Scottish Court of Session Decisions

Lord Kinloch—The present is a process of accounting, having reference to the affairs of the firm of Scott & Gillespie, Writers to the Signet, carried on in partnership by the deceased Mr John Scott and the defender Mr Gillespie. The Lord Ordinary has pronounced on certain points in the accounting, and his findings are now to be reviewed by us.

There is no controversy as to the first finding, “that, in terms of a letter dated 21st June 1849, addressed by the deceased John Scott to the defender, and assented to by him, the division of the profits of the partnership business to be carried on by them for the three years from 30th June 1849 to 30th June 1852 was to be in the ratio of three-fourths to Mr Scott and one-fourth to the defender.”

I further agree with the second finding of the Lord Ordinary, which is to the effect “that the said John Scott subsequently made a concession in the defender's favour in regard to the division of the profits for the two years from 30th June 1850 to 30th June 1852, by agreeing that, for these two years the business income up to £1600 should be divisible according to the foresaid original agreement, but that of all profits above that sum the defender's share should be one-third instead of one-fourth.” Whatever was the date of the letter appealed to by both parties on the subject of this concession, I consider the meaning thus put on it by the Lord Ordinary to be its only sound construction.

The important question between the parties is on the subject of a still further concession, alleged by the defender to have been made by Mr Scott with reference to these three years from 30th June 1849 to 30th June 1852, viz., that, in place of the sum of £1600 being taken as the limit of the primary division into fourths, the lesser sum of £1200 should be taken, and all above that sum divided into two-thirds to Mr Scott and one-third to the defender. If the defender is well founded in this allegation, the second finding of the Lord Ordinary would become immaterial, the whole three years being in that view under this last arrangement. But the Lord Ordinary has “found it not proved that Mr Scott ever made any further concession in regard to the division of profits for any portion of said three years from 30th June 1849 to 30th June 1852.”

The point of discussion thus arising has had not a little difficulty thrown around it from the direct contrariety of statement made on the subject by the two partners respectively. It is not disputed on either side that, in the course of the year 1852, and whilst a balance still remained to be made of the three years prior to 30th June in that year, there were conversations between the two partners as to a fresh arrangement of profits. But Mr Scott has stated, in various records of his testimony still extant, that this arrangement was altogether prospective, applicable to the period posterior to 30th June 1852; whilst the defender states that it was intended to govern retrospectively the division for the three previous years. There is not the slightest room for thinking that either party is in this doing anything but stating honestly, and in good faith, his true belief on the subject. The honour of both parties remains wholly unimpeached. There has been more or less misapprehension, probably on both sides. But the great discrepancy between the statements creates at first sight some embarrassment, and would go far to deprive the question of solution if nothing was before the Court but the oral testimony of the respective partners.

There is other evidence, however, within reach, to which, in this state of things, it is necessary to have recourse. And the first and most important item consists of the books of the firm. The books of every copartnership are rightly said to be, in the general case, the writ of all the partners. Certainly they must always constitute evidence of the highest value, in regard to the copartnership arrangements, where nothing appears to affect their accuracy and trustworthiness.

The books of Scott & Gillespie, as regularly and formally balanced for the three years in question, show a division of profits exactly in terms of the statement by the defender, viz., a division up to £1200 of three-quarters to Mr Scott, and one-quarter to the defender, and, of all profits beyond this sum, of two-thirds to Mr Scott, and one-third to the defender. This division stands out on the face of the books in plain and full expression, so as to leave no doubt what is meant. And it is not merely contained in a single note or jotting, as at first appeared to be the case. The Court has satisfied itself, by means of the production of the books, that it pervades the accounts both of the company and the respective partners, according to the most correct forms of book-keeping.

There is, further, some important evidence as to the authority on which the books were so made up. Mr Lamb, now solicitor in Nairn, was formerly in the service of Messrs Scott & Gillespie; and he depones that, about October 1852, he, being then assistant cashier, entered the division of profits for these three years, from the dictation of Mr Rendall, then principal cashier, since dead. He is shown a memorandum prepared by Mr Scott, setting forth the identical division inserted in the books, and he says—“It is my impression that that was the document from which Mr Rendall dictated to me the division of profits for the years 1850, 1851, and 1852.”

Mr Scott admits the preparation of this memorandum, and that it was given to Mr Rendall for his guidance in making up the books, Mr Rendall being book-keeper as well as cashier. But he says that it was merely illustrative of the proposed future arrangement, and was not intended to be applicable to the three previous years, and was erroneously so applied. Mr Scott is no doubt here stating what he conscientiously believed at the time of making the statement; but not only the oral testimony, but the real evidence in the case, is adverse to the accuracy of his recollection. In October 1852, and indeed through the whole of that year, there could be no preparation of a balance for any year subsequent to 30th June 1852; the balance for the first of these years could not be

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