Alex, Brown and Cates were general partners operating a copying business, the Star Copying Company, pursuant to an oral agreement. At the time the firm was formed, it was agreed that Cates' connection with the firm would be kept hidden from the world. Over the years his role was solely to maintain and keep the accounts of the firm's business progress from his home. The business continued for ten years.

On January 10, Alex carelessly dropped a heavy carton on the foot of a customer, Selena Jones, causing permanent injury to Jones. On March 1, Cates withdrew from the firm for reasons of health, and Alex and Brown promised Cates in writing that the firm would pay any liability that arose from the claim of Jones. Cates told no one of his withdrawal from the firm and the business carried on as usual.

On April 5, Max, who had been selling toner to the firm on credit for several years, sold 1,000 gallons of toner to the firm, which bill is not paid.

On June 1, Max's overdue bill remains unpaid and Jones' claim has not been settled.

(a) Jones, upon investigation, discovers that Cates had been a partner and Jones thereafter sues Cates for her personal injuries. Cates objects on several grounds, claiming: he did not cause the injury; he is no longer a partner; he was only a secret partner; and his co-partners promised him they would be responsible for and pay any liability that arose because of Jones' injury.

Discuss all of these contentions. What result?

(b) On June 1, Max also commences an action for the unpaid toner bill. If the partnership is insolvent, from whom may Max collect for this unpaid bill?