private claims without their consent. In many cases this would be most undesirable, as it might afterwards give rise to much unnecessary embarrassment in settling accounts between the partner and the company (a). 2. When a partner sues a company creditor for a private debt, Rule 2. he may be met by setting off the debt due by the company to the creditor. This rule is another consequence of the principle we are now considering, and proceeds on the following ratio, that since the partner is liable in solidum for the company debt to his own debtor, the latter may at once create the necessary concourse by using diligence against him as an individual (b). After a company has been dissolved, and the dissolution has been duly published, the quasi persona still subsists until the company be fully wound up; but the agency to bind the company formerly possessed by the partners ceases, and therefore new contracts made with one of the former partners are not contracts made with the company, but with the partner as an individual. consequence of this is, that no compensation can take place without the consent of all the former partners between a debt due to the dissolved company and a debt subsequently contracted by one of its former partners as if on its account (c). The No compensadissolution tion after without con sent of former partners. When a company is dissolved, but not bankrupt, and a debt Exceptions. due the concern may be apportioned among the former partners, any one of them may compensate a debt due by himself privately with so much of the company claim as falls to his own share (d). Here, however, there is not, properly speaking, a set-off between a debt due the company and the private debt of one of its partners, but between such partner's private debt and his ascertained share of the partnership estate. When by death, retirement, or otherwise, the rights and obligations of a company have come to centre in a single individual in his private character, and not as a trustee for creditors of the company, or for the representatives of his former partners, compensation may (a) See Hotchkis v. Royal Bank of (c) Anderson v. Rutherfurd, 1835, Scotland, 1797, M. 2673, aff. 3 Paton's 13 S. 488. App. 618. (b) Bogle v. Ballantyne, 1793, M. 2581. (d) Oswald's Trs. v. Dickson, 1833, 12 S. 156; Heggie v. Heggie, 1858, 21 D. 31. Rights centreing in a single individual. Case where partner has been dealt with as an individual. take place between debts due to or by the company, and those in which he is individually debtor or creditor. Here no injustice can arise to any one; for the question no longer lies between a third party and one of the partners of a company, but between two private individuals who are mutually debtors and creditors of each other. This point has never, it is believed, arisen for decision in any reported Scotch case; but on principle, the solution given appears to admit of no dubiety, and it has been so decided repeatedly in English cases which presented no elements peculiar to that system (a). It has already been pointed out, that a partner may become debtor or creditor in a transaction in which, though he really acted for the company, the opposite party dealt with him as an individual. When this takes place, compensation may be pleaded between the two contracting parties, altogether irrespective of the company. This proposition is a necessary consequence of the principle, that it is competent for any man to contract with another as a principal and entirely disregard his character of agent. It has been expressly affirmed in several English cases, and is indeed assumed in the Scotch case of Anderson v. Rutherford, before referred to (b). If, on the other hand, the party who contracted with the partner was aware that he was acting as agent, and transacted with him in that capacity, no concourse of debit and credit between them individually will avail against the claims of the company (c). (a) See Fletcher v. Dyche, 2 T. R. 32; Owen v. Wilkinson, 5 C. R. N. S. 526. (b) 13 S. 488. See also James v. Downie, 1836, 15 S. 12. (c) See James v. Downie, supra ; and Liddell and Co. v. Young and Son, 1852, 14 D. 647; Lumsden v. Allan, 1823, 2 S. 503; Dixon, 2 Barn. and Ald. 310; Dobson v. Christie, 1835, 13 S. 582. See as to what constitutes scienter, Fleming v. Findlay and Co., 1832, 10 S. 739. CHAPTER IX. RETENTION OR LIEN. Ir is a principle of equity, that no one ought to be compelled to Nature of. part with the property of another, while that other retains property belonging to him. This principle, working in the English and Scottish systems of jurisprudence, has in the former evolved the doctrine of lien, and in the latter that of retention. These doctrines originally presented points of considerable difference in extent and mode of operation; but gradually converging as each became more full and determined, they may now for practical purposes be said to coincide (a). Retention or lien differs from compensation in several important respects. Retention merely entitles the possessor to withhold pay ment or delivery till the counter demand is satisfied; compensation operates an extinction of the mutual debts: retention gives security for debts, even though they may be future, contingent, or illiquid; compensation applies merely between