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Scottish Court of Session Decisions
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Edmond v. Robertson. (Ante, vol. ii, p. 81.) [1867] ScotLR 5_30 (19 November 1867)
URL: http://www.bailii.org/scot/cases/ScotCS/1867/05SLR0030.html
Cite as: [1867] SLR 5_30, [1867] ScotLR 5_30
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SCOTTISH_SLR_Court_of_Session
Page: 30↓
Court of Session Inner House First Division.
v.
(Ante, vol. ii, p. 81.)
Facts:
G, partner of a firm, and manager of all its cash transactions, applied to R for an advance of money, alleging that it was to be applied towards a purchase by the firm in the line of its business. R advanced the money, and got a bill signed by the firm. The firm shortly after became bankrupt. R claimed to rank on the estate in respect of the bill. Held, on a proof, (the trustee rejecting the claim on the ground that the advance was not a company transaction but solely for behoof of G) that the trustee had failed in his proof, and that the creditor was entitled to rank.
This was an appeal by James Edmond, trustee on the sequestrated estates of Grant & Donald, druggists in Aberdeen, against an interlocutor of the Sheriff-substitute of Aberdeenshire. Alexander Robertson claimed to be ranked as a creditor on the bankrupt's estate in respect of a bill for £368, drawn by him upon and accepted by them shortly before their bankruptcy. The trustee rejected the claim, and Robertson appealed to the Sheriff. Minutes were lodged by the parties in terms of the Act. The trustee averred that Grant & Donald received no value for the bill, and that it was not a company transaction, but simply concerned Grant, one of the partners. Robertson denied this, and a proof was allowed by the Sheriff-substitute. Disputes arose in the course of the proof, and the case came before the Court on appeal against interlocutors of the Sheriff-substitute. The Court recalled the interlocutors, and remitted to the Sheriff to allow the books of the bankrupt to be produced, and to allow additional proof to both parties. Proof was led, and thereafter the Sheriff-substitute (J. Comrie Thomson), recalling a deliverance of the trustee, pronounced this interlocutor:—.
“Having resumed consideration of this cause, Finds it admitted that the bill, in respect of which the appellant claims, was accepted by a partner of the firm of Grant & Donald, subscribing the Company name thereto: Finds it proved that the said partner who so accepted the bill—viz., John Smith Grant—acted as cashier of the firm, and managed their bill and other money transactions: Finds that the letter No. 14 of Process refers to a previous bill, of which the bill on which the appellant now claims is a renewal: Finds that the respondent has failed to prove the fifth statement in his revised minute, of which he was allowed a proof: Therefore sustains the appeal: Recals the deliverance appealed against; and remits to the trustee to rank the claimant on the estates of the firm of Grant & Donald, and the individual partners of that firm, in terms of his claim: Finds the appellant entitled to expenses; but in respect of the judgment of the Lords of the First Division of the Court of Session, of date 25th May 1866, Finds that the expenses fall to be modified: Allows,” &c.
Note.—The appellant's position in this matter is not free from suspicion; and the Sheriff-substitute is of opinion that the trustee, in the performance of his duty to the other creditors, was justified in making very full inquiry before sustaining the claim.
But no evidence has been led to show conclusively why the appellant should have been willing to accommodate one partner only, or that he was aware that the firm had no interest in the transaction. It is certainly not enough to defeat such a claim as the present that one of the partners should depone, as Donald does here, that the firm had not, to his knowledge, any transactions with the appellant; because it is abundantly proved that Grant took charge of all their cash dealings; while, even if it were proved that Grant had improperly concealed from his partner the fact of the advance made to him by the appellant, yet, if the respondent fails to show that there was not a bona fide belief on the appellant's part that the transaction was for behoof of the company, the Sheriff-substitute is of opinion, in point of law, that the company's estate would be liable.
Page: 31↓
It only remains to notice that a large transaction in cod liver oil (which is proved to have heen represented to the appellant as the object of the advance) can scarcely he said to be outside the ordinary line of business in which druggists carrying on an extensive retail trade might fairly be presumed to engage.”
The trustee appealed.
Lord Advocate ( Gordon) and Mackenzie for him.
Shand and W. M. Thomson in reply.
2 Bell's Com., 615, 616; Dewar, M., 14,569; Lindsay on Partnership, i, 274; Ersk., iii, 3, 20, were cited.
Lord President—This is a case depending very much on a variety of circumstances, and not involving any question of principle. At the same time it must be decided with reference to well established principles in the law of partnership.
The claim made by Robertson was prima facie a claim not well supported by vouchers; because, the sequestration having been awarded on 10th January 1865, the affidavit was only accompanied by a bill dated 31st December previous; and, prima facie, a bill of that date could not be held to prove its own consideration, and inquiry became indispensable. The account Robertson gave of it was, that that represented an advance made by him in August preceding, an advance to the firm of Grant & Donald for a purpose intimately connected with the carrying on of their business as chemists and druggists in Aberdeen. It has been said that the transaction as alleged was not of a nature falling within the general scope of that business, because it was an investment to the amount of £400 in the single article of cod liver oil, whereas their business was a retail business only. I am not satisfied that it was retail only; but it is clear that it was extensive, because the trustee admits that they carried on an extensive business in Aberdeen, and we have evidence of that before us, and that it was to some extent a wholesale business, and that they sold to other druggists, chiefly in the country. Therefore, a party acquainted with the nature of their business, and knowing that they carried on an extensive business as druggists in Aberdeen, would not be startled by hearing that they were going to make an investment to the amount of £400 in cod liver oil. That is Robertson's case, and he says, that believing that, and that the firm wanted money, he advanced the sum by means of an accommodation bill, which he afterwards retired. This sum was advanced to one of the partners, Grant, and the mandate implied in partnership, if all the other circumstances were favourable, would probably be sufficient to justify the claimant in dealing with one. But the case is somewhat stronger, for it is proved that Grant was the cashier of the firm, and transacted the whole of that business, and that Donald never interfered. That being so, I think that a party in Robertson's situation, dealing with Grant as cashier of the firm and receiving from him the statement I have mentioned, was entitled to believe that in making this loan to Grant he was making it for behoof of the firm, particularly as he got at the same time from Grant a back letter, written indeed by Grant, but signed by the firm, that the bill was granted for their accommodation. There are some things in the statements of Grant not very creditable, and there is no reason to shut our eyes to the fact that some of the money was not used for firm purposes; but if Robertson dealt in good faith, I think the firm are bound, even though one of the partners committed a misappropriation of part of the money. I think the interlocutor of the Sheriff-substitute is very well conceived, and puts the judgment on the right ground.
Adhere, with expenses.
Solicitors: Agents for Trustee— Hill, Reid, & Drummond, W.S.
Agents for Claimant— Renton & Gray, S.S.C.