Scottish Court of Session Decisions

At advising on 30th March 1973,—

LORD JUSTICE-CLERK (Wheatley).—The pursuer in this Sheriff Court action is the executrix-dative of her father who died on 1st December 1954. The first defenders are a firm of solicitors in Glasgow, of which the second-and third-named defenders are the partners. The fourth-named defender is the executrix of the late John Finlay MacLeod, a solicitor who had been a partner with the second-named defender in the firm of John Finlay MacLeod and Parker, solicitors from 5th April 1958 until his death on 18th June 1958. The said John Finlay MacLeod alone acted professionally for the pursuer as executrix aforesaid from 1955 until 5th April 1958. On 5th April 1958 MacLeod and the second-named defender became partners under the firm name of the first-named defenders and thereafter they acted professionally for the pursuer as executrix until the death of MacLeod on 18th June 1958. From 18th June 1958 until 20th January 1959 the second-named defender alone carried on business as a solicitor under the firm name of the first-named defenders. On 20th January 1959 the third-named defender, who had been an apprentice with the first- and second-named defenders, and the second-named defender became partners under the firm name of the first-named defenders and have carried on the business of solicitors as partners ever since.

The pursuer's action is firstly for an accounting against the defenders jointly and severally for the intromissions of the said John Finlay MacLeod and of the first-named defenders as agent and agents respectively of the pursuer in her capacity as executrix-dative aforesaid for the period from February 1955 to 18th June 1958. The second crave is for an accounting against the first-, second- and third-named defenders jointly and severally for an account for their intromissions as agents of the pursuer as executrix aforesaid for the period from 18th June 1958 to date. The third crave is against all the defenders jointly and severally for payment to the pursuer, as executrix aforesaid, of the sum of £10,000 or such other sum as may be found to be due as the true balance due to her on such accounting.

This action was raised as long ago as October 1962. There has since that time been a debate on relevancy, an appeal thereafter to the Sheriff Principal, an abortive appeal to the Court of Session, which was made too late, and a proof. The proof which was lengthy ended in October 1966 and the Sheriff issued his interlocutor in March 1968. As appears from the Sheriff's note the matter in dispute at the proof related to the liability of the first-, second-and third-named defenders to account for the intromissions of the said John Finlay MacLeod prior to 5th April 1958 and that was the only matter debated before this Court. It was accepted by counsel for the first-, second-and third-named defenders that his clients were accepting liability to account as from 5th April 1958. The Sheriff decided against these defenders and found in law that "they are bound to account to the pursuer for the whole intromissions of the late John Finlay MacLeod and themselves with the executry estate of the late Richard Kearney." This, of course, includes the liability to account for the period prior to 5th April 1958. The fourth-named defender was represented at the proof but was not interested in the matter which was in issue therein. As executrix of John Finlay MacLeod she accepts responsibility for an accounting from February 1955 until 18th June 1958, the date of her husband's death. She was not represented at the appeal against the Sheriffs said interlocutor. The first-, second- and third-named defenders have appealed against that interlocutor.

Before considering the one live issue in the case, there are several points which should be noted. Firstly, no distinction was drawn between the position of the second and third defenders. They were represented by the same counsel, and it was accepted that if one was liable to account for the period prior to 5th April 1958 the other was also liable. Secondly we were informed that much of the delay between the marking of this appeal to the Court of Session and the hearing of it was due to unsuccessful attempts by the parties to settle this very unfortunate dispute. In the third place mention must be made of the failure of the Sheriff to state his views on the credibility and reliability of the witnesses whom he alone saw and heard. A reading of the voluminous evidence in this case discloses inconsistencies and contradictions not only between the evidence of different witnesses but also within the evidence of individual witnesses. With little or no assistance on these matters to be found in the Sheriff's Note, it is not surprising that counsel on both sides attacked some findings in fact made by the Sheriff and suggested altered or new findings. In the event we have found it necessary both to amend and supplement the Sheriff's findings.

The one question which we were called upon to decide was whether the first-, second- and third-named defenders, by reason of the events and circumstances which occurred on and after 5th April 1958, including the partnership which was formed and commenced on that date, are liable for the actings of John Finlay MacLeod as a solicitor prior to that date, and in particular for his intromissions in the estate of the late Richard Kearney.

