

(a) By the termination of the definite term or particular und
king specified in the agreement, |

(b) By the express will of any partner when no definite te
* particular undertaking is specified,

(c) By the express will of all the partners who have not
gned their interests or suffered them to be charged for tk
parate debts, either before after the termination of any specif
rm or particular undertaking,

(d) By the expulsion of any partner from the business be
de in accordance with such a power conferred by the agreem
tween the partners;

(2) In contravention of the agreement between the partne

here the circumstances do not permit a dissolution under
her provision of this section, by the express will of any part:
any time;
3) By any event which makes it unlawful for the busin
. the partnership to be carried on or for the members to carry
1 in partnership;

(4) By the death of any partner;

‘83 By the bankruptcy of any partner or the partnership;

6) By decree of court under section thirty-two.

Sec. 32. Dissolution by decree of court.—(1) On applicat
y or for a partner the court shall decree a dissolution whenev

(a) A partner has been declared a lunatic in any judicial p
eding or is shown to be of unsound mind,

(b) A partner becomes in any other way incapable of p
rming his part of the partnership contract,

(c) A partner has been guilty of such conduct as tends
fect prejudicially the carrying on of the business,

(d) A partner wilfully or persistently commits a breach of |
urtnership agreement, or otherwise so conducts himself in matt
lating to the partnership business that it is not reasonably pr
cable to carry on the business in partnership with him,

: (e) The business of the partnership can only be carried on
OSs

B Other circumstances render a dissolution equitable.

2) On the application of the purchaser of a partner’s inter
nder sections twenty-eight or twenty-nine:
(a) After the termination of the specified term or particular
undertaking,

(b) At any time if the partnership was a partnership at will
nia the interest was assigned or when the charging order was
issued.

Sec. 33. General effect of dissolution on authority of partner.—
Except so far as may be necessary to wind up partnership affairs
or to complete transactions begun but not then finished, dissolution
terminates all authority of anv partner to act for the partnership,

(1) With respect to the partners,

(a) When the dissolution is not by the act, bankruptcy or death
of a partner; or

(b) When the dissolution is by such act, bankruptcy or death
of a partner, in cases where section thirty-four so requires.

(2) With respect to persons not partners, as declared in sec-
tion thirty-five.

Sec. 34. Right of partner to contribution from co-partners after
dissolution.— Where the dissolution is caused by the act, death or
bankruptcy of a partner, each partner is liable to his co-partners
for his share of any liability created by any partner acting for the
partnership as if the partnership had not been dissolved, unless

(a) The dissolution being by act of any partner, the partner
acting for the partnership had knowledge of the dissolution, or

(b) The dissolution being by the death or bankruptcy of a
partner, the nartner acting for the partnership had knowledge or
notice of the death or bankruptcy.

Sec. 35. Power of partner to bind partnership to third persons
after dissolution.—(1) After dissolution a partner can bind the
partnership except as provided in paragraph (3)

(a) By an act appropriate for winding up partnership affairs
or completing transactions unfinished at dissolution

(b) By any transaction which would bind the partnership if
dissolution had not taken place, provided the other party to the
transaction

(I) Had extended credit to the partnership prior to dissolu-
tion and had no knowledge or notice of the dissolution; or

(II) Though he had not so extended credit, had nevertheless
known of the partnership prior to dissolution. and, having no
knowledge or notice of dissolution, the fact of dissolution had not
been advertised in a newspaper of general circulation in the place
(or in each place if more than one) at which the partnership busi-
ness was regularly carried on.

(2) The liability of a partner under paragraph (1b) shall be
satisfied out of partnership assets alone when such partner had
been prior to dissolution

(a) Unknown as a partner to the person with whom the con-
tract 1s made; and

(b) So far unknown and inactive in partnership affairs that
the business reputation of the partnership could not be said to
have been in any degree due to his connection with it.
(3) The partnership is in no case bound by any act of a
partner after dissolution

(a) Where the partnership is dissolved because it is unlawful
to carry on the business, unless the act is appropriate for winding
up partnership affairs; or

(b) Where the partner has become bankrupt; or

_(c) Where the partner has no authority to wind up partner-
ship affairs, except by a transaction with one who

(I) Had extended credit to the partnership prior to dissolution
and had no knowledge or notice of his want of authority; or

(II) Had not extended credit. to the partnership prior to dis-
solution, and, having no knowledge or notice of his want of au-
thority, the fact of his want of authority has not been advertised
in the manner provided for advertising the fact of dissolution in
paragraph (1b IT).

(4) Nothing in this section shall affect the lability under
section sixteen of any person who after dissolution represents him-
self or consents to another representing him as a partner in a
partnership engaged in carrying on business.

Sec. 36. Effect of dissolution on partner’s existing lhability.—
(1) The dissolution of the partnership does not of itself discharge
the existing liability of any partner.

