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repeal the doctrine of bonâ fide purchaser for value, it certainly would not follow that legal titles to land and chattels would cease to be transferable, but to such a conclusion we must come if we follow the logic of those who argue that even to-day the assignee of a chose in action does not acquire legal title.
UNIVERSITY OF CHICAGO LAW SCHOOL.
Walter Wheeler Cook.
THE UNIFORM PARTNERSHIP ACT AND
N a recent number of the HARVARD LAW REVIEW there was published a criticism of the Uniform Partnership Act which has been approved by the Conference on Uniform State Laws and recommended to state legislatures for adoption.' Mr. William Draper Lewis, the draftsman of the proposed Act, replied to the criticism by an article published in the December, 1915, and January, 1916, numbers of the REVIEW.2 Although unable to find in the article to which he replies a statement of reasons for the contention that the Act should be framed on the legal-person theory of partnership, Mr. Lewis states at some length his reasons for believing it should not be framed on that theory, and asserts that it was not framed on that theory but is inconsistent therewith." The editors of the REVIEW have kindly allowed the writer to supplement his former article by a more explicit statement of the considerations which favor the adoption of the legal-person theory as the basis of a codification of the law of partnership and a reply to the objections urged by Mr. Lewis.
The views expressed by Mr. Lewis regarding legal personality 6 are difficult to understand for two reasons: First, he confuses entities in general with entities which are capable of legal personality. His definition of entity as "phenomena grouped in the mind as possessing a common attribute not had by other phenomena "' may very well answer the purposes of philosophy, but is of little assistance in dealing with the problem of whether an alleged entity is such an entity as is capable of legal personality. It is submitted that an entity is capable of legal personality, i. e., of being recognized and treated by the law as a legal person, if it has objective
1 "The Uniform Partnership Act - a Criticism," 28 HARV. L. REV. 762.
2 "The Uniform Partnership Act a Reply to Mr. Crane's Criticism," 29 HARV.
L. REV. 158, 291.
3 29 HARV. L. REV. 158.
29 HARV. L. REV. 162–92.
reality, interests such as the law protects, and power to will and to act. A group of human beings is such an entity. A business or group of activities is not. Second, he regards human personality as the only true legal personality and all other legal personality as fictitious. A legal person is an entity treated by the law as the subject of rights and obligations. Human beings constitute the numerically largest class of legal persons and have a wider range of interests and powers than other legal persons, such as the state, the city, the university, the business corporation. But not all human beings are legal persons, nor are all legal persons human beings.9
Mr. Lewis admits that the partnership is an entity,10 and apparently does not deny that it is capable of being treated as a legal person. The issue is whether it should be so treated in a codification of the law of partnership.
A. THE LEGAL PERSON THEORY SHOULD BE ADOPTED AS THE BASIS OF CODIFICATION
1. In any one jurisdiction the body of the law of partnership contains many rules and doctrines which are inconsistent with each other. As between the several common law jurisdictions there are an extraordinary number of conflicting decisions. The lack of unity, coherence and uniformity is largely due to the fact that the law of partnership has been built upon a patchwork foundation consisting of elements drawn from the law merchant, from equity and from the common law, whose special contributions have been joint estates and joint obligations. The Act attempts to remedy the situation by introducing a new element, "tenure in partnership." "1 The most effective way to make the law of partnership logical, scientific and uniform is to abandon the old premises and substitute one from which a body of law can be deduced with ease and certainty. The only adequate premise is the theory that the partnership is a legal person.
8 29 HARV. L. REV. 161-62.
A slave is a human being, but has at times been denied all legal personality. That the personality of associations as separate from the personality of the associates individually is a fact not a fiction, is demonstrated in an article by Mr. Harold J. Laski, "The Personality of Associations," 29 HARV. L. REV. 404.
10 29 HARV. L. REV. 162.
11 Uniform Partnership Act, § 25.
2. The certainty and ease with which the details of the law could be developed under the legal-person theory would immensely shorten the labors of the judge, lawyer, student and business man.
3. Many important problems would receive solutions more nearly approximating current ideas of justice and business convenience than is now possible. For example, the questions regarding the rights of a partner and his separate creditors in partnership property,12 the right of an insolvent partnership to dispose of its property,13 and the right of a partner to enter into a contract with the partnership valid and enforceable at law before dissolution.
4. The practical superiority of the legal-person theory is demonstrated by the fact that civil law countries have adopted it.14
5. Although the common law is said not to recognize the partnership as a legal person, many courts have expressly declared it to be such and based their decisions upon the theory that it is to be regarded as a legal person.'
