Scottish Court of Session Decisions

These were conjoined actions in regard to the partnership affairs of the Mossend Iron Company. I. The first was an action at the instance of Mrs Neilson, widow of William Neilson, iron and coalmaster, Mossend, who died on 24th May 1882. She was trustee along with Hugh Neilson, James Thomson, engineer and shipbuilder in Glasgow, and James Neilson, acting under the trust-disposition and settlement of the said William Neilson, dated 1st December 1880, and recorded 8th September 1882, and also along with James M'Creath, mining engineer in Glasgow, who accepted office and acted as trustee till 26th January 1883, when he resigned. Mrs Neilson sued with concurrence of Walter Neilson, Thomas Neilson, John Neilson, William Neilson, and Beaumont Neilson, children of William Neilson, and beneficiaries under his settlement. The defenders were the Mossend Iron Company, and the individual partners thereof, viz.:—(1) Walter Neilson; (2) Hugh Neilson; (3) James Neilson; (4) Hugh Neilson junior; and (5) the said Mrs Neilson, Hugh Neilson, James Neilson, and James Thomson, as trustees under William Neilson's settlement. The pursuer sought to have it found and declared “that at the date of the death of the said William Neilson, he and the defenders Walter Neilson, Hugh Neilson senior, James Neilson, and Hugh Neilson junior were partners carrying on business under the name of the Mossend Iron

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Company, under the terms contained in a contract of copartnery entered into between William Neilson and the said defenders, other than Hugh Neilson junior, dated 22d and 28th March 1867, and in particular under the terms therein contained relative to the death of a partner of the said company, and the right of the executors of a deceased partner to become partners in the company, or otherwise to have it found and declared that at the date of the death of the said William Neilson, he and the defenders Walter Neilson, Hugh Neilson senior, James Neilson, and Hugh Neilson junior were partners carrying on business under the name of the Mossend Iron Company, under the terms contained in a draft contract of copartnery prepared in or about the year 1875, and bearing to relate to a proposed partnership between the said William Neilson and the defenders, and in particular under the terms therein contained relative to the death of a partner of the said company, and the right of the executors of a deceased partner to become partners in the said company; and it being so found and declared, under one or other of the alternative conclusions, to have it found and declared that the pursuer and the said James Thomson and James M'Creath (as the trustees of the deceased alone qualified to act in questions with the Mossend Iron Company) were entitled under either of the said deeds, as executors of the said deceased William Neilson, to become partners of the said company by intimating in writing to the surviving partners their intention to become partners of the said company at any time within two months after the decease of the said William Neilson, or otherwise by such intimation to make the whole executors of the deceased partners of the said company; and to have it found and declared that the power thus conferred upon the executors of the deceased William Neilson was validly exercised by an intimation in writing, dated 21st July 1882, authorised by the pursuer and the said James M'Creath, and signed by the agents of the pursuer and the said James M'Creath as executors, and despatched to each of the defenders Walter Neilson, Hugh Neilson, James Neilson, and Hugh Neilson junior on the said date, and that in accordance with the said notice the pursuer and the defenders Hugh Neilson and James Neilson, along with the said James Thomson and the said James M'Creath, became partners as executors in the said company, and that they have since the said date continued to be partners in the said company: Or otherwise, in the event of its being held that the pursuer and the defenders Hugh Neilson and James Neilson, and the said James Thomson and the said James M'Creath, did not become partners of the Mossend Iron Company, as executors, to have it found and declared that the copartnership trading under the name of the Mossend Iron Company was terminated as at the said 24th May 1882, the date of the death of the said William Neilson, or at such other date as should be fixed by the Court in the course of the process;” and to have the pursuer and defenders, along with James Thomson, authorised to wind up or sell the business of the company. There were also conclusions for accounting.

The contract of 1867 referred to in these conclusions expired in 1873, and the termination of the draft contract of 1875 was at 31st May 1882. The draft contract of 1875 contained this clause relative to the right of the executors of a deceased partner to become partners in the company—“ Tenth, Upon the death of any partner, his executors shall be entitled, if they see fit, to become partners of the concern until the expiry of the first five years of the contract, or in their option, until the final expiry of this contract, they always being bound to continue the deceaser's capital in the concern down to the time when they shall cease to be partners, and having a voice in the management thereof; but in case such executors shall be more than one in number, they shall be obliged to exercise their voice through one only of themselves, appointed to attend the meetings of the company for that purpose; but further, in case such executors shall decline becoming partners, and elect to have the deceaser's share and interest in the concern paid out, then such share and interest (as the same shall be ascertained by a balance of the company's books as on the day of decease, if such decease shall occur during the first year of the contract, or by the immediately preceding balance if it shall occur after the first year) shall be paid out, subject to the option hereinafter given, with interest thereon at the rate of five pounds per centum per annum from the date of such balance, but under deduction of any sums paid in the interim, with interest thereon, by the company's bills, in equal instalments, at twelve, eighteen, twenty-four, and thirty months from the date of decease, with power nevertheless to the remaining partners, or a majority in value of them, if they shall see fit, to accelerate such payments under corresponding rebate of interest in such manner as they may determine. But it is understood and agreed, that if the executors fail to intimate in writing to the surviving partners their intention to become partners as aforesaid, within the period of two months after the day of decease, they shall forfeit their right to become partners, and in that case the surviving partners, or the majority of them in value, shall be entitled, in their option, either to pay out the deceaser's share and interest in the eoncern in manner herein above provided (and in which case such share and interest shall devolve on and belong to the surviving partners in proportion to their respective interests in the concern), and to free and relieve the executors and representatives of such deceaser of all debts and liabilities of the copartnery, whether incurred before or after the date of his decease, or to wind up the concern in manner specified in article twelfth hereof.” This clause was substantially the same as the corresponding clause in the contract of 1867.

