Business Hints for Men and Women Part 28

When a man invests money in a business in the management of which he takes no active part, he is said to be a "silent partner."

Such a partner has a share in the gains and he is responsible as the others for the firm's liabilities.

Again, a man may not give money or time to a firm, but is willing, for business reasons, that his name shall appear as if he were in the a.s.sociation. In this case the man is known as a "nominal partner."

Although this man is not ent.i.tled to a share in the profits and has no money invested, yet he can be held liable for the debts and other obligations. The reason for this is very plain.

LIABILITY

In all matters rightly belonging to the business of a firm, any member has the right to act, and his acts will be held binding in law.

It is usual for partners active in a business to have each his separate duties, but even if these duties be designated in the articles of agreement, the outside business world is not supposed to know anything about the relative duties of the members of a firm as decided among themselves, so it is decided that each is empowered to act for his partners.

Under the usual articles, it is stipulated that while a dual partnership lasts, neither of the members shall make a note, sign a bond, or enter on any outside obligation as an individual without having secured the written consent of his business a.s.sociates.

Each partner in a firm is liable with the others for all the business indebtedness.

If a firm fails, and the a.s.sets are found not sufficient to satisfy the creditors, they can levy for satisfaction on the private property of one or all of the partners.

If a member of a firm should become so far indebted, as an individual, that he cannot comply with his obligations, the interest he holds in the firm may be disposed of and applied to the payment of his debts.

This does not mean that the creditors may take or seize on any particular thing which the firm holds jointly, but that the debtor's interest in the concern may be so disposed of. All this the law has provided for.

A new partner admitted into a firm cannot be held responsible for the debts of the old concern.

HOW TO DISSOLVE

Every partnership agreement must provide for and distinctly state the period for which it is to continue.

At the end of the period named, the partnership is dissolved by limitation.

If the partnership is to continue, a new agreement must be made and signed.

On proper application, a partnership may be dissolved by an order of the court.

If a member who has become objectionable to his partners should not agree to a dissolution of the firm, the partners may apply to a court of competent jurisdiction for a decree of dissolution.

No member of a firm can withdraw at his own option. The consent of the other partners is necessary, and before he is released he must provide for his share of the obligations.

Notice of dissolution should be published, and notices sent to agents and others interested.

The following is the customary form of notice:

The copartnership heretofore existing between John Smith, Harry Roberts and Thomas Allen, under the firm name of Smith, Roberts & Co., is this day dissolved by mutual consent.

John Smith.

Harry Roberts.

Thomas Allen.

June 30, 1910.

SPECIAL PARTNERSHIPS

Limited or special partners are not recognized in some states.

This is a method of a.s.sociation whereby a person joins a partnership, putting in a sum agreed on, and which he may stand to lose as an investment. He is ent.i.tled to a _pro rata_ in the profits, but he cannot be held for the debts.

In some countries marriage is regarded as a civil contract or form of partnership, subject to dissolution by the courts.

CHAPTER XXII

INVESTMENTS

It is a remarkable fact that many men who have shown remarkable shrewdness in conducting a business in which a fortune may have been acc.u.mulated, exhibit the judgment of children when it comes to making investments.

There are able lawyers who have made fortunes in the practice of the profession which they understood, only to lose them by investments in mines or other ventures, about which they knew absolutely nothing but what was told them by the scheming speculator and smooth-tongued promoter.

As has been intimated before in these pages, there is a great difference between saving through and h.o.a.rding through a spirit of miserliness.

SAVINGS

Every wage or salary earner, no matter how small his compensation, should try to lay by something of that little as a provision against the unproductive days.

No matter how small the amount a man has set aside, after paying for life's necessities and meeting all just debts, he is to that extent a capitalist.

The miser would hide his savings out of reach, but the man with the foresight to save will usually have the judgment to place these savings where they will fructify and grow, producing the fruitage known as interest.

The young man or the young woman, or any one else who places his little acc.u.mulations in a savings bank, has begun a form of investment that may, if persisted in, place him or her above want, even if it does not ent.i.tle either to a place on the lists of great capitalists.

CAPITALISTS

The capitalist not only has money of his own to invest, but he may and very often does need more money properly to exploit the enterprises in which he is engaged.

Money loaned to such men, after being a.s.sured of their ability and integrity, is an advantage to the lender as it is to the user.

The lender's profit is a.s.sured if the enterprise does not fail, and the added capital not only insures against failure, but it may enable the manager to succeed beyond any expectations he could have if forced to carry on the work with only his own resources.

The capitalist may choose to buy land in the suburbs of a city and build thereon a house to be sold or rented. This should always be made to secure the money borrowed.

A capitalist may establish a fund from which, on good security, the business men of the community may obtain loans, for which they get a higher interest than that which they undertake to pay to those whose money they are using.

Again a capitalist may undertake to loan to farmers, who have not the means to carry on the work, but who are anxious to make their lands more productive, through drainage and crop rotation. In this case the money loaned is secured by the usual bond and mortgage.

Or it may be that another body of men is anxious to start a great manufacturing enterprise in the neighborhood, but has not enough money to place the venture on a paying basis.