Scottish Court of Session Decisions

By agreement of copartnery dated 6th August 1870, William Thomson, clothier, Dundee, and Charles Alexander, printer, Dundee, on the narrative that they had for some time been carrying on business without any distinct arrangement as to terms and conditions, agreed “to carry on business in copartnership as printers and newspaper proprietors in Dundee, under the firm of Charles Alexander & Company, and that for the period of ten years from and after the 9th day of April 1870, and thereafter until either partner shall give the other twelve months' previous written notice of his intention to dissolve the copartnership, when upon the expiry of such twelve months the copartnery shall come to an end; but the partner giving said notice shall be bound at any time during the running of the said twelve months to sell his whole right and interest in the copartnery, and its assets, under burden of his share of its debts, to the other partner, for such a price as shall be put thereon by two valuators, one of whom shall be named by each partner, or by an oversman to be named by such valuators, to act in the event of their disagreeing.”

The assets of the copartnery were to consist of certain heritable property, and the copyright of the Dundee Courier and Argus, the Northern Warder, and the Weekly News newspapers, and were to belong to the partners in the proportion of two-thirds to Thomson and one-third to Alexander. The parties further agreed that Alexander should take the active management of the business of the copartnery, and should be the manager thereof, at such salary as should be from time to time agreed upon between the partners, and that the profits of the business should belong in the proportion of two-thirds to Thomson and one—third to Alexander, and that the losses should be borne in the like proportions. The concluding clause was as follows—“And it is hereby further agreed that the death of either partner shall not dissolve the copartnery, but, on the contrary, the representatives of the partner deceasing shall be entitled to take his room and place in the copartnery, with this exception, that such representatives shall not be entitled to take the active management or carrying on of the business of the copartnery.”

The parties carried on business as partners in terms of this agreement till the death of Alexander on 5th September 1884. He left a trust-disposition and settlement, by which he nominated and appointed Mrs Helen Anderson or Alexander, his widow, and Charles Alexander junior, his son, to be his trustees. This settlement contained the following clause—“I direct my trustees, as soon after my decease as possible, to convey and give over to my son Charles my whole right and interest in the business in which I am engaged at the time of my decease.”

In October following Alexander's testamentary trustees raised an action in the Court of Session against Thomson to have it found and declared “that on a sound construction of the agreement of copartnery between the said deceased Charles Alexander and the defender, dated the 6th day of August 1870, the pursuers, as trustees foresaid, collectively form one partner along with the defender in the copartnery formerly carried on by the said deceased Charles Alexander and the defender, and that the defender, in the events which have happened, has no right to assume or exercise by himself the active management of the business of the said copartnery, or to exclude the pursuers, as trustees foresaid, from an equal share in the regulation of the affairs thereof,” and to have him interdicted from “assuming or exercising by himself the active management of the business of the said copartnery, and from excluding the pursuers, as trustees foresaid, from an equal share in the regulation of the affairs thereof, and from giving orders or directions, or incurring obligations in connection with the said business, without the consent of the pursuers, and from appointing or dismissing servants of the said copartnery without the said consent.”

They averred that Charles Alexander the younger had been employed, with an interval of five months, in the office of the business from 1870 till the date of the action, and that for the last nine months he had by his father's desire, and with the knowledge and consent of the defender, taken the actual management of the entire business, and that shortly after Alexander the elder's death the defender had himself assumed the entire management of the business, and had intimated to the staff, and to the clerks and servants of the copartnery, that they were in future

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to take their instructions from him and not from Charles Alexander junior or the pursuers, and that he had threatened to dismiss Charles Alexander, and had stopped payment of his salary. They further stated—“The pursuers do not themselves claim the active management, but they claim an equal voice with the defender in determining how the active management is to be carried on, and they have all along been and still are ready and willing to concert measures with the defender for that purpose, and generally to consult with him upon all matters connected with the copartnery. The position taken up by the defender renders this impossible, and the present action has therefore become necessary.”

The defender denied that Charles Alexander junior had been since 1870 continuously in the office of the firm; that his father had given him occasional employment there, but that from the irregularity of his attendance, and from his incapacity, his position was that of a mere supernumerary without any recognised position in the office, and that he was not fitted for any but the most subordinate position in any department of the business. He admitted having intimated to the staff that they should take their instructions from him, and that he had instructed the cashier not to pay any moneys in name of wages or profits to Charles Alexander.

The pursuers pleaded—“(1) On a sound construction of the said agreement the pursuers as trustees foresaid collectively form one partner along with the defender in the copartnery of Charles Alexander & Company, and are entitled to all the rights and privileges of partners. (2) The defender is not entitled, in the events which have happened, to assume or exercise by himself the active management of the business of the said copartnery, or to exclude the pursuers as trustees foresaid from an equal voice in the regulation of its affairs, and the pursuers are entitled to decree of declarator and interdict as concluded for.”

The defender pleaded—“(1) The action having been raised without any joint deliberation on the part of the trustees at whose instance it is brought, and one of these trustees having disclaimed the same, the pursuers have no title to sue. (3) On a sound construction of the agreement of copartnery, and in the events which have happened, the defender is entitled, to the exclusion of the pursuers, to take the active management and carrying on of the business. (7) The pursuers are not entitled to take the room and place of the late Charles Alexander in the copartnery before confirming to his estate.”

The Lord Ordinary ( Kinnear) pronounced this interlocutor—“Finds that the pursuers as trustees of the deceased Charles Alexander are entitled to take the place of the said deceased in the copartnery between him and the defender, and collectively form one partner with the defender in the said copartnery, and to this extent and effect finds and declares in terms of the conclusions of the summons: Quoad ultra finds that the pursuers are not entitled to take the active management of the business of the copartnery, and assoilzies the defender from the conclusions of the summons: Finds the defender entitled to expenses, &c.

“ Opinion.—The pursuers are a majority of the trustees, and as such are entitled to maintain this action on behalf of the trust-estate notwithstanding the dissent of one of their number. It is settled law that a general disposition unconfirmed, although it may not be a complete title to discharge, is a licence to sue. The first and seventh pleas for the defender are therefore repelled. But the latter plea is only repelled because on the merits I am prepared to give effect to the defender's contention. I am not prepared to hold that the pursuers could without confirmation insist upon taking an active part in the management of the business, but I think they are entitled to have their interest in the copartnery declared.

“It is not doubtful that under the contract the copartnery was not dissolved by the death of Mr Alexander, or that his representatives are entitled to take up his interest in the concern. But it is stipulated that the representatives of a deceased partner ‘shall not be entitled to take the active management or carrying on of the business.’ It is said that this refers to a previous clause under which, while both partners were alive, the active management was committed to Mr Alexander, and that it means merely that his representatives are not to have the entire management to the exclusion of Mr Thomson. But it is equally applicable to the representatives of either partner, and a stipulation that the representatives of a deceased partner shall not exclude the surviving partner from all share in the management would be quite superfluous. On the other hand, it is perfectly intelligible that while partners may be ready to agree that their respective interests in their common business should transmit to representatives on death, they should nevertheless think it necessary to stipulate that persons of whom they know nothing should not be entitled to take an active part in the management of the business. This appears to me to be the meaning of the stipulation in question, and I think it excludes the pursuers’ claim to have an equal voice with the defender in the regulation of their affairs.”

The pursuer reclaimed, and argued — The clause providing that the representatives of a predeceasing partner were to take “his place and room” in the copartnery, evidently intended, when applied to the representatives of Alexander, that they were to to take the management, which was part of the deceased's “place and room” therein.

Counsel for the defender were not called on.

At advising—