By his trust-disposition and settlement William Neilson assigned and disponed to and in favour of “Mrs Ann Yule or Neilson, my wife; Hugh Neilson, iron and coalmaster, Summerlee, near Glasgow, my brother; James Thomson, engineer and shipbuilder in Glasgow, son of the late George Thomson, engineer and shipbuilder in Glasgow; James M'Creath, mining engineer in Glasgow; and James Neilson, iron and coalmaster, Mossend, my son; and to the acceptors and survivors, and acceptor or survivor of them, the major number of them accepting and surviving and resident in the United Kingdom from time to time being a quorum, and to the nearest heir-male of the last surviving acceptor,” and conferred the following powers upon his trustees—“And without prejudice

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to the powers which my trustees may have at common law, or by statute, or otherwise, but in addition there to, I confer upon my said trustees and their foresaids the following special powers in carrying out the purposes of this settlement:—That is to say—( First) To carry on, for such time as they may think proper after my death, my interest in the Mossend Iron Company, and any other business in which I may be engaged at my death, alone or in conjunction with others, or continue my interest in such business, and to apply the whole or such part of my estate as they may consider necessary for that purpose.” The trust-deed contained this further provision—“( Third) I provide and declare that in all matters in regard to which the interests of any of my trustees as an individual is in conflict with the interest of any beneficiary under these presents, and in transactions with partnerships or companies in which they are partners or shareholders, the vote of such trustee shall not be counted in the determination of such matters, but the adverse interests of any trustee, or the fact of his being an interested party, shall not otherwise affect his power to act.” The trustees were duly confirmed as executors.

The Mossend Iron Company pleaded, inter alia, that the pursuer had no title to sue.

The Lord Ordinary ( Lee) on 3d July 1883 allowed to the pursuer and defenders a proof before answer, and on a reclaiming-note being presented by the defenders, the First Division on 17th July 1883 adhered to the Lord Ordinary's interlocutor, reserving the question of the pursuer's title to sue, as reported in vol. xx. p. 816.

Before the proof the defenders, the Mossend Iron Company, who had not previously disputed the averment of the pursuer Mrs Neilson that William Neilson was a partner of the Mossend Iron Company at the date of his death on 24th May 1882, obtained leave to amend their record and put in a statement that shortly prior to his death in the beginning of May 1882 William Neilson had made an arrangement with the other partners of the firm that he should retire, on the footing that his interest therein should be paid out as shown in the balance-sheet of 31st May 1881, receiving in addition to the sum to which he was entitled thereunder 5 per cent. on the balance at his credit on current account as per that balance-sheet, and 10 per cent. on his capital in lien of profits since 31st May 1881. This agreement was not averred to have been embodied in any formal writing, but it was averred that William Neilson retired on these terms, and was thereafter no longer a partner. This statement, however, they failed to prove. There was a dispute as to whether at the date of William Neilson's death the ruling contract of copartnery was the draft contract of 1875, the stipulated duration of which expired on 31st May 1882, or whether the rights of the partners were not governed by the contract of 1867, the termination of which was at 31st May 1873, it having been according to this contention continued as a partnership-at-will till William Neilson's death. These points are dealt with by the Lord Ordinary in heads (1) and (2) of his opinion infra.

With regard to the intimation given by William Neilson's executors to the company of their intention to become partners of the company, the following facts were proved:—At the date of William Neilson's death on 24th May 1882 two of the five trustees appointed by him were disqualified from acting in regard to questions in connection with the company, because they were partners of the company, and therefore personally interested, viz., James Neilson and Hugh Neilson. The other three trustees—Mrs Neilson, Mr James Thomson, and Mr James M'Creath—held an adjourned meeting on 21st July 1882, the minute of which bore—“After full discussion it was resolved (Mr Thomson, who desired to be neutral, not voting) to take advantage of the provisions of the contract of copartnery of the Mossend Iron Company, and become partners in the late Mr William Neilson's stead, and the law-agent was instructed to give the necessary notices to the surviving partners.

