Decree arbitral. pro tanto (a). The settlement must be proved scripto; but it has been held in England, that proof of acquiescence will supply the want of signature (b). Mere transmission of the proposed settlement or account, though unobjected to, is, however, no evidence of acquiescence (c). When a settlement has de facto taken place, the mere discovery of an error calculi will not entitle the account to be opened up in toto, especially after the lapse of time (d), unless the mistake is one which affects the whole; but where fraud is established in any item, the whole account will be opened up (e), whatever time may have elapsed (ƒ). Where a regular settlement or discharge has been executed, conclusions of reduction must be conjoined with those of count and reckoning (g). Payment, even when admitted, is no defence to an action for accounting, for the object of the action is to ascertain the amount due (h). And on the other hand, the existence of an, agreement to settle on certain terms is not necessarily a complete defence; for if performance within a given time was a condition of the terms being accepted, the right to force an accounting will revive if the condition has not been purified (i). If the agreement is binding, it ought to be libelled, and the action should be for payment or performance. A decree-arbitral is a good defence to an action of accounting, provided it apply to and be exhaustive of the conclusions of the summons (k). It has been held by the English Equity Courts, that an agreement to refer to arbitration forms no bar to a judicial (a) Pollock, Gilmour, and Co. v. Ritchie, 1851, 13 D. 640; Hunter v. Cochrane's Trs., 1829, 8 S. 171, and 9 S. 477; Taylor v. Shaw, 2 Sim. and Stu. 12; Endo v. Caleham, You. 306. (b) Morris v. Harrison, Colles. 157; Willis v. Jernegan, 2 Atk. 252; but see Walker v. Consett, Forrest 157. (c) Irvine v. Young, 1 Sim. and Stu. 333; Clements v. Bowes, 1 Drew 692. (d) Pitt v. Cholmondely, 2 Ves. sen. 565; Vernon v. Vawdry, 2 Atk. 119. (e) Wharton v. May, 5 Ves. 68; accounting (a); it is very doubtful if this is law in Scotland, at least where an arbiter has been named (b). The period over which the right to accounting extends, is ordinarily from the commencement of the partnership relation down to the time when the action is raised, or until dissolution, if that event has already taken place. Generally speaking, an incoming partner has no right to an accounting beyond the time of his entrance; because he has no right to share profits which accrued before he became a partner (c). Both these rules may, however, be altered by circumstances. If settlements or discharges have taken place up to a certain time, this will bar all inquiry previous to that period; and it is quite possible that an agreement may have been made with an incoming partner, in respect of which he is entitled to an examination of the partnership accounts prior to the date of his entry, as, for example, when he has undertaken liability for debts. previously contracted. Period over which account ing should extend. provisions. c. 17. Companies formed by special act, royal charter, or registration, Statutory contain provisions in their respective instruments of formation, which, taken in connection with the general Acts, regulate the modes in which the members are entitled to enforce the right of accounting against the concern, and serve to protect their interests from being sacrificed by carelessness or impropriety of conduct on the part of the officials in dealing with property of the company. The provisions of the Companies' Clauses Consolidation (Scot- 8 and 9 Vict. land) Act in relation to these matters are as follows:-The directors are required to keep full and true accounts of receipts and expenditure (sec. 118). The books must be balanced at the prescribed periods, and if none be prescribed, fourteen days at least before each ordinary meeting. A balance-sheet must also be made up, exhibiting the stock, credits, and property of every kind belonging to the company, the debts due at the date of making the balancesheet, and a distinct view of the profit and loss during the preceding half-year. This balance-sheet must be examined by the directors and (a) See Agar v. Macklew, 2 Sim. and Stu. 418; Thompson v. Charnock, 8 T. R. 139; Michell v. Harris, 4 Bro. C. C. 311; Street v. Rigby, 6 Ves. 814. (b) Bell on Arbitration 20. See per Lord Justice-Clerk Hope in Hawkins v. Wedderburn, 1842, 4 D. 944; (c) Gordon v. Rutherford, T. and R. Act 1862. Books and accounts. members. signed by the chairman previous to each ordinary meeting (sec. 119). The books so balanced and the balance-sheet must for the prescribed period, and otherwise for fourteen days previous to each ordinary meeting, lie open for inspection of members at the company's principal office or place of business. At other times a written order is required to allow shareholders to inspect (sec. 120). The balancesheet, together with the auditor's report thereon, must be produced at the ordinary meeting (secs. 121, 109, and 111). The directors must appoint a book-keeper, charged with the special duty of entering the company accounts in books provided for the purpose; and he is bound, under heavy penalties, to permit any shareholder to inspect such books, and to take copies or extracts, at any reasonable time during the prescribed periods, or otherwise one fortnight before and one month after each ordinary meeting (sec. 122). If Table A be adopted as the articles of association, companies under the Act 1862 will