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Scottish Court of Session Decisions |
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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> M'Kersie v. Mitchell and Others [1872] ScotLR 9_549 (25 June 1872) URL: http://www.bailii.org/scot/cases/ScotCS/1872/09SLR0549.html Cite as: [1872] ScotLR 9_549, [1872] SLR 9_549 |
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Page: 549↓
One of the next of kin of a deceased, who owned one-half of a distillery, held not entitled to insist that the business should be sold in order that the true value of his share might be ascertained, while a majority of the next of kin agreed that their respective shares should be ascertained by arbitration. Held also, barred by mora from challenging the proceedings of the executors, which had taken place about seven years before any active step was taken to set them aside.
Archibald Mitchell, distiller in Campbeltown, died, intestate and unmarried, on 2d March 1863. He was survived by two brothers and three sisters, viz., the defenders John Mitchell and William Mitchell, and by Mrs Mary Mitchell or Sheddan, Mrs Isabella Mitchell or Campbell, and the pursuer, Mrs Jean Mitchell or M'Kersie, who were his surviving next of kin, and who, along with Archibald Mitchell (a nephew of the deceased), residing at Iowa, in the United States, were the whole parties among whom his moveable estate fell to be distributed. The pursuer, William M'Kersie, was the husband of the said Mrs Jean Mitchell or M'Kersie.
Some time after Mr Mitchell's death the defenders John and William Mitchell, on a petition to the Commissary of the county of Argyll, were decerned executors-dative qua two of the next of kin to the deceased, and afterwards gave up and recorded an inventory of the deceased's personal estate. The testament-dative by the Commissary in their favour was dated 19th September 1863. They then took possession of and administered the
Page: 550↓
whole estate of the deceased, who at the time of his death was possessed of considerable means, heritable and moveable. In particular, he was the principal partner of the firm of Wylie, Mitchell, & Co., distillers and maltsters at the Rieclachan Distillery, Campbeltown. Five-tenths, or one-half, of the concern belonged to him; two-tenths to the defender Mrs Jean Harvey; two-tenths to her son, the defender James Harvey; and one-tenth to the defender John Mitchell. There was no written contract of copartnery between the partners of the distillery company, and by Mr Mitchell's death the company was dissolved. Shortly after his death, the pursuer M'Kersie, for himself and his wife, intimated to the defenders John and William Mitchell that he wished the deceased's estate, and particularly the distillery business, to be publicly sold, in order that the full value might be realised. The other defenders were also informed that this was the wish of the pursuers. On 9th August 1863, M'Kersie received a letter from the agent of John and William Mitchell requesting him to attend a meeting of the next of kin of the deceased, for the purpose of making arrangements for ascertaining the value of the deceased's interest as a partner of Wylie, Mitchell, & Co. The pursuers declined to attend the meeting. On 11th August 1863, M'Kersie received a letter from the executors' agent, with a copy of a minute of the meeting, bearing, inter alia, that the parties present had resolved to ascertain the value of the deceased's interest in the distillery by arbitration; and had authorised the executors John Mitchell and William Mitchell to nominate an arbiter for them. The parties present at the meeting were the defenders John and William Mitchell, Mrs Hugh Mitchell, for her son Archibald Mitchell, and Mrs Campbell. M'Kersie protested against these proceedings. On 29th September 1863, he received a letter from the defenders' agent, intimating that another meeting of the next of kin of the deceased would be held on the evening of that day, for the purpose of choosing a referee in room of one previously appointed, who had declined to act. M'Kersie declined to attend this meeting also. At the meeting it was agreed to nominate William M'Nair as a valuator for the executors.
The surviving partners of Wylie, Mitchell, & Co. having named James Stewart as referee on their behalf, a reference was entered into on 30th September 1863, by the said James Harvey on behalf of the surviving partners of Wylie, Mitchell, & Co., and by William Mitchell on behalf of the executors of the deceased, with a view to ascertain the value of the deceased's interest in the distillery. This reference was the deed first sought to be reduced. On 30th September 1863, the day on which the reference was entered into, the arbiters issued a deliverance which bore that the value of the deceased's interest in the late firm of Wylie, Mitchell & Co. amounted to £3645, 11s. 9d. This deliverance was the second document of which reduction was sought. On 2d October 1863, two days after the reference had been entered into and the deliverance issued, the arbiters pronounced a decreet-arbitral, finding that the said sum of £3645, 11s. 9d. was the value of the deceased's interest in the firm as at 9th July 1863. This award was the third document sought to be reduced.
On the 2d of October 1863, M'Kersie received another letter from the defenders, intimating that a meeting of the next of kin of the deceased would be held that evening, for the purpose of fixing their proportions of the deceased's interest in the firm, as fixed by the arbitrators; but he declined to attend this meeting, or to be bound by the valuation of the arbiters, and insisted that the executors were bound to realise the whole property of the deceased by bringing it to public sale.
Notwithstanding the remonstrances of the pursuer, a new copartnery, under the name of Wylie, Mitchell, & Co., was formed, the partners being the defenders, John Mitchell, William Mitchell, Mrs Jean Ferguson or Harvey, James Harvey, the firm of J. & W. Mitchell & Co., and the said John Mitchell and William Mitchell, the individual partners of J. & W. Mitchell & Co., and Mrs Campbell, who allowed her share of the executry estate to remain in the business of Wylie, Mitchell, & Co. In the new company the whole stock, &c., of the former firm were taken as a part of the capital stock of the new firm, the share of the deceased being taken at the price put upon it by the award.
