Object of

treatise.

Acts so as to obtain limited liability, all companies formed by royal charter, and all such as have been incorporated by Act of Parliament without restriction of the corporate privileges. Beyond this there is still a higher class, composed of companies who have not only the full privileges of corporations, but who have also certain aggressive powers in virtue of their special Acts.

The object of the present treatise is to examine the law applicable to the various forms which the partnership relation assumes in Scotland, in so far as they are applied for purposes of mercantile gain. Any allusion, therefore, which may be made to associations not having gain for their object, is merely incidental, or for the purposes of illustration.

All associations, of whatever kind they may be, which are formed for the purposes of gain, are fundamentally partnerships; and whatever peculiarities they may be intended to possess, and however numerous their membership, they will fall under the provisions of the common law applicable to ordinary firms or unincorporated companies, except in so far as in questions inter socios the common law has been modified by special agreement, and in so far as it has been excluded in relation to the public, by registration under the Act of 1862, by charter or letters patent, by special Act, or by this in combination with the Consolidation Acts. In short, the common unincorporated partnership or company is the type of which they are all modifications, and to which, but for the force of one or other of the above agencies, they will return.

Furthermore, though the great facilities afforded by the Act of 1862 for obtaining incorporation will undoubtedly, at no distant period, render the unincorporated common law company a thing of the past, and though there is reason to believe that further legislation in the same direction will ultimately place the benefits of registration at the disposal even of private firms, yet it is manifest that, for years to come, questions will arise out of circumstances which occurred in the former state of the law; and it is probable that, however low the benefits of registration may be brought, cases will still occur, where, through negligence on the part of members or officials, the common law will break through the barriers of

statute.

For these reasons, the common law, as applied both to firms and

companies, will be fully examined and explained; and in this manner, it is hoped that the way will be paved for understanding and appreciating the machinery adopted by the Legislature, not only in the Registration Acts, but in the other modes by which incorporation may be attained.

Another circumstance in the plan of the present work must here be noticed. As has been already observed, the law of partnership in Scotland, though based on an admirable theory, has never been elaborated into a complete system. The consequence of this is, that while the equity and artistic simplicity of its principles command the admiration of the student, the practical lawyer often finds that many points of daily occurrence have not been judicially determined, and are still open to difference of opinion.

On such occasions, it has been usual to resort to the law of England, as deserving of the utmost consideration, not only as it deals with interests, customs, and a state of society so similar to our own, but also because, in consequence of the large extent and the endless variety of conditions under which the spirit of combined enterprise has manifested itself in that country, it supplies an ample store of precedents seemingly applicable to every case that may present itself.

Reference to
English law.

be avoided.

That this practice, which is becoming daily more common, is Dangers to attended with great advantages, no one who gives much attention to the subject will deny, more especially as it has received the high sanction of Professor Bell, and of other writers who have undertaken to treat of Scottish partnership law. Yet the great risk of error and misapprehension that always attends the application of decisions, dicta, and principles found in one system of law, to questions arising in another and a very different system, must be steadily kept in view, more especially when such application is attempted to be made by the Scottish lawyer, whose legal training, while it has familiarized him with the civilians, has unhappily done nothing to acquaint him with the genius and principles of that system of law by which the greater part of the British empire is regulated.

It is true that, in so far as partnership is concerned, the decisions of the English tribunals have, in the great mass of cases, been in accordance with equity, and with that practical good sense which was to be expected from a great mercantile community; so that

Rules suggested.

