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United Kingdom House of Lords Decisions
You are here: BAILII >> Databases >> United Kingdom House of Lords Decisions >> David Morrison and Others, (Turnbull's Trustees) v. William Robertson [1825] UKHL 1_WS_143 (26 April 1825)
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Cite as: [1825] UKHL 1_WS_143
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SCOTTISH_HoL_JURY_COURT
Page: 143↓
(1825) 1 W&S 143
CASES DECIDED IN THE HOUSE OF LORDS, ON APPEAL FROM THE COURTS OF SCOTLAND, 1825.
2 d Division.
No. 17.
v.
Subject_Submission. —
Circumstances under which (affirming the judgment of the Court of Session) a decree-arbitral, alleged to be ultra vires, and containing an error calculi, was sustained.
George Turnbull, merchant in Perth, and William Robertson, merchant in Blair-Gowrie, entered into a joint adventure
_________________ Footnote _________________ * It is stated by the respondent, that recently before the death of the granter he consulted Mr M'Queen, afterwards Lord Braxfield, as to whether the clause was objectionable, and that he received an opinion recommending a new deed as a prudent measure; but “as to the second objection, which is an objection to the “testing clause,” in so far as it wants the words, “before these witnesses,” I do not think that the objection is relevant to annul the deed, because, as is very properly observed in the memorial, the enactment of the statute 1681 is literally complied with. The instrumentary witnesses do, in reality, subscribe the deed, and subscribe themselves as witnesses, and those who subscribe as witnesses are likewise named and designed in the deed itself, which is all that is required by the foresaid statute.” He also stated, that a similar opinion had been given by Mr Campbell, afterwards Lord President; and that the entailer was only prevented, by being then on deathbed, to execute a new deed; and that although Lord Robertson was at first against the validity of the clause, he afterwards was satisfied that it was unobjectionable.
Page: 144↓
“That some differences have arisen relative to some transactions between the said William Robertson and the said deceased George Turnbull, which the parties are desirous of terminating by arbitration. Therefore, they have submitted and referred, as they do by these presents submit and refer, all questions, disputes, differences, and demands competent to the one party upon or against the other, upon any account, or for any cause whatever preceding the date hereof, to the amicable decision, final sentence, and decree-arbitral to be given forth and pronounced by William Bett, banker in Cupar Angus, and George Brown, merchant there, arbiters mutually
Page: 145↓
chosen by the parties submitters.”
Mutual claims were lodged and answered by the parties, on considering which the arbiters issued the following notes:—
“The late George Turnbull and William Robertson had a copartnership concern in the purchase, bleaching, and sale, of three parcels of cloth. Mr Turnbull granted acceptances for the price, which were discounted, and the proceeds applied by Robertson, the drawer and indorser of the bills, to pay the price.
The whole expense of the purchase of these parcels of goods amounted to
L.1840
3
9
And the bleaching to
328
2
4
L.2168
6
1
Mr Turnbull failed, and executed a trust-deed on 5th October 1810; and at this time the goods forming the second adventure had been consigned by Mr Turnbull for sale at Glasgow, and were then unsold. The goods forming the third adventure were at Claverhouse Bleachfield, and were taken possession of by Mr Robertson for sale. The proceeds of both these parcels of goods, the arbiters conceive, should have been applied in paying the debts of the copartnership, and must still be so applied; for they understand it to be the law and the universal rule in mercantile transactions, that the funds of every copartnership must be applied, as far as they go, in paying the copartnership debts, before a third party can have any interest therein.
The second adventure brought to Mr Turnbull's trustees L. 301, and the third to Mr Robertson L. 579. 7s. 1d., and he paid L. 328. 2s. 4d. for bleaching.
At the time of Mr Turnbull's failure, the bills accepted by him to Mr Robertson, and discounted, and the contents applied by the latter in paying the price of the second and third parcels, amounted to L.1110. 10s. 5d., and they were in the hands of third parties, who discounted them. They were wholly unpaid, and, with the expense of bleaching, formed the undischarged debt against the copartners, and which should have been defrayed from the joint stock, so far as that would go.
Soon after the failure of Mr Turnbull, Mr Robertson also became insolvent. The creditors in the bills above-mentioned ranked, as they were entitled to do, on Mr Turnbull's funds for the whole amount, and received a dividend amounting to L.457. 17s. 6d. from his trustees. They also ranked on Mr Robertson, and received from him dividends amounting to L. 660. 5s. 10d., which paid these bills in full. The statement by
Page: 146↓
Mr Turnbull's trustees, that they paid dividends on bills, where Mr Robertson was drawer and Mr Turnbull acceptor, to the amount of L.1222. 1s. 8d. is thus explained: Mr Robertson is admitted to have been a private creditor to the extent of L.111: 11s. 3d., which being deducted from the L.1222. 1s. 8d., leaves the amount of the copartnership bills L.1110. 10s. 5d. as above mentioned.
