Scottish Court of Session Decisions

The late Robert Hope, a farmer in Galloway, and his brother, the defender James Hope, were engaged for many years prior to 1826 in extensive cattle-dealing transactions. While Robert Hope made purchases in Scotland, James resided principally in England, and managed the sales. Ex facie of the dealing, although the brothers transacted business in connexion with each other, there was no appearance of a copartnery. In 1826, from 14th August to 16th November, bills and acceptances for various amounts were granted by and in name of Robert Hope for the purposes of this business.

Robert died on the 20th November of that year, when it was found that his affairs were in a state of insolvency. Trustees having been named by the creditors for realizing the estate of the deceased, and various questions having arisen, they raised a multiplepoinding in December, 1828, bringing into Court the funds already realized (including certain sums paid over to them by James Hope), describing them as funds of Robert Hope, and concluding to have them distributed among the parties called, who appeared as the creditors of Robert Hope. The pursuers, the National Bank, who had acquired right to the bills above mentioned, lodged a claim thereon as creditors of Robert individually.

In consequence of circumstances emerging in this process, a question arose as to the existence of a copartnery between the brothers, and the consequent liability of James for the debts hitherto supposed to have been due by Robert individually. The competency and relevancy of an allegation of partnership, as in this multiplepoinding, was disputed by James Hope, who was also a claimant; and the process continued in dependence without this question being decided either as to the fact or the relevancy.

In these circumstances, the National Bank raised action against James Hope, setting forth that his deceased brother and himself had “carried on business together as cattle-dealers, but without assuming any company firm; that the said James Hope, as the surviving partner in the business so carried on by them,” and as representing his brother, was indebted to the Bank in various sums contained in the bills granted by Robert Hope in 1826 to certain parties “for the purposes, or in relation to the business, of the said company,” and to which the Bank had now acquired right, and concluding for payment accordingly.

There was no distinct averment in the condescendence with reference to the character in which Robert Hope had granted the bills in question, but the fact of a partnership between the brothers was averred, and also that “they invariably held themselves out to and transacted with the public as copartners in these transactions.” It was stated that the bills were granted by Robert for the purposes of the copartnery, and that the proceeds thereof were appropriated and used for behoof of the copartnery. In defence against the action, it was pleaded inter alia,—

1. The action is incompetently libelled against James Hope, as the surviving partner of an alleged copartnership, for the sums contained in the bills described in the summons as the acceptances of Robert Hope; since, although it is founded on an allegation of copartnery, and the bills are ex facie the bills of Robert Hope individually, there is no statement in the summons or condescendence to the effect that Robert was authorized by the company to sign bills in his own name for the firm, and that the bills in question were so subscribed by him, even though granted for company purposes. Besides, bills subscribed by an individual can only found action against the individual subscribing. ¹

2. The bills are prescribed. Looking to the nature of the multiplepoinding in 1828, the proceedings had therein are insufficient to elide the prescription. It was a process raised to divide the funds of Robert Hope among his individual creditors, in which character the National Bank claimed upon and produced the bills now founded on, but the present action proceeds on the assumption that the bills were company obligations, and therefore their production in the multiplepoinding cannot avail. The

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¹ Thomson on Bills, p. 270; Siffkins, 2 Campb. 308.

process by which prescription is to be interrupted must not only have been raised within the six years, but must proceed on the same media as that in which the pursuers now “seek to prevail.” ¹

The pursuers answered;

1. The action is laid with sufficient accuracy, and the pursuers are entitled under it to prove that there was a latent copartnery, and that the bills founded on were subscribed by Robert Hope in name and for behoof of the firm.

2. The sexennial prescription is elided by the production of the bills in the multiplepoinding, and the pursuers are not precluded from this answer to the plea of prescription by the character of that process, and the circumstances attending the competition therein. Besides, holding the multiplepoinding to have been raised for the distribution of Robert Hope's funds, and the present action to be founded on the allegation of a copartnery, which implies joint obligation, if the bills are confessedly saved from prescription against Robert Hope, the pursuers can now plead that being saved from prescription against one of the joint-obligants, they are saved against both.

The Lord Ordinary pronounced the following interlocutor, adding the subjoined note ^*:—“Repels the defences founded on the first six pleas in law maintained for the defender, and especially the defence that the

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¹ Maclaren v. Buik, Feb. 27, 1829, ante vii, 483 and F. C. (Lord Glenlee's opinion.)

