Scottish Court of Session Decisions

The Lord Justice-Clerk said—I should be very unwilling to pass a note of suspension of a charge on such a decree except on some very relevant allegation, or on an allegation raising some question not yet decided in this branch of law, because it was the policy of the Joint-Stock Acts to make recovery of calls very summary; and to provide that shareholders should not have a ground for suspending except by showing that they were not partners or proper contributories. The first ground that is relied on by the suspender is, that he and the other joint-owners of the shares in question hold them as trustees; and they say that the existence of the trust exempts them from personal liability for payment of the calls upon grounds in law not affected by the judgment in the recent case in the House of Lords of Lumsden v. Buchanan. The ground of difference suggested between that case and the present is, that in that case the parties who as trustees were held personally liable had subscribed the contract of copartnery; whereas the suspender in the present case has not subscribed the contract of copartnery, but has become a shareholder in the company only by subscribing and accepting the transfer. The question therefore is, whether the legal effect of subscribing the transfer is the same as subscribing the contract of copartnery. Upon that point I entertain not the slightest doubt. I think the effect is the same. I think this is clearly shown both by the terms of the transfer itself, and by the terms of the contract of copartnery. Under the 5th head of the contract of copartnery there is a declaration that no one can acquire shares without putting himself in the same position as the person from whom he acquired them, as regards both rights and liabilities. But no doubt it may be said that this is a clause in a contract which the party has not subscribed. But this is met by the form of transfer. The form of transfer is prescribed by the 11th section of the contract of copartnery. Colonel Graham and Sir H. Seton Stewart, who, on the part of the trust-estate, accepted of this transfer, agreed “to take and accept the said capital stock, and hereby become partners of the company, and bind and oblige ourselves as such to implement the purposes and fulfil the whole conditions, rules, and regulations contained in the contract of copartnery, here held as repeated brevitatis causa.” Therefore, in so far as this ground of suspension is concerned, it is quite impossible to distinguish this case from that of Lumsden.

In the second place, it is said that the liquidator, under existing circumstances, is not entitled to enforce this decree. The circumstances, it is said, are completely changed since the Court gave him this decree, and that change is, that the whole debts of the company have been paid. This is admitted on the part of the respondent, under the qualification that the liquidator has either paid all the debts or at least is in funds to pay them. The question comes to be, whether the decree obtained in 1859 can be made available to compel a contributory who has not paid up his share of the funds necessary to pay the debts, can be still compelled to pay up that share for the purpose of equalising the loss among the other partners; or, in other words, whether the decree can be made available for purposes of contribution, apart from purposes of payment. That appears to me to depend on the 5th section of 21 and 22 Vict., c. 60. That section applies to cases of involuntary winding-up. But section 14 applies to cases of voluntary winding-up, and through that section the powers given by sec. 5 are made applicable to the present case. There is a double object in this Act. The first is to pay the creditors of the company; the second is to equalise the losses of contributories. I am therefore of opinion that this objection also is unfounded.

The third plea maintained on the part of the suspender, and which, so far as I can find from the note of the Lord Ordinary, does not appear to have been mentioned to him, is that the decree which is sought to be enforced by the charge is a decree which proceeds upon a petition praying for decree against the several contributories named in the list annexed to the petition, Colonel Graham's name stands in the list thus: “Lieutenant-Colonel William Graham of Mossknowe, Ecclefechan; Lord Hallyburton, Sir John Hay, Bart., of Park; and Montague Bere of Morebattle, Devon, trustees for E., D., and Mrs Joanna Grace Sandford, Edinburgh;” and the sum set against these names is £5500. The parties entered here as contributories are plainly jointly interested in fifty-five shares; are jointly liable to pay £5500. The objection stated is, that this is not a decree against these gentlemen jointly and severally. It is a remarkable fact that, while the two gentlemen who made themselves partners of the company by signing the transfer were Colonel Graham and Sir Henry Seton Stewart, it is the name of only one of these that appears in the decree; and the question is, whether under these circumstances decree has gone out against Colonel Graham for payment in solidum. The question is one of some difficulty. If the liquidator had put the names both of Colonel Graham and Sir Henry Stewart into the list, I should have had no difficulty in holding them jointly and severally liable. But I cannot read this at present as a decree against Colonel Graham in solidum. I am therefore for passing the note to try this question.