“Mr Thomson intimated that he would not incur any responsibility or liability in connection with the foregoing resolution, or the partnership by the trustees which would result from it.”

The law-agent accordingly of the same date addressed to Messrs Hugh, Walter, and James Neilson instruction of the resolution of the trustees, in the following terms—“ Glasgow, 21st July 1882.—On behalf of the executors of the late Mr William Neilson, we beg to give you notice, that under the provisions of the contract of copartnery of the Mossend Iron Company they elect to become partners in his stead.” The agents for the company reply on 25th July 1882, as follows:—“With reference to your notices of the 21st instant, addressed to Messrs Walter, Hugh, and James Neilson of the Mossend Iron Company, we shall feel obliged by your informing us under what contract of copartnery, and under what particular clause or clauses therein, the notice is given.” This was followed up by another letter from the company's agents, dated 5th October 1883—“Although you have not yet favoured us with an answer to the inquiry contained in our letter to you of 25th July last, our clients, the surviving partners of the Mossend Iron Company, now instruct us to intimate to you, as acting for the trustees and executors of Mr William Neilson, that they cannot admit or recognise any right on the part of your clients to elect to become partners of the Mossend Iron Company in his stead, as stated in your letters to our clients on 21st July last; and that they treat the notice contained in these letters as of no effect. We have further to intimate that our clients are prepared to pay out the late Mr Neilson's interest in the company as ascertained by the balance preceding his death, viz., the balance of 31st May 1881, all in terms of the contract of copartnery.”

On 21st November 1882 another meeting of trustees was held, at which James Neilson, Hugh Neilson, James Thomson, and James M'Creath were present, the minute of which bore:—“The following letter from Messrs Bannatyne & Company [the law-agents of the company] was read to the meeting. The law-agent was instructed to see Mr M'Jannet [of that firm], and in the event of consignation being made, to endeavour to make arrangements which would result in the least possible loss to the party proving in the wrong:—‘ Glasgow, 14 th November 1882—Dear Sirs—We are instructed by the Mossend Iron Company and remaining partners to intimate to

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you, on behalf of the trustees and executors of the late Mr William Neilson, a former partner, that in terms of their contract of copartnery they are ready, and now offer to pay Mr Neilson's trustees and executors the sum of £70,000 sterling to account of his interest in that company, and we are to add that if payment be not taken within eight days from this date the amount will be lodged in bank in joint names in order to stop interest at more than deposit rates.” It further appeared from this minute that Mr Thomson and Mr M'Creath had made investigations and had satisfied themselves that the valuation contained in the balance-sheet of 31st May 1881, of which Mrs Neilson and the beneficiaries under William Neilson's trust complained, were fair and reasonable. On 26th January 1883 Mr M'Creath resigned, and no other meeting of trustees was held before the present action was raised on 31st January 1883.

Defences had been lodged not only, as already stated, for the Mossend Company, but also for Hugh Neilson, James Thomson, and James Neilson, the trustees, other than the pursuer, of William Neilson. The position taken up by them was stated to be as follows:—“(Stat. 1) After the death of the said William Neilson, the Mossend Iron Company proposed that the said executors should be settled with upon the basis of the balance-sheet of 31st May 1881, being the last balance prior to William Neilson's death. The present defenders as trustees were of opinion that the proposed settlement would be the most beneficial arrangement that could be made in the interests of the trust-estate& & The pursuer, however, and her younger children took objections to the valuations in the said balance-sheet of 1881. And the pursuer proposed that the executors should elect, in terms of the contract of copartnery, to enter the partnership. The defenders Hugh Neilson and James Neilson were precluded by the provisions of William Neilson's trust-disposition and settlement from voting upon the question, but they objected qua trustees to become partners in said company, or to incur responsibility either as such or in connection with the pursuer's proceedings. Ultimately Mr M'Creath concurred with the pursuer in electing to enter the said partnership, while the defender James Thomson dissented. The letter of 21st July 1882 was then sent to the company upon the instructions of the pursuer and Mr M'Creath. (Stat. 2) Mr M'Creath resigned the office of trustee and executor in January 1883, and the defender James Thomson is thus, in terms of the said trust-disposition and settlement, the only trustee except the pursuer whose vote can be counted in the determination of any questions between the executry estate of the said William Neilson and the said company. As already stated, the said James Thomson was opposed to the executors taking up the partnership of the said William Neilson, and he is still of opinion that it is not for the benefit of the trust estate that the interest of the said William Neilson or his trustees in said partnership (assuming that the trustees were entitled to elect to become partners) should be continued, and he declines as one of the trustees to become a partner or to incur responsibility either as such or in connection with the pursuer's proceedings. The defenders are convinced from a careful examination of the Mossend works and collieries, made by the defender James Thomson and Mr M'Creath, that the objections which the pursuer and her younger children took to the valuations and the balance-sheet of 1881 are unfounded.”

