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Capital of the Firm

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CAPITAL OF THE FIRM. Having treated of the formation of partnership we come now to consider the incidents and principles which regulate the partnership during its existence. And first of the partnership capital, which is the ag gregate sum of the amounts agreed to be paid or con tributed by each partner as the basis for the beginning or continuing the business of the firm. Capital need not be money, but may be furnished in the form of any kind of property. The capital, or contribution of each partner, in whatever shape contributed, is partnership and not individual property for the duration of the partnership. A partner cannot commit a crime by any act relating to the possession of the partnership property, as by embezzlement, and the like. His con trol of the firm property is lawful, and the only remedy for its misuse is in equity. But by agreement the par ties may limit the authority of a partner over firm prop erty. The amount or proportion which each partner contributes to the firm capital is important, as it is re paid before profits upon termination of the partner ship, and may be the basis upon which the profits and losses are shared.

The enhancement in value of a contribution during the existence of the partnership inures to the firm, which is also chargeable with any depreciation. (Frel inghausen v. Ballantine, 38 N. J. Eq. 266.) Under the debt theory the assets are distributed on account of and in proportion to the contributions, and each partner must make up a loss in proportion to his share of the profits. (Moley v. Brine, 120 Mass. 324.)

partner and partnership