Mushet, of the Calder Ironworks, for himself and partners; but the lease was granted to 'David Mushet and his heirs, secluding assignees, legal or voluntary, and all sub-tenants.' On the bankruptcy of the company, the Court found that the lease had determined, though Mushet himself was not bankrupt, on the ground that it was truly granted to the company, and not to Mushet as a private individual. CONVERSION OF COMPANY PROPERTY INTO SEPARATE ESTATE. Whenever, at the formation of a company, the partners make contributions of property to the concern, they convert their separate estate pro tanto into company property; and when, at its dissolution, they divide the common stock among themselves, or each receives back his original contribution, they change company property into separate estate. The same conversion takes place when one partner retires from the concern, and receives a part of the company property; when the company transfers to one of its partners, by sale or otherwise, what previously formed part of the joint-property; when a partner throws into the common stock of an existing company that which was previously his own; and when a new partner is introduced and contributes property. It is competent both to the partners and to the company to make such conversions at will, so long as they retain the full control of their respective estates. The agreement or obligation to make such conversion may be proved prout de jure, except in the case of heritable property, where written evidence is required. The actual transfer, however, which completes the conversion, must, as we have already seen, take place in accordance with such solemnities as the law requires. In England, this free power of conversion is restrained in the English law. few cases only where creditors have a lien over the property; but in this country it ceases whenever the estate sought to be converted is laid under restraining diligence. And a partner endeavouring to convert his separate estate into partnership property, in fraud of his creditors, would come under the provisions of the Act 1621, c. 18, as the company would be regarded as a conjunct and confident person. At least this would be the case in private partnerships. M See, as examples of the conversion of company property into separate estate, the cases noted below (a). General rules. NATURE OF PARTNERSHIP PROPERTY. The partnership property, or joint-stock, is, as we have already seen, held by all the partners jointly for the uses of the company; and one of the consequences of this is, that all heritable property belonging to the company is moveable quoad succession, for the only right in it which any partner possesses is a mere jus crediti. This rule is firmly fixed both in the English and Scottish systems of law (b). In applying this rule, however, great care must be taken to distinguish between company property and separate estate. To the former only is the rule applicable. After what has been already stated as to the distinction between company property and separate estate, it is unnecessary to do more in considering this part of the subject than to state the following rules: 1. Property, in its nature heritable, will be deemed moveable, and descend to the executors of partners, when it was acquired simply for partnership purposes, was intended to be thrown into the common stock in its entirety, and not merely for its temporary use, or was purchased with company funds, though for a temporary purpose only (c). 2. Property, in its nature heritable, is considered unconverted realty, and descends to the heirs of partners, if it has been acquired as separate estate by a partner, or by two or more of them as co-owners, and its usufruct only has been contributed for company purposes (d). (a) Bayne v. Ferguson, 1817, 5 Dow 151; Cunningham v. Warner, 1824, 2 S. App. 225; M'Cowan, 1852, 14 D. 901. (b) 2 Bell's Com. 613; Lindley 565. (c) Compare Sim v. Balfour and Others, 1804, M. App. voce Her. and Mov. No. 3, H. of L. 1811, 5 Pat. App. 525; Corse's case, 1802, 13 F. C. 162, M. App. v. Her. and Mov. No. 2; Murray v. Murray, 1805, ibid. No. 4; Minto v. Kirkpatrick, 1833, 11 S. 632; Irvine v. Irvine, 1851, 13 D. 1367. The following English cases may also be referred to: Bell v. Phyn, 7 Ves. 453; Randall, 7 Sim. 271; Cookson, 8 Sim. 529; Ripley v. Waterworth, 7 Ves. 425; Darby, 3 Drew 495; and Essex, 20 Beav. 442. (d) Compare the Scotch cases noted supra, with the English cases, Balmain v. Shore, 9 Ves. 500; Rowley v. Adams, 7 Beav. 548; and Phillips, Bisset on Partnership, p. 50. PROPERTY HELD BY CORPORATIONS. may hold pro perty directly. Corporations, being proper persons, are entitled to hold pro- Corporations perty, whether heritable or moveable, real or personal, directly; and do not require the intervention either of their members or of other persons as trustees for their behoof. The titles to heritable property may therefore be taken to the corporation in its corporate name, and the feudal right may be