They pleaded—“(1) The said James Thomson having been and still being opposed to the executors of the said William Neilson continuing the said partnership, and all the trustees of the said William Neilson except the pursuer being of opinion that the settlement proposed by the said company is the arrangement most beneficial for the trust-estate, the action should be dismissed.”

The Mossend Iron Company, besides pleading as already stated, pleaded—(1) No title to sue. “(3) The executors of the deceased William Neilson not having validly or timeously exercised any power competent to them to become partners of said company, the defenders should be assoilzied from the first three declaratory conclusions of the summons. (7) The said James Thomson having been and still being opposed to the trustees or executors of the said William Neilson continuing the said partnership, and all the trustees of the said William Neilson, except the pursuer, being of opinion that the settlement proposed by the said company is the arrangement most beneficial for the trust-estate, the action should be dismissed.”

II. The other of the conjoined actions was at the instance of Hugh Neilson junior, as a partner of the Mossend Iron Company, and as an individual, against the Mossend Iron Company, and Walter Neilson, Hugh Neilson, and James Neilson, the individual partners, along with the pursuers, of the Mossend Iron Company, and against Mrs Neilson, Hugh Neilson, James Thomson, and James Neilson, as William Neilson's trustees and executors, to have it found and declared that from and since the expiry on the 31st day of May 1882 of the term mentioned in the draft contract of copartnery for the endurance of the copartnery trading under the name of the Mossend Iron Company, or otherwise from and since William Neilson's death on 24th May 1882, the copartnery had been carried on by Walter Neilson, Hugh Neilson, and James Neilson, and the pursuer by themselves or together with the executors of the deceased William Neilson as a partnership-at-will, and that the pursuer was entitled to have the copartnery and the business thereof wound up either as at the 4th day of May 1883 (the date of the pursuer's written notice after mentioned) or as at the date of citation, or otherwise as at the 24th day of May 1882, or as at such other date as the Court might fix, and to have the defenders decerned and ordained to concur with the pursuer in winding up the copartnery by realising the assets and paying or discharging the liabilities, in order to the division of the surplus assets among the parties entitled there to, and to take all other steps necessary towards the winding-up.

Hugh Neilson junior, the pursuer of this action, was a son of William Neilson, and was assumed as a partner in 1876, and thereafter the terms of the contract of copartnery were embodied in the draft of 1875 above referred to. This draft contract contained the following clauses:—“ Eleventh, In the event of the bankruptcy or declared insolvency of any of the partners during the currency of this contract, the same shall nevertheless

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subsist and continue in regard to the solvent partners, but the partner so becoming bankrupt or insolvent shall cease to be interested in the concern, and his share shall be held to have terminated as at the date of the last annual balance preceding such bankruptcy or insolvency, and shall devolve on and belong to the remaining partners, in proportion to their respective interests in the concern; and the same shall be ascertained and fixed by that balance, and the remaining partners shall be entitled, in their option, either to pay out the bankrupt or insolvent partner's share and interest in the concern, under deduction of any sums which may have been paid to him or for his behoof, between the date of said balance and the date of bankruptcy or declared insolvency, with interest thereon, by the company's bills, in equal instalments, at twelve, eighteen, twenty-four, and thirty months from the date of bankruptcy or declared insolvency, or (in the option of the remaining solvent partners) sooner, or to wind up the concern in manner specified in article twelfth hereof. Twelfth, If, three months before the termination of this contract, the whole partners of the company shall not have agreed to continue to carry on the business thereof, any one or more of them who may be desirous of retiring shall be entitled to do so, and shall, immediately on the completion of the balance after mentioned, be paid out by the partner or partners electing to continue the business, his or their share and interest in the concern, as the same shall be ascertained by a balance of the company's books as at the termination of the contract to be completed, within not more than three months from said termination, and that either in cash or by his or their bills, with security; and in the event of the partners differing as to the security or as to the date at which the bills shall be drawn, or otherwise, the terms shall be fixed by the arbiter after mentioned; but if the whole partners wish, the property and assets of the copartnery shall be disposed of as follows, viz.—It shall be competent for any one of the partners, by himself, or for any one or more of them together, to give in sealed offers for the same as a going concern, but under and subject to the whole debts and liabilities of the copartnery as at the date of the dissolution; which sealed offers shall be opened at a given place and time by a neutral party to be named by the partners or by the arbiter hereinafter named; and the highest offerer shall be held to be the purchaser, and shall be bound to pay the price, and otherwise implement his part as purchaser within the time and in the manner that shall have been mutually agreed upon beforehand or been fixed by the arbiter after named, on the application of any one of the partners; and in case any two of the said offers shall be equal in amount, the parties making the same shall be entitled, if they see fit, to give in new sealed offers at the meeting fixed for opening the original offers, and the highest offerer under said new offers shall be preferred as purchaser, and be bound to pay the price, and otherwise implement the provisions as aforesaid; and in case only one offer shall be made, the same shall not be opened, but the party making it shall become the purchaser at such a price as shall thereafter be mutually agreed or fixed by the arbiter after named, and in any one of these cases the price (after deducting expenses) shall be divided among the partners according to their respective rights and interests in the copartnery, and in case no offer is made, then the said property and assets shall be realised in such way or manner as shall be mutually agreed upon, or as shall be fixed by the arbiter hereinafter named, and with the proceeds the debts and liabilities of the copartnery shall be discharged in whole, or as far as the proceeds will go, and the surplus or deficiency, as the case may be, apportioned among and paid to or by the partners according to their respective rights and interests in the copartnery.” The term of expiry of the copartnery under this draft contract of 1875 was 31st May 1882. It was admitted that since then no new written contract had been executed.