The Sheriff in his interlocutor of 29th March 1968 found that they were, and his reasons for so finding are set out in the note appended to his interlocutor. His approach to the problem was governed by the opinion expressed by the Sheriff Principal in the note to his interlocutor dated 3rd June 1965. In my opinion the learned Sheriff Principal correctly enunciated the law, and the purpose of the proof was to establish the facts to see how they fitted into the law as so exposited. On the facts which he found proved the Sheriff purported to follow the Sheriff Principal's approach, at least in the first instance, and in doing so he reached what in my opinion is the correct result but for the wrong reasons. In line with the Sheriff Principal's reasoning he seems to have accepted that the principles and considerations which were applied in the cases of Miller v. Thorburn; M'Keand v. Laird; and Heddle's Executrix v. Marwick & Hourston's Trustee which related to trading concerns could equally apply to the business of a solicitors' firm, but he found two facts which seemed to differentiate the present case and justify him in rejecting the pursuer's reliance on that line of authority. In the first place he took the view that it had been established that it was agreed in principle between the second-named defender and MacLeod that a substantial amount of capital would be contributed into the firm by the second-named defender, and he considered that this had such a significant effect that it took this case out of the line of the above-mentioned authorities. In the second-place he considered it to be a material distinction that in the above-cited cases the incoming partner had previously worked in, or had been intimately connected with, the business in which he subsequently became a partner, whereas in the present case the second-named defender was an outsider coming into a business, the affairs of which were in a state of disorder, who was wholly unaware of the extent of the liabilities of John Finlay MacLeod and who would not in these circumstances be expected to assume responsibility for them. He accordingly found that the partnership formed on 5th April 1958 should not be regarded as having taken over the whole liabilities of MacLeod's business, and thus rejected the pursuer's primary argument. On the other hand, he sustained what he described as the pursuer's secondary argument to the effect that the first-, second- and third-named defenders had expressly accepted liability to account to her for MacLeod's intromissions with her father's executry estate. He said that on the evidence and productions in the case he found this argument irresistible. He accordingly found in favour of the pursuer. This ground of judgment just cannot be sustained, and pursuer's counsel did not seek to sustain it. The pursuer has no case for it. She nowhere avers that these defenders expressly accepted liability to account. The pursuer did have arguments in addition to her primary one, but this was not one of them, and I fear that the Sheriff may have misconstrued her submissions.

I am also of the opinion that the Sheriff misconstrued the evidence and the law on the two points which he held to differentiate the present case from the line of authority cited to him. He states that it was agreed in principle between the second-named defender and MacLeod that, as soon as accounts of the business were prepared, a substantial amount of capital would be contributed by the second-named defender; that it was on this basis that the second-named defender became a partner; and that throughout the subsistence of this partnership it was always contemplated by both partners that capital was to be contributed by the second-named defender. In these circumstances he felt that it would be unreasonable to infer that the second-named defender had any intention of accepting liability for MacLeod's preexisting debts.

This line of reasoning proceeds in my view on a misconstruction of the evidence. It is true that at one point in his evidence the second-named defender said that it was agreed "in principle" that he (and the third-named defender who was to be admitted as a partner in due course) would provide capital, but when his evidence is read as a whole an entirely different picture is presented. While it was recognised during the discussions between MacLeod and the second-named defender that capital might have to be introduced by the latter (and the third-named defender) no agreement on this was ever reached. The second-named defender, who knew that MacLeod's business might be in financial difficulties, was not prepared to put any capital into the business until the books of the business had been made up and a balance sheet prepared. His capital contribution was going to depend on what the balance sheet showed was the value of what was being taken over. This exercise was not carried out and neither he nor the third-named defender in fact made any capital contribution. There was accordingly never any agreement that capital would be introduced by the second-named defender. It was contemplated that capital might be introduced by him, but the fact of contribution and the amount thereof were contingent on certain things being done which were never done, and no capital was injected. The stark fact remains that the second-named defender became a partner without making any capital contribution and without being under any binding obligation to make one. I am not saying that an agreement to inject capital into a business may never be in itself a factor to be taken into account. It may be a factor, although conditioned by other things such as the full terms of the agreement and the general surrounding circumstances. What I am saying is that in this case there never was an agreement which obliged the second-named defender to pay anything and there never was any payment. In these circumstances I do not consider that the inference drawn by the Sheriff, on which he rejected the pursuer's argument, can be justified.

