Miller v MacLeod
| Jurisdiction | Scotland |
| Judgment Date | 30 March 1973 |
| Date | 30 March 1973 |
| Docket Number | No. 15. |
| Court | Court of Session (Inner House - Second Division) |
SECOND DIVISION.
PartnershipObligations of partnersSolicitor acting in executryFormation of partnershipLiability of partnership and partners to account for intromissions prior to formation of partnership.
A solicitor practising on his own account undertook the winding-up of the executry of a deceased person. Because of ill health he was unable to attend to his business regularly and his books and accounts got into a state of disorder. On 5th April 1958 he entered into partnership with another solicitor who was aware that the first solicitor's affairs were in disorder. The partnership took over the whole assets and goodwill of the business of the first solicitor and continued the business without any appreciable change, and in particular continued with the winding-up of the executry without fresh instructions. No agreement was reached between the solicitors as to the capital to be contributed by the second solicitor. The first solicitor died on 18th June 1958 having prepared an account of charge and discharge in the executry for a period ending on 31st August 1957. After his death the surviving solicitor carried on the business under the firm name. On 20th January 1959 he entered into partnership with another solicitor under the same firm name, and thereafter the new partnership continued to carry on the business and in particular the winding-up of the executry.
The executrix raised an action in which she sought, inter alia,an accounting from the partnership and its partners for the intromissions of the deceased solicitor and the partnership during a period ending on 18th June 1958. The partnership and its partners denied having a liability to make an accounting in respect of any period prior to 5th April 1958.
Held that the proper inference from the circumstances was that the partnership and the solicitor joining in it accepted the liabilities attaching to the business, including that of a liability to account for the intromissions of the deceased solicitor prior to 5th April 1958.
Mrs Isabella Miller, the executrix-dative of her father the late Richard Kearney, raised an action of Count, reckoning and payment in the Sheriff Court at Glasgow against (1) John Finlay MacLeod and Parker, Solicitors, Glasgow, (2) Arthur Brendan Parker, (3) Mario Piacentini, and (4) the executrix of the late John Finlay MacLeod who died on 18th June 1958. The pursuer sued for (first) an accounting against the defenders jointly and severally for the intromissions of the late John Finlay MacLeod and of the first-named defenders as agent and agents respectively of the pursuer qua executrix-dative of her father for the period from February 1955 to 18th June 1958, (second) an accounting against the first-, second- and third-named defenders jointly and severally for an account of their intromissions as agents of the pursuer qua executrix-dative aforesaid for the period from 18th June 1958 to date, and (third) for payment by the defenders jointly and severally to the pursuer qua executrix-dative aforesaid of the sum of10,000 or such other sum as might be found to be due as the true balance due to her on such accounting.
The action was raised in October 1962. The first-, second- and third-named defenders tabled pleas to the relevancy and competency of the action in so far as it related to their liability to account in respect of intromissions in the executry of the late Richard Kearney prior to 5th April 1958. After a debate the Sheriff dismissed the action in so far as it related to that liability to account, and quoad ultra allowed a proof before answer. The pursuer appealed to the Sheriff-Principal who sustained the appeal, repelled the first three defenders' pleas to the competency of the action, allowed a proof before answer on the whole averments and remitted the cause to the Sheriff-substitute. No application for leave to appeal to the Court of Session was made at the hearing of the appeal or within seven days of the Sheriff's interlocutor. Thirteen days after that interlocutor the Sheriff, ex proprio motu, granted leave to appeal to the Court of Session. The Court held that the Sheriff's interlocutor granting leave to appeal was incompetent.1
Proof was thereafter led before the Sheriff who found against the defenders.2 The first-, second- and third-named defenders appealed to the Court of Session.