On 22nd March 1883 Hugh Neilson junior, the pursuer, personally intimated to the other partners of the company that he had come to the resolution to exercise his right to have the company dissolved, and requested that a meeting should be convened. This was followed up on 4th May 1883 by a letter from the pursuer to his copartners, and to the law-agents of William Neilson's executors, requiring that the copartnery should be terminated as of the date thereof, and that the necessary steps should be taken to have its assets realised and its affairs wound up.

The pursuer pleaded—“(1) The pursuer being a partner of the Mossend Iron Company, and the same being a partnership-at-will, or otherwise having come to an end on 24th May 1882 [the date of the death of the pursuer's father William Neilson], he is entitled to have the said business wound up, its assets realised, its liabilities paid and discharged, and the surplus assets divided, all as concluded for.”

The Mossend Iron Company pleaded—“(3) On a sound construction of the contract between the parties, the pursuer is not entitled to have the company wound up, but only to retire therefrom and be paid out in terms of the contract.”

Defences were also lodged to this action on behalf of William Neilson's trustees and Mrs Neilson. They maintained the position respectively taken up by them in the other action.

These two actions were conjoined on 23d November 1883. and after a proof, in which the facts above stated, and those given in the opinion of the Lord Ordinary infra, were proved, the following interlocutor was on 7th March 1884 pronounced by Lord Lee in the conjoined actions:—“The Lord Ordinary having considered the debate, with the proof and whole cause, Finds in the conjoined actions, as matter of fact—(1) That at the date of his death on 24th May 1882 the late William Neilson was a partner of the firm carrying on business under the name of the Mossend Iron Company, and that the allegations by the defenders the Mossend Iron Company and others, and Hugh Neilson and others, to the effect that he had previously retired or agreed to retire upon the terms set forth in the amended record have not been proved; (2) that the other partners of the said firm at said date were Mr Walter Neilson and Mr Hugh Neilson, brothers of the deceased William Neilson, and also Mr James Neilson and Mr Hugh Neilson junior, two of his sons; and that the terms of the subsisting partnership were contained in the draft contract of 1875, as corrected in pencil in article seventh, to the effect

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of making the salary of James, the fourth party, £1000 instead of £500; (3) that the deceased William Neilson at his death left a trust-disposition and settlement in favour of his wife, his brother Hugh, his son James, his son-in-law James Thomson, and Mr James M'Creath, mining engineer, Glasgow, and the ‘acceptors and survivors, acceptor and survivor of them, the major number of them accepting and surviving, and resident in the United Kingdom, from time to time, being a quorum,’ as trustees for the purposes and with the powers therein mentioned; (4) that on 21st July 1882, and at an adjourned meeting of the trustees of Mr Neilson, at which Mrs Neilson, Mr Thomson, and Mr M'Creath were present, and Messrs Hugh Neilson and James Neilson absented themselves as not having a vote on the question then to be considered, it was resolved (Mr Thomson, who desired to be neutral, not voting) to take advantage of the provisions of the contract of copartnery of the Mossend Iron Company, and become partners in the late Mr William Neilson's stead, and of the same date, by virtue of instructious given at said meeting, an intimation was given by the agents of the trust to the surviving partners that the executors elected to become partners; (5) that the said intimation, although not authorised by Mr Thomson, or by Messrs Hugh and James Neilson, who intimated that they refused to incur any responsibility in connection with said resolution or the partnership therein referred to, was authorised by a quorum of qualified trustees and executors; (6) that subsequently to the death of the said William Neilson, and to the expiry on 31st May 1882 of the contract term of the partnership, the business of the copartnership was carried on by the surviving partners without any new agreement, and without any expression of a desire on the part of any partner to retire from the concern on the terms specified in the twelfth clause of the contract: And finds in law—(1) That the power conferred by the contract of copartnership upon the executors of a deceasing partner was validly exercised by the executors of the deceased William Neilson by the intimation above mentioned, of date 21st July 1882, to the effect of making them, as such executors, partners of the said company or copartnery until the expiry of the contract on 31st May 1882; (2) that since 31st May 1882 the copartnery has been carried on as a partnership-at-will; (3) that the articles under which the partnership was carried on prior to 31st May 1882 do not exclude any of the partners from now dissolving the copartnership, and requiring the concern to be wound up in the manner specified in article twelfth; and that the pursuer Hugh Neilson junior is therefore entitled to have the said copartnery and the business thereof now wound up, as at 14th May 1883, in such way or manner as shall be mutually agreed upon, or as shall be fixed by the arbiter named in said draft contract of copartnery; and with these findings appoints the conjoined actions to be put to the roll for further procedure, and grants leave to reclaim.

