SECTION XX - INTRODUCTION
Under German, as under English law, commercial associations are either societies (Gesellschaften) or legal persons, corporations (Vereine, Korperschaften). Unfortunately the most important associations of the second type are also called Gesellschaften although they are corporations: thus the Aktiengesellschaft, corresponding to the English company limited by shares, the Kommanditgesellschaft auf Aktien or Aktienkommanditgesellschaft, a combination of an Aktiengesellschaft and a partnership, and the Gesellschaft mit beschrinkter Haftung (shortly called 'G.m.b.H.') corresponding to the English private company.
The commercial code itself deals only with the commercial partnership (offene Handelsgesellschaft), the Kommanditgesellschaft (a partly limited partnership), the Stille Gesellschaft (society with a sleeping partner) and the Reederei or Partenreederei (society of part-owners of a sea-going ship).
Outside the commercial code, in special laws, we find the following: the Aktiengesellschaft and the Aktienkommanditgesellschaft (these two were formerly included in the commercial code, but are now governed by a law of January 30, 1937); the Gesellschaft mit beschrinkter Haftung (private company; laws of 1892 and 1898); the co-operative society (Erwerbs-und Wirtschaftsgenossenschaft; laws of 1889); the mutual assurance company (Versicherungsverein auf Gegenseitigkeit, law of June 6, 1901).,85. The law regulating commercial associations is partly to be found in the commercial code and in the special laws just mentioned, partly in the German civil code, the BGB. The gaps which exist in the commercial laws are to be filled by the provisions contained in the BGB:
(a) Those commercial associations which have legal personality, such as the Aktiengesellschaft, are subjected to rules of the BGB relative to legal persons, ' Vereine '. Thus, for example, section 31 of the BGB is applicable, according to which a legal person is responsible for torts committed by one of its organs within its authority; see on this, Chapter II, section VI, 114 above.
(b) Many rules of the BGB on civil partnerships (sections 705-740) apply also to commercial societies, such as the commercial partnership.
(c) Finally there are some associations which, though they belong to trade and commerce in respect of their economic function, are governed not by commercial law, but entirely by the rules of the BGB on societies (section 705 BGB). They are notably the following:
(aa) The so-called Consortium or syndicate, or occasional partnership (Gelegenheitsgesellschaft). This is a partnership created for the purpose not of carrying on an enterprise, but for one isolated act, or several isolated acts, in the commercial sphere, for example, a society for floating bonds of a public loan or shares of a company.
(bb) Partnerships of handicraftsmen or other merchants of lesser degree (see above section VIII).
(cc) Many cartels are partnerships of civil law. They are not commercial because they do not carry on a commercial enterprise and have no firm-name. The enterprises of the partners remain separated;
(see above section X).
(dd) Unterbeteiligung (accessory participation) is best described by an example: X is a partner in the partnership of X, A and B, or a shareholder in the company C; he wishes to rid himself of part of the risk connected with partnership or share. On the other hand, he does not wish to relinquish his rights entirely by assigning them to another person. He can achieve this by granting a subshare to a third party Y. This type of partnership resembles the society with a sleeping partner. It is merely a so-called Innengesellschaft (internal partnership): Y does not become a partner in the firm X, A & B, or a shareholder in the company C. He participates only in the rights and duties of X, and there exists no relationship between Y on the one hand, and A, B or C on the other.
During the Nazi r6gime the legislator took steps to facilitate the conversion of company enterprises into partnerships or single-merchant-enterprises, and so re-establish a system of personal responsibility. The law concerning such conversion was promulgated on July 5, 1934 (RGBl I 569).
Notably the transformation of ' one man companies' into single enterprises was made easy, especially in the matter of costs. Where the single person was the owner of all the shares in a company, he could convene a ' general meeting' of shareholders and there pass a unanimous resolution concerning the transfer of the company's property to himself. By registration of that resolution the assets and liabilities of the company became his personal assets and liabilities; the company was extinguished. Similar rules were applicable if at least nine-tenths of the shares were in his hands.
