
    *Isaac Marquand, and Erastus Barton, impleaded with George Fitch, appellants, against The President and Directors of the New-York Manufacturing Company, respondents.
    ⅛ the co-partner-solves the part-⅜ the articles ex-partnership ⅛ two°onhe con-traeting parties (¿4liutStand foe^°*er part-piierahip 1 6 ;[“sinos*0{°.*jf0 A bona fide assignment by one of several
    0f the fSftwf, ⅛ c“e> ⅛ a^omt of the °f^ the oithe . a“d t0^)badTeTñ taken of th« stock,Üym’L-,⅞ assignment,and ⅛» p»*deliver the stare claimed by the assignee, that was taken asa ^al“fati“h“' at°cf had been sold. at Publl.c auction or private sale, the ™lue, woul¿ have been much less, and the value of such stock had fallen between the time of taking the inventory, and the taking the account before the master.
    APPEAL from the Court of Chancery. The bill filed the 25th of May, 1815, by the respondents against the appellants, stated, among other things, that in the year 1813, the appellants agreed to enter into copartnership for the purpose of carrying on the business of watch-makers and jewellers, under the firm of Erastus Barton & Co., and written articles of co-partnership were executed by them on the 24th of January, 1814, which were set forth in the bill. The appellant, Fitch, having become indebted to the respondents to a large amount, for money borrowed on endorsed notes, to secure the payment thereof, on the 23d of April, 1814, assigned to the respondents, among other things, his share of the copartnership stock, &c belonging to the firm of E. Barton and Co. The cashier of the respondents, on the 23d of April, 1814, gave a written notice to Barton and Marquand, the other partners, stating that Fitch had, that day, assigned to the respondents, as collateral security, for money loaned by them to him, all his equal and undivided fourth part of all the goods, merchandize, stock in trade, debts and effects, in any wise belonging, due, owing or payable to the house or firm of E. Barton and Co., in which he, Fitch, together with B. and M. are interested as copart-Tiers, &c., and, also, all debts, &c. M. and it., on the 27th of April, 1814, acknowledged the receipt of the notice of the assignment by Fitch of his interest in the establishment, adding, that they should hold themselves accountable to the respondents for the same. F., soon after the assignment, failed, and in May, 1814, became utterly insolvent.
    *On the 15th of October, 1814, an inventory of the stock arid effects was taken, at the instance of the respondents, with a view to a settlement between them and the appellants, which, however, did not take place. The respondents insisted that, by force of the assignment, and of F.’s insolvency, the partnership was, in effect, dissolved, and prayed for a discovery 1 - „ ’ i i j j and an account, &,C.
    'file appellants M. and B. put in their answer, setting forth the articles of copartnership, &c. They admitted the assignment of F. to the respondents, their notice, and the answer. , , , ! ¶* i • r i i • They denied any consent to a dissolution ot the partnership, and that if any was to be inferred from their letter in answer to the notice of assignment, it proceeded from inadvertence ⅛11^ misapprehension, from the effect of which they prayed to be relieved. They referred to the inventory of the stock taken October, 1814, but alleged that the value had considerably diminished, in consequence of the peace; that the concern was subject to heavy demands for rents, taxes, &e.; that the value of fixtures and improvements in the store would be lost, and other sacrifices incurred, by a dissolution of the concern, the business of which was then prosperously conducted, and yielded a profit, &c.; that, by the sixth article of the copartnership, it was to continue until two of the contracting parties should demand a dissolution of it: that no such concurrence of two of the parties had been declared ; and that the partnership, consequently, continued ; that the books were open to the inspection of the respondents, and no account was necessary; that they were not charged with any perversion or mismanagement of the funds of the concern ; and that the assignment by F. was made under an assurance that the business of the firm should not be interrupted ; and that if it was broken up, it would be injurious to the whole concern, and ruinous to tí., who had embarked his whole fortune in it, and for nearly three years had devoted his whole attention to it.
    The bill was taken pro confesso against F. The cause being put at issue as to M. and B., witnesses were examined on both sides. The cause came on to be heard, on the pleadings and proofs, in June, 1817, and in September following an interlocutory order or decree was pronounced, by which *it was decreed that the partnership between M., B. and F. was adjudged and declared to have been dissolved from and after the date of the assignment from F. to the respondents ; and it was ordered that it be referred to a master to take an account of all the partnership property and effects, including debts and credits, and of the balance, if any, due to the respondents, as assignees of F., upon the settlement of the concerns of the partnership; and that in taking the account, the master should make due allowances to the appellants for all just and necessary charges in relation to the partnership; and have power to examine all or any of the parties under oath, touching the matters referred to him.
    The master, after a full examination and hearing before him, made his report, with the testimony before him, from which it appeared that the amount due to the respondents, as assignees of including interest from the 15th of October, 1814, was $‘7,617 and 69 cents. The master, in ascertaining the value of the stock, adopted the prices contained in the inventory the 15th of October, 1814.
    To this report the appellants filed the following exceptions:
    1. That the master had adopted the original cost of the stock as the rule of value, instead of the valuation contained in two statements made before him by the witnesses, one of which was founded on a gross deduction of thirty per cent, and the other on a like deduction of fifty per cent. 2. That no deduction or allowance had been made, on account of depreciation in value by reason of its being culled, change of fashion, loss by expenses of fixtures, &c., or otherwise. 3, That the master has reported the value of the stock to be $6,532 and 27 cents, whereas, on the principles stated in the foregoing exceptions, it would be, in the one case, $3,477 and 20 cents, and in the other, $2,085 and 28 cents. 4. That the master has stated the amount of capital brought in by Fitch to be $6,475, whereas, the actual capital advanced by him was $6,133 and 12 cents. 5. That he had allowed interest on the balance reported to be due.
    