“ Opinion.—These actions were conjoined in terms of an interlocutor pronouncod by the First Division of the Court on 22d November last, and a proof was allowed to the parties in the conjoined actions. Before the commencement of the proof leave was obtained by the defenders to make an important amendment on the record. The effect of it was to substitute for an admission that the late William Neilson was a partner at the date of his death, a denial of the averment to that effect, and an allegation that in the beginning of May 1882 (he died on 24th May) he had agreed to retire, and had retired.

This allegation went to the root of the action at Mrs Neilson's instance. For if it were well—founded all other defences were superseded. If William Neilson was not a partner at the date of his death, the clause founded on as empowering his executors to become partners in his stead had no application.

In Mrs Neilson's case, therefore, the first question is whether this new defence has been substantiated. The evidence of Mr James Neilson and Mr M'Kinnon, with the correspondence produced, is certainly sufficient to shew that the parties had very nearly concluded an agreement of the kind alleged. I think that the terms were substantially adjusted so far as that could be done verbally; and I see no reason to suppose that Walter Neilson, or any of the other partners, would have refused to concur in and carry out the arrangement if it had been presented in a complete shape for their consent. But unfortunately the evidence shews beyond all reasonable doubt that the proceedings were stopped by William Neilson's orders before all the parties concerned were conclusively bound; and I think that as long as matters were entire, and the proposed retirement was incomplete, William Neilson was entitled to stop proceedings as he did.

2. The next question is, what was the contract under which the partners were carrying on business at the time of Mr William Neilson's death? That Hugh Neilson junior was admitted as a partner in 1876, as from 31st May 1875, and upon the terms specified in the draft contract produced, is, I think, proved. The balance-sheets furnished to him corroborate the statements of the other partners on this subject; and I think it not material that he denies having seen the draft, as he admits that he left himself in the hands of his father, a portion of whose stock was transferred to him. The fact that the draft is corrected in pencil as regards the salary of James, is not inconsistent with the statement that it embodies the terms of the new partnership. The correction was acted on in keeping the partnership accounts; and the explanation given of the draft not being extended and executed is in my opinion satisfactory and sufficient. My opinion is, that having been adjusted by William Neilson on behalf of his son Hugh, and with Hugh's authority, and having been acted on by all the partners as the regulating contract, the draft must be taken as containing the articles of the partnership.

3. There is more difficulty about the question whether the power conferred by the tenth article upon the executors of deceasing partners was effectually exercised by the resolution and intimation of 21st July 1882. William Neilson died on 24th May. The contract term of partnership expired on 31st May. The period of two months allowed to the executors extended to 24th July. On 21st July the contract term of partnership had been expired for a period of seven weeks. The surviving partners might have resolved to wind up the concern at 31st May; or they might

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have given notice to the executors that it would be wound up as at that date, in the event of the option of becoming partners being exercised by them. But I do not see how they could prevent the executors exercising within the stipulated two months their power of becoming partners ‘until the final expiry of this contract.’ I cannot hold that on 21st July it was too late to exercise that power, to the effect of making the executors partners at least down to 31st May, and thereby obtaining the benefit (if it should be a benefit) of the balance-sheet of that date.

Two arguments, however, were maintained, which appeared to me to require attention, and to be attended with difficulty in the circumstances of this case. (1) That the power conferred by the contract is not given to a bare majority of executors, but is, both from the nature of it and in its expression, a joint power which could only be exercised by the concurrence of all the executors—at least of all the executors qualified to vote and act in the matter. (2) That at all events the power could only be exercised by a quorum (viz., a majority) of the whole number of executors.

It appears to me that if the concurrence of all the executors is not required by the contract, the power of a quorum to act by a majority of their number is settled by the decisions to which I formerly [ ante, vol. xx. p. 717] referred ( Shanks v. Aitken, March 4, 1830, 8 Shaw, 639; Blisset's Trustees v. Hope's Trustees, February 7, 1854, 16 D. 482). But it is not without hesitation that I have arrived at the conclusion that the power is one which could be effectually exercised without the concurrence of all the executors qualified to vote upon the subject.

The difficulty is well illustrated by the terms of the conclusions of the summons, which seek to have it declared that by the act of two executors the whole five became partners, and ‘have since the said date continued to be partners in the said company.’ But it is only ‘as executors foresaid’ that they are said to have become partners; and no question is raised by the circumstances of this case as to the rights or liabilities of the individual executors towards third parties.