The state of the whole copartnership concerns have this result. The whole expense of purchases and bleaching amount to
L.2168
6
1
SALES.
1st adventure,
L. 880
10
4
2d ditto,
301
0
0
3d ditto,
579
7
1
1760
17
5
Total loss,
407
8
8
Half to each partner,
203
14
4
The whole debts have been discharged by the parties, but in different proportions.
At the date of the failure, Mr Robertson had received no part of the copartnership's funds, but Mr Turnbull had received from the sale of the first adventure,
L. 880
10
4
But he paid the original cost,
729
13
4
L.150
17
0
This sum being in the hands of Mr Turnbull when he failed, Mr Robertson could only have been entitled to rank on his funds for one-half had the copartnership been closed; but as this was not the case, he had a preference in law on Mr Turnbull's interest in the goods then undisposed of, which, as the then solvent partner, he was entitled to retain till he was reimbursed in a future accounting.
Copartnership Account continued.
Balance, as above, in Mr Turnbull's hands when he failed,
L.150
17
0
His trustees received for the second adventure, sold after the failure,
301
0
0
Carried forward,
L. 450
17
0
Page: 147↓
Brought forward,
L. 450
17
0
The trustees paid dividends on copartnership bills,
457
17
6
So there is due them on receipts and disbursements,
L. 6
0
6
William Robertson, on the other hand, paid compositions or dividends on copartnership bills, to the amount of
666
5
10
And he paid for bleaching copartnership cloth,
328
2
4
L. 994
8
2
Deduct, received by him, proceeds of third adventure,
579
7
1
L. 415
1
1
Deduct the above over payment by Mr Turnbull's trustees,
6
0
6
L. 409
0
7
Mr Robertson, therefore, on these copartnership concerns, has advanced L. 409 0s. 7d. more than Mr Turnbull or his trustees; and the copartnership funds being exhausted, it appears to the arbiters at present, that Mr Robertson is now entitled to rank on Mr Turnbull's estate for the above sum, and to draw a dividend therefor equal to the other common creditors.
Mr Robertson makes an additional claim for L. 120 of interest and expenses received and paid by him on the copartnership bills. The arbiters are of opinion, that if he could instruct such payment previous to Mr Turnbull's failure, he would be entitled to rank on Mr Turnbull's estate for one-half; but as no evidence of this has been shewn, the arbiters cannot sustain the claim.
The arbiters appoint their clerk to furnish the parties with copies of these minutes, and to intimate their orders, that they will be ready to hear any observations thereon within ten days from this date.
(Signed)
W. Bett.
George Brown.”
A representation was then lodged by the trustees, in which they denied that they had received the proceeds of the second parcel of linens, being L. 301, and offered to prove that such was the fact. On considering that representation, the arbiters
Page: 148↓
Page: 149↓
“The Lord Ordinary has advised this cause, and will shortly notice the reasons urged for setting aside the decree-arbitral.
First. It is said that the arbiters exceeded their powers, in so far as the parties never intended to authorize them to decide on any claim to be made by the defender against the pursuers; but on the contrary, the sole end of the submission was to enable them to consider a claim by the pursuers against the defender, and which only was made before the submission was proposed and entered into.
On this the Lord Ordinary will observe, that whatever might have been the state of the claims before the submission was entered into, it is quite clear that it was in the view of parties that mutual claims might be made; and accordingly the submission is of all claims and demands competent to the one party against the other. Had one claim only been in view, that claim alone would have been submitted, but that is not the fact; reciprocal claims were in contemplation, and were referred to the arbiters.
Reciprocal claims and answers were made and judged of; so that there is nothing in this objection.
Secondly. It is said, that the arbiters determined without hearing the pursuers. But this appears equally unfounded, as the very statement of the pursuers proves; for they made repeated representations against the opinions of the arbiters, which were communicated to them.
Thirdly. It is said that, by the judgment of the arbiters, they have authorized a double ranking; and there is no sort of question that this is true: neither does it seem to be disputed by the defender, and there is as little question that this is illegal. But what then? Had the point been tried in this Court, the double ranking would not have been allowed. The creditors in the bills would have ranked upon the bankrupt or trust-estate of George Turnbull, and also on Robertson; but as their claim on Robertson was in virtue of these bills, it is impossible that he could be allowed to rank a second time on them on Turnbull's estate. But the arbiters, in allowing this second ranking, have erred in law and principle: technically speaking, they
Page: 150↓
have committed iniquity, which is no ground for setting aside their decree. Fourthly. It is pleaded, that they have assumed facts to be true when proof of the reverse was offered, in so far as they held that L.301, as the price of the second parcel of yarn sold by Turnbull, came into the hands of the pursuers as his trustees, when the latter offered to prove that Turnbull had uplifted the money previously to the trust.
