The Sun.
London, England, 1855-02-03 00:00:00

LAW OF PARTArEISIin).

It is to be hoped that, as seon as the .Ministerial
boureLsque has blown over, Mr. ClirdwelLs Bill to
Amend the Law of Partnership will receive the attars-
th nof the Legislature. It is high time that the modie
fication of that important branch of commercial law, so
long and so urgently desiderated by the country, will be
been
of accomplished. Few social questions have
of late years more earnestly and searchingly discussed,
or have elicited a stronger conflict of opinion among
experienced and thinking men than that which relate:
to the expediency of legalising partnerships with •
limited liability. Notwithstanding this, the reason
and the strength of the argument is, we venture to
assert, with those who affirm the proposition. The
most striking objections urged by the opponents of
the projected change in our law of partnership ma'y'
be thus stated. They say, firstly, " that there is no
want of capital in this country, ready to be embarked in
any promising enterprise," and that, therefore, farther
facilities for uniting the capital of many individuals and
applying it to speculative concerns should not be afforel.ed ;
secondly, that te give those facilities will increase the
tsndeney to iali seeculatien and fraud ; and lastly, that
it is not just to allow parties to receive an unlimited
amount of profit with a limited responsibility for lose.
Let us look closely into the force of these objections bc.
fore we advance the reasons which in our judgment are
conelusivo that the affirmative is the safe side of this
avowedly difficult question.
Upon the first of these points we join issue with
the object srs, and say that, though there may be no
absolute deficiency of capital iu the Country ready to
be embarked in certain promising undertakings, there
are many branches of trade and industry languishing for
want of capital, to which it might be applied with benefit
tott'l panics concerned, arid, of consequence, with benefit
to the common weal. This position is supported by the
able lteport of the Society for Promotingthe Amendment'
of the Law, on the Law of Partnership, which expressly
states, "that there are numerous cases in which a great
and injurious difficulty in procuring capital exists in Great
Britain." It is only where a narrow view of this question
is taken that the objection appears formidable. The eco-
nomist, who limits his observation to our mineral works
to our manufactures of textile fabrics and hardware, to
our shipbuilding, and to some other important branches of
productive industry, will find no deficiency of capital, and-
therefore be disposed to assent to the objection. But
a more extended and a closer survey of the country will
disclose to him numerous fields for the profitable employ-
ment of capital from which it is now withheld by the
operation of the existing law of partnership. "Not
only," says Mr. Edgar, "are there many small towns
advantageously situated for manufactures and trade
which merely vegetate from generation to generation
net only are there many works of public utility, which
might be ultimately profitable to their promoters, left
unatteinpted throughout the country, but a large pro.
portion of land capable of being profitably cultivated
remains unimproved, while a very considerable propor-
tion of that which is cultivated yields only half returns
in consequence of the want of capital on the part of
landowners and farmers." This, we think, effectually
disposes of the first objection, and changes the denial
into an affirmation that further facilities for uniting the
contributions of small capitalists and directing it into
new channels should be afforded by a change in the
existing law.
The next objection, that partnerships with limited line
bility will open a door to rash speculation and fraud, is
based upon an assumption, and may or may not be true,
as the event alone can determine. But that the proba.
bilities against it are as strong as those in its favour may
be easily established. There would seem to be no reason
why reckless and fraudulent trading should prevail more'
under a law of limited liability than under the existing
law, the effect of which is to restrain cautious and sub.
stantial persons from entering joint-stock companies,
and to leave these enterprises in the hands of Mere specu-
lative and less prudent and trustworthy individuals.
As regards third partieS and the public, at least the same
protection against fraud would be afforded as at present;
for the new law will necessarily provide means for in-
forming parties dealing with a partnership formed
under it of the extent of its resources ; and it will be
their duty to inform themselves, as they do at present
when Bailing with private individuals of the respectabi-
Lty of the ostensible and responsible managers of the
companies or partnerships with which they propose to
deal. The state of popular education, the superior in-
formation, and the vigilance of the press, form, at the
present day, the surest safeguard against specula.
lative delusion.. We shall have no more South Sea
bubbles and Mississippi schemes ; never again see peers
and pedlars j astling each other in the thronged thorough.
fares of Change-alley; duchesses quitting 100 and lane.
quenet to join a rabble of noisy speculators ; or ladies of
the bed-chamber openly pawning their jewels that-
they may participate in the popular enthusiasm for
American stock. If these scenes were ever to be
revived, they would probably have been re-enacted a-
short time ago on the realisation of the dreams of
Raleigh and Pizarro, by the discovery of the gold
fields of California and Australia. There are some
indeed who assert, and with great show of probability,
that the excitement and panic of 1824, 1825, 1836,
1845, 1816, and 1847, were largely due to the existing
a.v of partnership. "Unless there had been," says the
writer above quoted, "an immense amount of capital
in the country which was not profitably employed, the
opportunity would not have been afforded for the schemes
which caused the panic and excitement of those periods ;
end the best preventive of their recurrence seems to Le
to afford convenient Means for the profitable invest.
Inuit of capital by a system of limited liability, which
by equalising' the pressure will render it wholesome and
benetica,." When, in 1807, Regnaud br.mght before the
French Council of State the articles of the Code of Com-
-1 merce that provide' for the rogulati:m of partnerships ea.
c,»itniandite, in which the liability of the shareholders other
luau the gcrants or managers is limited to the amount
of sub, eriptttliii,oelen:
ospoker themeslf
commerce,
r, i lit, idt tie, d
a every...,
community
nwuntetir.
t. ofy of
n capitalterets
interests
-_itcc'rii‘e e theirulaa: ts :I jiolancr,lie l!.'ns
and
Itthaensioifeaicatlutrieers, btehtewecaenp
t ldrelord
ttl:
highest persons in the State and the lowest traders.".
Subsequently, when a decision of the French courts re,
lazed the restrictions upon the system bypermitting the un.
limited transferability of the shares of such companies, nit
apprehension was felt sinii!neeto that urged in the objection
we are now considering, that rash speculations and fraud,
would be encouraged by the limitation of liability ; but
itt.,,liii.eluannadeciti.ioprr
jeptzlelddedfood to
M. Troplong, wr,ting in 1843, speaks of that fear as
as having died away, from the experience that the anti.
cipated evil had not arisen ; and he deduces from it this
wholesome inference, that it would therefore be inad-
visable to alter the system of limited liability at the in.
stance either " of pretended friends of progress or °pixy•
nents of every new element."
To the last objection, that it is unjust to allow parties
to receive an unlimited amount of profit whilst they
beer a limited responsibility for loss, the answer is that
there is nothing in such a state of things inconsistent
with sound principles of jurisprudence or opposed
to those of natural justice. It should be with the
creditors as with the buyer of a horse—caveat emptor.
Under the existing law, creditors, assured of the
unlimited liability of every member of the company or
1 lotterytr7jei h e
partnership with which they trade, are careless and in-
different, and enter into contracts, with a reckless haste
and not unfrequently a dishonest purpose. The new law
will make them more circumspect. Even now, notice
to creditors, or express stipulation, will limit the liability
of partders as well as of all other contracting parties.
The new law will therefore only enact by statute that
which has always been a principle of our common law.
It will afford to creditors the fullest opportunity of as•
suring themselves, before they enter into contracts, of the
means and responsibility of the concern with which they
intend to trade, and will treat these facilities for infer.
illation as a presumption of notice in the manner of a
special contract such as we have above alluded to. This
third objection, though specious, is clearly fallacious. .•
These appear to be sufficient answers to the main ob.
jectione urged against the proposal to permit in this*
country the formation of partnerships with limited
liability. There is, however, another, equally plausible
but less forcible than these, which has unduly preju•
diced against the proposed change minds of a timid
and conservative nature. They say that as the country lasts
attained to an unexampled height of grandeur and ope.
lence under the old law, it ' would be hazardous and
unwise to repeal it and introduce an innovation. The
supporters of the proposed change confidently answer.
True, the country has become a great and'opulent min.
try under the old law, but had it not been fettered by
stilliv gerehaatveer aenldtesntdileldritchheesrethraenmiatrikios winis.
the unwise restrictions of that law, it would have beea
. .
answer to the
reasons urged by the opponents of a modification.
of our law of partnership by admitting the principle
of limited liability, to the full extent of our limits
on the present occasion. In a future article we pro-
pose to advance some reason in favour of the proposed
change, and to review the evidence in support of it. In
the meantime we may rest assured that a principle which
has been found to work well in Austria, Prussia, France,
and America—which has been affirmed by a resolution
of the House of Commons, and been supported by Lord
Ashburton and Mr. F. Baring (who have witnessed its
operation in the United States), Mr. G. W. Norman,
Mr. Senior, and Mr. Bellenden Ker—will have due cone
.sideration in Parliament, and will run small chance of
defeat from the endeavours of capitalists, whose wish
and purpose is to retain monopolies which the existing
law has too long enabled them to enjoy.—Daily News.

