W. Duncan and Others (Brechin Gas Co.) v. Thomas Hunter Whitson [1854] UKHL 1_Paterson_328
It was provided the articles of copartnery of a gas company, that no partner should hold more than twenty shares. A. W., who held twenty shares , purchased twenty more in name of his brother T. H. W., who was then abroad, but who had left a commission and factory in favour of A. W., in terms sufficient to cover the transaction. T. H. W. was duly entered in the register of shareholders, and the dividends were paid to his brother for him. On his return to this country he repudiated the purchase, and declared that the shares were not his, but his brother's. The company thereupon required A. W. to find some other person willing to undertake the responsibilities of a shareholder. Before any new holder of these shares was found, T. H. W. wrote a letter recalling his repudiation, and expressing his willingness to undertake the responsibilities attaching to a copartner .Held (affirming judgment), 1. That the company's requisition did not amount to such an acceptance of T. H. W.'s repudiation as to bar his subsequent retractation; that, as he was now willing to undertake the responsibilities of a partner, the company were bound to receive him as such, and to pay the dividends to him . 2. That it was not relevant to aver that this was a mere device on the part of A. W. to evade the conditions of the contract of copartnery, by holding twenty additional shares in his brother's name . 1The defenders appealed against the judgment on the following grounds :—“1. In the circumstances, it was to be taken as an established fact, that the respondent was not originally the owner of the stock in question; and he was barred from maintaining that he was originally the owner; and nothing had occurred sufficient to confer on him any subsequent right to it. 2. The respondent, as he was not, and never had been, a partner of the company, was not entitled to sue for dividends on its stock.”The respondent supported the judgment for the following reasons :—” 1. The appellants have no legal interest in maintaining the pleas upon which their defence is rested; the only interest they could maintain, which is that of having a separate partner as holder of twenty shares of stock, is attained by the very fact of the receipt of dividends by the respondent as proprietor. 2. The respondent, having been admitted and registered as a partner in the books of the company, is entitled, as in a question with the company, to the privileges and advantages of a partner. 3. It is not competent to impugn the claims of the respondent without a reduction of the register. 4. The respondent having all along been liable as a partner, in consequence of the acts of his mandatory, and all that was required by the appellants having been accomplished by his adoption of the shares, and ratification of the acts of his commissioner before any pretext of forfeiture, the appellants were barred from rearing up any pretended forfeiture. 5. The respondent having been recognized as a partner subsequent to the challenge, and nothing having subsequently happened to deprive him of his status, the refusal of payment of his dividends was illegal. 6. The resolution of the general meeting of the 31st July 1843 was illegal, and the attempted execution of such a resolution a contravention of the contract of copartnery.”Footnote
1 See previous report 23 Sc. Jur. 546. S. C. 26 Sc. Jur. 417.Page: 329 ↓
Sol.-Gen. Sir R. Bethell , and Anderson Q.C., for appellants; Rolt Q.C., and R. Palmer Q.C., for respondent.The arguments turned entirely on the conduct of the parties, and the construction of the letters in evidence.Lord Chancellor Cranworth .—My Lords, this is one of those unfortunate cases, of which, I have already had occasion to remark, sometimes we have, unhappily, too many specimens from that part of the United Kingdom north of the Tweed, namely, an enormous and expensive litigation, going through a great number of years, for a most inadequate object. This litigation commenced in the month of January 1845. The object was to recover three sums of £8 10 s . It must, however, be admitted, that was not all; for, on the success or failure of that might depend the right of the parties to continue to receive annually £8 10 s ., or whatever else might be the dividend upon certain shares in a gas company in a town in Scotland.The suit was instituted by Mr. Thomas Whitson; and what he alleged by his summons was, that he was the holder of 20 shares in the company, of which he had been the holder since 1837 —that the dividends had been regularly paid to him, or rather to his brother, as agent for him, up to a certain day in 1841 or 1842—that three dividends had accrued due, they being payable on the 1st of August, at the time when the suit was instituted in January 1845, which dividends had not been paid. The object of the suit was to compel the company to pay him those dividends. The company objected to the payment of those dividends; and they object, because, they say, that by the terms of the partnership the original capital, which was £1800, divided into 360 shares of £5 each, had been apportioned amongst certain persons, and that by § 3 of the contract it was declared, that “no partner shall hold more than 20 shares of the capital stock; and in case any of the partners shall acquire more, by succession or otherwise, he shall be bound to dispose thereof within two years after acquiring right thereto; and failing his doing so, the extra stock so held shall then fall and belong to the directors, for the benefit of the company; and the directors shall be entitled so to declare, by a minute entered in the books of the company.”Now, the first question is—What is the meaning of that clause? for, on the very surface of it, it admits of two constructions. On the part of the company, it is said, it means absolutely to prohibit any party being interested, legally or equitably, either by original purchase, or by succession, or in any other way, either in his own name or in the name of any trustee for him, in more than 20 shares. Not so, says the pursuer, the present respondent—that is not the meaning. The meaning only was, that for every 20 shares there shall be a partner in the books, which would secure for the 360 shares a partnership stock of £1800; and when that stock was augmented, as it was, would secure more; and as a great number, probably, would not hold the full amount of 20 shares, it would secure an extensive partnership, each of whom would be responsible for the liabilities of the company.Now, unfortunately, we have not the deed before us; much light might have been thrown on what was the real meaning, if we had had that instrument. Mr. Anderson says, it was incumbent on the pursuer to have brought forward that deed if he thought it material to his case. I cannot agree in that remark. There can be no doubt it was for the pursuer to bring forward in his case everything necessary to make out his case; but the pursuer makes out his case by saying, “I was a shareholder, and these dividends have become payable, and I therefore claim the dividends.” That is the case of the pursuer. If the company met that case by saying there was something in the deed which prevented your claiming the dividends on those 20 shares, then, I think, it would have been incumbent on them to bring forward the instrument in its integrity, in order to enable your Lordships to construe it; and, I think, therefore, that whatever doubt or difficulty there may be in the construction, is to be attributed, not to the pursuer, but to the original defenders, the present appellants.Now there are two modes in which this clause may be construed. It may mean, as is contended for by the appellants, that, under no circumstances, shall any one, either in his own name, or any other name, hold more than 20 shares. It may mean, as has been suggested by the respondent, in any event, that there should be such a number of partners, as that for every 20 shares there should be a partner. Now, which construction ought your Lordships to put upon it? I think, in the state of doubt in which we are placed, it is fair to say, that the construction put upon it by the company is that which your Lordships may safely adopt; and I cannot entertain the least doubt but that the meaning the company put on it—that which they held out to Alexander and Thomas Whitson—was only that there might be somebody responsible for every 20 shares. If that be so, then the judgment below was correct, and I come to that conclusion upon looking at the facts of the case chronologically. Mr. Alexander Whitson lived in Scotland, and was originally an owner himself of 20 shares in this company. His brother was a mariner abroad; and the speculation appearing likely to be a prosperous one, the secretary of the company, in the beginning of January 1837, at the time when the stock was extended, proposed to Mr. Alexander Whitson to take more shares—that is, to get some friend to take them for him. Certainly, if it turned upon that letter only, I believe at that time Mr. Gordon did notPage: 330 ↓
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My Lords,that being so, it appears to me that the judgment which the Court of Session camePage: 332 ↓
Interlocutors affirmed with costs .Solicitors: Maitland and Graham, Appellants' Solicitors .— Richardson, Loch, and Maclaurin, Respondent's Solicitors .