The Sun.
London, England, 1844-04-26 00:00:00

LAW INTELLIGENCE.
COURT OF CHAACERk, April 24.
FEARENSIDE V. DERIIAM-THOMPSON V. DERHA.M.
IN RE DERIIAM.-JUDGMENT.

The Loan CHANCELLOR—There does not appear to
be much controversy as to the facts in this case. The
question is as to the rights of the respective parties. In
the year 1829 William Hinde formed this partnership
with Walter Alan Hinde, James Derham, and Robert
Derham. The whole of the stock in trade, machinery,
and what was necessary for the purpose of carrying on
the business, was provided by William Hinde. It had
formerly belonged to the partnership of Hindes and
Patchett. I presume that William Hinde purchased it
far that sum. It was taken at a valuation—a valuation
of about 61,0001., and was transferred to the new firm,
and as this stock in trade was furnished entirely by
William Hinde, he had credit with the partnership for
the amount of the valuation. The amount of that value-
tion, therefore, was at that time his capital in the con-
cern; and if' the partnership had been dissolved imme•
diately afterwards, and the stock in trade had been
valued at precisely the same sum, it would follow that
the whole of that stock in trade would have belonged
again to William Hinde, and would have been appro-
priated to him. By the partnership articles he had an
interest to the extent of 11-20ths in the concern, that is,
in the profit and loss of the concern. The other parties
had between themselves, I think, the other nine shares,
3 20ths to each of them. Those were the respective
interests that the parties took in the profit and loss of
the concern. It was stipulated in the partnership deed—
the partnership to endure for sixteen years—it was
stipulated that if William Made should die before the
expiration of the sixteen years, that he should have the
privilege of naming, either by deed, or by his will any
one or more of his sons to succeed him in the partner-
ship to the extent of so much of his share and interest as
amounted to 5-20ths ; and it was also stipulated that he
should leave in the concern, or that his son should bring
into the concern, a capital not exceeding 30,0001., at the
discretion of the surviving partners. It was also stipu-
lated that after his death, if he should appoint a son or
sons to succeed him in the concern, that that part of his
interest which was not disposed of to his son should be
purchased by the surviving partners, and they should
give for the purpose of securing that sum to the repre-
sentatives of William Hinde a mortgage upon the lease-
hold and the freehold property belonging to the con-
cern, and it was stipulated that that part of his capital
should be paid out by instalments of 1,5001. yearly, the
first instalment to be paid, I think, in the year 1835.
Such were the provisions, as far as it is necessary at
present to consider them, of the partnership articles.
It is material, therefore, to consider if no alteration had
taken place with respect to the relative position of the
parties, what would have been the effect of the partner-
ship articles, supposing he had appointed a son to sue •
ceed him in the concern, and had died before the ex-
piration of the sixteen years. The effect of it I con-
sider would be this : you would ascertain what his
capital was in the concern at the time of his death.
You would deduct from that capital the 30,000/. that
was to be left in the concern, and the surviving partners
would be required to execute a mortgage upon the lease-
hold and freehold property for the amount of the differ-
ence between the capital in the concern and the sum left
in the concern for the purpose of carrying it on for the
benefit of his own son ; for instance, as an example, the
only case that I have of a stock-taking, was in the year
1833—June, 1833. It appears by that stock-taking,
which was to be the measure of his interest, that at
that time the capital in the concern amounted altogether
to 51,000/., and of that 51,000/., 41,0001. and upwards
was the share of the capital belonging to Mr. William
Ilinde ; therefore, if the partnership had been dissolved
by his death, shortly after that stock-taking, the sur-
viving partners keeping 30,0001. in the concern, as the
capital of the incoming partner, the son of William
Ilinde, they must have given security for the difference
between the 30,0001. and the 41,000/., which was
his interest in the concern at that time. That
I take to be the true construction of the partner-
ship articles, and the meaning of the parties
at the time they executed that instrument.
Then an alteration afterwards took place ; when I say
afterwards, not after the stock-taking, to which I have
referred, but after the execution of the articles. In the
month of February, 1832, a new arrangement was made
with respect to the interests of the respective partners.
It was agreed that, from that time, Mr. William Hinde
should be interested to theextent only of five-twentieths,
and that the other fifteen-twentieths should be divided
between the other partners in the shares mentioned in
the memorandum, to which I have referred, and it is
said that, in consequence of that alteration, the arrange-
ment with respect to the mortgage was at an end. Ido
not think that that is the construction of the partnership
articles or the meaning of the parties. The alteration
as to the proportions in which they were to be interested
in the profit and loss, did not at all affect the amount of
the capital which ho had in the concern. If they had
dissolved the partnership immediately after the change
had taken place, Mr. William Hinde would have been
entitled to have out of the partnership precisely the
same sum that he would have been entitled to take im-
mediately before the alteration. It was the capital in
the concern which was the object of consideration with
respect to this security. It is called the capital of the
concern in the partnership articles.—they speak of his
interest in the concern. His interest and share in the
stock in trade mid in the machinery, but it is called his
capital. His said capital is to be paid out by instalments
of 1,500/. a year, the first instalment to be paid in the
year 1835 ; and when you come to the alteration in the
partnership articles there is, in the same memorandum,
his said capital is not to be begun to be paid until five
or six years—l forget which—till five or six years after
the death of William Hiude. That is the thing to which
reference is made. It is his interest in the concern—his
capital—his capital as ascertained at each stock-taking,
because his capital is ascertained, and that of the respec-
tive partners is also ascertained at the stock-takings. It
is his capital that is to be paid out—it is the balance of
capital for which security is to be given. I conceive,
therefore, that notwithstanding the alteration in the pro-
portions in which the partners were to be interested in
the profit and loss in consequence of the memorandum
entered into in the month of February in the year 1832,
the stipulation with respect to the mortgage security re-
mained unaltered. It is said that he had no surplus in-
terest, that the whole interest was given to his son, but it
is quite clear that that was not the intention of the par-
ties, because, in that very item, they talk of the continu-
ing capital, and arrange as to the manner in which that
continuing capital is to be paid out. It is to be paid out, li
the first payment to be made six years after the death of
William Hinde ; I consider, therefore, the mortgage se-
curity was required after the alteration which had taken
place with respect to the shares of profit and loss by that
memorandum of February, 1832, precisely as before.