THE PATRIOTIC FUND AND THE FENIALE ORPHAN Akira
LUM, LAMBETH.—Yesterday a special general zneetir.g
of the guardians of this charity was held to consider
an application from the Committee of the Patriotic,
Pend. The chairman stated that some' time ago they
Puu
had placed at the disposal of the Duke of Catnbridge,
: at present its
their presidei.t, five prpresentt itions for the orphan chit.
dren of those gallant nnn serving in the Crimea. They
laaodmatalol
Committee
receivedto an
take
the care of the latter. The secretary said that Captaiu
Fishbourne, in his interview with tile guardians, state
that there had been 9,000 or 10,000 deaths in the British
fifteenPi'i i orphancati n
ldren,d
cc. ,n 1 the ;Arioticr
army, and that on an average 60 soldiers were dying
daily, consequewly there would be a great marty
orphans to provide fur. The asylum was intended to
accommodate 160, but at present it contained 163, index
pendent of the 5 to be presented by the Duke of Cam"'
bridge. After some conversation, in which Mr. L. Red.
bead, Mr. Freeman, Mr. H. Maudslay, Mr. Holland,
and other guardians took part, Mr. Forrest moved it
resolution to the effect that the guardians deeply deplore
that the bye-laws compelled them to decline the offer of
the committee of the Patriotic Fund to provide a tem-
porary home for the orphan children of our soldiers who
i have fallen in defence of their country in the East. The
I ,esolution was unanimously adopted.