Freely Available British and Irish Public Legal Information
[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]
Scottish Court of Session Decisions
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Hamilton v. Steele [1871] ScotLR 8_547 (8 June 1871)
URL: http://www.bailii.org/scot/cases/ScotCS/1871/08SLR0547.html
Cite as: [1871] ScotLR 8_547, [1871] SLR 8_547
[New search] [Printable PDF version] [Help]
SCOTTISH_SLR_Court_of_Session
Page: 547↓
Court of Session Inner House Second Division.
v.
Facts:
Where partnership at will was terminated as at 10th February 1870, circumstances in which held ( diss. Lord Cowan) that a bill dated 17th March 1870, which was the renewal of a bill between partners to be paid from the proceeds of goods sold, was truly a bill between partners, with reference to a partnership transaction, and not a bill drawn and accepted as between individuals; was not affected by the previous termination of the partnership, and therefore could not form the ground of summary diligence.
By missive dated 3d August 1869, Hamilton and Steele entered into a contract of copartnery for the manufacture of shale oil at Broxburn. Steele was to advance £1350 and Hamilton £300 for the purposes of the concern. The partnership was at will—there being no term of endurance in the missive, and it did not contain any provision as to the name of the firm, but an existing lease of the works where it was intended to carry on the business was to be obtained in Hamilton's name solely. Hamilton was the managing partner, and carried on the business for some time, but Steele constantly complained that Hamilton would not keep
Page: 548↓
him informed how the business progressed. In the beginning of November 1869 Hamilton said he had run short of money, and asked an advance from his partner. To this Steele agreed, and accordingly, on 15th November, accepted a bill for £300 at 4 months, which he discounted. For this bill lie granted a receipt, in which he undertook to retire the bill from funds of oil sold. Thereafter, and towards the end of January 1871, Steele had become so dissatisfied with Hamilton that he determined to bring the contract to an end. The partners accordingly had a meeting on about 1st February at which the partnership was terminated. On the following day they advised with their agent as to how Steele could best be paid out, and the concern taken over by Hamilton. Various proposals were made, but no final agreement made—or at least if made, it was never carried out. Then on 18th March the bill mentioned fell due, but Hamilton being unable to meet it, a new bill was drawn, dated on 17th March 1870, in which the position of parties was reversed, Steele being the drawer and Hamilton the acceptor. This new bill was discounted by Hamilton, and the previous bill retired. On 29th March 1870 Steele advertised in the Scotsman and Herald newspapers that he would not be responsible for debts incurred by Hamilton from and since 8th February 1870. In all negotiations which took place between the parties subsequent to that date, it was never maintained by Hamilton that the partnership subsisted thereafter, and in particular in certain memoranda prepared by Hamilton relative to a proposed copartnery between him and a Mr Wallace, the bill of 17 March was not included as a liability. Further, in the state of liabilities prepared by Hamilton, as at 1st February, the bill of 15th November was not included as one of them. When the said bill of 17 March fell due it was not taken up by Hamilton, whereupon Steele did summary diligence upon it, and incarcerated Hamilton. Hence the present suspension and liberation.
In the Bill-Chamber the Lord Ordinary granted liberation and passed the note on juratory caution, to which interlocutor the Second Division adhered. Thereafter a proof was allowed before answer. On the evidence led,
Campbell, with him Shand, maintained for the complainer that the partnership subsisted subsequent to 1st February, at all events for winding up; that the bill of 17th March was truly a renewal of the one of 15 November, which must be treated as an advance of capital to the concern, and that accordingly the former was a bill as between partners, with reference to partnership matters, and could not therefore be made the ground of summary diligence.
Brand, with him Scott, for the respondent, maintained (1) That the bill of 15th November, though falling to be paid out of the funds of oil sold, was not an advance of capital but a separate loan, and to be dealt with as such. (2) That the partnership was terminated on 1st February. (3) That the bill of 17th March was not truly a renewal of the former bill, but an advance of money by Steele as an individual, and that though the proceeds may have been used to retire the former bill, that was a matter of which Steele had no cognizance, and that this was further shown by the fact that the acceptor shall at the first bill become the drawer of the second. (4) That though a contract of copartnery, terminable at will, might subsist after it was at an end, for the purpose of winding up as betwixt partners, it could not be held to subsist with reference to a transaction which was regarded by the parties at the time as of a separate nature, and not included in the partnership affairs.
The Lord Ordinary (
“ Edinburgh, 10 th April 1871.—The Lord Ordinary having heard counsel for the parties, and considered the argument and proceedings, including the proof, finds, as matter of fact, that the complainer and charger entered into partnership, conform to the missive No. 49 of process, dated 3d August 1869, for manufacturing shale oil, at works at Broxburn, upon the terms therein mentioned; that, in order to raise money for the purposes of said partnership, the bill for £300, dated 15th November 1869 (No. 10 of process), was drawn by the complainer upon and accepted by the charger, payable four months after date; that this bill having been discounted by the complainer, who was the active and operative manager of said copartnery, the proceeds were applied by him for the purposes thereof; and that, in order to meet and retire said bill when it became due on 18th March 1870, the bill now charged on was drawn by the charger on and accepted by the complainer, and having been discounted by the latter, the proceeds were applied by him to pay and retire the previous bill: Finds also, as matter of fact, that when the first of said bills was granted it was expected that it would be paid at maturity out of money to be realised from the sale of oil manufactured by the copartnery, but that no such money had been realised when said bill became due, nor has yet been realised: Finds also, as matter of fact, that about the beginning of February 1870, and for some time afterwards, negotiations took place been the complainer and charger having for their object an arrangement whereby the partnership between them should be dissolved, and its debts and liabilities undertaken by the complainer, but that the parties failed to complete any such arrangement: Finds also, as matter of fact, that the affairs of the said copartnery have not yet been wound up, and that the liabilities of the complainer and charger, inter se, as the partners thereof, have not yet been cleared up and ascertained: Finds, in these circumstances, that the bill debt now charged on is one of the foresaid copartnery debts, and that in law the charger is not entitled to enforce payment of it from the complainer in the manner now attempted by him: Therefore suspends the decree and charge complained of, and whole grounds and warrants thereof, and decerns: Finds the complainer entitled to expenses, allows him to lodge an account thereof, and remits it when lodged to the auditor to tax and report.”
To this view the Second Division adhered, but with a difference of opinion. The majority, consisting of the
Solicitors: Agent for Complainer— T. F. Weir, S.S.C.
Agent for Respondent— A. K. Morison, S.S.C.