The general rule as to the construction of nominations for the exercise of a trust power is, that if indefinite the majority are entitled to act ( Campbell and M'Intyre v. M'Intyre, January 12, 1824, 3 S. 126; Grant v. Campbell's Representatives, 1764, M. 14, 690). The case of mandatories inter vivos is different. Erskine, iii, 3, 34, and the case of Lag (M. 14, 689) referred to by Erskine, iii, 9, 40, in support of the doctrine that all of the executors must concur where two or more are conjoined, seems not to have been a case of indefinite nomination but of a joint nomination. Besides, it implies that one of four executors can act if the rest should refuse to assist, and has always been so regarded.

It was said, however, that in this case the terms of the nomination require concurrence on the part of all the executors, firstly, because it is only ‘if they see fit,’ that the executors have power to become partners. This, it is argued, excludes the idea that a bare majority was to be allowed to decide the question; secondly, because in case such executors should be more than one in number, it is required by the contract that they should be obliged to ‘exercise their voice through one only of themselves appointed to attend the meetings of the company.’ This, it is argued, proves the meaning of the contract to have been that the executors should be united. There is much force in these arguments. But I am unable to adopt the conclusion that they are sufficient to show that the contract was intended to deprive the executors of a deceased partner of the power of acting according to his appointment in the ordinary way. I therefore repel the objection to the validity of the resolution arrived at on 21st July, so far as founded upon the objection that all the executors qualified to vote upon the question did not concur, and upon the argument that at least a quorum of the whole body must concur.

But it was also maintained that the resolution of 21st July, when considered in the light of all that passed upon the occasion, could not be regarded as a final decision of the point. It was said to have been intended only for the purpose of keeping the matter open. My opinion is that this contention is negatived by the proof, which I think clearly substantiates the accuracy of the minutes.

On the whole, therefore, I sustain the intimatiod of 21st July as a valid exercise of the power conferred upon executors.

(4) Assuming that the power conferred by clause 10 was exercised, the question remains, to what effect has it been exercised? and the first observation which occurs under this head is, that the proviso of clause 10 applicable to the case of a failure to intimate the intention to become partners takes no effect. There was no failure to intimate the intention of the executors. The case is therefore not one in which an option is given to the surviving partners, or the majority of them in value, to decide whether they should pay out the deceaser's share or wind up the concern in manner specified in article 12. I think that the effect was to make all the executors as a body partners of the concern in the place of the deceased. Any one executor who wished to refuse to become a partner as one of the body, was, I think, bound to retire from the executry. Indeed, I think he should never have accepted the office unless he was prepared to exercise the powers conferred, if it should be for the interest of the executry to do so. But my view is that the exercise of such power could do no more than make the executors partners for the remainder of the contract term. The executors' notice would necessarily give to the surviving partners an opportunity of making a counter intimation that the partnership was not to be continued after the expiry of the stipulated period. If the partnership was allowed to go on after 31st May, it was a partnership-at-will, and because no such counter intimation was made, I can find nothing in the contract which would entitle the executors (supposing their intimation to have been accepted without dispute) to insist on the concern being carried on after the expiry of the contract by the surviving partners along with them. Such a compulsory continuance or renewal of the contract would have required very clear provision. The articles do not seem to me to have contemplated anything of the kind. And therefore in both actions I find that subsequent to 31st May 1882 the copartnery was carried on as a partnership-at-will.

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(5) The only other question which requires to be noticed is that raised by the action of Hugh Neilson junior, who demands that the concern shall be wound up. Having regard to the risk of causing serious injury to the interests of the leading partners by giving effect to the pursuer's, Hugh Neilson junior's demand, and to the evidence on that subject, I was very unwilling to pronounce for a winding-up if it could be avoided. I am bound, however, to say that I have been unable to find any defence established. The plea that an individual partner is only entitled to retire in terms of article 12 is not supported in my judgment by the contract of copartnery. The 12th article I think gives to every partner a right to retire, but it does not exclude any partner (as I think it might lawfully have done) from demanding a dissolution and winding-up at the expiry of the contract.

I therefore sustain so far the claim of Hugh Neilson junior. But I think that in the meantime he is not entitled to a decree for winding-up in the manner required by the conclusions of the summons. My opinion is that the letter as well as the spirit of the 12th article requires that the partners should have an opportunity of mutually agreeing upon the manner of winding-up, and that in the event of a difference of opinion the arbiter named by the contract ought to be called in to fix the manner of winding-up.

I think it right to note that in the argument before me it was not disputed that the trustees of William Neilson were, at the date of the alleged intimation, his ‘executors’ within the meaning of the 10th article of the contract of partnership. They are not expressly nominated executors by the trust-disposition and settlement, but they appear to have been confirmed as such prior to 25th August, and in practice it appears to be understood that it is not essential to confirmation as executor-nominate that there should be an express nomination.—See Alexander's Practice of Commissary Courts, 67.”