12 This matter is dealt with in the Act by instituting a "tenure in partnership,” the incidents of which are substantially the same as the legal consequences of recognizing the partnership as a legal person as the owner of the partnership property. The Act thus impliedly adopts the legal-person theory. See 28 HARV. L. REV. 771-73. In one instance the Act probably goes beyond the legal-person theory in protecting the partnership from the act of a partner. Suppose the firm of A. and B. owns land standing on the record in the names of A. and B., no partnership relation being disclosed. A. purports to convey to C., a bona fide purchaser, his half interest as tenant in common. C. would get a good title under existing law, and also under the legal-person theory, as A. and B. would be considered trustees for the partnership. Under § 25 (6) apparently the bona fide purchaser for value would get nothing, the conveyance not being authorized by the partnership.
13 The Act makes no provision for this situation. See 28 HARV. L. Rev. 774. 14 28 HARV. L. REV. 764.
15 Some of these cases are cited in a note, 28 HARV. L. REV. 766, n. 37. That they support the proposition for which they are cited follows from Mr. Lewis's admission that "the courts in deciding the cases, in whole or in part, base their conclusion on the legal-person theory." 29 HARV. L. REV. 175. But he denies their value as tending to prove the desirability of adopting the legal-person theory as the basis of codification on the ground that the cases on analysis “fall into two classes: first, those in which the same conclusion as that arrived at by the court can also be reached under the aggregate theory as set forth in the provisions of the Uniform Act; and second, those in which the conclusion, due solely to the conscious adoption of the legal-person theory, is inequitable and unjust." The fact that the Uniform Act contains provisions under which the first group of cases would be decided the same way as they have been decided by courts which have based their decisions on the legal-person theory proves the Act to have adopted, to a certain extent at least, the legal-person theory. The other cases, which Mr. Lewis characterizes as “unjust and inequitable,” apparently consist of two out of the sixteen cited in the note Clay, Robinson & Co. v. Doug
6. Many decisions of cases involving questions of partnership law are irreconcilable with any other than the legal-person theory, although that theory is not expressly referred to as the basis of the decisions.16
las County, 88 Neb. 363, 129 N. W. 548 (1911), and Curtis v. Hollingshead, 2 Green (N. J. L.) 402 (1834). In the former case the question was whether the tax law of Nebraska rendered taxable at its place of business the credits of a partnership, the members of which were non-residents. The court held the property taxable under the statutes on the ground that the partnership is an entity distinct and separate from its members recognized by the law as a person which had acquired a domicile in the state, and that its course of business "however much it might protect a natural person, in our judgment presents no obstacle in the instant case to the enforcement of the taxing laws of this state." Mr. Lewis regards this "intimation" in the passage quoted that a non-resident natural person might escape taxation under the circumstances which would render a partnership taxable as an arbitrary and unjust result. It is to be observed (1) the alleged injustice is a distinction between a foreign partnership and a foreign natural person as the subject of taxation under the Nebraska statutes, (2) from the context the distinction seems to be one suggested by counsel rather than by the court, (3) the distinction is at most a dictum unnecessary to the decision of the case, (4) the distinction results from the provisions of the statute as construed by the court and not solely from the regarding of a partnership as a legal person.
Curtis v. Hollingshead, ubi supra, is also a case of statutory construction. The point decided is that under the New Jersey attachment law a firm creditor cannot sue out an attachment against one of a firm who has absconded, the other members remaining in the state. Mr. Lewis objects to an injustice in the possibility of a distinction between this situation and that of an absconding joint debtor not a partner. It is to be observed (1) that the court does not sanction such a distinction, but on the contrary asserts the same rule applies to both cases (pages 407, 408), and (2) if any such distinction existed it would be due to the statute and not solely to the court's treating the firm as a legal person.
While it is submitted that in neither case is there any inequitable and unjust result due solely to the adoption of the legal-person theory, it is not denied that such results are possible in some situations. But as in the case of corporation law injustice can be avoided by statutory provision and by the court of equity doing what in corporation law has been called "disregarding the fiction."
16 These cases are referred to in part in 28 HARV. L. REV. 767-68. Mr. Lewis sees in these cases "no more than illustrations of the obvious fact that the activities of the partners as associated in partnership form a group of activities separate from their other activities." 29 HARV. L. REV. 191. He discusses the cases under nine headings, which will be followed in replying to his comments.
First. "A creditor holding a security given by a partner individually is not treated as a secured creditor for the purpose of proving against the insolvent estate of the firm." Mr. Lewis's explanation of this rule is that "each class of the partners' creditors, the partnership and separate creditors, have priority on the joint and separate assets respectively; and therefore the partnership creditor does not take any of the property out of which he or his fellow partnership creditors are claiming dividends when he uses the security which he has received from the separate estate of the partner." 29 HARV. L. REV. 182. The explanation is inadequate for two reasons: (1) The insolvency and bankruptcy acts involved in the cases cited define a secured creditor as