definition of partnership, and one more in accord with the established conditions of modern business, might be suggested thus: Partnership is the voluntary association of two or more persons for the purpose of carrying on business together, and dividing its profits and sharing its losses between them. For there may be, and often is, a sharing of the profits of a business venture, when there is no partnership. Agents, or brokers, or commission merchants may be offered and accept a share of the profits, as an inducement to greater effort on their part, but this will not constitute them partners with their principals. There must be a community of interest in both the profits and the losses, to constitute a valid partnership.

Section 399.-FORMATION OF PARTNERSHIP.— A partnership can be formed only by the consent of all the parties. As the voluntary consent of all the members is necessary in the formation of a partnership, it is the law that no new partner can be admitted into a partnership without the consent of every member. If one partner sells his interest in the partnership property, this will not make the purchaser a partner, without the consent of the partner who stays in the business. Neither member of a partnership can force a new member into the firm.

Section

400.-PARTNERSHIP

PROPERTY. The

property of a partnership consists of all that is contributed to the common stock at the formation of the partnership, and all that is subsequently acquired by the partnership. But while every partnership presupposes that there must be something brought into the common stock or fund by each member, it is not necessary that each should contribute or contract to contribute money, goods, effects, or other property, towards the common stock; for one may contribute labor, or skill, and another may contribute property, and another may contribute money, according

as they shall agree. Sometimes it happens that each partner contributes only skill, or labor, or services, for the common benefit. But all must contribute something, and thus join together either money, or goods, or other property, or labor, or skill. Whether the partners in the first place contribute money, or real or personal property, or only their personal labor and services, if they afterwards acquire any property in the partnership business and with partnership funds, it belongs to the firm, and not to the members individually.

Civil Code, Section 2401.

Section 401.-PARTNER'S INTEREST IN PARTNERSHIP PROPERTY.-The interest of each member of a partnership extends to every portion of its property. One partner has no interest distinct from the other in the assets of the firm. One partner has no control of the partnership assets which the other cannot have. The property of the partnership is common, held by a community of interest; and it is always first liable for the partnership debts, before any of it can be applied to the individual use or individual debts of either partner.

Section

402.-POSSESSION OF PARTNERSHIP PROPERTY.-Partners are equally entitled to possession of the partnership property. Partners are joint owners and possessors of all the capital stock, funds, and effects belonging to the partnership, as well as of those which belonged to it at the time of its first formation and establishment; so that, whether its stock, funds, or effects be the product of their labors or manufactures, or be received or acquired by sale, barter, or otherwise, in the course of their trade or business, there is an entire community of right and interest between them.

Neither partner has any right of possession of the partnership property to the exclusion of the other. One partner is as much entitled to the possession as the other. Nor

would it make any difference if the partnership was dissolved; for in that case both partners would be entitled equally to the possession of the partnership assets, until the partnership affairs could be finally settled up.

Section 403.-PARTNER'S SHARE IN PROFITS AND LOSSES.-In the absence of any agreement on the subject, the shares of partners in the profit or loss of the business are equal, and the share of each in the partnership property is the value of his original contribution, increased or diminished by his share of profit or loss. Where there is no agreement between the partners, they are to contribute equally to every loss, whether the loss be unpaid advances, or the loss of the original capital brought in; and this is the rule, whether the partners contributed to the capital in equal shares or not. It is essential to the interest of a valid partnership that there should be a sharing of profits and a sharing of losses. Profits and losses will be shared equally, if there is no agreement to the contrary, no matter what proportion of the firm assets was originally contributed by each. But the partners may agree between themselves that one shall have a larger share of the profits than the other, or that one, if losses occur, shall bear a larger share of the loss than the other, and this agreement will be valid and binding. An agreement to divide the profits of a business implies an agreement for a corresponding division of its losses, unless it is otherwise expressly stipulated. But the law recognizes the fact that the inequality of skill, of labor, or of experience, which the partners may bring into the particular business, may not only justify but positively require an inequality of compensation, and of exemption from loss, as a matter of justice and equity between the parties. And the law has, therefore, wisely not prohibited it; but has left it to the parties. to exercise their own discretion in these matters, taking care that no fraud, imposition, or undue advantage is taken by one of the other. And wherever stipulations are fairly

made between partners, for unequal sharing of profits and losses, the law will uphold and enforce them as valid agree

ments.

Civil Code, Sections 2403, 2404.

Section 404.-APPLICATION OF PARTNERSHIP PROPERTY TO PAYMENT OF DEBTS.-Each member of a partnership may require its property to be applied to the discharge of its debts, and has a lien upon the shares of the other partners for this purpose, and for the payment of the general balance, if any, due to him. The debts of a partnership must be paid out of the partnership property, before any portion of it can be applied to the individual debts of the partners. The interest of a partner may be levied upon for the payment of his debts, but when this is done, the creditors of the firm must be first satisfied, be-. fore the property can be taken to pay anybody else.

Section 405.-WHAT IS PARTNERSHIP PROPERTY. -All property, whether real or personal, acquired with partnership funds, is presumed to be partnership property. There is little difficulty in determining the partnership character of personal or movable property, as a stock of goods, for instance; but there is sometimes difficulty in determining the true character of real estate. The deed to real estate must necessarily be made to and be recorded in the individual names of one or more members of the firm. Cases often occur where the partner in whose name real property stands of record denies that it is partnership property and claims it as his own. Whenever this occurs, it is important to know the law governing the matter. It is the general rule in law that real or immovable property is deemed to belong to the persons in whose name the deed stands. But, as to partners, however the recorded title may stand, or in whose name it may be, real estate bought with partnership funds for partnership purposes will always be considered partnership property.

Section 406.-MUTUAL OBLIGATIONS OF PARTNERS. The relations of partners are necessarily confidential, and they are always bound to deal in good faith one with another. In all proceedings connected with the formation, conduct, dissolution, and liquidation of a partnership, every partner is bound to act in the highest good faith toward his copartners. He must not obtain any advantage over them in the partnership affairs, by the slightest misrepresentation, concealment, threat, or pressure of any kind. The contract of partnership has its foundation in the mutual respect, confidence, and belief in the entire integrity of each partner, and his sincere devotion to the business and true interests of the partnership; and good faith, reasonable skill and diligence, and the exercise of sound judgment and discretion, are necessarily and naturally expected of each party to the partnership. Judge Story in his book on partnership says, on this subject: "Good faith not only requires that every partner should not make any false representations to his partners, but also that he should abstain from all concealments, which may be injurious to the partnership business. If, therefore, any partner is guilty of any such concealment, and derives a private benefit therefrom, he will be compelled to account therefor to the partnership. Upon the like ground, where one partner, who exclusively superintended the accounts of the concern, had agreed to purchase the share of his copartners in the business for a sum, which he knew, from the accounts in his possession, but which he concealed from them, to be for an inadequate consideration, the bargain was set aside in equity, as a constructive fraud; for he could not in fairness deal with the other partners for their share of the profits of the concern without putting them in possession of all the information, which he himself had, with respect to the state of the accounts and the value of the concern." As illustrations of the good faith which must be observed by one partner to another, so clearly