      *The exceptions were argued before the chancellor, who, in September, 1818, made a final decree, overruling all the exceptions, with costs, and confirming the report, and ordering that B. and M. should pay to the respondents the sum of $7,617 and 69 cents, reported to be due, with interest and costs.
    
    From this decree, as well as from the interlocutory order, or decree first mentioned, the appellants appealed to this court.
    The Chancellor assigned the reasons for his decree, as follows :
    The suit was for a settlement of partnership accounts, on the ground of its dissolution by the act of Fitch, one of the partners.
    He became indebted to the New-York Manufacturing Company, in a very large amount, which he was unable to pay, and accordingly, on the 14th of April, 1814, he assigned over to them all his share, or undivided estate and interest in the copartnership between him and the appellants. In May following, Fitch actually stopped payment, and became insolvent.
    It. was contended, on the part of the Manufacturing Company, that the copartnership was dissolved, by the assignment, in April, or, at least, by the insolvency, in May. This was denied on the part of the appellants, on the ground that, by the original articles of copartnership, it was to continue, until dissolved by the death of one of the parties, or until two of them should demand a dissolution. According to the construction given to the articles by the appellants, they had a right to keep the capital of Fitch in their trade or concern, notwithstanding any assignment of his property to his creditors, and notwithstanding an actual insolvency on his part.
    I wras of opinion, that the partnership was dissolved by the assignment, and that the appellants were accountable for all the interest of Fitch in the capital and in the profits of the concern. I do not mean to say, that a voluntary assignment by Fitch, of his property to his creditors, may not be a breach his contract or covenant with his copartners. *The question, as between them, under their articles of agreement, it was not necessary to discuss. But the creditors of one copartner, who take his property by assignment, or on execution, cannot be inv°lved) against their consent, in the responsibilities of a co-partnership. The capital stock, or interest of a partner, is certainly liable to his separate debts. His creditors are entitled to it without the risk and burden of being partners. An act of bankruptcy, says Lord Mansfield, [Cowp. 448.) is a dissolution of the partnership, not only by virtue of the statutes of bankruptcy, but from the necessity of the thing, since assignees cannot carry on a trade. According to the doctrine on the part of the appellants, a party may lock up his capital in a mercantile house, by such an agreement as the one in this case, and it must remain untouched, without the consent of his copartners, during his life. If the creditors take it by assignment, they must become partners in the firm, and can only touch the yearly profits, and must be liable to the yearly losses, and for all the engagements of the firm. This doctrine appears to me to be too unreasonable, and too inconvenient, to be endured.
    There are special circumstances in this case, to show that here was a dissolution by the consent of the firm.
    
