Scottish Court of Session Decisions

On 11th December 1890 John Rutherford, joiner, Annan, obtained decree in the Small Debt Court at Dumfries, against Brember & Company, chemists, 134 High Street, Annan, for £9, 19s. being the amount of an account for tenant's fittings in their shop at Annan executed in May and June of that year.

On 8th January 1901 William Brember, hotel-keeper, Strathaven, was charged, “as one of the partners of Brember & Company above designed, as such partner and as an individual” to implement the said decree within ten free days from that date under pain of poinding and sale, if the same be competent without further notice.

Brember presented a note of suspension against Rutherford, praying the Court to suspend the charge.

The complainer averred—“Thecomplainer is not, and never was, a partner of the said firm of Brember & Company, nor is he in any way responsible for their obligations. In particular, he is not in any way responsible for the charger's claim against the said firm, and is not liable to be called upon to make payment of said claim, either as a partner of said firm or as an individual. The complainer was not in any way affected by said decree, and there is no warrant for the execution of diligence against him at the instance of the charger.”

The complainer pleaded, inter alia—“(1) There being no warrant for the execution of diligence at the instance of the charger against the complainer, the proceedings complained of should be suspended. (3) The complainer not being a partner of said firm of Brember & Company, and not having held himself out as such, is entitled to have the said charge suspended as concluded for.”

The respondent pleaded, inter alia—“1. The complainer being the proprietor of the business carried on under the firm name of Brember & Company, and being liable for the debts thereof, said charge is orderly proceeded, and the note should be refused. 2. The complainer being one of the partners of the firm of Brember & Company, is liable for the debts thereof, and the note should be refused. 3. The complainer having by his actings held himself out as (1) owner, and (2) as partner of said business, and the respondent having relied on his name and credit as such owner and partner, the note should be refused.”

On 26th January 1901 the note was passed, and on 26th February 1901 the Lord Ordinary ( Stormonth Darling) allowed a proof, which was taken on 12th March.

Thereafter on 28th March 1901 the Lord Ordinary ( Stormonth Darling) sustained the third plea-in-law for the respondent, found the charge orderly proceeded, and refused the note of suspension.

Note.—[ After a statement of the facts]—“Rutherford seeks to justify the charge on the ground either that Brember was in fact a partner or that he held himself out as such. It is admitted on record that Brember was tenant of the shop for a year from Whitsunday 1900, but that circumstance is not enough to make the charge good, because the decree was taken against Brember & Company, and not against Brember individually as tenant. It is proved to my satisfaction that he was not in point of fact a partner in the business nor the owner of it. He contributed by way of loan the greater part of the capital with which the business was started, but the business itself belonged to one Flynn, Brember's brother-in-law, who traded under the name of Brember & Company,” for a reason ( which it is not necessary to specify), “and it was thought desirable both by Brember and himself that his own name should be kept dark.

Page: 39↓

But then the question remains whether Brember incurred liability to Rutherford by holding himself out as a partner, and I am of opinion that he did.” [ His Lordship then gave the grounds on which this opinion was based].

The complainer reclaimed, and argued, inter alia—His first plea-in-law should be sustained. The decree was against the firm alone, and he admitted that such a decree was competent— Forsyth v. Hare & Company, November 18, 1834, 13 S. 42. There was also no doubt that under such a decree diligence could proceed against any partner of the firm—Partnership Act 1890 (53 and 54 Vict. cap. 39), sec. 4, sub-sec. 2. But the complainer was not a partner of the firm, and although a person holding himself out as a partner might make himself liable to third parties just as if he was a partner, that did not make him a partner of the firm— Clippens Shale Oil Company v. Scott, May 17, 1876, 3 R. 651, 13 S.L.R. 429. There was therefore no warrant for the execution of diligence against him.

Argued for the respondent—A person holding himself out as a partner so as to incur liability to a third party was liable to the same diligence as if he was a partner. In any event, under the general law of holding out he was personally barred from maintaining that he was not a partner in a question with the innocent third party whom he had deceived— Findlay v. Currie, December 7, 1850, 13 D. 278; Goodwin v. Industrial and General Trust Company, Limited, December 6, 1890, 18 R. 193.