Scottish Court of Session Decisions

The Lawson Seed and Nursery Company (Limited) was, on 2d January 1873, incorporated under the Companies Acts 1862 to 1867 to carry on the business of nurserymen and seedsmen.

In 1884 a provisional agreement was entered into between the company, first parties, and Thomas M'Laren, S.S.C. on behalf of the firm of Peter Lawson & Son, second party, whereby certain provisions were made on the narrative that the first parties were proprietors or owners of the nursery stock situated at Bangholm and Warriston, Windlestrawlee, Golden Acre, Granton Road, and certain plants at Broomhill, near Edinburgh, and also of the general seed stocks, fixtures, fittings, implements, and office furniture in the premises occupied by them as aforesaid, and that they bad entered into certain contracts to have seeds supplied to them, and that it was proposed to form a company under limited liability to be called Peter Lawson & Son (Limited) for the purpose of (1) acquiring from The Lawson Seed and Nursery Company (Limited) their right, title, and interest in the premises; (2) purchasing the general seed stock, fixtures, fittings, office furniture, books, and implements belonging to The Lawson Seed and Nursery Company (Limited), with their interests in the contracts and goodwill of the seed business; (3) the management and realisation of the nurseries at Bangholm, Warriston, Windlestrawlee, Golden Acre, and Broomhill; and (4) the collection and realisation of all debts due to The Lawson Seed and Nursery Company (Limited).” The proposed company of Peter Lawson & Son (Limited) was thereafter formed on the basis of the agreement. The agreement provided that The Lawson Seed and Nursery Company should give Peter Lawson & Son (Limited) a lease of the business premises in Edinburgh and Leith, and transfer to them the seed stock and fittings, and by the seventh article it was provided that “the said company” [Peter Lawson & Son (Limited)] “shall manage and realise, on behalf of the first parties” [The Lawson Seed and Nursery Company (Limited)], “and subject to their direction and control, the said nurseries situated at Bangholm and Warriston, and clear off the remaining stocks of plants at Windlestrawlee, Golden Acre, and Broomhill, and pay the proceeds, as these are received, to the first parties. The said first parties shall pay all nursery rents, taxes, wages, and other expenses connected with the said nurseries, including the wages of all parties employed with approval of the first parties exclusively in the nurseries, but the said company shall pay all other expenses of management. The said company shall be entitled to deduct from the proceeds realised a commission of five per cent. for their trouble, but declaring that this commission shall be payable only on trade sales by private sale or public sale, and not on a sale of the nursery stock as a whole, should that be carried out by the first parties, who reserve full power at any time to dispose of the nursery stock in bulk or as a whole. But in the event of the said company finding a purchaser for the said nurseries as a whole, other than themselves, to the satisfaction of the first parties, the said company shall be entitled to a commission of five per cent. on the purchase price.” By the eighth article of the agreement it was provided—“The said company shall, subject to the direction and control of the first parties, collect the whole of the book-debts due to the said first parties (and for which they shall receive a remuneration of five per cent. on the amount collected), and shall pay the same on collection to the said first parties.”

This agreement was recorded in the Books of Council and Session. The agreement was in operation from the formation of the new company of Peter Lawson & Sou (Limited) till the proceedings now reported were taken in 1886.

Questions having arisen in that year about the management, and about the right of The Lawson Seed and Nursery Company (Limited) in consequence of their dissatisfaction therewith to appoint a manager at the nurseries and on other matters, the directors of The Lawson Seed and Nursery Company (Limited) resolved on 16th October to call an extraordinary general meeting with a view to a winding-up voluntarily.

This meeting was duly called and held, and the following extraordinary general resolutions were adopted:—“That the company was unable to continue its business, and that it was advisable to wind it up voluntarily; that Messrs George Todd Chiene and John Scott Tait be appointed liquidators; and that the liquidators should, if and when they found it expedient to have the voluntary liquidation of the company continued subject to the supervision of the Court, concur in applying to the Court for a supervision order.”

Accordingly a petition praying for a supervision order was presented to the Court, with consent and concurrence of the liquidators.

The petitioners stated that they desired a supervision order so as to avoid difficulties which they anticipated through the separate action of creditors.

Peter Lawson & Son (Limited) lodged answers. They referred to the agreement quoted above, stated that the right it gave them to manage the business, collect the debts, and receive commission thereon was an important consideration to them in making the agreement, that they had paid considerable sums in connection

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with working the agreement, that the petitioners were endeavouring to defeat it, and that this was a device to get rid of it by a liquidation and to start a new company free of it, to the great loss and damage of Peter Lawson & Son (Limited). They further alleged that the object of the present application was not only to defeat the agreement, but to deprive them of their just rights under the same; that the petitioning company was perfectly solvent, and had no creditors who were pressing for payment; that they (respondents) were satisfied that if the provisional agreement was worked out according to its true intent sufficient debts would be recovered to pay its liabilities; and that if the object of the liquidation was to realise the estate, they, the respondents, had a right to effect that realisation, and to get paid for their trouble in terms of the agreement.

The respondents also presented a counter petition craving the Court, as The Lawson Seed and Nursery Company had not agreed to wind up for any good and sufficient reason, but simply to get rid of the agreement by which they were bound, to recal and rescind the resolutions to wind up, and find and declare that it was unjust, or at least that it was inexpedient, to have passed them.

Sec. 129 of the Companies Act 1862 provides that “a company under this Act may be wound up voluntarily.… whenever the company has passed an extraordinary resolution to the effect that it has been proved to their satisfaction that the company cannot by reason of its liabilities continue its business, and that it is advisable to wind up the same.”

Argued for the petitioners—Creditors could never intervene to stop a voluntary winding-up. The 129th section of the Companies Act 1862 left that matter entirely in the discretion of the company itself. Here the petitioners desired a supervision order because of the questions which had arisen with the respondents, who were in possession of the books, and to such an order they were absolutely entitled under the statute.

Argued for the respondents—The petitioners were barred from presenting this application by the terms of the agreement. Impliedly they had renounced the right to be wound up under the statute. They had agreed to a form of voluntary winding-up other than the statutory form, viz., that the respondents should have the duty and benefit of conducting the winding-up. The respondents had, for that right to wind up the petitioning company, paid a full price. The right of the respondents under the agreement

MacCredie's Trustees v. Lamonds, ante, p. 114.

The Reporters are informed by the Defenders, with reference to Part II. of this report (being that part which states the decision of the Lord Ordinary on certain deductions claimed by the defenders, which did not require to be dealt with by the Inner House), that the defenders did not, as stated on p. 117 of the report, acquiesce in his Lordship's decision on these points, but that, after the interlocutor was reclaimed against, the questions between the parties as to these deductions were compromised by the pursuers agreeing to allow certain deductions was higher than that of a mere creditor; it was that of an administrator. This was just an attempt to destroy the respondents' administration. The respondents' petition for recal of the resolution was, no doubt, unprecedented, but it was competent in the circumstances, the whole matters in dispute being before the Court.

At advising—