      Fitch and Marquand were both directors of the bank of the respondents, and the latter was present at the board of directors at the time of the negotiations and arrangements which preceded the assignment, and he continued his attendance regularly at the board, long after the assignment and insolvency of Fitch. The respondents were not acquainted with the clause I have alluded to in the original articles of copartnership, until many months after the assignment: and during the negotiations that preceded it, Fitch frequently requested the board of directors not to dispose of his interest in the co-partnership, or break up the same, but the board uniformly refused to take the assignment under any such terms or conditions ; and the appellant, Marquand, was present at all the communications from Fitch to the board of directors, and never made any contradiction, or put forward the articles as an objection. His silence, under all these operations, ought to pre-elude him from questioning #the fair and natural effect of the assignment, as a dissolution of the concern, so far as Fitch and his property were involved.
    I, accordingly, declared, that the partnership was dissolved upon the assignment, and that an account ought to be taken upon that basis.
    On the coming in of the master’s report, exceptions were taken to it.
    The three first exceptions related to the value given by him to the capital stock of the company.
    
      There was an inventory of the stock taken on the 15th of October, 1814. at the instance of the respondents, with a view to a settlement between the parties. It is not absolutely certain whether the value of the articles, as set down in the inventory, was intended to represent their then value, or the original cost. If it was intended to represent their value, at that time, there would seem to be no objection, for the object of the inventory and valuation was to lay the foundation of a settlement. There was then no depreciation of price, and no immediate expectation of peace. If, however, the value was, as the appellants allege, taken from the original cost, that must be a good criterion, in the absence of other proof. It must be deemed to have been, in the opinion of the parties, a true and correct rule of estimation, being the very one they must have adopted at the purchase, and commencement of the partnership, in January, 1814. Between January and October, 1814, there was no essential variation in prices, n« the state of the country, and of its trade, remained the same.
    If the proceeds of the stock would have been a better rule in taking the account, yet the appellants were unable to show, with any precision or certainty, what those proceeds were. The books of the company being called for, and produced before the master, could not show it, as the partnership stock and concerns were so blended with other transactions and sales, as not to be capable of discrimination.
    The respondents were, therefore, compelled to resort to the original cost, as the best test of the value. No actual loss was shown, no depreciation, prior to the year 181.5 ; and, ^indeed, whether we resort to the cost, or to the value, they will be found to have been the same, between the commencement of the partnership, in January, 1814, and the inventory in October following, when the appellants refused to deliver up the share of the property belonging to Fitch, even though an indemnity was offered for any loss on account of expenses.
    The three first exceptions were, consequently, overruled.
    The fourth exception states, first* that more was allowed for capital brought in by Fitch, than he actually advanced. This is a mistake in point of fact. The appellants admit that 6,475 dollars were brought in as charged, and the 341 dollars, afterwards withdrawn, were charged to the respondents.
    It stated further, that the capital was chargeable only on the profits of the business. But this exception is contrary to the articles of copartnership, which declare, that the profit and loss, after refunding to Fitch 6,000 dollars, to be advanced by him, were to be divided, &c. The division of profit referred to in the articles, necessarily implied a previous reimbursement of the capital employed. It is no more than the equitable and ordinary principle of settlement applied to such cases.
    The last exception related to the charge of interest; but the allowance of interest on the amount justly due, upon a fair valuation of the stock appropriated by the appellants, seems 1° be too plain and ordinary a point to be susceptible of doubt.
    The exceptions were, accordingly, overruled.
    
