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Scottish Court of Session Decisions |
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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Pattison v. Ballingal [1874] ScotLR 12_68 (13 November 1874) URL: http://www.bailii.org/scot/cases/ScotCS/1874/12SLR0068.html Cite as: [1874] SLR 12_68, [1874] ScotLR 12_68 |
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A contract of copartnery fixed the respective shares of the partners, and further provided that, in the event of his survivance, the junior partner was to carry on the business under the firm-name, and was to be chargeable with the payment of certain sums to the representatives of the senior partner, but only after setting aside a yearly minimum sum from the profits of the concern as his own share. On the death of the senior partner, the junior, by the advice of his principal clients, entered into a fresh partnership with another firm, in which his share fell considerably short of the sum allotted to him under the former contract. Held that he was not bound to account to the representatives of his former partner, or to make any payment to them in respect of the business which his said clients transferred to the new firm.
The summons in this case was issued on 11th July 1871, at the instance of Mrs Annie Condie or Pattison, eldest daughter and executrix-dative of Mr James Condie, solicitor, Perth, and wife of Mr Frederick Hope Pattison, blacking-manufacturer in Glasgow, along with her husband, against Mr Andrew Hunter Ballingal, Writer to the Signet, of the firm of Messrs Geo. Condie, Conning, & Co., writers, Perth. The purpose of the summons was to have it declared that a contract of copartnery, entered into by Messrs Condie & Ballingal on 22d January 1869, and particularly the eleventh article thereof, was still a subsisting contract, and that Mr Ballingal was bound to fulfil the obligations which in that article were undertaken by him. The summons then contained a requisition for an account of the profits of the firm of Messrs Geo. Condie, Conning, & Co., from 12th May 1870, (the date of Mr Condie's death), till 19th July 1871, in order to decree against Mr Ballingal for £2000, or such sum as should for that period be found due to Mrs Pattison, as Mr Condie's legal representative. The summons also contained an alternative claim of damages to the amount of £5000 against Mr Ballingal, in case he should be found to have successfully evaded the contract of copartnery. In support of the summons the following articles of the contract of copartnery were relied upon, viz.—
“ Sixth.—In the event of the business being arried on by Mr Ballingal after the death of Mr Condie, he shall pay to Mrs Alexandrina Condie, widow of Mr George Condie, solicitor, Perth, (now Mrs Cross), the sum of £200 on 31st December in each year of the ten years immediately succeeding the death of Mr Condie, declaring that in the event of the death of Mrs George Condie (now Mrs Cross), the annuity shall be payable to her daughter Laura, or to her guardians during her minority.
Eleventh.—In the event of Mr Condie predeceasing Mr Ballingal, it shall nevertheless be competent to Mr Ballingal to continue to carry on business under the firm of Condie & Ballingal but in that case the sum of £1000 shall annually be set aside for Mr Ballingal out of the free proceeds of the business after deduction of clerks' salaries and other expenses and the annuity before provided for, and the remainder only of the free proceeds shall be divided, and that into three equal portions,—of which two shall be paid to Mr Condie's legal representative, and the other third portion shall belong to Mr Ballingal.
Twelfth.—It shall be understood that in the event of Mr Ballingal continuing the business after the death of Mr Condie, and its becoming expedient for him to assume a partner into the same, he shall give a preference to such one of the grandsons of Mr Condie as may qualify himself for the business.”
Then, founding upon those articles, Mr and Mrs Pattison alleged that Mr Ballingal had, upon Mr Condie's death, adopted the device of changing the name of his firm from “Condie & Ballingal” to “Geo. Condie, Conning, & Co.,” for the purpose of defrauding the representatives of Mr Condie of their just rights, and, if possible, of evading his obligations; that letters had been sent by him to Mr Condie's clients with the view of securing their business to himself, and of appropriating to himself the goodwill of the business of Condie & Ballingal, and the whole profits to be derived from the business; and that since Mr Condie's death he had continued to transact the business of the clients, and of the firm of Condie and Ballingal, in all respects as formerly, under colour of the name of “Geo. Condie, Conning & Co.” Again, to meet the case of Mr Ballingal being found to have successfully evaded the contract of copartnery, Mr and Mrs Pattison alleged that Mr Ballingal had abused the position of trust in which he was placed, and that through his fraudulent conduct Mr Condie's representatives had sustained loss, for which he was responsible to the amount of at least £5000.
