James Thomson - Lord Advocate (Jeffrey - John Campbell v. Campbell's Trustees - Lushingto - David Dundas
[1831] UKHL 5_WS_16
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(1831) 5 W&S 16
CASES DECIDED IN THE HOUSE OF LORDS, ON APPEAL FROM THE COURTS OF SCOTLAND, 1831.
1 st Division.
No. 2.
v.
Subject_Partnership —
Held (reversing the judgment of the Court of Session), that when there is no conclusive written evidence fixing the proportion of profits to be drawn by partners, the question is one for a Jury; and a remit made to try an issue accordingly.
Campbell's Trustees raised an action before the Court of Session against James Thomson, Writer to the Signet, setting forth that their constituent, the late Archibald Campbell, “in the year 1798, after having served an apprenticeship to a Writer to the Signet, entered into the office of Mr. James Thomson of Bogie, W. S., defender, as a clerk, with whom he continued for a series of years: That, after being some time in the defender's office, the said Archibald Campbell, at or prior to the year 1805, came to have the principal and most confidential situation in the defender's office as head clerk, and in that situation had the chief charge or superintendence of his whole business: That Mr. Campbell thereafter devoted himself so exclusively to those departments of the business usually performed by the master or his partner, that his gains by writings were inconsiderable, and totally inadequate to form a sufficient remuneration either to Mr. Campbell or to any person of his education and standing in his profession: That it has been alleged by the defender, that Mr. Campbell continued in the defender's office as a clerk twelve years or more: That during the said period the said Archibald Campbell rendered the most effectual service to the defender in his extensive and lucrative business; but no settled account ever took place between the defender and Mr. Campbell in that capacity: That thereafter Mr. Campbell was assumed as a partner by the defender; and although the precise date of the assumption has not yet been accurately ascertained, yet it will be established, by a writing under the defender's own hand, particularly from a letter addressed by him to the “Numerous and respectable tenantry of Auchterarder,” on the 13th day of February 1813, that the said Archibald Campbell was assumed
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In defence Thomson admitted, that Campbell had been a clerk with him from 1798 till 1813: That in April of that latter year he admitted him as a partner to the extent of one-third share; and he stated, that at the same time he had settled with him for all claims prior thereto as clerk. Campbell's Trustees denied that there had been any settlement relative to Campbell's claims as a clerk; averred that he was admitted as a partner in January 1813; and they founded on a letter addressed by Thomson to the tenantry of one of the estates of which he had the management, dated February 1813, in which he stated, that “it being inconvenient for me to leave Edinburgh, I have sent my assistant and partner, Mr. Archibald Campbell W. S., to collect the rents,” &c. This, they maintained, proved the fact of the partnership; and that, as it was not alleged that there was any special contract, the rule of law was, that each partner was entitled to one-half of the profits.
To this Thomson answered, that there was no such rule of law as that alleged: That there was merely a presumption that the profits were to be divided in proportion to the stock or skill contributed: That this was a question of fact to be fixed by a jury; and that Campbell having contributed neither capital nor superior skill, nor brought any adequate or proportional increase of business, and being a young man, with the prospect of succeeding to an established business, it was impossible to presume that he was to have one-half of the profits.
The Lord Ordinary, in respect of its being admitted, not generally, but under different qualifications, which are denied, that Mr. Campbell was assumed as a partner by Mr. Thomson, and the evidence to establish a co-partnery being otherways incomplete and defective, while (assuming that there was a partnership betwixt the parties) there is no evidence whatsoever of any agreement as to the extent of the interest of the parties respectively in the profit and loss of the alleged concern; and being necessary that all these different points should, before further procedure, be fixed and determined; found that this case must be remitted to the Jury Court, in order that issues, exhausting the said matters, may be prepared and sent for the determination of a jury.
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Campbell's trustees reclaimed, and prayed the Court to alter and find that as Campbell was a partner at least from January 1813, he was legally entitled to one half of the free profits and emoluments realized by the concern from that date down to the dissolution of the partnership by his death: That he was entitled to a fair remuneration for his services as clerk; and that on these different claims the defender was bound to hold count and reckoning, and to pay as concluded for in the summons.
