Scottish Court of Session Decisions

The next question regards a sum of income tax. The partners of Gowans & Mackay had agreed to dissolve the copartnership, and on May 26, 1869, they exchanged mutual discharges. Mr Gowans got endorsed to him a bill by the Highland Railway Company for £13,952, 12s. 4d., and Mr Mackay one by the same company for £8651. In consideration of these bills so endorsed to them, the one partner, Gowans, undertook to pay off all the outstanding debts and liabilities of the firm; while, on the other hand, Mackay assigned to his partner, Gowans, the whole other assets of the firm, and all rights he had or might have to them. Now, at the time that this arrangement was made there was due by the firm a sum of income tax amounting to £250. The question is, whether this is one of those payments which Mr Gowans undertook to discharge? Mr Gowans did pay the sum of £250 on 31st May 1869, but Mr Hill afterwards paid over to Mr Gowans what was called Mr Mackay's share of this—the notion being that this £250 was not a debt of the firm, but of the partners individually. Now, there is no doubt that this tax is payable by the beneficial recipients of income. If matters were always settled strictly, we should have fewer questions on this subject in Court. But this principle is frequently lost sight of, and Mr Gowans, when he paid the £250 as above mentioned, was, I am persuaded, acting upon the real understanding between the partners. I think, therefore, that the point has been properly disposed of by the Lord Ordinary.

The only other disputed matter arises under date 14th May 1866. This relates to a sum of £100 lent by to George Gowans, the defender's brother. Mr Gowans and his brother had given a joint bond for the sum, which Mr Hill paid, and Mr Hill's trustee comes now on Mr Gowans to relieve him of the sum in this bond. But Mr Gowans very naturally says—I insist on an assignation. Now, there seems to have been a good deal of reluctance on the part of Mr Hill's trustee in granting this assignation. This is to be regretted, as it must be granted now, and till it is granted we cannot give decree for this sum. This is, however, sufficient to dispose of that question.

The matter of expenses remains for our consideration. There are a number of opposing things to be looked to. On the one side, the extremely loose and unsatisfactory state in which Mr Hill's books were kept has undoubtedly been a source of great expense and of much of the difficulty that has been experienced in clearing up some of the questions, which would otherwise have been free from doubt. On the other hand, there has been some misconduct of the litigation on the part of the defender. This has been more apparent indeed to the Lord Ordinary than to us, as it came more immediately under his notice. But I think that the modification which he has made is hardly sufficient. He has deducted one quarter from the pursuer's expenses. We are all agreed that it should have been one-half.