      T. A. Emmet, for the appellants,
    contended, that the assignment by F. to the respondents, on the 23d of April, 1814, did not operate as a dissolution of the copartnership. According to the sixth article of the contract, there could be no dissolution, except by death, without the concurrence of two, at least, of the parties. The assignment being the single act of F., if it is to have the effect of dissolving the partnership, is m direct violation of his express covenant, and must be void, as regards the rights of the other partners. *This is not a case of bankruptcy of one partner, or of an execution against him. It was a voluntary assignment to secure future debts; and it was not understood or intended by the parties, that it should operate as a dissolution. This case, then, is clearly distin guishable from those cases, in which the property of one of the partners is acquired by a third person, by operation of law The respondents consented to stand in the place of F. as partners, and the business could be carried on as well after the assignment as before. It is true, that the appellants, M. and B., might have objected to receive the respondents as partners, in the place of F., but they did not; and the partnership went on, with the entire acquiescence of the respondents, from April to October. If losses had accrued to the concern, during that period, would not the respondents have been obliged to bear their share of them ? The assignment was purely voluntary, and to secure not only a present debt, but future advances ; if it was obtained from F. with a view to destroy the copartnership, it was a fraud on the appellants M. and B.
    
    Again; to give the respondents the full benefit of the assignment, it is not necessary that the partnership should be dissolved. F. was to have no personal interference whatever in the business. He furnished the whole capital, and the other two partners were to carry on the business, and after refunding the capital advanced out of the profits, the residue was to be divided between the partners. The assignment was intended merely to transfer to the respondents, the right of F. to receive the moneys, from time to time, payable by virtue of the articles of copartnership, and for which the appellants have always been ready to account. Again; the insolvency of F., which happened a month after the assignment, cannot be said to have dissolved the partnership; for, having assigned all his interest to the respondents, he had ceased to be a partner, and was a mere stranger. _
    _ Next, as to the exceptions taken to the master’s report: Here the counsel discussed the exceptions at great length.
    
      * Wells, contra.
    1. The assignment from F. to the respondents, especially when followed by his insolvency, worked a dissolution of the partnership ; and if the consent of M. and B. should be thought necessary, that is fairly to be inferred from the assignment and tire negotiations between them and the respondents.
    Where the partnership is general and without limitation as to its duration, either partner may put an end to it when he pleases. But the sixth article contains a limitation of a peculiar kind, and the question is, What is its reasonable construction ? It is not denied that the death or lunacy of one partner would have put an end to the partnership: So, in case of a bankruptcy of one of the partners, where a bankrupt law exists. In all these cases, though the articles of copartnership are silent as to the events, the law provides for them. What is the reason that the bankruptcy of one partner works a dissolution ? It is because all his interest in the concern is assigned to strangers. It is the assignment which operates the dissolution ; it severs the unity of interest between the contracting parties. ('Fox v. Hanbury, Cowp. 448. Hague v. Bolleston, 4 Burr. 2174.) In the case ex parte Smith (5 Vesey, 295.) the attorney general, arguendo, said, that “ the assignment severed the joint tenancy.” “ From the moment it is executed, it has precisely the same effect as the voluntary assignment.” The lord chancellor said, that the adjudication that the partner is a bankrupt, severed the partnership. In Smith v. Stokes, (I East, 363—367.) Lord Kenyon said, “It was not the act of bankruptcy alone that dissolved the joint tenancy, but the act of bankruptcy followed up by the commission and assignment. Nothing passes to the assignees till the assignment; but when that is executed, they are in, by legal relation, to the time of the act of bankruptcy.” The respondents are trustees for all the stockholders of the company. Like the assignees of a bankrupt, they are trustees-, not partners. It can never be tolerated, that one of the partners, by assigning his interest, can introduce any person he pleases, into the partnership. The respondents act under a banking charter. Can they lawfully carry on trade, or be concerned with M. and B. as partners in their business ? #If they can become partners, then the former partnership is at an end, and it is a new contract of copart-nership, without any articles or limitation whatever, for the respondents are not parties to the former contract; and either party may, then, put an end to this partnership, whenever he pleases.
    In principle, there can be no difference, as to its operation and effect, between an assignment under a statute of bankruptcy, mal a voluntary assignment by one of the partners of all his interest in the partnership, if the doctrine of the respondents’ counsel was to prevail, the creditors of one of these partners could not touch his interest, by an execution, without consent °f his copartners. It is true, if the assignment is fraudulent and collusive, and merely for the purpose of breaking up the copartnership, it would be void, and of no effect. But a bona fide assignment must stand, though its effect, like that of an assignment under a bankrupt law, is to dissolve the partnership. Such is the rule of the civil law, 
      (Just. Inst, lib. 3 tit. 26. s. 8.) and such is the doctrine of the Supreme Court. (Murray v., Bogert, 14 Johns. Rep. 318. Ketchum v. Clarice, 6 Johns. Rep. 144.) Indeed, the contrary doctrine is unfounded in principle, and would be too dangerous to be tolerated.
    The counsel then examined the evidence in the case, and contended, that it sufficiently appeared, that M. and B. consented to the assignment and dissolution, and that the parties having acted advisedly, could not now set up any pretence of ignorance or misapprehension.
    He then proceeded to discuss the exceptions to the master’s report, which he said was correct, and fully supported by the evidence.
    
