This liability is said to be founded on their participation in the profits ; Winship v. Bank, 5 Pet. (U. S.) 574, 8 L. Ed. 216 ; Dob v. Hal sey, 16 Johns. (N. Y.) 40, 8 Am. Dec. 293; 1 H. Bla. 31. Another reason given for hold ing them liable is that they might otherwise receive usurious interest without any risk ; 4 B. & Ald. 663 ; Muzzy v. Whitney, 10 Johns. (N. Y.) 226. But inasmuch as a dormant partner differs from an ostensible partner only in being unknown as such, the liability of each must be owing to the same cause, viz.: that they are principals in the business, the dormant partner being undisclosed ; L. R. 7 Ex. 218. Sharing profits is simply evi dence of this relation ; 5 Ch. Div. 458; and the usurious interest theory is so palpably illogical that it has never been accepted to any extent ; 2 W. Bla. 997.
So long as he is unknown he may retire "without giving notice to the world"; 1 B. & Ad. 11; Nussbaumer v. Becker, 87 Ill. 281, 29 Am. Rep. 53 ; Magill v. Merrie, 5 B. Mon. (Ky.) 168 ; Deford v. Reynolds, 36 Pa. 325 ; but when known to any persons he ceases to be dormant as to them and must give them notice of retirement ; 1 C. & K. 580 ; Lieb v. Craddock, 87 Ky. 525, 9 S. W. 838 ; Park v. Wooten's Ex'rs, 35 Ala. 242 ; and if known to many, such notice must be the same as of a general partner ; Elmira I. & S. R. M. Co. v. Harris, 124 N. Y. 280, 26 N. E. 541.
Dower. It has been held that a partner's widow is entitled to dower in firm lands sub ject to the equities of the parties; Campbell v. Campbell, 30 N. J. Eq. 415. Firm debts are a lien on partnership lands paramount to a widow's right of dower ; Sumner v. Hampson, 8 Ohio 328, 32 Am. Dec. 722; Simpson v. Leech, 86 I11. 286; where part nership land is sold to pay debts, the widow of a partner has no dower ; Willett v. Brown, 65 Mo. 138, 27 Am. Rep. 265; but contra, Bowman v. Bailey, 20 S. C. 550; Markham v. Merrett, 7 How. (Miss.) 437, 40 Am. Dec. 76. Where the firm debts are all paid the dower revives ; Brewer v. Browne, 68 Ala. 210.
The general result of American cases is that dower does not attach to firm real es tate until it has served all the purposes of the partnership and then so much as remains in specie, unconverted, becomes individual real estate, subject to dower ; Woodward Holmes Co. v. Nudd, 58 Minn. 236, 59 N. W. 1010, 27 L. R. A. 340, 49 Am. St. Rep. 503; Walling v. Burgess, 122 Ind. 299, 22 N. E. 419, 23 N. E. 1076, 7 L. R. A. 481; Haupt
mann v. Hauptmann, 91 App. Div. 197, 86 N. Y. Supp. 427; as to what descends to the heir there is dower; Perin v. Megibben, 53 Fed. 86, 3 C. C. A. 443; Galbraith v. Tracy, • 153 Ill. 54, 38 N. E. 937, 28 L. R. A. 129, 46 Am. St. Rep. 867 ; Huston v. Neil, 41 Ind. 504; Greenwood v. Marvin, 111 N. Y. 423, 19 N. E. 228; Mowry v. Bradley, 11 R. I. 370. In some states dower attaches at once and the wife must join in a deed; Dyer v. Clark, 5 Metc. (Mass.) 562, 39 Am. Dec. 697; Bowman v. Bailey, 20 S. C. 553; Lenow v. Fones,. 48 Ark. 557, 4 S. W. 56 ; Collins v. Warren, 29 Mo. 236; and see Gilmore, Partn.
54, for cases on the subject.
Firm funds. A partner who P withdraws firm funds from the business, thereby di minishing the stock, and applies them to his own use, is liable to the others for the in jury; Honore v. Colmesnil, 1 J. J. Marsh. (Ky.) 507; Kelley v. Greenleaf, 3 Sto. 101, Fed. Cas. No. 7,657; and funds so used by a partner may be followed into his invest ments,; Shaler v. Trowbridge, 28 N. J. Eq. 595.
Fraud. One•partner will be bound by the fraud of his co-partner in contracts relating to the affairs of the partnership, made with innocent third persons ; 2 Cl. & F. 250; Jack son v. Todd, 56 Ind. 406; Wright v. Bros seau, 73 I11. 381; Chester v. Dickerson, 54 N. Y. 1, 13 Am. Rep. 550; Banner v. Schlessing er, 109 Mich. 262, 67 N. W. 116.
This doctrine proceeds upon the ground that where one of two innocent persons must suffer by the act of a third person, he shall suffer who has been the cause or the occa sion of the confidence and credit reposed in such third person; Locke v. Stearns, 1 Mete. (Mass.) 562, 563, 35 Am. Dec. 382. The liability, therefore, does not arise when there is collusion between the fraudulent partner and the party with whom he deals; 1 East 48 ; or the latter has reason to suppose that the partner is acting on his own account ; 2 C. B. 821; 10 B. & C. 298. See infra.
Not only gross frauds, but intrigues for private benefit, are clearly offences against the partnership at large, and, as such, arc relievable in a court of equity ; 3 Kent 51, 52; 1 Sim. 52, 89.
A fraud committed by a partner (in a law firm) while acting on his own separate ac count is not imputable to the firm, although, had he not been a member of the firm, he would not 'have been in a position to com mit the fraud; Andrews v. De Forest, 22 App. Div. 132, 47 N. Y. Supp. 1011.