The second ground relied on by the Sheriff for differentiating the present case is, in my opinion, equally unsound. His first reason was that in the present case the incoming partner was an outsider who was coming into a business, the affairs of which were in disorder, and who was unaware of the extent of MacLeod's liabilities. In that situation he would not be expected to assume responsibility for these liabilities. While it is true that in the cases which he cites the incoming partner had been an employee or intimately connected with the business (as was the position of the third-named defender here), there is nothing in any of the authorities or in my view in principle to make this a point of distinction or to narrow the general principles enunciated in the cases cited. The fact that because of his previous connection with the business, an incoming partner may know more about the state of the business than an outsider, may or may not be a factor for consideration in a particular case. It is certainly not a qualifying or restrictive condition. In the present case the second-named defender knew that MacLeod's business might be in financial difficulties and that the Kearney executry presented problems. He took no steps to ascertain what the financial state of the business was and what were its liabilities. He was going to walk into an existing business as a partner with a half-interest share in all its assets, and if he chose to ignore the warning lights in connection with the liabilities that was his own faulty look-out. As Lord Trayner, the Lord Ordinary in Heddle's Executrix, pointed out at p. 701, ignorance of the debt is no answer if the requisite conditions are fulfilled. I do not consider the Sheriff's inference on this point to be justified. A short answer to this appeal might be to say that since on the pursuer's primary argument the Sheriff had erred on the two points which he thought differentiated this case from the line of authority cited, that argument succeeds. That, however, would do scant justice to the full and careful arguments presented by defenders' counsel. In the first place they challenged the soundness of the law relied on by the pursuer's counsel in relation both to the primary and to the alternative cases presented by the pursuer. Then they sought to establish on the facts of the case that in any event the pursuer had failed to prove her case even on her own legal standards.

Their first argument was based on equity by comparison and not on legal authority. Reference was made to section 17 (1) of the Partnership Act, 1890, which states:

"A person who is admitted as a partner into an existing firm does not thereby become liable to the creditors of the firm for anything done before he became a partner."

It was submitted that it would be both anomalous and inequitable that this protection should be given to a person admitted as a partner to an existing partnership but should be denied to a person being admitted into a business as a partner with the individual previously carrying on the business simply because that other person was an individual and not a partnership firm. This argument ignores two things. In the first place the Act in its long title is said to be a declaratory as well as an amending Act. Secondly no attention seems to have been paid to the word "thereby." All the subsection says is the fact in itself of being admitted a partner into an existing firm does not render the incoming partner liable for the firm's pre-existing debts. That was merely re-stating the existing law.

In Heddle's Executrix, which was decided two years before the passing of the Act, Lord Adam said at p. 706:

"I do not suppose that anyone will contend that when a new firm is constituted by a person becoming a partner in an existing business, whether carried on by an individual or a firm, the new firm becomes liable for the debt of the old business. Neither do I think that the mere fact of the new firm taking over the whole assets of the old business will per se render the new firm liable for the debts of the old business. I think in all cases it is a question of circumstances, and that it must be established by presumption, or by proof of facts and circumstances, that the new firm agreed to adopt the old debts and become liable for them."

It will be seen that this dictum applies to both sets of circumstances envisaged in the argument. What is the presumption? It was stated by Lord Justice-Clerk Inglis and Lord Cowan in Miller v. Thorburn at p. 362, whose opinions on the subject were shared by Lord Adam in Heddle's Executrix at p. 708, that there is a general presumption which may be displaced by facts pointing to its non-application, that where a new firm takes over the whole stock and business of a going concern and continues on the same footing it is held also to take over the whole liabilities. This statement of the law was reaffirmed by Lord President Normand in Thomson & Balfour v. Boag & Son at p. 10. His Lordship pointed out, however, that the presumption must not be extended beyond the point to which it properly applies, and under reference to the opinion of Lord Shand in Heddle's Executrix gave illustrations of circumstances in which the presumption might be displaced.