be furnished with a set of regulations very similar to, though perhaps more perfect than, the foregoing. They are as follows :— The directors must cause true accounts to be kept (1) of the company's stock-in-trade; (2) of the income and expenditure; Inspection by and (3) of the credits and liabilities of the company. The books of accounts must lie at the company's registered office; and, subject to such reasonable provisions and restrictions as may be imposed by the company in general meeting, they must be open to the inspec tion of the members during business hours (No. 78). Once a year at least the directors must lay before a general meeting a statement of the income and expenditure, made up to a date not more than three months before the meeting (No. 79). This statement must be arranged under convenient heads, and must show the amount of gross income, distinguished by its sources, and the amount of gross expenditure, distinguishing the different kinds of items. The year's expenditure must be fairly charged against the year's income, so as to bring out a clear balance of profit and loss; and where any item of expenditure which ought properly to be distributed over several years has been incurred in one year, the whole of such item must be stated, with the reasons why it ought so to be distributed (No. 80). A balance-sheet of the property and liabilities of the company, as nearly as possible in the form annexed to the table, must be made out every year, and laid before a general meeting (No. 81); and a printed copy must also be served on every member seven days before such meeting (No. 82). Still further to secure the interests of the members, the table Auditors. makes the following provisions for the appointment and duties of auditors -The first auditors are appointed by the directors; their successors by the company at their ordinary annual general meeting (Nos. 84-87). The auditors may be members, provided they are not directors or other officials, or are interested in transactions with the company (No. 86); and they are capable of re-election on quitting office (No. 89). On the occurrence of a vacancy among the auditors, the directors must forthwith convene a general meeting to supply the same (No. 90). The remuneration of the first auditors is fixed by the directors; that of their successors by the company in general meeting (No. 88). If no election of auditors is made as directed above, the Board of Trade may, on the application of five members, appoint an auditor for the current year, and fix his remuneration (No. 91). Every auditor must be furnished with a copy of the balance-sheet, which he is to examine, with the relative accounts and vouchers (No. 92). Every auditor must likewise be supplied with a list of all the company books, and has access to them and the accounts at all reasonable times. He may employ professional assistance, at the company's expense, to aid him in the investigation of the accounts; and he may examine any director or officer in relation thereto (No. 93). The auditors must make a report to the members upon the balance-sheet and accounts, stating whether in their opinion the balance-sheet exhibits a true and correct view of the company affairs, and contains the particulars required by the regulations; and whether, if they have found it desirable to examine the directors or other officers, they have received the required information in a satisfactory manner. This report must be read, together with that of the directors, at the ordinary meeting (No. 94). This examination of the accounts must be made, and the correctness of the balancesheet ascertained, by one or more of the auditors, at least once in every year (No. 83). If one auditor only is appointed, all these provisions are held to apply to him (No. 85). CHAPTER VII. CONTRIBUTION AND INDEMNITY (a). UNDER this heading it is proposed to consider the obligation inter socios which lies upon all the partners to contribute proportionally towards liquidation of the debts and making up the losses incurred by the company; the cases in which a partner's claims against the company suffer abatement proportionably to his own liability to contribution; and the right which a partner has to be indemnified by the company for losses sustained or obligations incurred by him on its account. Obligation to contribute. I. LIABILITY OF THE PARTNERS TO CONTRIBUTE RATEABLY In the absence of special stipulations to the contrary, all the partners are bound to contribute towards the losses and debts of the company in proportion to the interest or share held by them respectively in the concern: i.e., if the right to share profits be equal, so also will be the liability to contribution; and if some have a right to a larger share of profits than the others, the liability to contribution will be exactly proportioned in the same ratio (b). This rule may, however, be modified by special agreement. (a) The word originally selected was 'Relief; but Indemnity was afterwards substituted, because it is doubtful whether Relief bears a meaning co-extensive with the subject, because Indemnity is generally used by the Legislature, and because it seems most undesirable to perpetuate a difference in the phraseology of English and Scottish law where the meaning is the same. (b) MacAlister v. Alexander, 1887, 15 S. 1061, aff. 1839, M'L. and Rob. 353. See Aytoun, 1844, 6 D. 1409; Orr and Co. v. Pollock, 1840, 2 D. 1092 ; Gray v. Douglas, Heron, and Co., aff. May 10, 1779, 6 Pat. App. (Sup.) 800; Wilson v. Bruce, 1853, 16 D. 171; |