debts due and liquid. Retention, moreover, ceases to operate as soon as possession is lost, provided this be not due to force or fraud. Retention may be either general or special. As a rule, a party can only retain effects in security of a debt or obligation with which they are immediately or directly connected, as a ship for the value of repairs made upon it; but in some cases there is a more general right of retention, as for a general balance of accounts, and over articles of the same kind transmitted in the general course of dealing (b). As a general rule, it may be stated that retention has place between the persons of a private firm, of a company, or of a cor (a) More's Stair, cxxxi., 1 Lectures 402; Bell's Prin. s. 1431. (b) See Bell's Prin., supra, and Bell's Dict. and Dig. 721. Difference retention and between compensation. Retention as companies and between the public. Cases where retention has place. Cases where it is excluded. Stuarts v. M'Gregor and poration, and the public, in the same way as between two individuals. But inasmuch as these artificial persons can only transact with the public by means of agents who may be either their partners, office-bearers, or others specially employed for the purpose, questions of an embarrassing nature frequently present themselves. The solution of such questions is to be found in the principles of agency; and when properly stated with reference to these principles, they will be found to present little difficulty. If the company's agent, be he partner, director, or a stranger specially employed, contract with one of the public as a principal, or, in other words, conceal his agency; or if the other party choose to contract with the agent, not in that character, but on his individual credit, retention has place between the agent and such party, and the company has no right to interfere in the matter. Thus, where the owner of goods sent them and indorsed the bills of lading to a merchant for sale, who again delivered them to a broker for the same purpose, and the broker bona fide made advances to the merchant on their credit, it was held that the broker was entitled to retention of them against the true owner in security of his advances (a). So, when a party consigned goods in his own name, without mentioning that they were the property of another for whom he was acting, the consignee was found entitled to retain the goods for debts due by the consignor, although existing prior to the consignment; and he was found not liable to account to the true owner for the proceeds (b). But, on the other hand, when the party with whom the transaction takes place has reason to know, either expressly or otherwise, that the person with whom he transacts is truly acting as agent for a company, no right of retention accrues between such party and the agent (c). The only case that might seem hostile to the principle here laid down, is that of Stuarts and Fletcher v. M'Gregor and Co. (d). (a) Ede and Bond v. Findlay, Duff, and Co., 1818, 19 F. C. 208 and 509. (b) Johnston v. Scott and Son, 1818, 19 F. C. 561; Attwood v. Kinnear and Sons, 1832, 10 S. 817. (c) Stirling and Sons v. Duncan and Co., 1823, 1 S. App. 389; M'Call and Co. v. Black and Co., 1824, 2 S. App. Here the consignee of goods was found not entitled to retain them against their true owners, for advances made by him to the agent who had consigned them; but it must be observed that the advances were not made on the credit of the consigned goods, and had no relation thereto, and the contract was that of deposit, which never grounds retention (a). signment of When goods are consigned, it seems doubtful whether any Case of conright of retention exists for debts on a general balance previously goods. existing, even where the consignee was in ignorance of the agency. In Johnston v. Scott and Son (b), the Court seem to have held that there was; in Johnston and Manly v. Findlay, Duff, and Co. (c), a contrary view seems to have been taken; while in Reid v. Watson (d) the question was stated to be one of difficulty, and was left undetermined. Similar rights exist as between partnerships or companies and their partners or members, to which the names of retention or lien are also given, though they might be more properly designated by the terms quasi retention and quasi lien. Since the company may be creditor of one of its partners, it has a lien over his share to that extent (e); but this does not exist over shares held pro indiviso by persons who are not both debtors (f). Since, again, all the partners are trustees of the company property, 1st, for the company creditors; 2d, for partners who are its creditors; and 3d, for the partners themselves in respect of their shares or other beneficial interest in the concern,-it follows, 1st, that all the partners, or the company, which is the same thing, have a right to see the company property applied for payment of the company debts, that is to say, have a right akin to that of lien or retention over the company property for this purpose (g); and 2d, that every partner has a right to have the company property applied in liquidation of his own claims against the concern, after the public creditors have been satisfied; or, in other words, that he Quasi retention nerships and between part their members. |