Apart from one point, defenders' counsel did not challenge the law thus stated, but sought to establish its non-applicability to the facts of the present case. The one point on which the law thus enunciated was challenged was that the decision in the case of Nelmes & Co. v. Montgomery & Co . ran contrary to it. The facts of each case have to be examined and not merely the result, since the result is dependent on the facts, and each case may have its own special facts. This explains the different results arrived at in Nelmes & Co. and the other cases above cited, and in Heddle's Executrix Lord President Inglis at p. 710 was at pains to approve of Lord Adam's exposition of the law in that case. I am accordingly of the opinion that this challenge fails.

The major challenge by defenders' counsel to the invocation of this line of authority was that while it might apply to commercial firms and trade debts it should not apply to a solicitors' firm and an obligation to render an accounting for intromissions. It was pointed out that the principles enunciated supra had never before been applied to the latter type of case. As far as I know that is so, but by the same token I know of no case where the Court has refused to apply these principles to that type of case. And in principle and in logic I do not see why these principles should not be so applied.

A solicitor's business is a law agent's business. He is the legal agent for his client. If he undertakes work for his client he is entitled to charge fees, but in certain types of work he may have to render an accounting for his intromissions with his client's property or estate and subsequently pay over to his client what is found due on the accounting. This is manifestly so in the case of a solicitor undertaking to carry out the executry work in an estate. The rendering of an accounting for his intromissions with the estate is a preliminary to his payment of what is due to the client, and he is under an obligation to render such an accounting. I cannot see how the money ultimately found due by him to the client can be said to differ in principle from a trade debt, when it is in effect a trade debt. That incidentally seems to be a view accepted by the third-named defender in his evidence at the proof. And if such a trade debt is a liability to be taken over when a new partnership is formed, then it seems to me to be inevitable that the preliminary requirement of an accounting falls into the same category. I am accordingly of the opinion that this line of attack by defenders' counsel also fails.

This brings me back to the question which is posed by the opinion of Lord Adam in Heddle's Executrix at p. 706 quoted supra, namely whether in the circumstances the pursuer has established by presumption or by proof of facts and circumstances that the new firm agreed to adopt the old debts and become liable for them. Of course, the establishment of the presumption itself is dependent upon sufficient facts being proved to sustain it, and this in my opinion entitles the Court to look at all the facts, whether they occurred before, at or after the establishment of the partnership on 5th April 1958. Thus there may be involved facts on which pursuer's counsel relied to support alternative cases of implied undertaking to account, homol-ogation and personal bar. I do not find it necessary to deal with the merits of these alternative cases or the spirited attack on them by defenders' counsel, because in my opinion such facts may be looked at to see whether they have relevance and importance on the primary issue.

This issue, however, can only properly be determined by an examination of the facts held to be proved. We must look at the evidence for ourselves to see whether the Sheriff's findings in fact are justified, without the benefit of his guidance on the credibility and reliability of witnesses. Having done so I am of the opinion that the findings in fact require supplementation and amendment, with consequential amendments to the findings in fact and law and in law. In order that these new findings may be more readily understood, I shall set them out in full.

The new findings-in-fact are as follows:—[His Lordship set out the findings-in-fact stated above and continued:] From findings 9 to 16 inclusive I am satisfied that the presumption has been established and there is nothing in the findings otherwise to displace that presumption. Indeed there is much to support it. When the second-named defender was assumed into partnership by the late John Finlay MacLeod on 5th April 1958 without making any capital contribution he became entitled to a half interest share in the going concern of the business with whatever assets effeired to it and its goodwill. In the circumstances I am of the opinion that the proper inference is that he intended or must be deemed to have intended to accept whatever liabilities attached to the business which he was joining, and these included the liability to account for MacLeod's intromissions in the executry estate of the late Richard Kearney. Despite the protestations of the second-and third-named defenders to the contrary the evidence satisfies me that in any event the first-, second- and third-named defenders took over the instructions originally given to MacLeod and continued to act thereunder, thereby accepting and undertaking the responsibility of providing a full accounting in respect of that executry, and that included the period before as well as the period after 5th April 1958. I reject the submission by defenders' counsel that it is not competent to look at events after 5th April 1958 when considering the issue. Such subsequent events may have an evidential significance on the issue, and in some cases they have. Such an overall approach was taken in Heddle's Executrix.

