Scottish Court of Session Decisions

This is a case in which Thomas Steven, ironfounder in Glasgow, is pursuer; and Mrs Anne Morris or M'Dowall, residing in Glasgow, relict of the deceased John M'Dowall, ironfounder, Glasgow; William Anderson, accountant in Glasgow; John Brown, jun., cotton-broker there; William Walls, oil merchant there; Alexander Allan, ship-broker there; the Rev. Dr John Eadie, minister of the gospel there; the Rev. Peter M'Dowall, minister of the gospel in Alloa; John Stewart, clothier in Kilmarnock; and Anthony Hannay, cotton-broker in Glasgow—the accepting trustees and executors of the said deceased John M'Dowall, acting under a trust-disposition and deed of settlement executed by the said deceased John M'Dowall, with consent of his wife, upon the 22d day of August 1861—are defenders. The issue sent to the jury was in the following terms:—

“It being admitted that the defenders are the accepting trustees and executors of the said deceased John M'Dowall, ironfounder in Glasgow:

It being admitted also that the pursuer and the said John M'Dowall carried on the business of ironfounders in Glasgow, as partners of the firm of M'Dowall & Company, prior to the 1st January 1861:

Whether the pursuer was induced to subscribe the docquet to the balance-sheet on pages 66 and 67 of the private ledger and journal, No. 82 of process, and the contract of copartnership, dated 21st and 22d August 1861, of which No. 83 of the process is a copy, by the fraud of the said John M'Dowall?”

The pursuer, Mr Steven, was the nephew of the late Mr M'Dowall, ironfounder, Glasgow. In 1850 he entered into partnership with his uncle, and was to receive for the first two years a fourth of the profits and subsequent to that one-third. The business, it was maintained for the pursuer, was practically conducted by him, with the exception of the financial department, which Mr M'Dowall took into his own hands: and, in addition to his share of the profits, it was arranged that the pursuer should get £100 of salary. In the beginning of 1861 two brothers of the pursuer were taken into partnership along with him, and at that time the balance-sheet and contract of copartnery referred to in the issue were drawn out. In this balance-sheet the assets of the firm were valued at £42,000, and the pursuer said he then understood that it was an exhaustive and complete balance-sheet, and that Mr M'Dowall had averred that nearly the whole of his means was his proportion, being two-thirds of that sum. In September 1861 Mr M'Dowall died, leaving personal estate to the value of £63,000, in addition to heritable property worth £15,000. The pursuer maintained that on investigation it was found that no allowance was made in the balance-sheet for his share of the profits of the company for the ten years from 1850 to 1860, which he had allowed to lie in the concern, having only drawn during that time his salary of £100 a year, while Mr M'Dowall had drawn larger sums from the concern, which did not appear in the balance-sheet. On making application for this share to which he was entitled, he was met with the argument that he had signed the balance-sheet, which represented his share as a third of the £42,000. But he argued that the balance-sheet was only made up for the purpose of settling the affairs between the old company and the new company, and that the accounts of the partners had not been taken into view there, nor were they necessary for that purpose. The sums which Mr M'Dowall had withdrawn during the period of the partnership, as shown by the books and receipts, amounted in all to £30,000, and the present action was raised for the purpose of enabling the pursuer to get the question of his share of that sum thoroughly sifted.

The defenders, on the other hand, emphatically denied that the late Mr M'Dowall was guilty of the

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fraud imputed to him. They maintained that the pursuer had ample opportunity of challenging the balance-sheet, and that it was his duty to have examined and tested it before he affixed to it his signature.