076-NLR-NLR-V-21-MOHAMED-v.-WARIND.pdf
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Present : De Sampayo J. and Schneider A.J.MOBAMED v. WAKIND.
52—>D. C. Colombo, 47,478.
Partnership—Action by plaintiff fordeclaration that he »»partner—
Writingnotsignedbyplaintiff, butsignedby defendant—Con-tinuanceof' businessafter expiration of term—Isnewwriting
necessary t—Assignment of interest of onepartner—Iswriting
necessary t
The plaintiff brought this action alleging that . he and the defend-ant on August 5, 1909, agreed to carry on business in partnership,and that,the defendantsince February 8, 1915, refusedto acknowl-edge theplaintiff ashis partner, and appropriatedtohimself
the capital and stock in trade of the said business to the plaintiff'sloss, andheprayedfora. declarationof hisrights as partner,
for dissolution of thepartnership and realization oftheassets,
and fora partnershipaccount. The defendant deniedthealleged
agreement,and stated thatifthere was such an agreement, the
partnershipwas dissolved priorto the acts complainedof against
him. He further pleaded that if the plaintiff at any time had anyinterest maintainable at law in the said business, he made over thesame to the defendant for good consideration.
Held, that though the writing (see judgment) relied on as consti-tuting the agreement of partpership was not signed by the plaintiff,but only by the defendant, that plaintiff was entitled to rely on itfor establishing a partnership as against the defendant.
Thepartnershipagreementprovidedthat “thebusiness shall
be .carriedoneven aftertheexpiration ofthis deed(five years)
if we agree. "
Held,that thisamountedto anagreementthat the partner-ship shall be continued if the members do notwindup thebusings
at the expiration of the periodof five years,and'that nofurther
writingwas required if theycontinuedto carryonthe business.
Ramen Chetty o. Vyfaven Chetty 1 distinguished.
The plaintiff in 1916 assignedhis share inthe partnershipto the
defendant, but no deed of assignment or other writing was executed.
Held, that the assignment wasvalid, thoughtherewas nowriting.
“ His (partner's) interestisrather in thenature ofa chose in
action,the transferof whichunder ourlaw isnotrequired to be
in writing. ”
rjpHE facts appear from the judgment.
Bawa, K. C. (with him A. St. V. Jayawardene), for plaintiff,appellant.
Hayley, for defendant, respondent.
Cur. adv. vult.
1910.
’ (1916) 2 G. W. R. 81.
September 15, 1919. Da Sampayo J.—
The parties are Indian Muhammadans, who have resided andtraded in Colombo. The plaintiff brought this action alleging thathe and the defendant on August 5, 1909, agreed to carry on businessin partnership in piece goods under the name and style of “ AbdullaHadjie Mohamed & Co., ’’ each being entitled to eight shares out of atotal of 16J shares, and the remaining half share to go to the poor(that is to say, devoted to charity), and that since February 8, 1915,the defendant, who solely managed the said business, refused toacknowledge the plaintiff as his partner, and appropriated to himselfthe capital and stock in trade of the said business to the plaintiff’sloss and damage of Rs. 70,000, and he prayed for a declaration of hisrights as partner, for dissolution of the partnership and realizationof assets, and for a partnership account. The defendant formallydenied the' alleged agreement, and stated that if there was such anagreement, the partnership was dissolved prior to the acts com-plained of against him. He further pleaded that if the plaintiff atany time had any interest maintainable at law in the said business,he made over the same to the defendant for good consideration.
The District Judge, in the first place, held that there was nowriting as required by section 21, sub-section (4), of the OrdinanceNo. 7 of 1840, for establishing the partnership, and therefore theplaintiff’s claim could not be maintained.. In my opinion thedocument A dated April 29, 1909, is a sufficient writing for thatpurpose. It appears that the plaintiff was' then trading in piecegoods in premises No. 75a, Main street, Colombo, and his stock intrade was valued at Rs. 10,000, which was to be brought'in as thecapital of a new partnership composed of the plaintiff (Bhai AbdullaHadjie Mohamed), the defendant (Hadjie Abdul Latiff Warind), andtwo other persons named Ibrahim Carim Gader and Abdulla Carim.Of these, Ibrahim Carim appears to have been then in India. Theother three met, and the defendant and Abdulla Carim executed adocument in Gujarati in the form of a letter addressed to theplaintiff. The document, which is attested by two witnesses, is asfollows: —
To Bhai Abdulla Hadjie Mobamed ■ Pardesi, inhabitant of Kutiyana,now of Colombo.
We, Hadjie Abdul Latiff Warind, Gader, Ibrahim Carim Gader, andAbdulla Carim Gader, inhabitants of Kutiyana, Hadjie Abdul LatiffWarind and Abdulla Carim of Colombo.
Bhai Ibrahim Carim is not here at present. If he comes within four,or five months he will be entitled to a share.
We three have received the stock in trade of your shop No. 75a ofColombo at cost price, including outstanding of the firm, for which wehave signed. The above-named shop will be carried on under the nameof Abdulla Hadjie Mohamed & Co. If we start any business, it shouldbe under the above-mentioned name, that is, Abdulla Hadjie Mohamed& Co. The capital is Bs. 10,000.
