United Kingdom House of Lords Decisions

This was an appeal from a decision of the Second Division of the Court of Session. The litigation began with an action of declarator and interdict at the instance of the appellants, the firm of Beveridge & Co., against Robert Beveridge and the trustees of the late Erskine Beveridge. In 1857 the late Erskine Beveridge, and his son James Adamson Beveridge, entered into a co-partnership, which was dissolved in 1860 by mutual consent. In 1862 Mr Erskine Beveridge entered into a partnership for three years with Mr Cance, and in 1864 Mr Robert Beveridge, brother of Mr Erskine Beveridge, was appointed manager of the factory business at a salary of £1200 a-year. At the same time, or soon after, James Adamson Beveridge was again taken into the firm, which still retained the original name of Erskine Beveridge &. Co., the agreement being that all contracts, bills, &c., should be entered into and given under the name of the firm. The business was to be more particularly under the charge of Erskine Beveridge during his life, and after his decease under the charge of his brother, the respondent Robert Beveridge, and the firm became bound to grant the necessary procuration and authority to Robert Beveridge which might be required by him in the office of manager for subscribing obligations for the firm. Erskine Beveridge died in 1864, and Robert Beveridge was left one of his trustees. It was alleged that the respondent then assumed to act as a partner instead of a mere manager, and that James Adamson Beveridge, the surviving partner, resisted this. That the respondent assumed to sign the name of the firm in his dealings without his nephew's consent or knowledge. That he also made alterations in the works, and, inter alia, ordered forty-four power-looms in place of the hand-looms formerly used, and persisted in purchasing these in spite of his nephew's remonstrances, alleging that this was one of the acts of his ordinary administration as manager. The respondent, also without the consent, and against the wish of the firm, cancelled existing contracts between the firm and many of the clerks and managers of departments, and entered into other arrangements, thereby adding to the liabilities of the firm. He also withdrew a sum of £20,000, being the funds of the firm, from one investment, and invested it elsewhere. The appellant, as representing the firm, now wanted to put a stop to these actings and method of proceeding on the part of the respondent.

The defender and respondent, Robert Beveridge, in answer, set up the defence that under his agreements with the firm he was entitled to superintend and manage the business of the firm, and to exercise all the rights and powers of a partner, and, in particular, was entitled to use and sign the company firm and style to all deeds and documents.

The Lord Ordinary held that James Adamson Beveridge was not entitled to sue in the name of the firm, and dismissed the action. This interlocutor was, however, recalled by the Second Division, and judgment delivered in the following terms:—The Court agreed that the pursuer had no title to sue in the name of the firm, but was entitled to sue as a partner; that the defender had no right to sign the name of the firm, but ought to sign in his own name; that he was not entitled, without James Adamson Beveridge's consent, to sign cheques binding on the company; that he had no right to lend or deposit the funds of the firm without James Adamson Beveridge's consent. They therefore granted decree of declarator and interdict in terms of the conclusions; but they also found that the defender acted within his power as manager in ordering the power-looms, and in fixing the salaries of clerks; and therefore assoilzied Robert from those conclusions of the action.

Both parties now appealed from the parts of the judgment decided against them respectively.

Sir R. Palmer, Q.C., for the appellant James Adamson Beveridge, said that this was an important question as to the proper management of a large and prosperous business, the income of the firm having been upwards of £29,000 a-year; and much of the difficulty arose out of the various deeds and contracts between the parties. The law of Scotland made trustees a quasi corporate body; and as the partnership deed provided that after Mr Erskine Beveridge's death his trustees should take his place and represent him in the partnership, this no doubt led to considerable difficulty in ascertaining the mutual rights of the parties. But at all events the main contention of the appellant was that he was admittedly a partner, and that therefore things could not be done by the manager of the firm against his wish and in opposition to his orders. The points on which the Court below decided against the appellant were wrongly decided. The firm being a separate person according to the law of Scotland, and these alleged injuries having occurred to the partnership, there was a

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title to sue in the firm, or at least the firm was properly made a party to the action, and if so, the appellant, as a partner, was entitled to make the firm a party. The Court below had not properly disposed of part of the action by declaring that the respondent had the powers of a partner. There was no foundation for that contention, and the Court ought to have distinctly declared that he was not a partner, and had not, as manager, any right to control and impair the right of the appellant as a partner. The respondent had no right to sign bills to bind the firm, and in order to do so legally ought to have a procuratory from the firm. But this he had not got. The same reason applied as to the right to order looms and alter salaries of clerks in spite of the remonstrances of one of the two partners. This was making the manager control the firm, instead of the firm controlling the manager. It was a complete disorganisation of an establishment for one of two partners of the firm to be overruled by the manager, and to have his own servants ordered and his own business carried on in a way that he expressly repudiated. The House ought therefore to reverse those portions of the interlocutor which assoilzied the respondent, and interdict him on all the points.

Mr C. G. Wotherspoon followed on the same side.

Mr Pearson, Q.C., for the respondent, said he regretted much, in a case like this, that their Lordships should be asked to decide an abstract question as to a manager's powers, when it is admitted that the respondent Robert Beveridge has so ably and successfully managed this business. The main questions were, what were the powers and the position of Robert Beveridge, and had he exceeded those powers? Now, according to the partnership deeds, Robert was a partner, and something more—the partnership was to go on after the death of Erskine Beveridge just as before, and his trustees succeeded him as partners. It was not the law of Scotland any more than the law of England that the trustees were a quasi corporate body. They were, as in England, each and all on the footing of partners.