In reply, Mr Ballingal denied all Mrs Pattison's allegations, and explained that after Mr Condie's death he did not “continue to carry on business under the firm of Condie & Ballingal,” but entered into an agreement of partnership with Messrs Conning & Hunter, writers, Perth; and that since 1st June 1870 the partnership thus formed had carried on business under the firm of “Geo. Condie, Conning, & Co.,” the name of George Condie being used with the assent of his testamentary trustees, and also with the assent of his widow, Mrs Geo. Condie (now Mrs Cross), whose annuity had been continued and might be increased. At the same time, Mr Ballingal stated three preliminary objections to the action. In the first place, Mrs Pattison had no right to sue, because the trustee in Mr Condie's sequestration was the proper legal representative of Mr Condie under Messrs Condie & Ballingal's contract of copartnery. In the second place, assuming her to be the proper representative, her husband and she were not entitled to sue,
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because he had been adjudicated a bankrupt, and a creditor's assignee appointed on his estate in 1864—they having been married since the year 1857. In the third place, Messrs Condie & Ballingal's contract of copartnery contained a clause of arbitration embracing all the questions raised, and these questions must, therefore, be disposed of by that means, and not in Court. Proof having been ordered and led, Lord Mure on the 25th March, 1874, pronounced the following interlocutor—“Finds that after the death of the late Mr James Condie in May 1870, the business which had been carried on by him and Mr Ballingal under the contract of copartnery entered into between them on 22d January 1869, was carried on by Mr Ballingal during the period embraced in this action in conjunction with the business of Messrs Conning & Hunter, and the partners of that firm, under the name of Geo. Condie, Conning, & Co.: Finds, in these circumstances, that Mr Ballingal is bound, in terms of the eleventh article of the contract of copartnery, to account to Mr and Mrs Pattison, as representing the late Mr James Condie, for the profits of the business of Condie & Ballingal so carried on by him after Mr Condie's death, and appoints Mr Ballingal to put in an account of the profits from the date of Mr Condie's death.
“ Note.—It does not, in the opinion of the Lord Ordinary, admit of doubt upon the evidence in this case that after the death of Mr Condie in 1870 the business belonging to the firm of Condie & Ballingal was carried on by the defender in conjunction with the business of Conning & Hunter, under the firm of George Condie, Conning & Company. This is proved by the oral evidence adduced, by excerpts from the books of the firms, by the way in which the balances were taken over upon the death of Mr Condie in 1870, and by the letters which the defender wrote to the different clients of Condie & Ballingal, in which he informs them that the business which is described sometimes as that of ‘the late firm of Condie & Ballingal,’ and at other times as ‘Mr Condie's business,’ is to be so carried on. And although it is not to be continued under the name of Condie & Ballingal, that change of name, for the reasons stated by the Lord Ordinary in the note to his interlocutor of the 18th of April 1873, does not appear to him to be of itself sufficient to exclude the claim now made on the part of the pursuer, and if the Lord Ordinary is right in this view, the main question remaining for consideration is, whether the circumstance that new partners were assumed, and a new copartnery formed in order to carry on, inter alia, the business of Condie & Ballingal, in the manner explained in the evidence, entitles the defender to maintain that he is not now bound to account, under the 11th head of the minute of agreement, for the profits of that business.
