Scottish Court of Session Decisions

Opinion of Lord Justice-Clerk—In this case we have from the Lord Ordinary a very long and elaborate note expressive of his opinion, and the result at which I have arrived is that he has come to a just conclusion, and indeed to the only possible conclusion upon the demand contained in the summons.

The pursuer brings this action for the purpose of asking the judgment of the Court to the effect that an agreement, dated the 19th of May 1863, which we have heard fully discussed, was made and entered into by the defender for and on behalf of the Glasgow Iron Company and the pursuer and defender as the whole remaining partners thereof, or must be held to have been so made and entered into. And then it has a further conclusion, which I suppose is dependent, although it may not necessarily be dependent, on our affirming the first of these propositions, that the partnership “accounts of the said company, from 31st May 1859 to 31st May 1870 inclusive, should be made up and settled on the footing that the said purchase was made for behoof of the said company and the pursuer and defender equally, and as the whole remanent partners thereof.”

Now, the first of these propositions, that the agreement which was made on the 19th of May 1863 was made on the part of the copartnery, and that the copartnery was entitled to the benefit, depends upon the proof, and I think the evidence which has been led proves beyond all question not merely that the agreement was not made on behalf of the company, but that the only thing which, upon the allegation of the pursuer, the defender was instructed or requested to do on behalf of the company never was done, for whatever may be the terms of this agreement, it proves beyond all question that James Reid remained a partner—and in point of fact he did remain a partner—of this company down to the day of his death, and never ceased to be so. And it seems equally clear that Stewart, who was the other partner, never did ask him to cease to be a partner, or that if he did ask him, Reid did not consent to it. What Stewart did was something entirely different, and something which the company never could by possibility have had the benefit of. In the first place, Stewart agreed with Reid, not that he should retire from the company, but that he should remain in the company until he (Stewart) wished him to retire, which he never did; and in the second place, they made a bargain to the effect that in respect of his payment some twenty years afterwards, or within twenty years, of the sum of £60,000 which stood at the credit of his copartner and uncle, Mr Reid, in the books of the firm, he should obtain a conveyance of the whole of Reid's interest in the firm as at that date. Now, as regards the first of these conclusions, I think it came out quite clearly in the debate that there never was a bargain under which Reid was to retire as at 19th May. Now, it appears from the evidence of Cassels that that is what he says Stewart undertook to do. Whether Stewart undertook to do that or not, it was not done. The agreement is of a totally different description, and therefore the case is dependent upon the first of these conclusions, that this was a bargain for behoof of the company, and I am quite clear that there are no materials in the facts of this case on which that could possibly be sustained.

The second ground is more difficult, and it raises some questions in regard to the law of partnership, the importance of which I entirely appreciate. It cannot be disputed upon the decided cases that although there is a delectus persons in the contract of copartnery, any partner may, if he chooses, assign his own share to a third party, as long as that does not interfere with the conduct of the company or the respective rights and interests of the partners inter se. There is nothing to prevent that in the law of partnership or the delectus persona. Neither is there anything under this contract of copartnery. All that is provided there about the assignment of shares in the copartnery is this, that the company shall not be bound to take any notice whatever of transactions of that kind. And so long as the company are not called upon to take any notice of them, there is no violation of that provision of the contract. Now, in the present case, what has actually happened is, that Mr Stewart holds an unintimated assignation to the whole of Reid's share. There is a clause unquestionably in the original contract of the 19th of May to the effect that “the right and interest or stock hereby sold (that is, the whole interest which Reid had) may remain in the first party's name, or it may be transferred over to the second party at any time he may require it.” That clause was never acted on in the second branch of it—that is to say, Reid's name continued as a partner to the end; and therefore no question arose as to that clause or as to the powers which Stewart might have had if he had chosen to act upon it. But I have a very strong opinion that in the circumstances that actually occurred the construction of that 7th clause, which would lead to the right of Stewart to turn Reid out, cannot be maintained, because on 19th March 1864 Mr Reid entered into a new bargain not only with Mr Cassels, the other partner, but with Mr Stewart himself. It was agreed on the 31st May 1860—the deed was signed on the 19th of March 1864, after the date of the other agreement—that James H. Robertson having sold his shares, there should be a statement of the position of the accounts; and it is said, “When it was arranged to buy J. H. Robertson's shares in the business, it was further agreed by the remaining partners that they should each have an equal interest in the company's business from the date of J. H. Robertson's retiring from the concern;” and therefore from the date of the signing of that minute, viz., the 19th of March 1864, there was substantially a new contract of copartnery, and a contract of copartnery under which Reid had a third share of the interest in the concern. It is not necessary to decide that matter, but I take it that Stewart was as much bound to it as Cassels was, and that that being posterior to the agreement, you cannot read the agreement in any way but conform to the stipulations of the contract which was made in 1864. And therefore Mr Reid did remain not only ostensibly but actually a partner of this company down to the day of his death, But then it is said and

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* The manuscript of this opinion was not received in time for publication with the report of the case.

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