William Drummond, for the Fife Banking Company v. Charles Hunter and Others, Trustees of the late Andrew Thomson [1834] UKHL 7_WS_564

UKHL
William Drummond, for the Fife Banking Company v. Charles Hunter and Others, Trustees of the late Andrew Thomson
[1834] UKHL 7_WS_564 · 1834-08-15
Circumstances under which it was held (affirming the judgment of the Court of Session), 1, That the share of a partner in a joint stock company had been transferred to an assignee, although the deed of assignation was not produced; and, 2, That the company by their conduct had waived a stipulation in the contract that all transfers should be made in a particular form and manner.

Subject_ Proof. —

Question, Whether it be competent to found on the scroll of a deed, as secondary evidence of its contents, without first proving the execution of the deed.The appellant, as cashier of the Fife Banking Company, which commenced business on the 2d of August 1823, brought an action before the Court of Session against the respondents, as representing the late Andrew Thomson of Kinloch, and against several other parties, setting forth, that in the month of May 1802 certain persons entered into a contract, by which they agreed to carry on a joint trade and business of banking, under the firm of the Fife Banking Company, for twenty-one years; that the capital stock was fixed at 30,000 l ., divided into shares of 500 l . each; and that the contract

Footnote

* The correct date is 31st August 1835.

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The respondents admitted that Mr. Thomson was originally a partner of the company, but alleged that he

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It appeared that Mr. Thomson had been cautioner to the bank for a Mr. Gourlay, who became bankrupt in 1820, and that, on the 11th of October of that year, his agent wrote to Mr. Anderson in these terms:—
“Mr. Thomson of Kinloch wishes to sell his Fife Bank shares, on purpose to pay his obligation to the bank for Mr. Gourlay. Will you get a merchant for them, or shall I advertise them in the newspapers?”
And in a subsequent letter he wrote, begging to “know whether it is necessary by the contract to make an offer of the stock to the directors before it is advertised for sale; and if so, what was the last selling price, as Mr. Thomson is willing that the directors shall have it at that rate?” The stock was afterwards advertised for sale, and was purchased by Mr. Anderson in 1822, at the price of 200 l . The respondents alleged that a formal deed of assignation was granted in his favour, of which they produced the scroll; but stated that Mr. Anderson had fled from Britain; and as the deed had been delivered to him, they could not make it forthcoming. This sum, it was stated, had not been paid to Thomson, but was placed to his credit in the bank books, in extinction pro tanto of the debt due by him to the bank. By this assignation, Anderson acquired right to the dividends from August 1821.Besides Mr. Thomson's share, Anderson held another, acquired from a Mr. Reid, and the dividends were 12 l . 10 s . per share. The first dividend was payable on the 7th of October 1822; and of that date an entry

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“William Reid, Andrew Thomson;”

which, it was said, denoted that the shares had formerly belonged to these parties; but the appellant alleged that this marking had been made ex post facto. Again, on the 4th of October 1823, being the last year of the old concern, there was the following entry:—

“1823, October 4.—E. Anderson, 2 - £25.”

These entries it was alleged meant to represent that Anderson was proprietor of the two shares. He had not been an original shareholder; and it was not alleged by the appellant that these dividends had been paid in respect of any other shares than those of Thomson and Reid. It also appeared, that posterior to the date of the assignation, and until the termination of the first contract, Thomson was not called to attend any meetings. His name was introduced into the new contract as one of the partners who had agreed to renew it, but it was not subscribed by him. It consisted of five pages, and was signed on each of these pages by Anderson; and on the fifth page, (but not on the others,) there appeared at the end of all the other signatures one in these terms:—

“Eb. Anderson, assignee of Andrew Thomson.”

On the other hand, the appellant stated, “that it was provided, that if any partner inclines to sell or transfer his share, he shall give notice of the intended sale, and the person to whom he proposes to sell, thirty days at least prior to a general meeting, of which notice the cashier shall immediately advise the whole partners by circular letters; and, at the following