The Mossend Iron Company reclaimed, and argued:—I. Mrs Neilson's Action—The pursuer had no title to sue. It was unnecessary to consider whether a majority of the executors could sue. This was an action in which one only of two qualified executors was suing, while the other declined because he differed on a point of trust-management. That has raised quite a different question from what the Lord Ordinary had decided. Apart from the merits, the fact that both did not concur was enough to exclude the action. When the differences between the executors was ascertained the objection was stronger. Mrs Neilson might have had a title to become a partner, but it did not follow that she was entitled to pursue, the non-concurring executor not even having been consulted as to the raising of the action. No minute of the trustees had been produced from which it appeared that question of raising of the action had been considered. The difference was one of opinion. It was not to be assumed Mr Thomson was wrong, and, on the other hand, it was quite clear Mr Thomson was within his rights. Therefore it could not be said that this was the case of an executor suing alone on account of the fraud or unreasonableness of the co-executor. There was no authority adduced by the other side for such a proceeding. Moreover, it was not clear that this was a valuable asset to the executors. How could Mrs Neilson ask a declarator that all the executors were partners of the company when the others declined to become partners? If she had a title to force them to become partners, then she ought to constitute her claim, but ought not to ask the company to try that question. On the merits—As the terms of the contracts of 1867 and 1875 were practically the same in regard to this question, it was not of much consequence which was considered to be the ruling one, but the company contended that the draft of 1875 was. The summons contained a conclusion that they were partners from the date of the intimation, but no conclusion that they became partners at William Neilson's death, which was what the Lord Ordinary had found. On a sound construction of the contract of 1875, the period for giving notice expired on 31st May 1882, so that the notice of 21st July 1882 was not timeous. There never was an agreement by the executors to come into the company. Co-executors must be unanimous, and in this respect differ from a body of trustees—Ersk. Inst. iii. 9, 40; Ersk. Prin. iii. 9, 20; Bell's Prin. sec. 1993; Inglis v. Meine, 1738, M. 16,115. The quorum here must have been three out of five, and this qualified quorum must not only have resolved to become partners but to enforce their resolution— Morrison v. Gowans, Nov. 1, 1873, 1 R. 116. II. Hugh Neilson junior's Action:—The pursuer was not entitled to have the company wound up. He was only entitled to be paid out. The terms of a partnership contract were to be carried forward into a partnership-at-will, so far as not inconsistent with the nature of a partnership-at-will—Lindley on Partnership, 823; Cox v. Willough, 13 Ch. Div. 863; Yates v. Phin, 13 Ch.Div. 839. This was a partnership-at-will after 31st May 1882; but article 12 of the draft-contract of 1875 was not inconsistent therewith, and therefore must be carried forward. Article 12 provided for two events, continuing or retiring; if any of the partners did not agree to go on, then he might take the alternative and retire. In that case the clause provided a mode of ascertaining the retiring partner's share of the assets. The clause was in favour of the continuing partners.

Counsel for William Neilson's trustees adopted the argument of the reclaimers in both actions.

Argued for Mrs William Neilson:—I. Mrs Neilson's Action—Either the contract of 1867 was the ruling contract or the draft of 1875. In either case, the notice given by the executors on 21st July 1882 was a valid intimation, sufficient to make them partners of the company. If the provisions of the contracts were not applicable, then the partnership was terminated by the death of William Neilson, and was thereafter carried on as a partnership-at-will. The executors were therefore entitled to have the business wound up. An objection had been taken to a winding-up, on the footing that they were not partners at all. It was sufficient that all the qualified executors had come together and considered the matter Blisset's Trustees v. Hope's Trustees, Feb. 7, 1854, 16 D. 482; Kames ii. 286; L. Lynedoch v. Ochterlony, Feb. 15, 1827, 5 S. 358; Grant v. Campbell, M. 14,690.

Argued for Hugh Wilson junior:—II. Hugh Wilson junior's Action—On the footing that he was a partner, and that the draft of 1875 was the ruling contract: After the expiry of the contract

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the partnership was carried on as a partnership-at-will. Article 12 did not in terms exclude a common law winding-up of the company. But even if it could be read so as to exclude such a winding-up, it could not apply to a partnership-at-will— (Dickie v. Mitchell, June 12, 1874, 1 R. 1030; Lindley on Partnership, 823)—for no clause in the contract inconsistent with a partner-ship-at-will could be carried forward into it. This clause, so interpreted, would be inconsistent, for it was of the essence of a partnership-at-will that any partner could dissolve the partnership at any time— Clark v. Leitch, 32 Beav. 14, aff. 1 De G. J. & S. (1863) 409. It was said that article 12 was a clause for providing a mode of winding-up, but this construction of the other side implied an obligation on the partner and a privilege to the company— Featherstonhaugh v. Fenwick, 17 Ves. 307.

At advising—