(2) A partner is discharged from any existing liability upon
dissolution of the partnership by an agreement to that effect be-
tween himself, the partnership creditor and the person or partner-
ship continuing the business; and such agreement may be inferred
from the course of dealing between the creditor having knowledge
of the dissolution and the person or partnership continuing the
business.

(3) Where a person agrees to assume the existing obligations
of a dissolved partnershtp, the partners whose obligations have been
assumed shall be discharged from any liability to any creditor of
the partnership who, knowing of the agreement, consents to a
material alteration in the nature or time of payment of such obliga-
tions.

(4) The individual property of a deceased partner shall be
liable for all obligations of the partnership incurred while he was
a partner but subject to the prior payment of his separate debts.

Sec. 37. Right to wind up.—Unless otherwise agreed the part-
ners who have not wrongfully dissolved the partnership or the
legal representative of the last surviving partner, not bankrupt,
has the right to wind up the partnership affairs; provided, how-
ever, that any partner, his legal representative, or his assignee,
upon cause shown, may obtain winding up by the court.

Sec. 38. Rights of partners to application of partnership prop-
erty.—(1) When dissolution is caused in any way, except in con-
travention of the partnership agreement, each partner, as against
his co-partners and all persons claiming through them in respect
of their interests in the partnership. unless otherwise agreed, may
have the partnership property applied to discharge its liabilities,
and the surplus applied to pay in cash the net amount owing to the
respective partners. But if dissolution is caused by expulsion of a
partner, bona fide under the partnership agreement, and if the
expelled partner is discharged from all partnership liabilities either
by payment on agreement under section thirty-six (2), he shall
receive in cash only the net amount due him from the partner-
ship.

(2) When dissolution is caused in contravention of the part-
nership agreement the rights of the partners shall be as follows:
, (a) Each partner who has not caused dissolution wrongfully
shall have,

(I) All the rights specified in paragraph (1) of this section,

an
(II) The right, as against each partner who has caused the
dissolution wrongfully, to damages for breach of the agreement.

(b) The partners who have not caused the dissolution wrong-
fully, if they all desire to continue the business in the same name,
either by themselves or jointly with others, may do so, during the
agreed term for the partnership and for that purpose may possess
the partnership property, provided they secure the payment by
bond approved by the court, or pay to any partner who has caused
the dissolution wrongfully, the value of his interest in the part-
nership at the dissolution, less any damages recoverable under
clause (2a II) of this section, and in like manner indemnify him
against all present or future partnership liabilities.

(<) A partner who has caused the dissolution wrongfully
shall have:

(I) If the business is not continued under the provisions of
paragraph (2b) all the rights of a partner under paragraph (1),
subject to clause (2a II), of this section,

(II) If the business is continued under paragraph (2b) of this
section the right as.against his co-partners and all claiming through
them in respect of their interests in the partnership, to have the
value of his interest in the partnership, less any damages caused to
his co-partners by the dissolution, ascertained and paid to him in
cash, or the payment secured by bond approved by the court, and
to be released from all existing liabilities of the partnership: but
in ascertaining the value of the partner’s interest the value of the
good-will of the business shall not be considered.

Sec. 39. Rights where partnership is dissolved for fraud or
misrepresentation.—Where a partnership contract is rescinded on
the ground of the fraud or misrepresentation of one of the parties
thereto, the party entitled to rescind is, without prejudice to any
other right, entitled,

(a) To a lien on, or right of retention of, the surplus of the
partnership property after satisfying the partnership liabilities to
third persons for any sum of money paid by him for the purchase
of an interest in the partnership and for any capital or advances
contributed by him; and

(b) To stand, after all liabilities to third persons have been
satisfied, in the place of the creditors of the partnership for any
payments made by him in respect of the partnership labilities;
an

(c) To be indemnified by the person guilty of the fraud or
making the representation against all debts and liabilities of the
partnership.

Sec. 40. Rules for distribution—In settling accounts between
the partners after dissolution, the following rules shall be observed,
subject to any agreement to the contrary:

a) The assets of the partnership are:
I) The partnership property,

(II) The contributions of the partners necessary for the pay-
ment of all the liabilities specified in clause (b) of this paragraph.

(b) The liabilities of the partnership shall rank in order of
payment, as follows:

(I) Those owing to creditors other than partners,

(II) Those owing to partners other than for capital and profits,

(IIT) Those owing to partners in respect of capital,

(IV) Those owing to partners in respect of profits.

(c) The assets shall be applied in the order of their declaration
in clause (a) of this paragraph to the satisfaction of the liabilities.

The partners shall contribute, as provided by section eigh-
teen (a) the amount necessary to satisfy the liabilities; but if any,
but not all, of the partners are insolvent, or, not being subject to
process, refuse to contribute, the other partners shall contribute
their share of the liabilities, and, in the relative proportions in
which they share the profits, the additional amount necessary to
pay the liabilities.

(e) An assignee for the benefit of creditors or any person
appointed by the court shall have the right to enforce the contri-
butions specified in clause (d) of this paragraph.