And, therefore, as far as relates to the parties in this
transaction, namely, the representatives of William
Hinde and the partnership, I think they were bound to
have given security for the difference between the
capital and the 30,0001. that was to be continued in
the concern, provided William Hinde had appointed
a son to succeed him in the manner arranged by
the partnership articles. The next question, there-
fore, to be considered is this—whether the will made
any alteration—what change was effected by the
provisions contained in the will. It is quite clear that
he intended to execute the partnership articles in the
will. lie recites the particular provision in the partner-
ship articles, that he has a right to appoint a son, or
sons, to succeed him in the partnership, as far as relates
to his interest in the five-twentieths; but he does not
execute the partnership articles, as it appears to me,
strictly. The provision was that he should have the
power of naming a son or sons to succeed him. He does
not name any son or sons to succeed him, but he makes
this arrangement, that the partnership shall be carried
on for the benefit of his sons in some way or other. He
gives a power to his widow, during her life, to arrange
between the sons what part or interest any one of
them shall take. She has the absolute power, if she
thinks proper, to exclude any one or more, to appro
priate the whole to one, or to divide it equally, or in any
other proportions, between the rest; and in the event of
her death, he gives the same authority to William Lamb
and James Derham, his executors. It is a contingent
and eventual provision in favour of Thomas Foster
Hinde, conditional on his behaving himself properly—
behaving himself properly, I suppose, in the opinion of
the widow, during her life, or in the opinion of the exe-
cutors afterwards. This is not a strict execution of the
partnership articles. Whether or not the surviving part-
ners would have had a power of neglecting this altogether
it is unnecessary to decide. They adopted it—they
acted upon it—they acted upon the provision contained
in the will adopting it, and therefore they are bound by
it; and therefore it appears to me that this clause
in the will, thus acted upon by the surviv-
ing partners with the consent of the executors—
this clause in the will was an authority to the execu-
tors to continue in the partnership the 30,0001,
if the
would have been continued in the partnership,
i
ip, f
strictly
provision in the partnership articles had been
aexreecsutitelid, byl
William
to h
notwithstandinginiam Hinde.
these I c
no
Intseir.daetri
0,
nt e rhe fore,
are they
they
iatri
eess, tai 1,1 n
between e s a
tmh ee nsi t unantdi o n
the w tehs
tar et
es p eocft
'Linde, as if the partnership articles had been strictly
complied with, that they were bound to execute a mort-
gage for the surplus of capital beyond the 30,000/., that,
I think, by these provisions in the will, the executors
were entitled to continue in the partnership. I think
that is all that it is necessary for me to state for the pur-
pose of settling the relative rights and claims, and dispo-
sition of things, hetween the partnershtiiihpueaamlnedaistehtielodledestwaanatdes
mHinde.ortg
gTehseecensrtiat
security
e upon
\IV
entitled
ldiatpomroperty to the extent of the differencek between
which, I think, his capital and the 30,0001.,
execu-
tors were authorised to continne in the ern; trrhheathelngso, the next question for consideration is, as. to the claim
in
nf
theth e
tLancasterime nf Williaman Lancaster bank advanced,
Hindu,e and almost immediately
after the partnerushoinp
the
formed, began to advance large
csuoinntsinouferad ounpeyto the e deposit of securities, and this
time of William Hinde's death ; and
at the period of William Hinde's death, there
was a debt of more than 30.0004 I think, due from the
partnership to the Lancaster bank. They were
entitled, therefore, to hold the securities which had
been deposited with them until that money was
paid off. If that money was paid off, then as far as re-
lated to William Hinde, they would have no claim upon
him, but till it was paid off they had a claim upon him
and against his estate. When paid off therefore, if paid
off, then William Hinde's estate would be entitled to the
first charge upon the leasehold and freehold property.
If the mortgage had been executed, which it ought to
have been, as it was provided for, that mortgage would
have been the first security after the debt due at the
time of William Hinde's death had been paid to the
Lancaster Bank. The next question, therefore,-is; what
is the effect of the subsequent transactions—has that
been paid off, that debt due from William Hinde, at the
time of his death, upwards of 30,000/. ? It appears that,
immediately after William Hinde's death an arrange-