* “The only defences on which the defender seriously asked absolvitor, without admitting or offering probation of the disputed facts, were the two specially mentioned in the interlocutor; and the Lord Ordinary is bound to say, that he has not repelled either of them without some hesitation.

“As to the first, though he thinks the summons might easily have been more fully and articulately libelled, he is not quite satisfied that it might not be supported, as setting forth sufficiently a claim, not merely for the sums in the bills as due to the holders of those written instruments, but for money advanced by them to and for behoof of the company—(See Art. 13th of the revised condescendence, particularly ad finem). The weight of authority, however, and especially of English authority, appears to be so much against this view of the case, that the Lord Ordinary would be understood not to rest his judgment in any degree upon it; and he abstains, therefore, from going into any examination of the various, and not very consistent decisions, which have been supposed to bear upon it. What he goes upon is this, that, taking the statement in the summons along with the more detailed allegations in the condescendence, he thinks it is sufficiently averred that the individual name or subscription of Robert Hope was truly the social firm under which the company obligations in Scotland were habitually undertaken, and that the use of that subscription was understood and recognised by both parties as binding upon the company, when actually employed in the proper business of the concern. The most recent of all the English cases upon this subject is that of the Carolina Bank case (8 Barnwall and Cresswell, 427), in which all the prior cases were considered, and which issued, under circumstances in many respects identical with those of the present case, in a judgment subjecting a company in payment of bills accepted under the name of a single partner, without any other proof of that individual signature having been adopted by the other partners as a social firm, than was afforded by the custom of employing it in company transactions with their knowledge and assent, as is most distinctly averred, and offered to be proved to have been the established course of dealing in the business of the company now in question.

“The defender admits that the pursuers are entitled, hoc statu, to assume the truth of these averments; and he meets the argument on the case referred to, and the plain principle on which it proceeds, partly by observing that this principle is not sufficiently set forth on the record, and chiefly by contending that its adoption only gives more irresistible weight to his second great defence of the sexennial prescription.

“In regard to the first of these answers, he says, that it is not only not averred on the record that the individual name of Robert Hope was used as a company firm, but that the supposition is excluded, by the distinct averment in the summons, that no company firm was adopted. But the Lord Ordinary is so far from thinking that there is any inconsistency in this, that he is rather of opinion that the statement in the summons may be fairly interpreted as importing that the individual names of the partners were, each in his own province, to be considered as the firm of the company. The meaning of the statement is merely, that no firm necessarily indicating the existence of a company was used. But assuming that there was a company, some signature must have been used to bind that company in its social transactions; and if these were exclusively conducted by the two partners themselves in their several departments, it seems necessarily to follow, that, if there was no proper social firm, they could only be authenticated by their individual subscriptions; and it is set forth accordingly, with abundant distinctness on the record, that this was actually the way in which the company business was conducted—Robert Hope buying cattle, and granting bills in Scotland, and James Hope managing the business in the same way in England. In these respects, as well as in the want of any averment of a formal compact or agreement to hold the individual name as a firm binding the company, the case of the Carolina Bank is exactly parallel with that of the pursuers, with one specialty, a fortiori, in favour of the present claim. There, one party conducted the company business in his individual name in America, while the other partners managed it in England under a proper social firm. There was no agreement that the individual should so trade in his own name, and indeed it was in evidence that he might have used the English social firm if he had thought fit. This is the specialty referred to, and it obviously strengthens the case of the present pursuers; for there was no proper social firm which Robert Hope could have fallen back upon; and he had, therefore, no way of binding the company, but by setting his own name to their obligations. Yet, the subscription of the single partner was held, in that case, to be sufficient to bind the company, merely because it had been habitually used, with the knowledge of the rest, in their business; while here, there is not only the same actual usage, but an absolute necessity of so using it, as there was no proper social firm which could have been employed for that purpose. The only material difference between the present case and that of the Carolina Bank seems to be, that here the pursuers certainly took the bills on the credit of Robert Hope as an individual, and in ignorance of his having any partner; while it would rather appear (though it is not quite clear from the report) that the Carolina Bank were aware that the American partner was acting for behoof of his company in England. It is possible that this may somewhat affect the application of that case; though the Lord Ordinary is of opinion, that upon the same principle on which latent partners (when discovered) are daily made liable to parties who had contracted without knowing of their existence, this is not a circumstance which should bar the recourse of the pursuers in the present action.