SECTION XXI - THE ORDINARY COMMERCIAL PARTNERSHIP (OFFENE HANDELSGESELLSCHAFT)
Partnerships of this type-which corresponds to the French socitde en nom collectif-are those in which two or more persons carry on a commercial enterprise in common and under a firm-name. They differ from partnerships under English law in that the English partnership does not pre-suppose commercial character, but may cover any 'trade, occupation, or profession, carried on in common with a view to profit'. The German commercial partnerships is an ordinary or 'open' partnership, if there is unlimited liability by all partners towards all creditors of the partnership; partners are liable without limitation, unless a limit has been fixed by contract. The open partnership differs both from the Kommanditgesellschaft (sociedt en commandite), where one or more members have limited, one or several others unlimited liability, and from the society with a sleeping partner (stille Gesellschaft), where the sleeping partner is not liable to the creditors directly but only, within limits, to the other partner or partners.
While under English law a partnership may not consist of more than twenty members, German law has not established a maximum.
The commercial partnership is not a legal person. Here German law resembles English law and differs widely from the French view. With respect to its legal nature, German theorists have developed and German courts have adopted a doctrine which is considerably lacking in precision: the doctrine of Gemeinschaft zur gesamten Hand (community of united hands).
This is unknown in England, though a similar concept can be found in the institution of joint-ownership. Its principal idea is as follows: The property of the partnership belongs to the partners in common; if they want to dispose of any part of the property they must ' put their hands together '; they must act unitis manibus, or, if one of them is allowed to act without the others, he acts merely as a representative of all of them (including himself).
Each partner has a share in the partnership's property, but he cannot dispose of his share, e.g. alienate it or charge it with a mortgage. He cannot do so even with the consent of the other partners.
The commercial partnership has however some of the attributes of a legal person. Thus it is possible for the partnership to become bankrupt;
bankruptcy proceedings are restricted to the property of the firm and do not involve the private property of the partners, section 209 Bankruptcy Act, 1877. Vice versa, the partners can become bankrupt without the partnership being affected. Further the partnership may sue and be sued under its firm-name without making the partners parties in the proceedings; conversely if all the partners are sued, this does not mean that the partnership is involved. If, e.g. a creditor obtains a judgment against the partnership only, he cannot seize the private property of any of the partners; and vice versa, if he sues the partners only, the judgment does not entitle him to seize the property of the partnership; section 124, 129 HGB. In this German law differs from English law.
These rules make it understandable that some German authors declare, that the commercial partnership is a genuine legal person, a corporation like the companies. Actually however, except in regard to a very few points, its legal personality is non-existent. A partnership ceases to exist if the number of partners sinks to one; the sole remaining partner is the sole owner of the enterprise and of the firm's property; a corporation, on the other hand, may continue its existence even if all shares come into one hand, and such '1one man companies ' (Einmanngesellschaf ten) are not rare in Germany.
Moreover, in the view of the German courts a partnership is not a merchant, but each of the partners is a merchant.
There remain however several points where it is doubtful whether the partnership should be treated as a legal person or not.
EXAMPLES: The same persons A and B have two different partnerships, one a banking enterprise under the firm-name A & Co., the other an industrial enterprise under the firm-name B & Co. Is it permissible for a creditor of A & Co., who is a debtor of B & Co. to set off his claim against his debt? The answer is no. Or, can one of the partnerships become bankrupt without the other? The answer is yes.
A commercial partnership requires a contract to come into existence. If a single merchant dies leaving two sons as his heirs, these are not at once partners of a commercial partnership. They form a co-heirship (sections 2032 ff. BGB), which is to be treated as a single merchant and which may become a partnership by express or implied contract between the co-heirs.
The commercial partnership is legally obliged to be registered in the commercial register, but it exists before registration unless the enterprise is one which becomes commercial only by registration. (Sections 2 and 3 HGB.)
While in the case of a civil partnership the various partners can only act together, each...