perfected by sasine or registration in like manner (a). sometimes Yet, inasmuch as corporations never die, being possessed of Trustees endless endurance, the casualty of relief due at the entry of an necessary. heir can never arise, where the vassal is an artificial person of this kind. It has accordingly been fixed by a tract of decisions, that superiors cannot be compelled to give an entry to a corporation unless they have become bound to do so by special stipulation or compromise. And this holds good even in the case of adjudications (b). To obviate this difficulty, it has accordingly become common to adopt a device originally suggested by Lord Stair (e), and to take the title in trust for the corporation to some person and his heirs, upon whose death or neglect to enter, the superior's casualties may arise and become exigible. This device has no doubt the Disadvantages of this practice. merit of silencing the objections of superiors, but it is open to all the disadvantages usually found to be inseparable from the complicated machinery of continuous trusts, and it should therefore never be resorted to when any arrangement can be made with the superior by which an entry can be obtained for the corporation direct. Nor, in general, need any great difficulty be apprehended in bringing about such an arrangement. A sum of money sufficiently large to be an equivalent for the casualties may be agreed upon and paid at the outset, or else the superior may be got to accept of an agreedupon sum at the expiration of certain fixed terms of years in lieu of the legal claims, whose periods of payment depend on the uncertain duration of human life. (a) Shaw's Bell's Princ. s. 2178. (b) 2 Stair 3, s. 41; 2 Ersk. 7, s. 7; Hamilton, as reversed, 1713, Rob. App. 172; 2 Bell's Ill. 36; Hill v. Merchant Company of Edin., 1815, 18 F. C. 132; Sir H. Campbell, 1843, 5 D. (c) 2 Stair 3, s. 41. Often unnecessary Statutory forms. Act 1845. Act 1862. There is great reason, however, to believe that conveyancers, from being in the habit of preparing titles to land for unincorporated associations, which can only hold real property through the intervention of trustees, frequently adopt the same method in the case of proper corporations, and take the titles not to the corporation itself in its proper name, but to its existing officials and their successors in office in trust for its behoof, even where such a course is neither prescribed in the incorporating instrument nor necessitated by the objections of the superior (a). Such a practice ought never to be adopted when it can be avoided: it is not only complex and cumbrous in itself, but may, in some cases, give rise to questions seriously affecting the validity of the title. In the case of companies incorporated by Act of Parliament for carrying out public undertakings, the proper procedure and forms for completing the company's title to land and other heritage will be found in the 'Lands Clauses Consolidation (Scotland) Act' (b), or in that taken in connection with the special act incorporating the company. These provisions will be fully considered at a future stage of the treatise. In the meantime it may be remarked, that the statutory forms and mode of procedure should in all cases where practicable be rigidly adhered to; for, though trifling deviations may not be productive of serious consequences, nothing short of necessity can warrant the conveyancer in deviating from prescribed statutory forms. All such additions, amplifications, or repetitions as are sometimes introduced in majorem cautelam, after the fashion of the ordinary styles, are at least censurable as unmeaning superfluities, and may subsequently produce effects or minister questions that cannot be foreseen. The maxim'superflua non nocent' is a very dangerous guide in such cases. Companies formed under the Companies Act, 1862,' are entitled like proper corporations to hold lands in the corporate name (sec. 18); and it is further provided, that all property, real and personal, belonging to a company previously existing, but afterwards registered under the Act, pass to and vest in the company as a corporation as soon as registration takes place (sec. 193). Of (a) Sir H. Campbell, 1843, 5 D. 1273. (b) 8 Vict. c. 19 (1845). course this does not affect the mode, tenure, or the form, as by trustees, etc., in which the lands may have previously been held. to amount of land. The amount of land which may be held by incorporated com- Limitations as panies is often specified in the charter or special act. This is always the case with companies formed under the Companies Clauses Act, 1845. The Act of 1862 makes no restriction of this kind in regard to companies formed for mercantile gain; but it provides that no company formed under the Act for the purpose of promoting art, science, religion, charity, or other such objects not involving the acquisition of gain, shall, without the sanction of the Board of Trade, hold more than two acres of land (sec. 21). |