This question is, in the opinion of the Lord Ordinary, attended with very considerable nicety; but, after viewing it in all its different bearings he has been unable to come to the conclusion that the defender is, in the circumstances, freed from all liability to account. The assumption of a new partner is not, as the Lord Ordinary conceives, sufficient, any more than the mere change of name, to take the case out of the provisions of the agreement. Because it was plainly in contemplation of the parties at the time the agreement was entered into that it might be necessary or expedient for the defender to assume a partner after the death of Mr Condie. For this provision is made in the 12th head of the agreement, which contains a stipulation to the effect that, should a new partner be assumed, a preference was to be given to one of Mr Condie's grandsons. But that clause contains no restriction as to the use of the new partner's name, and no qualification as to the proportion in which the profits were to be divided under the 11th head of the agreement, thereby plainly implying that neither Mr Condie nor the defender anticipated that any difficulty would occur in dealing with the profits of the business formerly carried on by Condie & Ballingal, in terms of the agreement, in the event of a new partner being assumed. For that would only involve an adjustment between that new partner and the defender of the proportion of the profits of the business of Condie & Ballingal, which was to belong to the defender under the provision of the 11th head of the agreement.
It appears from the evidence adduced that when the defender came to the conclusion after Mr Condie's death that it would be expedient for him to assume a partner, it was at one time proposed that Mr Hunter alone should be assumed, and if that had been done, the case, even if a change had been made in the name of the firm, would, in the opinion of the Lord Ordinary, have nevertheless fallen within the scope and spirit, although not perhaps within the very letter, of the provisions of the 11th and 12th articles of the heads of the agreement; and although the arrangement which was ultimately come to was of a somewhat different description, inasmuch as the business which had belonged to Condie & Ballingal was conjoined with that of Mr Hunter's firm—or rather the business of the latter firm was added to that of Condie & Ballingal—it appears to the Lord Ordinary that this transaction was in substance very much the assumption of a new partner in the shape of another firm, and as the defender has thus continued to carry on the business of Condie & Ballingal, the profits of that business, as distinct from those of the business which had belonged to Conning & Hunter, must, it is thought, be accounted for by the defender in terms of the 11th head of the agreement.
A great deal of the evidence was directed to show that one object which the clients of Condie & Ballingal seem very properly to have had in bringing about the present arrangement was to secure a provision for the widow of Mr George Condie. That, however, in the view the Lord Ordinary takes of the case, does not materially effect the question now under consideration, because that provision was very effectually secured by Mr Condie under the 6th head of the minute of agreement, which seems to have been transferred in almost the same terms to the agreement between the defender and Messrs Conning & Hunter.”
Mr Ballingal reclaimed, and, after hearing counsel the Court asked for an account of the average value of Mr Condie's business for the three years immediately prior to his death, an account of the value of Messrs Conning & Hunter's business for the same period, and statements of the proportions borne by the profits of those businesses respectively, one to the other, during the three subsequent years. In compliance with this, Messrs Lindsay, Jamieson, & Haldane, chartered accountants, Edinburgh, furnished the required accounts and statements on the part of Mr Ballingal, and corresponding
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accounts and statements were subsequently made up by Mr James Hutton, accountant, Glasgow, on behalf of Mr and Mrs Pattison. The case was then finally debated. At advising—
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The Court pronounced the following interlocutor—
“The Lords having heard counsel on the reclaiming note for the defenders against Lord Mure's interlocutor, dated 25th March 1874, Recal the said interlocutor; assoilzie the defenders from the conclusions of the summons, with the exception of the declaratory conclusion, and decern; find it unnecessary to dispose of the said declaratory conclusion, and quoad the said last-mentioned conclusion, dismiss the action and decern; find the defenders entitled to expenses to the extent of three-fourth parts of the taxed amount thereof allow an account of said expenses to be given in, and remit the same, when lodged, to the Auditor to tax and report.”
Counsel for Mr and Mrs Pattison—Solicitor-General ( Watson) and Rhind. Agent— William Officer, S.S.C.
Counsel for Mr Ballingal—Dean of Faculty ( Rutherfurd Clark), Q.C., and Keir. Agents— Dundas & Wilson, W.S.