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The Lord Ordinary, on the 21st of January 1834, pronounced this interlocutor:—

between the seller and purchaser; therefore, that the late Andrew Thomson was not a partner of the company at the expiry of the contract in 1823; assoilzies the defender, Charles Hunter, as trustee for Thomson's representatives, from the conclusions of this action, and decerns, and finds him entitled to expenses; reserving action to the pursuer, in competent form, for any sum for which Thomson's representatives may be liable in consequence of Thomson being a partner of the company previous to the transfer of his share in 1822.”
“Finds it proved, by the documents produced or referred to, that the late Andrew Thomson sold his share as a partner of the first banking company, in the year 1822, to Ebenezer Anderson, the accountant and teller of that bank, for the sum of 200 l ., and that the share was conveyed to him accordingly by a deed of assignation granted by the seller; that the transfer of the share was not executed in the form and according to the rules prescribed by the contract of copartnery, but that it was recognised, homologated, and acted upon by the company, and in consequence became effectual in a question with them, as well as in a question

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His Lordship at the same time issued this note:—

“Though the contract of copartnery prescribes certain forms, according to which shares shall be transferred, the company might dispense with these forms, if they thought fit.”
( East Lothian Bank v. Turnbull , 3d June 1824; Turnbull v. Allan and Scott , 1st March 1833.) *
“In the present case, it is proved that Thomson sold his share to Anderson, and executed a deed of assignation in his favour. The original deed is not produced, Anderson having absconded; but sufficient adminicles are produced to prove its tenor, which it is not necessary to do in a substantive action to that effect, the deed being founded upon in defence only, and for various other reasons. ( Moderator of the Synod of Merse and Tiviotdale v. Scott , 21st Nov. 1753.) †
That the transfer was recognised and acted upon by the company, is proved by their giving Thomson credit in account for 200 l ., being the price of the share, and applying that share in extinction of a debt due by him to the company,—by payment of dividends

Footnote

* 3 S. & D. 95., and 11 S. & D., 487.† Mor. 15823.

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It has been argued, however, that the defender is liable for sums applied towards the extinction of debts contracted by the company before Thomson ceased to be a partner, and that both at common law, and by the provision in the 13th article of the contract; but the Lord Ordinary thinks that that question cannot be competently raised under the record which has been closed in this action. The sum concluded for against the defender, rateably with the other partners and their representatives, is “143,005 l . 0 s . 10 ½ d ., with interest, agreeably to an account current, commencing the 2d of August 1823, and ending 2d August 1831,” both periods being subsequent to Thomson's retirement; and it is not set forth in the summons, that any part of that sum was applied in paying debts or satisfying obligations existing prior to 1823. Farther, it is set forth in the 22d article of the pursuer's condescendence, as the

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The appellant having reclaimed to the Court, their Lordships, on the 22d of May 1834, adhered. *Drummond appealed, and attempted to establish that the facts on which the interlocutors were founded were either inaccurate, or not supported by proper evidence; and that, at all events, the facts were not such as to convey to them such knowledge as was necessary to give relevancy to the plea of homologation, in order to elide the stipulation in the contract as to the mode of transfer.

Footnote

* 12 S. & D., 620.

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The respondents, on the other hand, contended that the facts were proved by competent and satisfactory evidence, and that the circumstance of having paid the dividends to Anderson was conclusive evidence of the recognition of him as the assignee of Thomson.Lord Brougham .—My Lords, the inclination of my mind is, that the question rests entirely upon the validity of the deed of assignation; that it need not be proved by an action of proving the tenor, as it was set up by way of exception, and not by way of the foundation of the original suit. I agree that an action of proving the tenor is not necessary where a deed is only founded upon, as in this case, and where without any such deed the same matter might be shown otherwise; yet where there is the necessity of showing, in the first instance, the existence of the deed as the very fundamental principle upon which the party can alone proceed, the admission of secondary evidence is not competent. Now, I cannot see how the Lord Ordinary could, without the circumstance being established that the deed was ever executed, or was destroyed, found his judgment upon evidence which he considered sufficient to prove what the contents of that deed were. Be it so, that secondary evidence could be let in of its contents, as is here contended for, still it cannot be legally done here, unless it be proved in the first instance that the deed ever existed.With that exception, I must say I have no great ground to quarrel with the judgment of Lord Corehouse. His Lordship's interlocutor is by no means an interlocutor drawn per incuriam. It is, on the

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His Lordship afterwards moved, and—

The House of Lords ordered and adjudged, That the said petition and appeal be and is hereby dismissed this House, and that the interlocutors, so far as therein complained of, be and the same are hereby affirmed.Solicitors: Andrew M'Crae— Richardson and Connell, Solicitors.