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Scottish Court of Session Decisions
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Wilson v. Dick and Son, and Others [1868] ScotLR 6_148_1 (2 December 1868)
URL: http://www.bailii.org/scot/cases/ScotCS/1868/06SLR0148_1.html
Cite as: [1868] SLR 6_148_1, [1868] ScotLR 6_148_1
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SCOTTISH_SLR_Court_of_Session
Page: 148↓
Court of Session Second Division.
v.
Facts:
Circumstances in which held that an investigation into the affairs of a firm was made on the employment of the partners of the firm, as well as on behalf of other parties interested.
In this case Mr Richard Wilson, chartered accountant in Edinburgh, sued Mrs Janet Birrell or Dick, widow of the late Charles Dick, brewer in Edinburgh, and Brydon Monteith, farmer, Tower Mains, near Edinburgh, as individuals; the firm of Charles Dick & Son, now or lately brewers in Edinburgh, and William Dick, lately residing in Edinburgh, presently in South America; the said Mrs Janet Birrell or Dick, and Charles Thomson, brewer in Edinburgh, the individual partners of said Company, as such and as individuals, for the sum of £ 419, 9s. 6d. The pursuer makes the following statement:— The pursuer, Richard Wilson, is a chartered accountant in Edinburgh, and on or about April 14,1865, was instructed and employed by the defenders, Mrs Janet Birrell or Dick and Mr Bryden Monteith, at a meeting of parties interested in the business of the defenders, Charles Dick & Son, brewers in Edinburgh, held on said date, to examine a balance-sheet that had been lately made up of the said defenders', Charles Dick & Son's
Page: 149↓
business, as well as the whole books of the said Company, so far as the same might be necessary for ascertaining the condition and accuracy of the said balance-sheet and books, and the state of the capital and business of the concern, and the proportions of capital at the debit or credit of each partner in the business. The defender, Mr Mouteith, stated that this step was expedient for the satisfaction of the partners themselves, and also in order to give confidence to Messrs M'Lean & Hope, and other customers of the business. The defender, the said Bryden Monteith, also stated that the pursuer's proposed employment was concurred in and approved of by the partners (other than the said Mrs Dick) Mr William Dick and Mr Charles Thomson. The defender, the said Bryden Monteith, was appointed preses of the said meeting, with power to sign the minutes for himself, Mrs Dick, and the absent partners of the said firm of Charles Dick & Son.” The pursuer then goes on to state that this employment was ratified by the defender's agent by letter; that he performed the work, and that it was afterwards approved of by some of the defenders— viz., William Dick and Charles Thomson, partners of the firm.
The defenders maintained the following pleas:— “ 1. None of the defenders other than Mrs Dick having employed the pursuer to do the work, for the alleged performance of which the sum sued for is charged, the said defenders should be assoilzied. 2. Separatim, as regards the defender Bryden Monteith, any part which he took in the matter having been taken wholly as the representative of Mrs Dick, under the said minute of agreement, the terms of which were well known to the pursuer when he undertook the employment, the defender incurred no responsibility or liability to the pursuer. 3. The action cannot be maintained, in respect that the pursuer did not perform the work which he was employed to do. 4. At all events the pursuer cannot recover, in respect that he failed properly and timeously to perform the said work, and that his said failure has been a cause of loss, injury, and damage to his employer. 5. In no view can the pursuer recover the sum sued for, in respect that the said sum is greatly in excess of a fair and reasonable charge for the work in question, even assuming it to have been properly performed.”