The Court remitted to the Lord Ordinary to reconsider whether the case should be remitted to the Jury Court, or reported upon cases in the usual form; and his Lordship having reported, their Lordships, on the 26th of May 1829, found, “That it is established by written evidence that a copartnery was entered into in January 1813, in respect of which all previous claims on the part of Mr. Campbell must be pronounced to have been passed from and discharged. Further, that the presumption of law is, that there was to be an equal participation in the profits of the business between the two partners;” and remitted to the Lord Ordinary to hear parties farther in the cause. *
Both parties appealed.
Appellant and Respondent (
Thomson).—The Court below have misapprehended the rule laid down by the institutional writers. That rule is, not that there shall be an equal participation of profits, but that the profits shall be divided on a principle of equality, having reference to the amount of the stock contributed. Thus, if one partner shall contribute two-thirds and another a third, and there is no stipulation as to the proportion in which the profits are to be divided, the law does not presume that they shall be equally divided—that is, that each partner shall receive one-half, but that they shall be divided on the principle of equality, meaning that the one shall get two-thirds and the other one-third. But where the parties are at issue as to the value of the amount of the stock contributed, the question must be submitted to a Jury, who will take all the circumstances into consideration, arising either from the relative position of the partners, their comparative skill, experience, means of enlarging the business, and the probabilities of the one succeeding to the
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* 7 Shaw and Dunlop, No. 338.
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2. In regard to the cross-appeal, the appellant was always ready to go into an inquiry as to the matter of fact, whether all claims by Campbell as clerk had not been settled; but on this there was satisfactory evidence before the Court.
Respondents and Appellants ( Campbell's Trustees).—Where there is no special contract between partners fixing the rate at which the profits are to be divided, the established rule of the law of Scotland is, that they shall be equally divided. It is so laid down by Lord Stair and by Erskine, and was so decided in the cases of Brock and M'Whirter; and in England was recognized by Lord Eldon in the case of Peacock.
2. Although the respondents were willing to have acquiesced in the judgment of the Court below relative to Campbell's claims as a clerk, yet, in order to keep the question open, they have appealed, on the ground that the decision was pronounced without any evidence, and merely on the supposition that, because Campbell was admitted a partner in January 1813, it was probable he would renounce all previous existing claims. This was a gratuitous assumption not warranted by the facts.
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My Lords, upon these grounds, taking it simply as a question of Scotch law, deciding nothing further—as it ought to be our rule in no case to go further than the question before us—saying nothing at all about Peacock v. Peacock, except to explain the discrepancy which is inaccurately supposed to have existed between the Court of Equity and the learned judge at Nisi Prius—saying nothing respecting the law, except as a question of Scotch law, established by the decision of a learned judge, established by the text writers of the greatest eminence—upon these grounds I concur with my noble and learned friend in advising your Lordships to reverse the decision, and remit the cause to the Court of Session, in order that they may send the question to the Jury Court, as they were in the course of doing, but for the impediment thrown in their way by the erroneous position laid down. But I would strongly recommend to the parties to make an arrangement themselves and take one-third, and then we shall hear no more of it, and they will save a great expense.
The Lord Advocate submitted, that on the cross-appeal, whatever this House might do in regard to the question of partnership, they ought to decide that Mr. Campbell had waived all claims for further payment for his services as clerk when taken into partnership.
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The House of Lords ordered and adjudged, That the interlocutors, so far as complained of, be reversed; and it is further ordered, That the cause be remitted back to the Lords of Session, of the first division, in Scotland, with instructions to them to direct an issue or issues to be tried by a jury, which issue or issues shall include the whole matters in dispute between the parties in this cause; or to proceed otherwise in the said cause as they shall deem just, and shall be consistent with this judgment.
Appellant's Authorities—Anderson, May 22, 1828 (6 Shaw & Dun. 836); Peacock, 16 Vesey junior, 49; 2 Campbell, 45.
Respondents' Authorities.—1 Stair, 16, 3; 3 Ersk. 3, 19; Brock, Dec. 9, 1696 (14,563); M'Whirter, Feb. 14, 1822 (1 Shaw and Dun. 3 Gow on Partnership, 9; Struthers, May 19, 1826, (ante Vol. II. 153.
Solicitors: J. Chalmer— Spottiswoode and Robertson,—Solicitors.
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