Bate v Robins
| Jurisdiction | England & Wales |
| Judgment Date | 12 February 1863 |
| Date | 12 February 1863 |
| Court | High Court of Chancery |
English Reports Citation: 55 E.R. 28
ROLLS COURT
[73] bate v. robins. Jan. 20, 21, Feb. 12, 1863. As to the proper mode in the absence of any agreement expressed or implied, of taking the partnership accounts of the bankers, as between a surviving partner and the estate of the deceased partner. A firm of two bankers were accustomed to keep the accounts, both of the customers 32BEAV.74. BATE V. EOBINS 29 and of the partners, at compound interest. One partner died. Held that, in the absence of any special agreement, it was not proper to continue the accounts as between the surviving partner and the estate of the deceased partner at compound interest. An executor, who allows his testator's estate to become insolvent, by keeping an account at a banker's at compound interest, will not be allowed the accumulated interest in passing his accounts. The question which arose, in this case, was as to the principle on which the accounts of a partnership ought to be taken, as between the late Defendant, Mr. Robins, and the estate of his former partner Mr. Bate. Thomas Bate, the testator, and the late Defendant, W. Robins, carried on business as bankers, in partnership together, at Stourbridge, on terms of equal profit and loss. The accounts of all the customers at the bank were kept at compound interest on both sides, and the amount standing to each partner with the concern was kept, in like manner, at compound interest. Thomas Bate died in October 1846, and the Plaintiff's were his legal personal representatives, his widow and son. At the death of Thomas Bate, the amount appearing to his credit in the books of the concern was the sum of 7189, 5s. 3d. This was arrived at by treating all the accounts of the customers with the bank as good debts, although a large class of debts due to the concern were more or less of a doubtful character. These went by the name of " dead balances," and the extent to which these might fail to be realized would therefore diminish the amount of the balance due to the estate to Mr. Bate. After Mr. Bate's death no new account was opened in the bank books, but the balance due to him was con-[74]-tinued, as if all the outstanding debts were good. The accounts of the representatives of Mr. Bate and of the " dead balances " were continued as before at 5 per cent, with annual rests, and the losses from the " dead balances," as from time to time ascertained, were written off as bad debts, and the share of each partner was then debited with one-half of such loss. This mode of keeping the accounts was adopted b}' Mr. Ryland (a clerk) without any authority or agreement on the part of the Plaintiffs. It was, however, known to the Plaintiff, C. J. Bate (the son), who continued to be a clerk in the bank after his father's death. In May 1851 accounts were rendered to the widow, and in June 1851 two meetings took place respecting them [see page 76], In August 1851 Mr. Robins sold his business to the Birmingham and Midland Banking Company, and the accounts were afterwards continued by that company. Under these circumstances, the questions were, first, whether the mode adopted for keeping the accounts was the proper one, as between Mr. Robins and the estate of Mr. Bate, and, secondly, whether there had been any special agreement or binding acquiescence on the part of the Plaintiffs, which justified that mode of keeping the accounts. the solicitor-general (Sir R. Palmer), Mr. Coleridge and Mr. Hallett, for the Plaintiffs. Mr. Selwyn, Sir H. Cairns and Mr. C. Hall, for the Defendant. the solicitor-general, in reply. [75] Feb. 12. the master of the rolls [Sir John Romilly], The first question I have to consider is, what is the right mode of taking the accounts between the partnership and the estate of the deceased partner, in the absence of any agreement, expressed or implied, varying the usual mode of taking such accounts ? I am of opinion that, independently of any agreement, the proper mode of taking the accounts is, to ascertain the net balance of the assets over the liabilities of the concern, to divide this in equal portions, and to pay to the representatives of the deceased partner one-half of this amount, together with simple interest at 5 per cent, per annum until payment thereof. If the concern be thereupon wound up and the business sold, this is a simple process leading to no complication or difficulty. If the surviving partner carry on the business, then a new element is to be dealt with, which arises from the manner in which the debts due to the concern are to be treated. The surviving partner who continues the concern may, at his option, adopt, 30 BATE V. ROBINS 32 BEAV. 78. as good debts, such of the debts due to the concern as he thinks fit, and those he must treat as assets in his hands, the remaining debts must be got in as speedily as can possibly be effected, and the amount derived from that source must be divided between the estate of the deceased...
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