Scottish Court of Session Decisions

This was an action at the instance of A. M. Morrison, writer in Glasgow, against James Service junior, also writer there, calling on the latter to produce a full account of his intromissions as a partner and as cashier of the firm of A. M. Morrison and James Service junior, writers in Glasgow, and to pay to the pursuer the sum of £1500 sterling as the balance due by him. The pursuer averred that he and the defender had carried on business in copartnership together under the name of A. M. Morrison and James Service junior, writers in Glasgow. He stated further:—“There were no special terms stipulated as to the shares of the copartners or the endurance of the copartnery. It was understood that the said shares should be equal, and that the copartnery could be terminable at will. The pursuer intended this action to be intimation of the termination of the copartnery by him, and he also hereby gives intimation of the termination of the copartnery… . The defender acted as book-keeper and cashier of the firm, and received from the pursuer, for the purposes of the firm's business, about £1000 of the pursuer's own private means. The defender has also got in considerable sums due by third parties to the firm.”

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The defender denied any partnership, and averred that the pursuer had no other business than that of a property agent. He admitted that they occupied the same office, and had the same staff of clerks. As regarded the advances alleged by the pursuer, the defender averred that the two had been joint adventurers in several property transactions, and that there was a balance due to him upon these.

The Sheriff-Substitute ( Erskine Mureay), after proof, found that there was no partnership, and dismissed the petition.

On appeal the Sheriff ( Clark) recalled the Sheriff-Substitute's interlocutor, and found “that the pursuer and defender are writers in Glasgow, and have carried on business as such in copartnership since the month of August 1876, and down till the institution of the present action, and that the defender is bound to produce a full account of his intromissions as partner and cashier of the said copartnery: Therefore ordains the defender to lodge in process, within fourteen days from this date, a full account of his intromissions as aforesaid, and remits to the Sheriff—Substitute for further procedure.” He added this note:—

“ Note.—In dealing with this case it is important at the outset to ascertain as nearly as may be the positions respectively taken up by the pursuer and defender. The pursuer says that he and the defender entered into a partnership at will as law and property agents in Glasgow in August 1876, and that the defender acted as cashier for the concern. The defender's story is not so clear, and there is some difficulty in ascertaining the exact position which he intends to take up. It seems, however, to amount to this—that though he and the pursuer carried on business in the same office, and employed joint clerks, yet they had no other connection than that of joint adventurers in some property transactions. The question at present to be considered is, which of these stories is the correct one?

“Now, prima facie, there is nothing to be said against the pursuer's story. There was no reason why the defender should not enter into partnership with him as contended for. The pursuer is a notary-public and a property agent, and had for a considerable time acted in both capacities, and had apparently established a pretty fair connection. The defender is a procurator of Court, though apparently not a notary. From his father's connection it was probable he would bring into the concern a fair amount of forensic business. He was not possessed of funds, but the pursuer was. There was no incompetency in their becoming partners in their joint law and property business—forming, in point of fact, a firm of writers to carry on all such business, whether conveyancing or forensic, as is usually carried on by writers in Glasgow — the one attending to the property and conveyancing work, the other to the business in Court. There were also, plainly, advantages to be gained by their entering into such a copartnery—both were in a position to contribute something by way of connection, and each possessed qualifications personally and professionally which might be utilised for their mutual advantage. That the parties themselves were impressed with these considerations is proved by the evidence of Adshead, a relative of the defender, with whom he and the pursuer had a meeting in August 1876, when they ordered from him certain furnishings as for the partnership into which they were about to enter. There is no reason to doubt that this meeting took place, and that the account of it given in the proof is substantially accurate. Adshead could have no object in making a statement contrary to the interests of his relative, the defender. His account is clear in itself, and is in all respects concurred in by the pursuer. The next thing that appears is that the pursuer and defender took an office in common, and employed joint clerks. Business of all kinds seems to have been obtained, and this business they conducted in the same office with the same staff of clerks. The work was distributed between them on the principle that each was to attend to that branch with which he was most conversant and had the requisite qualifications for conducting; the pursuer looked after the property and conveyancing department, the defender directed his attention to the law business properly so called. At the same time this did not form an absolute rule; and there is no reason to doubt that in the absence of the one the other supplied his place in so far as his qualifications enabled him to do so. The business books do not appear to have been regularly kept; but so far as they go they indicate the partnership relation, and certainly are by no means incompatible therewith. The day-book and ledger, so far as kept, appear to have been intended for the joint interests. The diary undoubtedly was common to both. As regards the letter-books, the pursuer and defender on coming together did not adopt a common letter-book, but continued to use those they had previously employed. And there was good reason for this, when it is considered that each party took a special charge of a particular department. Yet it is noticeable that the keeping of separate letter-books—one for the particular business of each—was by no means rigidly adhered to. On the contrary, the instances are numerous, and of continual recurrence, in which the letter-book used by the pursuer was employed for the recording of letters written by the defender; and in like manner the letter-book generally appropriated for the defender's work was utilised for the pursuer's purposes. Strictly speaking, it does not appear that a firm name or style was fixed upon and adopted; but this is not a circumstance of very much importance. A firm name or style is by no means essential to the partnership relation; and as in the present case the alleged partnership was only at will, and might be determined at any time, there was perhaps the less reason for adopting a firm name until it should appear whether the connection was to be of a permanent kind. Yet it is noticeable that something very nearly approaching, if not practically equivalent to, a firm name existed. The names of the pursuer and defender appeared on the door of their chambers in close juxtaposition. Instances are numerous in which letters were signed in the joint names. This appears from the letter-books, and it cannot be said that this was due to mistake or inadvertence when it is considered that such letters appear in the defender's letter-book, and even in his handwriting. Again, many transactions were settled in the joint names—a fact which the defender is compelled in evidence to admit. It is also noticeable that

