Scottish Court of Session Decisions

There can be no doubt that the books of A. G. Handyside & Co. were subsequently kept in conformity with Mr Handyside's view of the matter. At the preceding balance, on 15th January 1880, there stood at the debit of the joint-adventure account a balance of £813, 5s. 2d., being the price of the shares and interest. This account was closed in January 1881 by a credit entry of a like amount, while each of the partners was debited with a sum of £406, 12s. 7d., and the profits arising on the shares were on four several occasions thereafter, down to February 1883, placed in the books to the credit of the individual partners, while no account of these profits was sent to Kidd's trustees, although a statement of the profits arising on three other shares held by them was periodically sent.

The ‘Danube’ adventure was brought to an end by the sale of that vessel in August 1882, the price being payable in August 1883. The sum now sued for, £571, 2s. 6d., does not appear in any account in Handyside & Co.'s books prior to the dissolution of the firm in January 1883, but is one-half of the profits (including a share of the price of the vessel) which would be due to the pursuers Kidd's trustees on the footing that five shares had all along belonged to them, and that there was no valid transfer of the shares to Mr Handyside in February 1881. If that be so, I do not understand that any question is raised as to the sum sued for being the amount due.

The pursuers deny that Kidd's trustees ever authorised or consented to the sale of the shares to Mr Handyside.

Mrs Kidd, who was a sine qua non, and Mr Kidd, who were two of the four trustees then acting, deny that they ever knew or heard of the transaction, and I see no reason to disbelieve them. Mr Eunson, who took charge of the trust matters, is now dead, but there is no evidence to show that he knew anything about it, while Mr Aitken, the fourth trustee, also denies it. It is no doubt true that in the inventory of Mr Kidd's estate given up for confirmation in November 1880, the amount of Mr Kidd's interest in the ‘Danube’ was stated to be three shares, being shares which he held in his own name, and that the same was stated to be the amount of his trustees’ interest in a circular sent to the trustees by Messrs Handyside & Co. on 26th April 1882 with respect to a proposal to convert that into shares in a limited company, and was approved of by them without observation, but I do not think that any inference that might be drawn from these facts to the effect that the trustees knew that the five shares in question were no longer their property can prevail against the distinct evidence of the trustees that they did not know of or authorise the sale to Mr Handyside. In these circumstances, accordingly, I do not think that it is proved that Mr Aitken had any authority to transfer Kidd's trustees’ shares to his partner Mr Handyside, and therefore I think that the trustees were entitled to challenge the sale when it came to their knowledge. I think, therefore, that the rights of parties must be dealt with as if no such transfer had taken place, and that A. G. Handyside & Co. and the individual partners are bound in terms of their letter of 8th October 1879 to credit or pay Kidd's trustees with half of the nett proceeds of the ten shares.

The firm of A. G. Handyside & Co. was dissolved in January 1883. Mr Aitken, one of the partners, has paid one-half of the share of the proceeds of the ‘Danube’ due by the firm, and I think Mr Handyside, the other partner, is bound to pay the other half. It cannot be disputed that Mr Handyside knew that the transfer of the five shares to him was intended to include one-half of Mr Kidd's share or interest in the joint adventure, and that he is now in possession of the profits or proceeds effeiring to that one-half share or interest.

I do not think that it is necessary or desirable to determine in this action whether the account given by Mr Handyside as to what took place between him and Mr Aitken at the time of the transfer of the shares, and the object of that transfer, is proved, because I do not think that, assuming it to be proved, it would be a relevant defence to the action, seeing that in my view, Mr Aitken had no authority from the trustees to act as he is said to have done. It is obvious, on the other hand, that serious questions may possibly arise between Mr Handyside and Mr Aitken out of that transaction, which are not raised in this action, and which it is not advisable to prejudge.”

The Lord Ordinary pronounced this interlocutor:—“Decerns in terms of the conclusions of the action, but under reservation of the claims, if any, of the defender Alexander George Handyside against the defender Thomas Aitken in the premises.”

The defenders reclaimed, and argued that the form of judgment was wrong, for no action could lie against Handyside unless breach of trust were established against Aitken. If that were established, Aitken was the party against whom to proceed. The letter was not a document of trust, but prescribed only the method of management of the ship. The only title was the bill of sale. Aitken was therefore vested in ten undistinguishable shares, of which he conveyed five to his partner. He never divested himself of his other five. The conveyance as against his own shares was good, whether good against the trust or not.

Argued for pursuers and respondents—Handyside knew that he was purchasing trust-property. The letter was an acknowledgment of trust.

Authority for pursuers and respondents— Aberdeen Railway Company v. Blaikie Brothers, 1 Macph. 461.