Scottish Court of Session Decisions

This was a petition by a partner of a firm for sequestration of the partnership estate and appointment of a judicial factor to wind up the firm's affairs.

It was stated in the petition—On 1st April 1880 a firm of law-agents in Glasgow entered into a contract of copartnery with the petitioner, who had been a clerk in their service. Under this contract the capital of the new firm was to consist of £3000, of which £1000 was to be furnished by the petitioner and the remainder by the other partners; the petitioner was also bound to give his whole time and attention to the business, but the other partners of the firm, of whom there were two, were only to give so much time as might be necessary. It was also provided that the petitioner was to receive one-fifth of the profits, and all the partners were entitled to draw a certain sum monthly in anticipation of profits. The contract further provided for a dissolution in the case of death or bankruptcy, but there was no provision for the dissolution of the firm by a majority. The deed also provided for a reference in case of certain disputes or differences arising between the parties.

The petitioner presented in July 1884 this petition craving the Court to sequestrate the estate of the firm and to appoint a judicial factor to wind up its affairs. He set forth that though the business had been a prosperous one, his partners had been very extravagant and had far exceeded the stipulated amount of the drawings they were entitled to make under the contract; that in May 1883 he had pointed out that they were by so exceeding their proper amount of drawings bringing the firm into difficulties and making bankruptcy inevitable; that he had fallen into bad health, and was unable to attend to the business; that he bad been persuaded by his partners to remain in it though he wished to retire, but that they had in May 1884 executed, as a majority of the partners, a deed of dissolution bearing that in consequence of his having been unable to attend to business from ill-health and other causes, and having infringed the contract in various ways, they declared the copartnership to be renounced and dissolved. This he alleged to be an illegal attempt to expel him, which was ultra vires of his partners. He further set forth that his partners had taken exclusive possession of the business and effects, and transferred the funds to their names.

The other partners of the firm lodged answers asking that the petition should be dismissed, and stating that the firm of which they were partners was quite solvent, and that the debt of the firm to the petitioner amounted to about £3000, which they were willing to pay to him under deduction of his drawings and all other proper deductions. They also stated that the pursuer from the state of his health and of his habits had not attended to the business according to the contract, and that he had subscribed certain obligations in breach of it, and that they were entitled to terminate the partnership. They offered without prejudice to pay him a sum of £2000 on his retiral, or to refer to the arbiters named in the contract the questions raised as to his contraventions or as to the deductions claimed by them.

The petitioner died on 9th August 1884, and thereafter the trustees and executors under a trust-disposition and settlement lodged a minute craving that they might be sisted as trustees and executors in the place of the petitioner. In this minute of compearance they stated that the state of the firm had changed for the worse, and submitted that the respondents did not stand to the deceased's estate in the ordinary relation of surviving partners who might be safely trusted to ingather the estates of the firm, but were truly large debtors to it, whose obligations had recently increased and whose interests conflicted with those of the estate. They therefore craved that a neutral party should be appointed to wind up the firm.

The Lord Ordinary refused the application, and issued the following interlocutor:—“The Lord Ordinary having heard counsel on the motion for the compearers, the trustees and executors of the petitioner A. B., now deceased, to be sisted in terms of the minute, refuses the craving of the said minute.”