“It is needless to observe, that there is really no analogy between what might be requisite upon the face of a written instrument to warrant the use of summary diligence, and what may be a sufficient averment, in an ordinary action, for recovering the contents of that instrument. It would be going far to hold that a charge could be given to James Hope, upon a bill accepted only by Robert. But it is thought to be sufficient, in an ordinary action against James for payment of such a bill, to set forth an offer to prove that James was his partner,—that it had been the practice, for many years, to sign company obligations by the individual name of Robert,—and that the bill in question was so signed and accepted for a debt due by the company.

“Upon the other point—of prescription—there is also some perplexity. More than six years had undoubtedly elapsed before the defender was convened in the present action. But the bills had been produced and claimed upon in a multiplepoinding, in which he was a party, at an early period; and in that action, and long before the expiration of the six years, they were claimed upon as vouchers of a company debt. The question is, Whether this was sufficient to interrupt the prescription?

“It is admitted, that production in such an action will generally have this effect. But it is said, that the multiplepoinding was brought for the distribution of the funds of Robert Hope as an individual, and that the pursuers appeared in it, and churned upon these bills, only as creditors of that individual; and though, in the course of it, they alleged that there had been a company, and went to issue, indeed, with the defender on that point, still they had no proper claim upon him in that action, and would have obtained no effectual decree against the fund in medio, as a company fund; it being incompetent so to invert the nature of the subsisting process, as to distribute funds originally brought into Court as the fund of an individual among the creditors of a company, to whom, in the course of the proceedings, they had been discovered to belong.

“There is, no doubt, some difficulty in disposing of this objection. But the Lord Ordinary is inclined to think that it is not well founded, and that, in the circumstances of this case, there would have been no incompetency in so distributing the fund in medio in that original action. As he does not mean, however, to rest his judgment upon this view, he shall not go into the reasons which incline him to the opinion now indicated, farther than to observe, that the process of multiplepoinding is, of all the forms of action known to our law, the most flexible, and comprehensive; and that, where the actual holders of the fund neither object, nor have any interest to object, and where all the parties concerned are fairly convened, with full opportunity to maintain their respective pretensions, it is not easy to conceive that it should not have the capacity of accommodating itself to all emergent circumstances, and of effectually distributing among all who have a just light to them, funds really brought within its operation, though at first under a denomination which it might afterwards appear necessary to correct. The case of Ronaldson, 11th December, 1834 (13 Shaw, 180), was altogether of a different description, the real holders of the fund, in that case, being sisted (as nominal raisers) on a statement of facts inconsistent with their only title of possession, and to which they strenuously objected at the very outset of the proceedings; whereas the holders, and only raisers, in this case, entirely concurred in the views of the pursuers, in so far as to have been equally willing to account for the fund, whether it should turn out to be the property of a company or of an individual, and only abstained from describing it alternatively in their summons, because they were not then aware of the alleged existence of any such company. The case, as it actually stands (in the multiplepoinding), is nearly as if a bank, in which money had been lodged in the name of a deceased individual, bad brought the sum into Court in a multiplepoinding as belonging to that individual, and for division among his creditors, but that compearance had afterwards been made for parties alleging that it truly belonged to a different person, and had only been held by the individual as a trustee, and should therefore be distributed among them, as the creditors of the true owner. In such a case, the Lord Ordinary sees no room to doubt that the money so brought into Court might have been competently distributed in that process; and that the emergence of a more extended competition than was at first foreseen would afford no ground for dismissing the action as null or inept. In truth, the fund being in the hands of trustees for Robert Hope's creditors, must be dealt with exactly as if it had been in his own hands. But if it was truly a company fund in his custody, then he was individually a debtor for it to the company and to their creditors; and though brought into Court as his property, might undoubtedly have been claimed upon by the company, and by their creditors, as holding a riding interest upon theirs.

“It is needless, however, to enlarge farther on this view of the matter, or to enter at all upon another topic much pressed by the pursuers in their argument, viz. the personal exception to which they say the defender is exposed when urging this plea of prescription, from the circumstance of its having been owing to his own improper concealment of the existence of the partnership that the delay of their claims on him was occasioned. It is some answer to this, no doubt, that, at all events, they were aware of it long before the lapse of the six years, and still neglected to take the necessary steps till after they had expired. But it is not, perhaps, a complete answer, since, if his dissimulation produced an invalentia agere upon their part, they should probably be allowed to deduct the whole time of such invalentia from the period of prescription.