      
      
         “ Item, si quis ex sociis mole debiti preegravatus bonis suis cesserit, et ideo propter publica et priva,ta debita substantia ejus veeneat, solvitur societas. Sed hoc casu. si adhuc consentiant in societatem, nova videtur incipere societas(Inst. 3. 26. 8.
    
   Woodworth, J.

The first question to be decided is, whether the legal effect of the assignment is such as to dissolve the partnership.

* Fitch may have violated his engagement with his partners, by transferring his interest, but we are not called on to express any opinion on that point. Third persons claim Fitch’s interest and property in the concern, and are entitled to receive it, if the partnership was at an end.

It is well settled in England, that an act of bankruptcy is a dissolution of partnership ; this is by reason of the assignment, which severs the interest of the bankrupt, by operation of law. (Cowper, 448. 4 Burr. 2174. 5 Ves. jun. 295. 1 East, 163.)

An assignment made by the party himself, under circumstances like the present, produces the same result; in both cases, they give rise to a state of things altogether incompatible with the prosecution of a partnership concern, commenced, and previously conducted, by the bankrupt and his former co-partners. It is perfectly clear, that a new partner cannot be admitted without consent. This, ex vi termini, implies, that even consent would be nugatory, unless the assignee elected to become a partner: where he does not so elect, but (as in the present case) insists on a division of the property, the demand, according to acknowledged principles, cannot rightfully be denied. That a rule of this kind will, in some cases, and probably in the present, bear hard on the partners opposed to a dissolution, is not to be doubted; but its inconveniences are more than counterbalanced, by the superior benefits arising from its application.

There is another insuperable difficulty opposed to a continuance of the partnership, and that arises from the character in which the respondents are placed. How can they become partners with Marquand & Barton ? They are a corporate body, and act as trustees for the benefit of the stockholders. The bank had no power to become partners with the appellants ; it was not within their corporate privileges. It will not be pretended, that in the situation Fitch was placed, he had not a right to assign his interest, and that it passed under the assignment to the respondents. I conclude, therefore, that the assignment by Fitch, per se, dissolved the partnership. In the case of Ketchum and Black v. Clark, (6 Johns. Rep. 144.) where one of the partners had executed an assignment of all his right in the partnership *property and debts, it is said, that “ this act was, of itself, a termination of the partnershipbut there being no evidence of any public notice of the dissolution, nor any special notice to the party afterwards dealing with the firm, on that ground the partners were held liable. As between themselves, the point appeared to be conceded.