I am accordingly of the opinion that the pursuer has established her case. In view of the fact that while in agreement with the result reached by the Sheriff I am, with your Lordships, of the opinion that he reached the result for the wrong reasons, the findings in fact and law and in law also fall to be amended. I propose that they should be as follows:

"finds in fact and in law that John Finlay MacLeod and the second-named defender, as the partnership firm of John Finlay MacLeod and Parker, took over the whole business and assets of the then existing business of John Finlay MacLeod at 5th April 1958, and assumed the business liabilities of the said John Finlay MacLeod including the liability to account for the intromissions of the said John Finlay MacLeod to the pursuer as executrix of the late Richard Kearney; that the said liabilities of the second-named defender continued after the death of John Finlay MacLeod on 18th June 1958; and that the third-named defender, having entered into partnership with the second-named defender on 20th January 1959 as John Finlay MacLeod and Parker, carrying on the solicitors' business of John Finlay MacLeod and Parker, previously carried on by the second-named defender, also assumed the said liabilities of the said John Finlay MacLeod, including the liability to account for the intromissions of the said John Finlay MacLeod to the pursuer, as executrix of the late Richard Kearney; finds in law that the first-, second-and third-named defenders are bound to account to the pursuer as executrix aforesaid for the whole intromissions of the late John Finlay MacLeod and themselves with the executry estate of the late Richard Kearney; sustains the fourth and fifth pleas-in-law for the pursuer; quoad ultra affirms and repeats the executorial directions contained in the sherifi's interlocutor of 29th March 1968."

I therefore propose to your Lordships that the appeal should be refused and the case remitted back to the Sheriff to proceed as accords.

LORD MILLIGAN .—I agree with your Lordship that the appeal should be refused and I have nothing to add.

LORD KISSEN .—I agree with the views and observations expressed by your Lordship in the chair.

The Sheriff has, in my opinion, reached the correct result but for the wrong reasons. He has, wrongly in my opinion, decided that the facts and circumstances in the present case did not establish that the firm of John Finlay MacLeod and Parker, of which the deceased John Finlay MacLeod and the second defender were partners and which was set up on 5th April 1958, agreed to accept and take over the outstanding business debts and business liabilities of the said John Finlay MacLeod. This decision was based on two specialities which, he said, distinguished this case from other cases. On the other hand, he decided the case in favour of the pursuer on the ground that the first, second and third defenders had "expressly accepted liability to account." It does appear, however, from his use of the words "virtually irresistible," in explaining his decision on this ground, that he was really founding on an implied acceptance. He was, I think, wrong on this aspect.

The general principles relating to the liability of a new firm for the business debts of a business which has been taken over by the new firm have been repeatedly stated in various cases. Apart from the express assumption of liability for the pre-existing debts of a business which has been taken over, such liability can arise in other circumstances. I content myself with quotations from two cases. The first case is Heddle's Executrix v. Marwick & Hourston's Trustee . In that case Lord Adam said at pp. 706–707:

"Neither do I think that the mere fact of the new firm taking over the whole assets of the old business will per se render the new firm liable for the debts of the old business. I think in all cases it is a question of circumstances and that it must be established by presumption, or by proof of facts and circumstances, that the new firm agreed to adopt the old debts and to become liable for them."

At p. 708 he refers to the "presumption" as arising when the business is "continued on the same footing" and quotes the earlier authorities. These principles are in line with those followed in the later case of Thomson and Balfour v. Boag & Son . In that later case Lord President Normand said at p. 10:

"It is a settled principle of the law that when the whole assets of a going concern are handed over to a new partnership and the business is continued on the same footing as before the presumption is that the liabilities are taken over with the stock—Miller v. Thorburn, M'Keand v. Laird, Heddle's Executrix v. Marwick & Hourston's Trustee . The principle is that it would be inequitable to allow a trader to injure his trade creditors by assuming a partner and handing over his whole assets to the new partnership without liability to pay the trade debts."