“But, whatever may be in these suggestions, the Lord Ordinary wishes it to be understood, that his judgment upon this point of prescription proceeds on a narrower, but, as he thinks, a clearer principle. Assuming that the fund was brought into Court in the multiplepoinding as the property of Robert Hope individually, and there claimed upon by the pursuers only as such property, and that it was not competent to alter or invert that state or shape of the process in the course of the proceedings, he still apprehends, that if he is right in holding that the bills were truly company obligations, and subscribed by what must be held to be, in substance, a firm of the company, then the claim by the pursuers, as company creditors, though made only on the private estate of an individual partner, was still sufficient to interrupt prescription quoad the company, and to keep the debt alive as against all the other partners.

“This proposition is rested upon two principles, which, it is thought, are now well established in our law: 1st, That, after the failure of a company to pay its proper debts and obligations, i us Competent for the company creditors to claim payment of them from an individual partner; and, 2d, That a claim made tempestivé, by diligence or in judicial proceeding, against one co-obligant, will interrupt prescription against all the rest. But, if the law be so, and if these bills were truly company obligations, the consequence is obvious. If they had been signed by a proper social firm, and claimed upon from the first as company obligations only, there would seem to be no doubt either of the competency of the claim as against the private estate, or of its legal effect in preserving the debt as against all the other partners. The individual creditors might insist upon those of the company only drawing from the private estate, after the company funds had been accounted for and exhausted; but they could not object to the claim itself being received and provided for; and that would settle the point of prescription. But should it make any difference that the bills did not bear unequivocally, and ex facie, that they were company obligations, and that, in point of fact, they were at first claimed upon as vouchers of debt due by an individual? The Lord Ordinary thinks it should not, when it is considered that, long before the six years bad elapsed, they were distinctly founded on as company obligations, and set forward in that view, as extinguishing all competing claims on the part of the defender, who was thus shown to be in truth a joint obligant. This, which was judicially stated, and in a separate record, as soon as the necessary information was acquired, and while little more than three of the six years had expired, was equivalent to a correction of the original form of the pursuers' claim; or to the lodging of an additional or alternative claim, which was undoubtedly competent in such a process, and must have the same effect as if it had been so stated from the beginning.

“The defender may perhaps say, that though this might be a good answer, if the pursuers admitted that the fund in medio in the multiplepoinding was truly the individual property of Robert Hope, it will not make their claim in that process competent, since they now maintain not only that the debt was a company debt, but also that the fund itself belonged to the company. The Lord Ordinary is inclined to think that it does not lie in the mouth of the defender, while assuming, as the very basis of his objection, that the multiplepoinding could bring nothing into Court, but the individual property of Robert Hope, to allege that the fund so brought in must yet be held, as against the pursuers, not to he such property. The pursuers no doubt aver this, but he denies it; and the only effect of the dispute is, that it must be left to the Court to determine which is in the right. The true course, if all had been known at the beginning, would have been to describe the fund, not as a company fund, but alternatively. It may yet be found to be Robert Hope's, and to be divisible among all his creditors, whether claiming through the company or directly. But it is not necessary to go farther into this at present; because it appears upon inquiry, that, to a certain extent, the fund in medio was, beyond all dispute, the individual property of Robert Hope. It included the proceeds of his household furniture, and of the stocking of some farms which are admitted to have been held by him as an individual. Now this is quite enough for the pursuers. Upon that part of the fund in medio their claim was undoubtedly competent in the multiplepoinding. And having so claimed on a company obligation, and avowedly as company creditors, within the six years, the course of prescription was stopped, and the debt kept alive against all the other partners. It is upon this ground mainly that the defence of prescription has been repelled.”

action is incompetently libelled against the defender, James Hope, as the surviving partner of an alleged copartnership, for the sums contained in the several bills of exchange, described and enumerated in the summons as the acceptances of the deceased Robert Hope, his alleged partner; and also the defence founded on the plea of the sexennial prescription, as applicable to the said bills; and, quoad ultra, remits the case to the roll of Jury causes.”

James Hope reclaimed.