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Adjustment in Partner's Capital A/c

X and Y are p...

Question

X and Y are partners of a banking firm. X receives certain securities from a customer for safe custody and puts in the Sate custody of the firm. Y disposes off those securities and applies the money for his own use. Is the firm liable for Ys act?

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Solution

Solution: Section to which the given problem relates: Section 27.
Decision: Yes.
Reason: The firm is liable for the misapplication of property by a partner if the property was in the custody of the firm
[Leading case: .Devaynes v. Noble].

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