Writ of single partner. Writ of directors. the particular transaction belongs. Where this department of the business is committed to several persons, such as a board of directors, the oaths of all should in general be taken (a). When the reference has been made to the oaths of all the partners, it will not be held to be exhausted by the deposition of one of them (). Yet, on a reference to the oath of two partners as to certain facts respecting a bond due to one of them only by name, but alleged to be for the firm, it was held competent to take the oath of only the creditor named, the other partner being abroad (c). The same observations would seem to apply generally to the writ of partners less than the whole number; and the following remarks may also be noted in addition. If during the continuance of the copartnery one of the partners execute a writing which is properly a renewal of an old by the creation of a new obligation, it will bind the firm after the original obligation has undergone prescription; for this is not to be taken as an acknowledgment of a subsisting debt, but as an exercise of the institorial power to bind the firm by contract (d). If, again, a partner retires from a firm, while certain company debts remain unpaid, the writ of the remaining partners would seem sufficient to elide prescription not only as against themselves who continue to carry on business, but as against the retiring partner: for it must be presumed, that when he left the concern he empowered the remaining partners to transact for him in relation to unpaid company obligations; and it cannot be supposed that he had himself paid such obligations, seeing he had ceased to take any share in the management (e). In like manner, the writ of the managing partner of a firm, or the writ of the board of directors or other officials of a company, ought to be taken as the writ of the concern so as to interrupt prescription, for such officials are in reality their factors specially appointed (ƒ). (a) See per Lord Medwyn in M'Nab v. Lockhart, 1843, 5 D. 1020; Gow v. M'Donald, 1827, 5 S. 445; M'Gregor v. M'Gregor, 1860, 22 D. 1264; Campbell v. Ballantyne, 1839, 1 D. 1061; Kendal v. Campbell, 1766, M. 12351. See Duncan v. Forbes, 1831, 9 S. 540; Fleming v. Ballantyne, 1840, 3 D. 212. (b) Cleland v. M‘Cleland, supra. (c) Earl of Traquair v. Burrows, 1815, 6 Paton's App. 99, affirming judgment of the Court of Session. which is not reported. (d) See Treacher v. Galloway, 1844. 17 Jur. 55. (e) Milliken v. Love, 1803, Hume 754. (f) Per Lord Medwyn in M Nab v. books. The books of the firm or company have always been regarded as Company the writ of the concern in questions of this kind; and entries found in them will bind the company, unless forgery can be established (a). The writ or oath of a surviving partner is in general to be taken as that of the copartnery (b). prescription. The currency of all prescriptions may be interrupted by action; Interruption of but in the case of partnership, it would seem that the proceedings must be taken against the company as such, and not merely against a partner individually. In the case of Grant v. The Creditors of the York Buildings Company (c), a claim having been lodged on the company's estate, it was objected to on the ground that it had undergone the long negative prescription, and that a summons, decree, and horning which were relied on as interrupting prescription were inept, because these had been directed not against the company in the corporate name, under which by its special act it was entitled to sue and be sued, nor even against the directors, who subscribed the contract, but against the governor and directors at the date of the action, some of whom had ceased to hold office before the horning was given. The Court of Session held, by a majority, that the intimation thereby given to one or more of the partners was effectual to save the debt from prescription. On appeal, however, the House of Lords remitted to reconsider the question, but the matter was finally compromised without being judicially determined (d). In this department of partnership law, little assistance can be English law. obtained from the law of England, the late Mercantile Law Amendment Act, 19 and 20 Vict. c. 97, which does not apply to Scotland, having introduced certain special provisions by which the old rules as to limitations' have been greatly modified. The previous law was, however, in principle at least, not materially different from our own. It may be seen by referring to Collyer, p. 282; Lindley, p. 370; and Story on Partnership, sec. 324. Lockhart, 1813, 5 D. 1020; Smith v. (a) Leslie v. Magistrates of Brechin, 1808, 15 F. C. 2; Muirhead v. Town of Haddington, 1748, M. 2507; Buchanan v. Magistrates of Dunfermline, 1828, 7 S. 35; Ker v. Magistrates of Kirkwall, 1827, 5 S. (b) Fyfe v. Carfrae, 1841, 4 D. 152. (c) 1784, M. 11283. (d) 3 Paton's App. 17 (1785). See M. 11285. Advantages of a correct theory. English theory. CHAPTER XV. LIABILITIES OF PARTNERS AND SHAREHOLDERS FOR THE THE numerous and important questions which present themselves in this branch of partnership law render it extremely desirable that some consistent and easily intelligible theory should be adopted by which they might be solved, and to which all the principles found in operation might be referred. Many difficulties, however, beset the evolution of such a theory. The partnership relation embraces the elements and principles of many other contracts; the legal notion of the firm presents important differences in different systems of law; and it cannot be said that the decisions of the courts have been characterized