they must be law in any country where the partnership relation is properly understood, and equal justice is sought to be administered. But, on the other hand, it must not be forgotten, as it is very fairly admitted by the English authorities (a), that in one or two branches of partnership law, the original imperfection of the theory, coupled with the unbending nature of the technical rules of pleading adopted in England, has led to results so plainly unjust and intolerable, as to require legislative interference. And it is also very evident that, from the division of the English tribunals into separate courts of law and equity, any one not conversant with that system is apt to mistake the ruling in a particular case for the exponent of a principle of abstract justice, when in truth it is nothing more than a consequence of the suitor having sought his remedy in a court whose limited jurisdiction or mode of procedure did not permit it to deal with the question in its entirety. Furthermore, it is observable that even in that great mass of cases where the judgments of the English tribunals are plainly in accordance with abstract justice and sound polity, it not unfrequently happens that the media concludendi, in consequence of their assuming a highly technical form, are more apt to mislead than to guide when applied to cases in Scottish practice seemingly analogous.

These considerations suggest the following rules as necessary to be kept in mind when English authorities are had recourse to in order to elucidate the law of partnership in Scotland. All English decisions, dicta, and principles, which are ostensibly based on abstract justice or sound commercial polity, may be safely followed as precedents; but all such as are either founded on or are mixed up with technicalities, are to be distrusted, as of very doubtful authority in the Scottish system. English decisions are safe precedents when the circumstances of the case are substantially identical, but must be received with great caution when they are merely analogous. In considering the value of an English decision as indicative of a principle, regard must always be had to whether it has been given in equity or at common law, as in the latter case it may be the exponent of a mere technicality; and also as to whether it is not to be explained as the consequence of a rule in some other branch of English law, and peculiar to that system. Lastly, English (a) Lindly, Collyer, Thring.

decisions are in the most favourable circumstances to be regarded merely as valuable guides, not as authorities absolutely fixing the law in Scotland.

These observations are intended to apply to partnerships or companies existing only at common law; the case is different with such associations as are formed in virtue of laws which are general over the kingdom,—as, for example, companies governed by the Registration Acts. In such cases, where the law is the same, the constituted tribunals must be presumed equally capable of giving a sound interpretation whether they sit in London or Edinburgh, unless, indeed, it can be shown that the force of statute has failed totally to exclude the pressure of the respective common laws. When, therefore, there is no reason to suspect the presence of this latter element, English and Scottish decisions should be deemed of equal authority.

There is also another class of joint-stock companies in relation to which the law is extremely similar, and yet not quite identical, in England and Scotland. The Scottish Consolidation Acts are for the most part mere transcripts of those previously framed for England, and differ from them in little more than was necessary to enable the intentions of the Legislature to be worked out by the existing machinery of the law of Scotland. In like manner, companies formed under royal charter or letters patent, in Scotland and England respectively, differ from each other in such respects only as may be due to a difference (if there be any such) in the privileges conferred by these writs on opposite sides of the Tweed, or to the operation of the common law in other respects, where not entirely excluded. In these and the like cases the English authorities will generally be found trustworthy guides, except in so far as the circumstances referred to can be traced in operation.

Impressed with these considerations, we have not hesitated throughout this work to make a liberal use of English decisions, and have frequently referred to English writers not only where our own authorities were silent or doubtful, but where there was reason to believe that the subject in hand would thus receive fuller illustration. In doing this we have endeavoured to mark the distinctions in principle or theory between the two systems, to separate the equitable from the mere technical rule, and thus to distinguish

cases which are precedents merely in appearance, from such as are based on principles that must hold good in all systems of jurisprudence, or are identical in Scottish and English law. Well knowing, however, that the most laborious efforts will not in a field of this extent and intricacy afford an absolute guarantee against error and misconception, we have been careful in all cases to note the decisions and authorities from which we have deduced our views, thus putting it in the power of the practitioner to verify for himself the accuracy of the statement in the text. As it has been our endeavour to refer to all the authorities on the subject in hand which could be found in the law of Scotland, and as we have often referred to a great number in English law when such illustration seemed advisable, we have sought to state the doctrine or deduction in the text in as succinct a manner as possible, and have, as far as we could, avoided the practice of lengthened quotations, which, while they swell the letterpress, may generally be read to advantage only in the context out of which they are taken.