(f) Any partner or his legal representative shall have the right
to enforce the contributions specified in clause (d) of this para-
graph, to the extent of the amount which he has paid in excess
of his share of the liability.

(g) The individual property of a deceased partner shall be
ae) for the contributions specified in clause (d) of this para-

aph.
- (h) When partnership property and the individual properties
of the partners are in the possession of a court for distribution,
partnership creditors shall have priority on partnership property
and separate creditors on individual property, saving the rights of
lien or secured creditors as heretofore.

(i) Where a partner has become bankrupt or his estate is in-
solvent the claims against his separate property shall rank in the
following order:

I) Those owing to separate creditors,
II) Those owing to partnership creditors,
III) Those owing to partners by way of contribution.

Sec. 41. Liability of persons continuing the business in certain
cases.—(1) When any new partner is admitted into an existing
partnership, or when any partner retires and assigns (or the repre-
sentative of the deceased partner assigns) his rights, in partner-
ship property to two or more of the partners, or to one or more
of the partners and one or more third persons, if the business is
continued without liquidation of the partnership affairs, creditors
of the first or dissolved partnership are also creditors of the part-
nership so continuing the business.

(2) When all but one partner retire and assign (or the repre-
sentative of a deceased partner assigns) their rights in partnership
property to the remaining partner, who continues the business
without liquidation of partnership affairs. either alone or with
others, creditors of the dissolved partnership are also creditors of
the person or partnership so continuing the business.

(3) When any partner retires or dies and the business of the
dissolved partnership is continued as set forth in paragraphs (1)
and (2) of this section, with the consent of the retired partners
or the representative of the deceased partner, but without any as-
signment of his right in partnership property, rights of creditors
of the dissolved partnership and of the creditors of the person
or partnership continuing the business shall be as if such assign-
ment had been made.

(4) When all the partners or their representatives assign their
rights in partnership property to one or more third persons who
promise to pay the debts and who continue the business of the dis-
solved partnership, creditors of the dissolved partnership are also
creditors of the person or partnership continuing the business.

(5) When any partner wrongfully causes a dissolution and
the remaining partners continue the business under the provisions
of section thirty-eight (2b), either alone or with others, and
without liquidation of the partnership affairs, creditors of the
dissolved partnership are also creditors of the person or partner-
ship continuing the business.

(6) When a partner is expelled and the remaining partners
continue the business either alone or with others, without liquida-
tion of the partnership affairs, creditors of the dissolved partner-
ship are also creditors of the person or partnership continuing the
business.

(7) The lability of a third person becoming a partner in the
partnership continuing the business, under this section to the credi-
tors of the dissolved partnership shall be satisfied out of partner-
ship property only.

(8) When the business of a partnership after dissolution is
continued under any conditions set forth in this section the creditors
of the dissolved partnership, as against the separate creditors of the
retiring or deceased partner or the representative of the deceased
partner, have a prior right to any claim of the retired partner or
the representative ‘of the deceased partner against the person or
partnership continuing the business, on account of the retired or
deceased partner’s interest in the dissolved partnership or on ac-
count of any consideration promised for such interest or for his
right in partnership property.

(9) Nothing in this section shall be held to modify any right
of creditors to set aside any assignment on the ground of fraud.

(10) The use by the person or partnership continuing the busi-
ness of the partnership name, or the name of a deceased partner
as part thereof, shall not of itself make the individual property of
the deceased partner liable for any debts contracted by such person
or partnership.

ec. 42. Richts of retiring or estate of deceased partner when
the business is continued.—When any partner retires or dies, and
the business is continued under any of the conditions set forth in
section forty-one (1, 2, 3, 5, 6), or section thirty-eight (2b), with-
out any settlement of accounts as between him or his estate and
the person or partnership continuing the business, unless other-
wise agreed, he or his legal representative as against such persons
or partnership may have the value of his interest at the date of
dissolution ascertained, and shall receive as an ordinary creditor
an amount equal to the value of his interest in the dissolved part-
nership with interest, or, at his option or at the option of his
legal representative, in lieu of interest, the profits attributable to
the use of his right in the property of the dissolved partnership;
provided that the creditors of the dissolved partnership as against
the separate creditors, or the representative of the retired or de-
ceased partner, shall have priority on any claim arising under this
section, as provided by section forty-one (8) of this act.

Sec. 48. Accrual of actions.——The right to an account of his
interest shall accrue to any partner, or his legal representative, as
against the winding up partners or the surviving partners or the
person or partnership continuing the business, at the date of dis-
solution, in the absence of any agreement to the contrary.

PART VII.
MISCELLANEOUS PROVISIONS.

Sec. 44. When act takes effect—This act shall take effect on
the first day of July, one thousand nine hundred and eighteen.

Sec. 45. Legislation repealed.—All acts or parts of acts incon-
sistent with this act are hereby repealed.