It was, incidentally, held, on the facts of this case, that the payment by the new partner of a substantial contribution to capital had rebutted the presumption arising from the continuation of the going business on the same footing as before. I add that there may be other facts and circumstances which can rebut the presumption. A suggestion was made, on behalf of the defenders, that certain observations in the case of Nelmes & Co. v. Montgomery & Co qualified these general principles. I do not think so and I refer to the comments on the case of Nelmes made by Lord President Inglis in Heddle's Executrix at p. 710. The opinion of Lord Inglis (then Lord Justice-Clerk) in M'Keand was one of the authorities quoted by Lord Adam in Heddle's Executrix at p. 708.For the reasons given by your Lordship in the chair, I do not think that section 17 (1) of the Partnership Act, 1890, affects the position.

The first of the two specialities which, the Sheriff decided, distinguished the present case from other cases, where the said general principles were applied, was that "it was agreed in principle between the second-named defender and Mr MacLeod that, as soon as accounts of the business were prepared, a substantial amount of capital would be contributed by the second-named defender. It was on this basis that the second-named defender became a partner and remained a partner until Mr MacLeod's death. In other words, throughout the subsistence of the partnership it was always contemplated by both partners that capital was to be contributed by the second-named defender. That being so, in my opinion it would be unreasonable to infer that the second-named defender had any intention of accepting liability for Mr MacLeod's pre-existing debts."

The finding-in-fact which he had made on this matter was based on the evidence of the widow of Mr MacLeod (the fourth defender), who was, on her own evidence, not present when the said agreement in principle was supposed to have been made. It was, in any event, inaccurate in at least one other respect, that is, in regard to the sum of £500. The second and third defenders agreed that there were only discussions about the possibility of money being injected into the new firm. The second defender made it clear that the contribution of capital by him, if made, depended on his being satisfied with the accounts of Mr MacLeod's business and both the second and third defenders agreed that there was no final decision about the contribution of capital and, if there was to be a contribution by the second defender, its amount. The effect of those vague and nebulous discussions in February 1958 was that there was no agreement to contribute capital. In any event, it is difficult to see, on the evidence, how the amount of capital to be contributed was to be ascertained and what was to be its basis. The second defender, indeed, indicated that, with the later discovery of the extent of the liabilities of Mr MacLeod, an early dissolution of the new firm might have been required. One result of this so-called "agreement" was that on 5th April 1958, the second defender obtained one half of Mr MacLeod's business, including his assets, goodwill and connections, with no liability to pay any agreed sum therefor and with the option of dissolving the partnership, if agreement on the accounts or his contribution could not be reached. If the contention of the second defender were accepted, his acquisition of one half of Mr MacLeod's business was free of any liability for Mr MacLeod's pre-existing business debts and obligations. The Sheriff's original finding regarding contribution was unjustified by the evidence and the substituted finding nullifies the distinction which he made.

There is one matter which I should mention on this aspect of the case. Pursuer's counsel appeared to maintain that the important matter in regard to contribution of capital as rebutting any presumption of liability for preexisting debts, when a business was continued "on the same footing as before," was whether capital had in fact been contributed and not whether there was an agreement to contribute it. Reference was made, in this connection, to the opinions of Lords Trayner and Adam in Heddle's Executrix, at pp. 701 and 705 respectively. The point in that case was that the agreement to contribute capital had not been carried out. It was not said that an agreement to contribute capital to a new firm could not rebut the presumption of liability for pre-existing debts and that actual payment of the agreed contribution was essential. I think that the whole terms of an agreement to pay capital, the relationship of that capital to the assets of the new firm, and the fulfilment of the terms of the agreement are all matters which may be of importance in regard to the presumption. For the reasons which I have given previously, this aspect does not, however, arise in the present case.

