Scottish Court of Session Decisions

The summons describes the pursuers as being the firm of “The Antermony Coal Company,” and Austin & Company and Mr Wingate “being the individual partners of the said firm;” and the parties called as defenders are the firm of Walter Wingate & Company and Messrs Wingate & Bruce, the individual partners of that firm. Mr Wingate, who is at present in Australia, has not appeared in the action. Mr Bruce has appeared, and has stated several defences against the action; but under the present reclaiming-note we have at present only to dispose of the first of these defences, which is that the action cannot be proceeded with in respect that it has not been authorised by Mr Wingate. If that defence were well founded it would probably prevent the Antermony Coal Company from ever being able to enforce payment of the claim, even supposing it to be well founded, as Mr Wingate, who on that assumption would be one of the debtors, might never authorise an action to be insisted in against himself. But perhaps the company might have no remedy against such injustice if the defender could show that in strict law such trading companies are not entitled to sue their debtors to pay their debts in any case where one of the partners does not authorise the action. But is there any rule to that effect in the law of Scotland? In my opinion there is not, and I shall state the ground upon which my opinion rests.

The Scottish law of partnership is distinguished by this peculiarity, that even a private trading company, such as this Antermony Coal Company was, has one prerogative of a corporation, which is, that it is held to be a separate person in law; that as such it alone is the owner of the assets of the company; that it is the sole creditor in the debts owing to the company; and it is the proper and principal obligant in the debts owing by it, the individual partners being liable only subsidiarie for the company's debts. Thus the partners of the company individually and the obligants to the company are not immediately connected as creditors and debtors. For the same reason the connection of debtor and creditor may subsist between the company as a separate person in law and any one or more of its individual partners.

Another principle in our law of partnership is, that each individual partner of such a private trading company has a mandate or prepositura in the proper business of the company by which he has authority, in the name of the company, to enter into contracts, to subject it in liability for debts, to uplift and discharge debts owing to it, to institute actions against its debtors, and to carry on all other proper proceedings in the management of the proper business in which it is engaged—(Erskine, iii. 3, 20). This is one of the particulars in which a private trading company is distinguished from a joint-stock company.

Keeping these principles in view, I think the allegation of the defender Mr Bruce that the institution of this action has not been authorised by Mr Wingate is not relevant as a defence against the action. In the first place, Mr Wingate is not the creditor in the debt. Assuming, as we must do in considering this preliminary defence, that the sum sued for is owing by the defenders to the Antermony Coal Company, the creditor is that company itself as a separate person in law, and Mr Wingate individually is not in that position in reference to the debtors, and consequently no authority from him in that character is necessary to sustain the action.

Secondly, neither is his authority necessary in his character of mandatory, or prepositus, in the affairs of the company. The mandate, or prepositura of the firm of Austin & Co., which is the other partner of the Antermony Coal Company, is sufficient authority to it to institute this action at the instance of the company itself, the proper creditor for payment of a debt owing to that company as the price of goods sold and delivered by it to the defenders.

And accordingly it is a settled rule in our law of partnership that, in respect that such a private trading company is a separate person in law, it has a persona standi in judicio, and can itself sue and be sued by its social firm; and that (subject to an exception I am about to mention) it is not necessary that, whether it be pursuer or defender, all or any one of its individual partners should be a party to the action. This was long ago held in cases of the banking company of Douglas, Heron, & Co.; and the point, having been again raised, it was conclusively settled by the judgment of the whole Court in the case of Forsyth v. Hare & Co., 18th November 1834.

The exception to which I have just alluded is that of a company whose firm is what is called descriptive—that is, when it is denominated not by the names of persons, but only by some fancy description, such as that of the company in question, which is called the Antermony Coal Company. In such cases it has been deemed necessary that in judicial proceedings such a company should be identified by the names of some of its individual partners being added to its descriptive appellation. But why? Not, as already stated, because such partners are either the creditors of the debtors, or the mandatories or prepositors of the company's affairs, but because their names have been held to be requisite in cases of this kind, to complete the description of the companies, and to indicate that they are not mere myths, and also to indicate the names of some parties against whom personally execution may pass of any decree which may eventually be pronounced against the company, whether it be pursuer or defender. This was settled in a series of cases which occurred nearly forty years ago. A doubt as to the legality of parties suing or being sued by such descriptive firms occurred in the House of Lords in the case of the Commercial Bank of Scotland v. Pollock, and their Lordships allowed that case to lie over for a considerable time in order that the question might be fully considered. While that case was so standing over in that tribunal, the question occurred in two cases in this Court, and in both of them it was decided that companies having only such descriptive firms could sue and be sued by such firms, if the names of some of the partners were added. These cases were the Sea Insurance Company, 17th February 1827, and the Shotts Iron Company, 19th January 1828. And soon after these decisions were pronounced the House of Lords resumed consideration of the case of the Commercial Bank v. Pollock, and then gave judgment in it to the same effect on 28th July 1828. Although all these cases related to joint-stock companies whose affairs were carried on by official managers whose names were mentioned along with the descriptive names of the companies, the Judges expressly stated that the ground on which

Page: 166↓