by unbroken uniformity. It is therefore very doubtful whether, in the absence of a code, any theory of partnership liabilities can be constructed which shall in all cases afford a safe and unerring guide. At the same time, much will have been gained if a theory can be formed which harmonizes with the genius of the legal system to which it is applied, explains the authorities consistently with each other, and thus serves to indicate what is likely to be the view which the courts will adopt in dealing with questions not hitherto determined. According to the theory of the law of England, in so far as any consistent theory can yet be taken as evolved in that system, the liabilities of partners for the company debts and obligations is said to arise out of the doctrine, that they are agents and sureties mutually for each other within the company's sphere of action; so that as each may bind all, each is liable for the debts and obligations of all. Such a theory is the only one perhaps that can be adopted in a system which ignores the quasi persona of the firm; but although it is capable of being reasoned out to equitable results, it labours under the great disadvantage of being cumbrous and embarrassing in practical operation. theory. The law of Scotland in all probability adopts the same prin- Scottish ciples of agency and suretyship; but inasmuch as it recognises the separate quasi persona of the firm, it is capable of finding expression in a theory less cumbrous and more easy of application. According to our system, the partners are agents and sureties, not of each other, but of the firm; and the obligations which it contracts by means of their agency bind them individually as its sureties. The Scottish theory is that applicable to incorporate associations in both systems, with this qualification, that in incorporated associations the guarantee of the shareholders is generally, though not always, restricted within definite limits. But whichever of the two theories be adopted, the practical results appear to be the same; and therefore the English decisions on the subject of the liabilities of partners, though not to be taken as decisive, ought to receive great weight in discussing such questions as have not yet received an authoritative solution by our tribunals. General simi larity of prac tical results. Once an obligation has been validly incurred by the company General rules. or firm, it may, after being constituted against the concern, be enforced against the members as guarantees bound conjunctly and severally with their principal. When the obligation is ad factum præstandum, and can be performed by another, specific performance may be decreed against all or some of the partners. When, again, the firm ought as a person to perform the act, or where performance becomes impossible, damages will be awarded instead of specific performance. An obligation to abstain from acting when that is the nature of the obligation, may be enforced by interdict, as in England, by injunction. Whenever decree has been obtained against the firm, any one of the partners may, at the option of the creditor, be proceeded against for the whole amount of debt or damage decerned for, leaving him to find indemnity against his copartners as best he may (a). And any one of the partners may be charged on decree or diligence directed against the firm (b). (a) See Contribution and Indemnity, and Diligence. (b) See Diligence. Ancient Adoption of UNLIMITED LIABILITY OF PARTNERS AND SHAREHOLDERS IN No principle can be said to be better fixed in the laws both of Scotland and England, than the doctrine that every partner of a private firm, and every shareholder of an unincorporated association, incurs unlimited liability to the public for all the debts and obligations of the company. It has sometimes been thought that the common law of Scotland was originally different from that of England in this respect, and that it recognised a power in trading associations other than such as were incorporate by charter or special act, to limit the liability of their members to the subscribed capital, or even to the amount of their respective shares, after the fashion of the sociétés en commandite of French law. This opinion does not appear to be altogether without foundation. The old Scotch law of society was borrowed more from continental than from English sources; and as it formerly gave great prominence to the quasi person of the company, it is not improbable that principles analogous to those of the foreign sociétés en commandite were finding their way into this country, and might ultimately have become settled law had it not been for the infiltration of rules and precedents of English growth. This view receives countenance from the dictum of Lord Kilkerran, which has not a little embarrassed modern jurists, that the creditor of a company cannot pursue one of the partners for a company debt: his action lies against the company only' (a); and also from the circumstance that, in the case of Stevenson and Co. v. Macnair, where the defence was stated that the contract limited the responsibility of each partner to his own share, the Court waived deciding on that point, but sustained the other defences (b). But be this as it may, there is no doubt that the English rule of unlimited liability has long been fixed as the law of Scotland. In the case of Douglas, Heron, and Co. v. Hair (c), where every available plea seems to have been stated to save from ruinous liability, the plea of limited responsibility was not again raised; and (a) 1741, Kilk. 518. (b) 1757, 2 F. C. 92, M. 14560 and 14667. (c) 1778, 8 F. C. 57, M. 14605. |