The pursuers, on 9th September 1870, raised an action against the defenders John Mitchell and William Mitchell, as executors, calling them to account for their actings and intromissions, and objecting again to the business being taken over under the said valuation or reference, and demanding that they should have a share of the profits of the business until it should be sold as it ought to have been.
That action was, however, dismissed by the Second Division, on the ground that it was not sufficient to call the executors as defenders, but that the new firm must also be called for its interest. They accordingly raised the present action, concluding for a declarator that the executors were bound to have disposed of the distillery business by public sale, in order to ascertain the true value of the pursuer's interest in it; for a decree that the business should be sold; and for reduction of the above reference, deliverance, and award.
The Lord Ordinary ( Jerviswoode), after a proof, pronounced the following interlocutor:—
“ Edinburgh, 21 st March, 1872.—The Lord Ordinary..… finds as matter of fact, 1st, that a public sale of the business of the firm of Wylie, Mitchell, & Co., including the whole stock, property, good-will, and other assets thereof, the right and duty of the defenders, the executors of the late Archibald Mitchell, in regard to which sale is now sought to be established under the first declaratory conclusion of the summons, could not have been carried out on the death of the said Archibald Mitchell otherwise than subject to a serious risk of loss, and of detriment to the interests of the several persons representing him, and to the interests of the partners of the said firm other than the said Archibald Mitchell; and 2d, that a public sale of the business which is now carried on under the said firm, such as is contemplated under the second conclusion of the summons, would (assuming that the pursuers had right or title to insist on such a sale) be hazardous to, and involve serious risk of loss and injury to, the partners in the said present company; and, with reference to the preceding findings, finds as matters of law that the pursuers have failed to instruct by evidence any facts averred on their behalf which are relevant and sufficient to support or warrant the conclusions of the summons, or any of them: therefore assoilzies the defenders from the whole conclusions of the summons, and decerns,” &c.
Page: 551↓
The pursuers reclaimed.
Shand and Orphoot for the pursuers.
Fraser for the defenders, the executors.
Munro for the defenders, the new firm.
At advising—
Two elements were suggested in this case as substantially vitiating the agreement, and impugning its good faith. The first was, that John Mitchell, who was one of the executors, was also one of the surviving partners. If John Mitchell had been sole partner, and also sole executor, the objection might be formidable. But he was neither. The Harveys held the greater part of the remaining stock, and had no interest in the share of the deceased; and William Mitchell, the other executor, had no individual interest whatever in the estate. The surviving partners were therefore quite in a position to deal at arms-length with the executors, and were entitled to do so.
The other objection, as far as the surviving partners are concerned, is, that they were privately aware of Mr M'Kersie's letter of the 3d of October. I do not think they were bound to take any notice of it. No steps were taken to interpel them, and the demand made in that letter we have found to be one entirely inadmissible.
I am therefore of opinion that, as far as the surviving partners were concerned, the old concern was effectually brought to an end, and the interest of the partners validly ascertained and discharged, as between the survivors and the representatives of the deceasing partners. As the new concern, therefore, is distinct from the old, and never traded on the assets which belonged to it, the primary and leading conclusion of the action is untenable.
The only question which remains, and the only one which in my opinion the pursuers can in the circumstances raise, is a question of due administration on the part of the executor. But I can find no ground on which such a plea can be maintained.
In the first place, it is as well proved as in such a case it could be, that the settlement was perfectly reasonable. The valuators were examined, and gave their reasons for the valuation, and nothing is proved which can lead us to suppose that it was not fairly carried out. It is said the goodwill was not valued. It was doubted seriously, in Crawshay v. Collins, whether an expired partnership could be said to have any goodwill; and if it were to be wound up by a sale, it plainly could have none. A goodwill only applies to a going concern, but if stock and premises are disposed of, the goodwill perishes in the process—( See the Lord Chancellor's remarks). As it was, the estate of the deceased partner got the benefit of valuation of a lease which in reality, as we now find, did not exist. The valuators, however, say that they valued the stock as belonging to a going concern, which, of course, included the goodwill.
But I do not think the executors can in any view be called upon now to enter into any such enquiry. The whole stock has perished long ago. A revaluation is impossible. A sale is equally so. The pursuers deliberately refrained from interposing while they could do so with effect, and kept absolute silence for five years, while they knew that the agreement was being carried out and acted on. Their threats of legal proceedings add force to their delay; for they show that they intentionally refrained from proceeding, while in perfect knowledge of such rights as they had. It would be contrary to every principle of justice and reason to sustain such a claim now.
I propose, therefore, to place our judgment on a somewhat wider ground than the Lord Ordinary has adopted. I do not say that if that ground had been the only one, it was not sufficieut. The proposal is, that the stock of the new firm should be sold in order to ascertain the difference between the sum consigned for the pursuers, and what a
Page: 552↓
The other Judges concurred.
Solicitors: Agents for Pursuers and Reclaimers— Morton, Neilson, & Smart, W.S.
Agent for Defenders— John Galletly, S.S.C.