The Lord Ordinary (Jeviswoode) pronounced the following interlocutor and note:— “ Edinburgh, 11 th March 1868. — The Lord Ordinary having heard counsel, and made avizandum, and considered the record, with the proof adduced, productions, and whole process, including the joint-minute for the parties, No. 92 of process: Finds, 1st, That the employment of the pursuer, in the matters to which his claim in the present action relates, commenced by a communication by Mr Cotton, S.S.C., to him, in terms of the letter dated 18th April 1865, which forms No. 8 of process, and with which was inclosed, as the authority of the pursuer proceeding to inquire into the affairs of the firm of Charles Dick & Son, an extract from minute of meeting of parties interested in the business of that firm, held on the 14th April 1865 (Appendix A, p. 20), so far as the said minute related to the proposed employment of the pursuer: 2d, That the pursuer, in the course of acting under the employment foresaid, was engaged for a considerable period of time in an extensive investigation of the books and affairs of the said firm, of which the defenders, William Dick, Mrs Dick, and Charles Thomson, were then partners: 3d, That the said employment of the pursuer was recognised by the said firm, and by the defender Bryden Monteith, who acted in the management of the affairs of the said Company as the representative of the said Mrs Dick, who was a partner therein as aforesaid: 4th, That the defender Bryden Monteith was not a partner of the said firm of Charles Dick & Sons; and finds that the pursuer has failed to prove, as matter of fact, that he was employed in the matters to which this action relates by the said defenders as an individual, or otherwise than as the representative and as acting on the part of Mrs Dick; and, with reference to the terms of the questions stated in the said joint minute, No. 92 of process, Finds, 1st, That the pursuer was employed in the matters to which his claim relates by Mrs Dick, by the firm of Charles Dick & Sons, and by Charles Thomson and William Dick, as partners thereof: 2d, That the employment of the pursuer in the investigation of the affairs of the said firm was not confined to ascertainment of the interest of Mrs Dick therein only, but was extended to the whole affairs of the firm, with a view to the interests of the firm, and of the partners thereof; and that the pursuer did, in fact, perform the work to which his present claim relates; and, with relation to the terms of the said joint minute (92 of process), appoints the cause to be enrolled for such order as may be necessary, with a view to further procedure in the cause.
Note.— The points of chief importance here have relation to the matter of employment of the pursuer. That he was engaged in, and did perform in as satisfactory a manner as the circumstances would permit, the duties undertaken by him, the Lord Ordinary does not hesitate to affirm. But the questions in relation to the parties by whom he was so employed, raise some points of difficulty.
First, as regards the defender Monteith, it admits of no doubt that the employment of the pursuer commenced through his recommendation. But that circumstance does not go far in fixing liability on that defender, when it is seen that he was then acting as the representative of a partner of the firm, Mrs Dick, as to whose liability no doubt has been raised, and it cannot be said that the pursuer was in any doubt, in point of fact, as to the true position of Mr Monteith, who was not a member of the firm of C. Dick & Son.
Second, As respects the liability of that firm, a more difficult question— as it presents itself to the Lord Ordinary— arises. Because the Lord Ordinary feels bound to say that the pursuer, on receiving the instructions from Mr Cotton, under the letter of 18th April 1865, with the extract of the minute of meeting of the 14th, had no sufficient warrant to conclude that his employment was thereby authorized by the firm. But, on the other hand, it appears clear that, after the employment of the pursuer had been so resolved upon, and when it was found that it would be for the advantage of the copartnery, if not absolutely necessary, that its affairs should undergo an investigation, the firm did recognise and approve of the employment of the pursuer in that matter, and took benefit therefrom.
“On the whole, therefore, the Lord Ordinary must hold that the firm is to be regarded as having employed the pursuer in the matter of the investigation made by him into its affairs,”
The defenders reclaimed.
Page: 150↓
Balfour for them. Macdonald in answer.
At advising—
No doubt the letter sent to the pursuer, with the relative documents, on which his employment originated, was from Mr Cotton. But this letter is sent, along with other documents, for the pursuer's consideration— copy minute of 14th April 1865, which, although subscribed by Bryden Monteith as preses, purported to be that of a meeting of “ parties interested in the business of Charles Dick & Son,” — and set forth that the pursuer's employment was concurred in and approved, not by Mrs Dick only, but by the other partners, the defenders Charles Dick and William Thomson. The pursuer was therefore entitled to hold his employment to have been for all the parties interested in the business, assuming the statements in the minute to be correct as matter of fact. Did it appear, indeed, that Mr Monteith had misrepresented the facts, and that he had no authority for stating that the other partners of the Company concurred in his employment of the pursuer, liability could only have attached to Mrs Dick and to himself as having unauthorisedly acted in name of the others. But if, on investigation, the truth of the matter is that he was justified in alleging that he had the concurrence and authority of all the partners of the Company to the investigation by the pursuer of the affairs of the Company, and of which they were to reap the benefit, there can be no doubt that the parties, by whom he was authorised to act as he did, became liable for the work done on his employment, and that Mr Monteith, having merely acted a3 agent in the matter, was entitled to be absolved from all liability. Where a factor or agent acts unauthorisedly in name of his principal he will be liable personally, but where he has authority to bind his principal and transacts in his name, no personal liability attaches to the factor or agent. There may be circumstances in which joint responsibility may be incurred, but this must appear very clearly on the face of the transaction. In the present case, having regard to the evidence, documentary and parole, I am of opinion that no real ground exists for inferring such joint liability.