The Lord Ordinary considers this plea to be ill-founded. The arbiters did not assume the fact that the trustees had received the money: They declared their opinion, that it was of no consequence in which way the fact stood. They knew, and laid down as established, that Turnbull had uplifted
L. 880
10
4
as the price of the first parcel of yarn sold by him; And sold
729
18
4
Whereby he had in his hands a balance of
L. 150
17
0
And this they held to be a fund, which, though not ear-marked, was one on which Robertson was entitled to a preference, and of course was to be applied in payment of the bills pro tanto; and, consequently, when they laid down that as law, it is of no consequence whether Turnbull or his trustees received the L. 301 as the price of the second parcel, since, even admitting him to have drawn the money, the same principle which governed the former applied to the latter. The arbiters, therefore, did not require to, and did not, assume any fact without proof, that was any way material in regulating their opinion.
Lastly. It is said that they have found Robertson entitled to rank on Turnbull's estate for L. 409. 7d., in which they have committed an error calculi. And here the Lord Ordinary confesses that he feels much difficulty what to do; for to him it seems as plain as arithmetic can make it, that, on the principle assumed by the arbiters themselves, viz. that accounts should be adjusted between the parties on the same principle as if both had been solvent, no such balance as L. 409. 7d. would have been due.
Had Turnbull sold the whole three parcels, and received their price, he would have been liable to pay the bills which he granted for these goods and the bleaching of them, except Robertson's share of the loss, being L.203. 14s. 4d. The account would then have stood thus:—
Page: 151↓
Original price of goods L. 1840. 3s. 9d., bleaching L.328. 2s. 4d.
L.2168
6
1
Off Robertson's share of the loss,
203
14
4
L.1964
11
9
Of this Turnbull paid L. 729. 13s. 4d. and dividends L.457. 7s. 6d.
1187
0
10
Remains
L.777
10
11
But deduct what Turnbull did not receive, Robertson having uplifted it,
579
7
1
Due by Turnbull,
L.198
3
10
In this way Turnbull would have been owing Robertson, or, in other words, Robertson would have had to receive L.198. 3s. 10d.; and by a different mode of calculation the pursuers bring out a sum of L.203. 5s. 6d.; and in whatever way it is stated, it is impossible to bring out L. 409, if Robertson's share of the loss, which he was bound to bear, be taken into computation. The arbiters themselves state the accounts so as to bring out a loss to each party of L. 203. 14s. 4d. but they fail to deduct it. The Lord Ordinary believes the true balance to be as he has stated it, L.198. 3s. 10d. as may be proved by making Turnbull pay back to Robertson the proportion of money that he drew over half of the price of the goods, and then making each pay his half of the prime cost and bleaching. But the Lord Ordinary sees a difficulty in correcting the decree, without setting it altogether aside; and as the case is new, and the decree-arbitral has so many exceptional parts, he thinks that it is worthy the consideration of the Court.”
On advising the cause, the Court, on the 14th June 1822, repelled the reasons of reduction, sustained the defences, and found the trustees liable in expenses; and to this judgment they adhered on the 5th June 1823.
The Judges were unanimously of opinion, that the arbiters had not gone ultra vires; and Lord Robertson observed, that there was no proper error calculi, which must be an error in arithmetic, and not resolvable into an error in point of principle; but that here the arithmetical calculation was perfectly correct.
The Trustees appealed.
Appellants.—1st, Although the deed of submission is expressed in general terms, yet it was truly intended to apply merely to the
Page: 152↓
Respondent.—It is settled law, that a decree-arbitral can only be challenged on the ground of corruption, bribery, or falsehood; and in this case no such allegations are made. It is true, that if there be an error in arithmetic, it may be corrected at any time, but the error must be in arithmetic, and not an error in point of principle. In the present case, however, there is no error in arithmetic; and therefore, supposing all the statements of the trustees were true, they are utterly irrelevant. The submission was not confined to a claim by the trustees against the respondents. On the contrary, it was perfectly general, embracing claims against each other, and accordingly mutual claims were lodged and answered; and it was not till a late stage of the cause that this plea was brought forward. The objection, that the arbiters have erroneously allowed a double ranking, is not true in fact; and at all events it is irrelevant, because it resolves into a plea of error in judgment, or iniquity.
Page: 153↓
The House of Lords “ordered and adjudged, that the appeal be dismissed, and the interlocutors complained of affirmed.”
Appellants' Authorities.—Steele, June 22. 1809, (F. C.)
Respondent's Authorities.—1. Bankton, 23.; 22. Reg.; 1695, 25.; 4. Ersk. 3. 35.; Hardie, Dec. 18. 1724, (664.); Williamson, Dec. 12. 1739, (665.); Heddrington, June 21. 1771, (No. 3. App. Arb.); Kirkaldy, June 10. 1809, (F. C.); Grant, June 23. 1820.
Solicitors: Moncreiff and Webster— J. Richardson,—Solicitors.