The following findings-in-fact, as amended and supplemented in the Court of Session, are taken from the opinion of the Lord Justice-Clerk (Wheatley):
"(1) the pursuer is the executrix-dative of her father, the late Richard Kearney, who resided at 85 Armadale Street, Glasgow, and who died on 1st December 1954: (2) the first-named defenders are the firm of John Finlay MacLeod and Parker, solicitors, as presently constituted, the partners therein being the second-named defender, Arthur Brendan Parker, and the third-named defender, Mario Piacentini; (3) the fourth-named defender is the executrix-nominate of her husband, the late John Finlay MacLeod, Solicitor, Glasgow, who died on 18th June 1958; (4) in or about February 1955, the said John Finlay MacLeod took over on the instructions of the pursuer the winding-up of her said father's estate; (5) the said estate was an involved one with assets totalling more than 90,000, but by the time of his death the said John Finlay MacLeod had made considerable progress with the ingathering of the estate and had dispersed the bulk of the net estate among the beneficiaries entitled thereto; (6) during at least the last eighteen months of his life the said John Finlay MacLeod was unable through ill health to attend business regularly, but he did a certain amount of work at his home; (7) the pursuer, who lived nearby, frequently called on him at his home and discussed with him the affairs of the executry estate; (8) prior to his death the said John Finlay MacLeod had prepared an account of charge and discharge in the estate of the late Richard Kearney covering the period from 1st December 1954 to 31st August 1957; (9) in or about February 1958 discussions took place between the said John Finlay MacLeod, who was then a patient in a hospital in Inverness, and the second-and third-named defenders with a view to their subsequently becoming partners in his business. At that time the second-named defender was a legal assistant with another firm of solicitors in Glasgow and the third-named defender was serving his legal apprenticeship in the said John Finlay MacLeod's business (10) in the course of the said discussions the question of contribution of capital by the second- and third-named defenders to the said business was raised. It was agreed that capital might have to be introduced by them, but no agreement on this matter was reached. The seeond-named
defender was aware that the business of John Finlay MacLeod might be in financial difficulties, and he was not prepared to put in capital until the books of the business had been made up and a balance sheet prepared. His capital contribution would depend on what the balance sheet showed was the value of what was being taken over. This was not done, and the second- and third-named defenders in fact made no capital contributions; (11) both the second- and third-named defenders were well aware that the said business was in a precarious position financially, and that a troublesome aspect of it was the executry of the late Richard Kearney, but no discussion took place between them and John Finlay MacLeod about their liability for his pre-existing business debts; (12) following upon said discussions the said John Finlay MacLeod entered into partnership with the second-named defender on 5th April 1958 under the firm name of John Finlay MacLeod and Parker. That partnership took over and continued the business previously conducted by John Finlay MacLeod; (13) there was no written agreement governing the said partnership and the business was continued without any appreciable change; (14) in particular there was no change of business premises or address, business books, banking arrangements, telephone number or telegraphic address. In the business books a new page was started for the business of the partnership and the fees earned by John Finlay MacLeod prior to 5th April 1958 but paid thereafter were credited to his capital account but paid into the partnership's banking account and used to reduce the overdraft thereon; (15) the second-named defender caused to be inserted in the Scots Law Times a notice in the following terms: Messrs John Finlay MacLeod and Parker, Solicitors, Glasgow. Mr John Finlay MacLeod, Solicitor, 163 Hope Street, Glasgow, intimates that he has assumed Mr Arthur Brendan Parker, Solicitor, as a partner. The business will continue to be carried on at Mr MacLeod s present address under the firm name of John Finlay MacLeod and Parker. A circular notice in similar terms was sent to the clients of John Finlay MacLeod, but there was no evidence that the pursuer received it; (16) the said partnership took over the whole assets and goodwill of the business of John Finlay MacLeod and the business continued on the same footing as before; (17) the said partnership continued with the winding-up of the said Richard Kearney's executry without receiving any fresh instructions to that effect from the pursuer and without sending any notice to her that they were doing so; (18) at the time when the said partnership commenced the business books and accounts of the said John Finlay MacLeod's business were in a state of some disorder; (19) owing to the continued absence from business of the said John Finlay MacLeod during the whole period of said partnership little or no progress was made in ascertaining the precise financial state of the business and accordingly the question of the proposed contribution of capital by the second-named defender was never discussed again; (20) on the death of the said John Finlay MacLeod on 18th June...To continue reading
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