Governors of the Royal Bank of Scotland v Christie and Others (Creditors of Thomas Allan)
| Jurisdiction | England & Wales |
| Judgment Date | 06 April 1841 |
| Date | 06 April 1841 |
| Court | House of Lords |
English Reports Citation: 8 E.R. 84
House of Lords
Mews' Dig. v. 358; x. 618, 656; xi. 1238; S.C. 2 Robins, 118. On point as to application of rule in Clayton's Case (1 Mer. 585), see Cory Brothers and Co. v. Owners of Turkish S.S. "Mecca" (1897), A.C. 286; Lang v. Brown, 1859, 22 Dunlop, 116, 119. On point as to Scots Act of 1661, see Torrance v. Murdoch, 1842, 4 Dunlop, 774.
Partnership - Private Estate - Payment of Debts of former Partnership - Heir.
[214] GOVERNORS OF THE ROYAL BANK OF SCOTLAND,-Appellants; ADAM CHRISTIE and Others, Creditors of the late THOMAS ALLAN, Banker in Edinburgh,-Eespondents [March 30, 31, April 2, 6, 1840; April 6, 1841]. [Mews' Dig. v. 358 ; x. 618, 656 ; xi. 1238 ; S.C. 2 Robins, 118. On point as to application of rule in Clayton's Case (1 Mer. 585), see Cory Brothers and Co. v. Owners of Turkish S.S. "Mecca" (1897), A.C. 286; Lang v. Brown, 1859, 22 Dunlop, 116, 119. On point as to Scots Act of 1661, see Torrance v. Murdoch, 1842, 4 Dunlop, 774.] Partnership-Private Estate-Payment of Debts of former Partnership-Heir. A Partnership composed of three persons, A., B. and C., gave a joint and several bond to a Bank, to cover advances to be made to them by the Bank on a cash credit; and in that bond, two estates held by A. were specially named as part securities for these advances: A. died.-Held, that by his death the partnership was dissolved, and the security, so far as his estates were concerned, was no further continued; no arrangement between the surviving partners, or between them and the Bank, for the purpose of settling the general accounts, being capable of affecting that security. After the death of A. the Bank continued as before its dealings with the partnership, then constituted by B. and C.; and at a certain period, payments made to the Bank entirely balanced the debt due to it at the time of A.'s death.- Held, that the separate liability of A.'s estates was thereby discharged. B. the son and heir of A., within one year after his father's death, gave to the Bank 84 BANK OF SCOTLAND V. CHRISTIE [1840-41] VIII CLARK & FINNELLY, 215 a heritable bond over his father's estates, for securing payment of advances to be made by the Bank.-Held, that this was a bond for his own and not for his father's debts, and was consequently void under the Scotch Act of 1661, as a bond granted by the heir within one year of the ancestor's death. This was an appeal against a decree of the Court of Session, pronounced under the following circumstances.-A banking house in Scotland long carried on business, notwithstanding different changes in the partners interested, under the style of Kobert Allan and Son. This firm became bankrupt in 1834, and contests then arose between the creditors of the firm and the creditors of Thomas Allan, the senior partner, as to two certain estates called Campse and Lauriston. [215] The Appellants, creditors of the firm, insisted that these estates had become primarily liable to them for advances made by them, on heritable securities, to the partnership. The Respondents, the private creditors of Thomas Allan, contended that these estates belonged to the individual partner Thomas Allan, and were liable, in the first instance, to his creditors. Thomas Allan had become, by the death of his father im 1818, the chief partner in. the firm, and he then took into partnership one Alexander Wight. In, 1820, an estate called Campse, in the county of Fife, upon which the partnership had had a mortgage, was sold under a sequestration! issued against the mortgagor, and was purchased for the sum of 7000, which sum came out of the partnership funds. In the partnership books was the entry, " Estate of Campse, near Dumfermline; " and under this head was kept, on one side, an account of the price of the estate, and the amount of the annual outlay upon it; and on the other side, an account of the rents and profits received therefrom. At the close of the year 1820, this estate was conveyed by the trustee under the sequestration, to Thomas Allan ; and by a deed, to which the members of the firm were partners, it was declared that the purchase was for him alone; and to him was assigned the partnership claim on the estate, in consideration of the sum of 7000, the receipt of which was thereby acknowledged by the firm. In 1824, the estate of Lauriston, in the county of Edinburgh, was bought for the sum of 26,272. The negotiations for the purchase of this estate, which had been pending during nearly the whole of 1823, were carried on in T. Allan's own name; and the disposition of the lands, and the charter of infeoffment, were likewise made to him. He was enrolled, in respect of this property, as a freeholder of the county of Edinburgh under this [216] infeoffment; and he exchanged with another proprietor of the neighbourhood part of the lands thus purchased. He laid out money in.-the general improvement of the estate, and made alterations in the house, and entered with his family into the actual occupation of it. In October 1823, while the negotiations for the purchase of Lauriston were still going on, an account was opened in, the partnership books under the head of " The estate of Lauriston, near Edinburgh." From entries subsequently made in this account, the purchase-money appeared to have been furnished from the funds of the company, and so was the money expended in the improvements. This account was kept like that of the estate of Campse; the expenditure for purchase-money and improvements being placed on one side, and the receipts of rent on the other. The two sides of this account were annually balanced. The estate account was debited with the public and parochial taxes, and with the interest due on the purchase-money, and it was credited with the rents received ; but no account was ever kept of the rent that would have been derived from the occupation of the house, had any other person than Mr. T. Allan occupied it, no r was any sum put down to his debit for such rent. In the annual balance-sheets of the partnership, the estate of Lauriston was regularly inserted as if it formed part of the partnership stock. In August 1831, Robert Allan, juni., eldest son of T. Allan, became a partner in the firm. New articles of partnership were then executed, by one of which it was stipulated that Lauriston should be taken as T. Allan's own speculation, and he was to pay 3 per cent, interest on the money expended upon it. Another of the articles of partnership was...
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