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firm, must be treated in equity as company property (a). It would appear, however, that if the acquisition is unconnected with the company's line of business, or that, if so connected, it has been conceded to him by third parties for his own benefit solely, he will be allowed to retain it as separate estate (b).

No case exactly raising these questions appears to have occurred in Scotland; but there can be little doubt that the principles above stated would be given effect to by our tribunals, as they arise out of the very nature of the partnership contract, and are in close analogy with other principles that have been acted upon in our system (c).

after dissolu

If, after dissolution, but before winding up, a partner continues Acquisitions to carry on the business of the concern, and acquires property tion. thereby, such property does not, in the absence of fraud, fall under the partnership estate (d). And even where profits were realized from the use of what was undoubtedly partnership property, they were not, in the circumstances supposed, held to belong to the company assets (e). The case would be different if the surviving or continuing partner, and the representatives of his late partners, stood to each other in the relation of trustee and beneficiaries (ƒ). It must be observed, however, that while the fact of any kind Use of property of property having been used for partnership purposes is a strong presumption in favour of its being company estate, this is by no means conclusive evidence of such a proposition. The property may in truth belong to one of the partners, who may only have given the use of it to the company during the continuance of the partnership, or for a specific period. In other words, the partner may have contributed the use or proceeds of the property, not the property itself. This is a case of daily occurrence (g).

(a) Featherstonehaugh, 17 Ves. 298; Clements v. Hall, 2 De G. and J. 173. (b) Campbell v. Mullet, 2 Swanston

551.

(c) See Ersk. iii. 3, 20; Campbell v. Calder, 1805, 1 Bell's Com. 82, n. 3; Gibson v. Stewart, 1835, 14 S. 166, 1 Rob. App. 260. See also chap. on Powers of Partners, and Pothier de Soc. N. 123.

(d) Minto v. Kirkpatrick, 1833, 11 S. 632.

(e) Same case. See Lindley 549.

(f) Cochrane v. Black, 1855, 17 D. 321.

(g) Cox v. Stead, 1833, 11 S. 672, aff. 1834, 7 W. and S. 497; Smith v. Watson, 2 B. and C. 401, and 3 Ross Lead. Ca. 442; Meyer v. Sharp, 5 Taunt. 74; ex parte Hamper, 17 Ves. 404; Wedderburn's case, 4 My. and Cr. 41; compare with Reid and Hollingshed, 4 B. and C. 867. See Sime v. Balfour, 1804, M. App. Her. and Mov. 3; House of Lords, 1811, 5 Pat.

525.

by firm.

Separate estate vested pro indiviso.

Wilson v.
Threshie.

Campbell v. Calder.

Further, property may be vested in the individual partners pro indiviso, and yet such property may be separate and not company estate. The following case is a good illustration of the principle here stated.

Two partners of a fishcuring concern were pro indiviso proprietors of the buildings in which it was carried on. On the bankruptcy of one of them, his trustee claimed half of the house property as the separate estate of the bankrupt. In an action of declarator at the instance of the other partner, to have it found that the whole was company property, it came out in evidence, that there had been originally another partner, who had retired from the firm; that this partner had made the offer for the property for behoof of the company, and had then stated that he intended to retire; and that the property had been fitted up and used for the purposes of the company. But, on the other hand, it was proved that the partners were not bound to each other for any specific period; that though the partner who retired had remained in the concern for a year after the property was acquired, yet that the titles were taken to the other two partners pro indiviso, and to their heirs and assignees, without mention of him; and that the partner who now contended for its being company property had taken infeftment pro indiviso, and had granted a heritable security over it for his own private debt. Upon the whole, it was held to be separate estate (a).

In this and similar cases, the property is held by the partners not as partners, but as joint-owners; and what they contribute to the partnership is not the joint-property, but its use and proceeds. For illustration of the working of this principle, reference may be made with advantage to the English cases noticed below (b).

It must be observed, however, that when property has been plainly acquired for company purposes, and has been used without objection as such, the mere fact that it stands in the name of one of the partners will not render it separate estate. Thus, in Campbell v. Calder Iron Company (c), a lease was entered into with David

(a) Wilson v. Threshie, 1826, 4 S. 366. See also Jeffrey v. Crightons, 1821, 1 S. 137; MVean v. M`Vean, 1864, 2 MPh. 1150.

(b) Brown v. Oakshott, 24 Beav.

254; Morris v. Barret, 3 Y. and J. 384; Jackson, 9 Ves. 591.

(c) 1805, 1 Bell on Leas. 150, 1 Bell's Com. 82.

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

Corporations, being proper persons, are entitled to hold pro- Corporations perty, whether heritable or moveable, real or personal, directly; perty 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.
1273; Gardner, 1845, 7 D. 286; Lear-
month, 1854, 16 D. 580. See Earl of
Mansfield, 1829, 7 S. 642.
(c) 2 Stair 3, s. 41.

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