That the employment of the pursuer was for behoof of the Company, and was truly concurred in by all the partners, I think is clearly established by the proof. It must, first of all, be kept in view, as shedding light on the whole matter, that the death of Mr Dick sen. made it indispensable that the state of the affairs of the Company, and the respective interests of the several partners, should be satisfactorily ascertained, and that the amount of capital to be embarked in the new concern of Dick & Son by the several partners of the new company, and especially by Mrs Dick and her family, should be settled to their mutual satisfaction. A mere balance-sheet prepared by a junior partner of the old concern, it cannot be assumed, Would be accepted as affording that satisfactory view of the affairs of the Company which those interested in the estate of old Mr Dick were more especially entitled to require. And it farther appears to have been very expedient, if not necessary, for the new concern to satisfy those with whom they dealt, and in particular Messrs M'Lean & Hope of Leith, that the affairs of the Company were in a safe and sound state. I apprehend this to be the balance-sheet referred to in the fourth article of the contract of August 1864.
By the contract subsisting at the death of Mr Dick sen., entered into in May 1862, it was agreed that the capital of the Company was to be £ 19,000, the whole of which was to be contributed by Mr Dick sen., and on which he was to receive interest at four per cent, until the two junior partners should pay up their shares of the capital; and it was declared that the share and interest of Mr Dick sen. was to be 8-10ths, and that of each of the two junior partners l-10th. A balance-sheet prepared after Mr Dick's death by one of these junior partners might very justly be objected to as not affording satisfactory evidence of the state of the concern by his widow and representatives, do not think it therefore unreasonable, or anything more than was to be expected, that a thorough investigation into the Company's affairs should be made by a properly qualified person at the expense of the Company. And this is precisely what I hold on the evidence to have been done. For, although Mr Monteith, as acting for Mrs Dick, did apply to the pursuer in the first instance, and subscribed the minute of April 1865, it appears to me that he did so for behoof of all the partners in the concern, and that he had full authority to do so, and to bind the Company.
The fifth article of the contract of August 1864 has been alleged to indicute that Mr Monteith was to act in the affairs of the Company solely as representing Mrs Dick and the other representatives of Mr Dick senior, and to be remunerated solely by her and them. But this is not the true reading of that article of the copartnership. Its object is to provide for Mrs Dick's interest in the new concern being properly attended to and represented by a nominee to be approved of by the other partners, and who wasdrom time to time to have power to inspect and examine into the affairs, books, and vouchers of the Company— a most just precaution, when it is considered that the estate of the deceased Mr Dick was so deeply interested in the capital of the Company. I cannot view this provision of the contract to have had reference to that balance-sheet between the old concern and the new concern, and the ascertainment of Mr Dick senior's interest in the capital at the date of his decease, for which the fourth article of the copartnery provides. Had the evidence shown that the junior partners, Charles Dick and William Thomson, had wished some other party than the pursuer to be employed, and had repudiated his employment, the case would have assumed a different aspect; but in place of this, the statement of Mr Monteith in the minute of April 1865 is amply supported by the evidence. The minutes of the meeting in the pursuer's chambers on 9th July 1866 and 4th September 1866, with the intermediate letter from the defender Thomson dated on the previous day, are conclusive as regards the effect of the documentary evidence. And as regards the parole evidence, there is nothing in it calculated, in my apprehension, to disturb, and everything that might be expected to support, the conclusion at which I have arrived, that the pursuer's employment was concurred
Page: 151↓
The other Judges concurred.
Agents for Pursuer— Stewart & Wilson, W.S.
Agent for Defenders— George Cotton, S.S.C.