New Mining and Exploring Syndicate, Ltd v. Chalmers & Hunter and Others [1911] ScotLR 86 (18 November 1911)

New Mining and Exploring Syndicate, Ltd v. Chalmers & Hunter and Others [1911] ScotLR 86 (18 November 1911)

The firm and the innocent partner (Hunter) were not liable for the embezzled money because the funds were not received by the firm in the course of its business as law agents and conveyancers, but by Chalmers in his personal capacity as secretary. The firm was not gratuitously benefited, as the embezzled money paid into the firm's overdrawn bank account did not reduce the overdraft below its original level, and Chalmers remained a debtor to the firm. No liability arose under the Partnership Act 1890 or at common law.

Citation
[1911] ScotLR 86
Parties
Pursuer: New Mining and Exploring Syndicate, Limited; Defender: Chalmers & Hunter (dissolved firm); Defender: Hugh B. Hunter, W.S.; Defender: R. M. Maclay, C.A., trustee on the sequestrated estates of R. S. Chalmers
Jurisdiction
Scotland
Judgment Date
18 November 1911
Procedural Posture
Civil / Appeal (reclaiming Motion) From Lord Ordinary's Decision
Outcome
appeal dismissed; interlocutor adhered to; defenders assoilzied (absolved) from liability for sums embezzled prior to 17 December 1907
Legal Topics
Liability of Partners, Fraud of Partner, Scope of Partnership Business, Gratuitous Benefit From Fraud, Partnership Act 1890 Section 11(b)
Partnership Law Agency Law Equity Liability of Partners Fraud of Partner Scope of Partnership Business Gratuitous Benefit From Fraud Partnership Act 1890 Section 11(b)

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Parties

New Mining and Exploring Syndicate, Limited

Pursuer

Chalmers & Hunter (dissolved firm)

Defender

Hugh B. Hunter, W.S.

Defender

R. M. Maclay, C.A., trustee on the sequestrated estates of R. S. Chalmers

Defender

Procedural Posture

Civil / Appeal (reclaiming Motion) From Lord Ordinary's Decision

Legal Issues

  1. 1 Whether the firm is liable under Partnership Act 1890 section 11(b) for money embezzled by a partner not received in the course of the firm's business
  2. 2 Whether the firm is liable at common law for gratuitous benefit from a partner's fraud

Ratio Decidendi

The firm and the innocent partner (Hunter) were not liable for the embezzled money because the funds were not received by the firm in the course of its business as law agents and conveyancers, but by Chalmers in his personal capacity as secretary. The firm was not gratuitously benefited, as the embezzled money paid into the firm's overdrawn bank account did not reduce the overdraft below its original level, and Chalmers remained a debtor to the firm. No liability arose under the Partnership Act 1890 or at common law.

Court Disposition

appeal dismissed; interlocutor adhered to; defenders assoilzied (absolved) from liability for sums embezzled prior to 17 December 1907