In my view, the question must be decided upon the operation of the assignment itself; for, although Marquand was one of the directors, and present at all the communications from Fitch to the board, his consent cannot be inferred from his silence; because, it manifestly appears, from the acts and declarations of Fitch and the directors, that the actual consent of two of the partners was not, by them, considered to be necessary ; the solicitation of Fitch not to break up the establishment, was, undoubtedly, founded on his belief, that by force of the assignment they possessed the right, and the refusal of the directors is evidence that they entertained the same opinion; but it no where appears, that the respondents ever made an attempt to obtain the actual consent of the parties. 11 ad this been done, and bad Marquand made no objections, but remained silent, his conduct would have afforded grounds to infer his acquiescence; but while the negotiations were going on between Fitch and the respondents, from which it appears they considered the dissolution as a consequence of the assignment, Marquatid was not called on to speak; they did not profess to derive any thing from actual consent, and, therefore, his silence shall not now preclude him from questioning the authority exercised by the respondents; neither does the answer of Marquand and Barton, to the note of Greene, the cashier, indicate any thing more, than that they held themselves responsible to the respondents, for the interest they acquired under the assignment of Fitch; nothing more was then required of them, and to that they must submit, however prejudicial to their individual interest.

„ ,• • , T , . from the preceding view of this cause, I am of opinion, that the decree dissolving the partnership, and for taking an account upon that basis, was correct.

The remaining question arises on the exceptions taken to the master’s report. In ascertaining the balance due to #the respondents, the master has taken the valuation contained in the inventory, made by the parties in October, 1814, which, it is understood, corresponds with the original cost or value of the partnership property. In the absence of other proof, he has adopted it as the true value, in October, 1814.

It will be recollected, that the claim of the respondents was not, in the first instance, to demand payment of a certain sum of money, but to break up the establishment, and receive Fitch's proportion of the property and effects.

David I. Greene testified, that he called on the appellants for this purpose ; that the inventory was made to ascertain the amount, with a view to an arrangement, and that he “ offered to the appellants, to take the whole concern, and, release them, from all claim on account of Fitch's advances, and, to indemnify, the appellants against the debts of the concernThis offer was made in order to protect the appellants against loss, in consequence of fixtures, and some bad purchases. The proposition was declined by the appellants. They, consequently, became liable to pay the cash value in October, 1814, which it seems they preferred to the delivery of the property. The depreciation, in consequence of peace, cannot affect the question, because that happened several months after the demand and refusal. Neither are the appellants entitled to a deduction, on the ground that, had the articles been sold at public salej, a loss of thirty per cent, would have ensued. The respondents cannot, in justice, be bound by this test, neither can the appellants rightfully demand it. The respondents, in the first instance, merely claimed the delivery of the goods ; if their request had been complied with, the question of value could not have arisen ; but the appellants, objecting to this, cannot be permitted to say, we will retain the property, and if perchance we are made liable, the measure of damages shall not be according to the value of each article, but be governed by a calculation of loss, which is always consequent upon a sale at auction, of the remnants of a stock in trade. The appellants, having refused to deliver the goods, cannot make a forced sale the measure of damages, but must answer to the respondents according to the value in the ordinary course of business. #The true value, then, in October, 1814, must be the criterion It'was competent for the appellants to show, that the invoice price was too high, and could they have succeeded in that, they might claim a deduction; but having failed to do so, the question now is, whether the master was not justified in adopting the prices set forth m the inventory, which had been taken by the parties. Not a year had elapsed since the partnership commenced, and the war continued; and there could be no well founded calculation when it would terminate, so as to produce a depression of value. On the whole, I am of opinion, that the principles on which the master made his report were correct, and that the decree of his honor the chancellor ought to be affirmed.

April 27th.

This being the unanimous opinion of the court, it was, thereupon, ordered, ADJUDGED and DECREED that the decree of the Court of Chancery be affirmed; -and that the appeal be dismissed; and that the appellants pay to the respondents, for their costs, in defending this appeal; and that the record be remitted, <fcc.

Decree of affirmance.  