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deeds prepared in the common office frequently bear the joint names, and accounts appear to have been rendered in a similar manner. Advertisements in regard to property were habitually inserted in the public prints in the joint names. The defender, indeed, attempts to get over this by saying that it was done without his sanction; but it is very difficult to accept any such explanation when it is considered that the defender was well aware of the practice, and yet seems to have taken no effectual means to check it. It is very difficult in such circumstances to avoid the conclusion that it was done with his sanction. That there was a right to share profits is to a certain extent clearly proved. Even the defender is compelled to admit this, though with some reluctance; and the admission is all the more significant that it does not quadrate with but contradicts his statements on record. It seems also clearly proved that, in some cases at least, he had a joint interest with the pursuer in certain properties, which, though held in the name of one of them, were held for the common interest. The significance of this is further enhanced by the fact that the defender has declined to answer questions, the purpose of which was to probe this matter to the bottom, and for his declinature to answer which no good or intelligible reason is given. One of the strongest tests of the partnership relation is the existence of mutual agency, by which any one of the alleged partners has the power of binding his fellows or the concern with third parties. This is indeed aptly expressed in the civil law by the brocard ‘ contractus societatis non secus ac contractus mandati.’ Now, it seems that if there is any one fact more clearly proved than another in the present case it is this, that in a question with the world the pursuer and defender would have been effectually held liable as copartners. There can be no reason to doubt that orders given or obligations undertaken by either of them within the sphere of a writer's business would have effectually bound the other. Quasi—partnership therefore undoubtedly existed; but quasi-partnership has always been held to form a very strong presumption for the existence of actual partnership. (See Lindley on Partnership, 3d edition, vol. i. p. 93, and Peacock v. Peacock, 2 Campbell's Reports, p. 45.) There is one other consideration that strongly weighs with me in support of the existence of the partnership relation. It is plain from the I O U's produced in process by the pursuer that he has made very large advances during his connection with the defender—whatever that may have been. The defender indeed says that he holds similar documents from the pursuer; but beyond his ipse dixit he has produced no evidence of this, and has not put in process a single document of the kind. We are therefore compelled to assume that the pursuer's statement is correct, and that for some reason or other he had advanced very considerable sums to the defender. The defender would have us believe that these were loans to himself as an individual; but such a view appears to be almost incredible. It it clearly proved on the evidence that the defender was possessed of no means whatever when he formed his connection with the pursuer, and that he was not in a position to give any security for such advances as the pursuer might make. Nothing therefore is more unlikely than that the pursuer should have made the large advances he did for no visible reason, and simply on the personal security of the defender. But if the theory of partnership be adopted, the reason of the advances becomes at once apparent. They were contributions towards a common business, out of which each was to receive an equal share of profits, and in which the defender was to act as cashier for the concern.

On reviewing the whole evidence, therefore, I have come to be of opinion that the facts of this case can only receive an intelligible explanation on the theory of a partnership such as that contended for by the pursuer. There is a common place of business, and there are joint clerks. Books are kept in common to a considerable extent. The practice of doing business in the joint names is established by letters, settlements, deeds, advertisements. There is the right to share profits, plainly exercised in certain important instances, and there is nothing to indicate that a contrary rule applied in the general run of the business. There is quasi-partnership clearly established as regards the public. There are advances made by one of the parties that seem to be entirely inexplicable except on the theory of partnership.

