LIMITED PARTNERSHIPS 1. History.—Tho the limited partnership came into general use only recently, its history is perhaps more ancient than that of the ordinary partnership. It is undoubtedly an outgrowth of the Roman Law which provided that one or more persons might turn over property to a slave and avoid personal liability by trading thru him. Gradually there grew up in the civil law the rules governing this form of business, substituting of course for the slaves free persons who became general partners with unlimited liability. Louisiana, which uses the civil instead of the common law, recognized this form of organization; in 1822 the principal rules which grew up in the civil law were codified and enacted into a statute b3r the State of New York. New York's lead has now been followed by most common law jurisdictions tho England did not fall into line until 1907.
2. Essential features of limited partners/4.—in a limited partnership the partners are divided into two classes: general partners who are liable for all firm debts, and special partners whose liabilities are limited, usually to the amount of their respective con tribulions to the firm. As far as the outside world is concerned the general partners are in effect the firm. They are the active managers and also can di rect and bind the concern. Their names alone can appear in the firm name. When the firm is sued or wishes to sue, the general partners' names alone ap pear in the title to the action. Indeed, while in the ordinary partnership, the members could not sue the firm since they would in effect be suing themselves, this rule applies in a limited partnership only to the general members. They can enforce their claims against their own firm only by going into equity and getting an accounting. These difficulties do not stand in the way of the special partners, since if they wish to sue the firm they use only the names of the gen eral partners as defendants.
3. Method of forming and terminating limited part limited partnership exists by statute and not by common law; it is formed by the filing of a certificate. Moreover the provisions of the statutes and the agreements contained in the certificate must be strictly observed or the special partners will for feit their limited liability and become general part ners. Indeed, while the limited partnership may be dissolved for any of the causes applicable to ordinary partnerships, an additional cause is interference in the operations of the firm by a special partner or failure of any special partner to live up to his obliga tions. Thus if any one of two or more special part ners interferes with the business, or withdraws the capital he has contributed in pursuance of the certifi cate provisions, the whole partnership loses its limited character and all the members become liable .as gen
eral partners.' 4. Form of limited partnership agreemeut.—The following illustrates the form of a certificate of limited partnership in the State of New York: tinue, beyond the time fixed for its duration, the limited part nership which was heretofore formed and now exists under us, under the name or firm of Post and Flagg,' by making, severally signing and acknowkdging, and causing to be filed and recorded in the Clerk's office of the County- of New York, in the State of New York, this certificate by which such part I Limited partnerships are recognized in Canada. In all the provinces, the filing of the certificate is of course absolutely essential. There can be no dissolution of such partnership before the time mentioned in the certificate until a notice has been filed in the office where the original certificate was recorded, ancl in Ontario it inust also be published once each week for three consecutive weeks in the local newspapers and in the Official Gazette. The general principles underlying all limited part nerships are here well stated.
2 It should be noticed that this certificate was executed for the purpose of renewing and continuing an old partnership which had consisted of two partners, Post and Flagg. Where a new partnership is formed the firm name should contain the names only of the general partners. Sec tion .20 of the Partnership Law (Chapter XXXIX of the Consolidated Laws of the State of New York), provides in part: "Where any limited partnership shall hereafter be formed under the laws of this State, it may use the firm or corporate name of any general or limited partnership or of any corporation, domestic or foreign, which may theretofore have car ried on its business within this State. Where said general or limited partnership or corporation is discontinued or shall be about to discontinue its business within the State, and where a majority of the partners, general or special, in either of such last mentioned co-partnerships, or of the survivors thereof, shall be members of such co-partnership there tofore existing, or of the surviving members thereof, or where stock holders holding a majority of the stock of such corporation shall consent in writing to the use of such firm or corporate name by such new co partnership." nership is renewed and continued, pursuant to "An Act in relation to partnership, constituting chapter thirty-nine of the Consolidated Laws," and we do hereby certify and state: I. That the name or firm under which such partnership is to be conducted is Post and Flagg, and that the county wherein its principal place of business is to be located is the County of New York.