Powers of a Majority of a Society; - of a Surviving Partner.
Montgomery v. Forresters and Company
Date: 17 June 1791 Case No. No. 28.
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Forresters and Company fitted out a ship for the Greenland whale-fishery, and advertised a division of the property in her into thirty-two shares, of £.150 each; and it was stipulated that the majority of the adventurers should direct the employ, and disposal of the ship, and that the contract should subsist for three years. Forresters and Company subscribed themselves for ten shares, Montgomery for two, and Watson for one; other nine shares were likewise taken; and the remaining thirteen were never filled up. The ship made two unsuccessful voyages, and the concern appearing unprofitable, the majority of the subscribers resolved to sell the ship by public auction. Against this measure Watson and Montgomery entered a formal dissent by protest. The ship was not sold, whereupon the majority resolved to fit her out as a merchant vessel, which was accordingly done. Watson and Montgomery, who had again entered their protest against this last measure, now brought action against Forresters and Company, and the other partners, for a breach of contract; and urged, That the society being entered into for the whale-fishery, and to continue three years, that agreement could not be departed from without the express concurrence of the whole partners; and that the clause in the contract stipulating that a majority of the partners should direct the employ of the vessel, applied only to the detail of operations in the course of the agreed trade, and gave no power to this majority to alter the trade itself, or to put an end to it altogether. The Lords were of opinion, That independently of the clause in the contract, it was essential to the nature of a society of this kind, that the majority of the partners should have a power to put an end to it. It was like a lottery, or an adventure to purchase stock upon time, and which, if unfortunate, no law could bind the majority to continue, to the hazard of their ruin; they therefore assoilzied from the action. See Appendix.