Turning now to the explanation which the defender gives of the facts and circumstances brought ought out in evidence, they seem to be altogether insufficient. He mainly relies upon the theory that what would indicate partnership is to be attributed to the existence of certain joint adventures; and what this will not explain, he endeavours to get over as mistakes and inadvertences. I do not think there is much in the theory of joint adventures. If parties were nowise connected, except in one or two instances of special transactions, the theory of joint adventure might afford a reasonable explanation. But when it becomes necessary to invoke this theory at almost every turn, and when in order to explain the facts it is necessary to assume a series of joint adventures forming a large part of the business, it becomes much more probable that actual partnership existed, seeing that this view gives an intelligible and much more probable explanation of all that has occurred. As regards the use of the joint names, and the insertion of letters written in the joint names in books, the publication of advertisements in their joint names, and similar transactions, it seems to me vain to contend that all this is to be explained by mistakes or inadvertences. The practice was far too common to have escaped the knowledge of the defender; and certainly if he did not intend the pursuer to understand that partnership existed, he was inexcusable in permitting such a practice to go on for so long a period unchecked. It must also be considered, that on the defender's theory it is very difficult to understand what end or advantage the pursuer could have expected to gain from his connection with the defender. If the defender had been a man of means, it is quite possible that the pursuer might have been willing to enter with him into a series of joint adventures as regarded property; but seeing that the defender had nothing to advance, and that all the advances, at least at the outset, were to come from the pursuer himself, it is very difficult to understand what purpose the latter purposed to serve by joining himself with the defender otherwise than as a partner. On the other hand, if a regular

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partnership was entered into, the pursuer had a very considerable deal to gain, and the arrangement is not only intelligible, but highly probable. The defender had a certain connection, and had certain qualifications—to wit, those of a law agent—that could be profitably utilised for the common interest; but of course this necessarily meant that in the proper law business, just as in other transactions, the pursuer was to have the same interest as the defender.

There are some circumstances on which the defender laid great stress as militating against the theory of a partnership, and to these it is desirable to advert in conclusion.

It is said that the office was not taken in the social name, but only in the names of both parties as co-tenants. I see nothing, however, in this to militate against the theory of a partnership. No doubt in practice premises are often taken in the names of firms; but the other custom is also common, and it is perhaps in strict law the more correct of the two. A partnership is only a quasi—person, and it seems more correct to take leasehold property just as proper feudal subjects, not in the social name, but in the name or names of one or more of the partners, who shall hold as trustees for the joint concern.

It is said that in the schedules for the attorney licences taken by each of the alleged partners the column in which their names should be entered as partners is left blank, and from this it is argued that they could not have been in partnership or in contemplation of partnership when such schedules were filled up. 1 do not think there is anything in this argument. On reference to the statute it will be found that the Legislature has not required a practitioner on obtaining an attorney licence to state whether he is a partner or not. The column intended for such a statement in the schedule seems to be a mere form, destitute alike of legislative direction and statutory force. It would be a matter of very great inconvenience if persons in partnership as writers could only obtain the attorney licence on condition of their disclosing the partnership relation in the schedules of application. It would, in so far as the business of an attorney is concerned, render latent partnerships impossible; and besides, in the case of partnerships at will, it would be a very dangerous thing to state the partnership, because in that case the parties might be held bound as partners for the whole period over which the attorney licence extended. As matter of fact, it is well known that this column in the schedule is by no means usually filled up by such as are in partnership.

It was further argued that as the alleged partners did not keep a common bank-book, but conducted their banking transactions separately, this afforded a strong inference against the existence of a partnership. It must be noticed, however, that the keeping of a bank account in the firm's name is by no means a necessity to a partnership, and that in a great many cases the partnership funds stand in the name of one of the partners. If it be true that in the present case the defender was to act as cashier for the firm, there was a good reason why the company funds should stand, not in the common name, but in his own.

From the evidence of the witness Mrs Blues, who is a sister of the defender's, it would seem that the pursuer had on one occasion, denied that there was any partnership between them. There is not, however, so much in this as at first sight might appear. That Mrs Blues had a meeting and some conversation with the pursuer is undoubtedly true. Whether she correctly understood and now remembers the import of that conversation is a very different question. Nothing would be more likely than that she should have misunderstood the import of a conversation relating to legal subjects; and the weight of her evidence goes for very little when it is seen that in the conjunct probation the pursuer distinctly denies that he ever made such a statement to her, and gives an explanation of the conversation which seems much the more probable one. In any view, there may be set against the evidence of Mrs Blues the very clear statement of another relative of the defender's, viz., Adshead, to which I had occasion to advert at the outset of the note.

Lastly, the defender founds strongly on the evidence of the joint-clerks, viz., M'Master and M'Allister, as tending to show that in their estimation there was no partnership. It must be noticed, however, that a very large part of their evidence is totally incompetent, on the wellknown principle that a witness cannot be asked whether he believed or understood that a partnership existed, but can only be asked as to facts and circumstances coming under his observation, from which not he, but the Court, is to draw the legal inference. (See Chatto & Co. v. Pyper, 1827, 4 Murray, 354.) It must further be noticed that neither of the witnesses in question can make any clear or definite statement upon the subject. They do not say that they heard a partnership either admitted or denied by either of the alleged partners, nor can they say that when engaged the relationship between their employers was in any way explained. When the evidence of these witnesses is perused, apart from their understandings or imaginings, it seems to me that the facts and circumstances to which they speak, so far from militating against the existence of a copartnery, are not only fully reconcileable with that relation, but go very far to support its existence.”

On the defender's failure to lodge an account, decree was given against him for £1500. The defender then appealed to the Court of Session.

At advising—