The second of the two specialities on which the Sheriff relied to distinguish this case from other cases was that, in this case, the second defender had not worked in nor been previously connected with Mr MacLeod's business, and was an outsider coming into a business, whose affairs were in a state of disorder. It was said that he could not be expected to assume responsibilities for liabilities when he was unaware of the extent of them. These grounds of distinction appear to me to ignore the general principles which are applicable in such cases. Liability for the pre-existing debts does not depend on whether the incoming partner had been an employee or "intimately connected" with the old business. That was the position in the cases quoted by the Sheriff but there is no suggestion in any of the authorities that the general principles are of such limited application. The fact that the second defender may have been unaware of the extent of Mr MacLeod's business liabilities is also of no consequence. (See, for example, Miller at p. 360 and Heddle's Executrix at p. 701.) It was said by counsel for the defenders that it was impossible to presume that the second defender could ever have intended to take over what he described as an "open-ended commitment" and that equitable considerations are against that. The fact is that the second defender acquired on 5th April 1958 a one half share of all the assets, including the goodwill connections and the continuing work of Mr MacLeod's business, which he admitted was of some value, without any obligation to make any payment, as I have previously indicated. Equitable considerations do not appear to me to assist the second defender who was, in any event, aware of the precarious financial position of Mr MacLeod's business, although not the extent of it.

A further submission on behalf of the defenders was that the general principles which were stated in the reported cases applied to "trade debts" only and not to the liabilities of a solicitor to account for his intromissions. This line of defence had been taken before the Sheriff and Sheriff Principal in support of these defenders' second plea-in-law on relevancy quoad the parts of the crave which are in dispute. The Sheriff Principal, reversing the Sheriff, had decided that there was no difference between "trade debts" and the liability of a solicitor to account for his intromissions and to pay the debt shown to be due by such accounting. I do not think that I require to extend this opinion further by dealing in any detail with this submission. I agree entirely with the views of the Sheriff Principal, as stated in his note, dated 3rd June 1965, on this aspect and with the views expressed by your Lordship in the chair. The amount of debt due by a solicitor may, in certain circumstances, require to be ascertained by an accounting but that cannot mean that it is other than a debt incurred in the course of business as a solicitor. To suggest that because ascertainment of the exact amount due may be more onerous than in the case of a quantified debt, such a debt should be excluded from the application of the general principles which I have previously discussed has no equitable or rational basis. Solicitor's businesses are not, in any event, unique in this respect. A mercantile business may owe a debt to an agent who is paid on a commission basis, and such a debt may require an accounting to ascertain the exact amount due. I cannot see why a solicitor's business should be in a special category, as was suggested. I reject this argument.

There can, I think, be no doubt that the facts and circumstances which were established in the present case have the result that the defenders' appeal fails. The assumption by the defenders of a liability to account for the pre-existing debts and obligations of Mr MacLeod must follow from the facts found in findings 9 to 16 inclusive. Mr MacLeod's business was continued "on the same footing as before." There is nothing to rebut the presumption that Mr MacLeod's liabilities, including his liability to account for his intromissions with the pursuer, as executrix, were taken over with his business on 5th April 1958. The other findings are not inconsistent with that conclusion and, indeed, lend support to it. I cannot accept the contention of counsel for the defenders that the events which occurred after 5th April 1958 can have no bearing on the presumption which is to be drawn about liability for pre-existing debts and are not part of the relevant "facts and circumstances." It is correct to say that the important date in this case was 5th April 1958 but actions which followed that date can have an important bearing on the presumption and form part of the relevant "facts and circumstances." It is clear that, in all the reported cases, the Court did consider the events which occurred after the new partnership commenced as having a relevant bearing on the question of liability for preexisting debts.

It is unnecessary, in the circumstances, for me to consider, at any length, the Sheriff's reasons for his upholding the pursuer's "secondary argument." I do not think that the pursuer's pleadings relevantly stated the case which the Sheriff upheld, whether that case was one of express acceptance of liability or implied acceptance of liability. I do not think that cases of personal bar or homologation, as put forward by pursuer's counsel, were relevantly pleaded. In any event, the evidence fell far short of the minimum required to establish the pursuer's case on the "secondary argument," whatever its legal basis was.

For the reasons which I have given, I agree that this appeal fails.