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The Tebms or Pabtnbrship.
Shareofa quarter annaassignedforthe greatPirSahib. Share of
«ight annas is assigned for Abdulla Hadjie Mohamed, that means. foryourself. Share ofeight annas for threeof us,that meansHadjie
Abdul Latiff, Ibrahim Carim, .and Abdulla Carim. Moreover, ifIbrahim Carim arrived here within the above-mentioned period, hisshare will be included with us, and if he does not come, his share will bedivided between Hadjie Abdulla Latiff and Abdulla Carim.
The total sharesarrangedare sixteen anda quarterannas as above
mentioned. The deed of partnership is to stand in force for five years.If any one out of three of us leave the firm by causing mischief, then hewill have to leave after paying Be. 1,000damages,besides theamount
receivedbyhim from timeto time,andhe will haveto bear a share
of anylossincurred, but ifthere isanyprofit, heis not entitled to it.
If we wishto do any other business, itshould bedonewith the consent
of Abdulla HadjieMohamedand withtheadvice ofeach other. The
supervision in the above business is given to Abdulla Hadjie Mohamed.We shall not doanything without your consent andpermission.Further,
we shall carry on the business heartily, and honestly keeping in mindthe Holy Presenceas a witness ofour great Saintthe Piram Pir.
Further, each of us shall receive from Bs. 300 to 400 per year for foodand clothing. No one will take more than that. The business shallbe carried on even after the expiration of this deed if we agree, otherwiseto settle the accounts. The Companyshallbear ourpassage expenses
from Colombo to Kutiyana, and the accounts will be closed yearly.
Besides the capital of Bs. 10,000, if any more money is required,the Company shall pay the interest, if any, on the additional sum.
We, each andall, the above-mentionedpartners,are responsible for
any transaction carried onfrom this day.Too areentitled torecover
a share of the losses from our private property.
We have signed this deed on our own account in full possession ofour senses, with good heart, knowing, and understanding, and we arequite sober at the time of signing. Accepted by us and our heirs,the 29th April, 1909, Thursday, on the 7th day of Babiul Akbar 1327.
Waisak Sudtb Thursday.
Written by Abdulla Carim Gader in our presence of all.
Signed by myself (on50-cent stamp),AbdullaCarim. Theabove-
writing is correct.
Witness: Hadjie Abdul Gany Gija Pardesi, in the presence of threepartners.
Witness:Yoosuff SakurJandula, in thepresenceof HadjieLatiff,
Abdulla Carim, and Abdulla Hadjie Mohamed.
Translation from Gujarati.
(Signed) M. Abdulla,Sworn Translator, Colombo.
The above document contains all the essential elements of apartnership agreement. The reason why the document has beenconsidered as not a sufficient writing under the Ordinance is that itis not signed by the plaintiff. The provision of section 21 of theOrdinance is that “ No promise, contract, bargain, or agreement,unless it is in writing and signed by the party making the same, or
1919.
Db SahpavoJ.
Mohamedv. Wa/rind
1919.
Db Sampayo
J.
Mohamedv. Warind
( 228 )
by some person thereto lawfully authorized by him or her, shall beof force or avail in law for any of the following purposes. ”
The purposes mentioned are (1) for a guarantee, (2) for pledgingmovable property, (3) for the purchase or sale of movable property,and (4) for establishing a partnership where the capital exceedsone hundred pounds (t.e., Bs. 1,000). It will be noticed that thewriting is required to be signed by the party making the promise,contract, bargain, or agreement. The entire provision is intendedto require a particular kind of evidence to prove a contract oragreement, which may in any action or legal proceeding be deniedby the party making the same. This is undoubtedly so in the caseof the purposes (1), (2), and (3), and there is no reason for thinkingthat both parties must sign in the case of (4), which is provided forin the same language and in the very same context as the othercases. There are, of course, always two parties to a contract, butthe question in every case is whether the writing is signed by theparty against whom the contract or agreement is sought to beenforced. For the purpose of this action, I think it is only necessaryto remember that the agreement of partnership is sought to beenforced against the defendant who denies its existence, and hehaving signed the writing in question, I think the plaintiff is entitledto rely on it for establishing the partnership. The other twopersons retired from the partnership on August 5, 1909, and gaveover their shares to the defendant, and this explains the statementin the plaint that the plaintiff and the defendant agreed to carryon business in partnership on August 5, 1909, though the date ofthe writing was April 29, 1909.
Another point decided by the District Judge against the plaintiffis as to the continuance of the partnership after the expiration ofthe period of five years provided for in the agreement. Under theEnglish Partnership Act, which generally applies to Ceylon byvirtue of Ordinance No. 22 of 1866, where the partners carry onthe business without a fresh agreement, a partnership at will willbe presumed, but it has been held on Ceylon that by reason of therequirement as to writing in Ordinance No. 7 of 1840 that particularprovision of the English Act does not apply in .Ceylon, and thatany agreement to continue the partnership must be evidenced bya writing in the same way as the original partnership agreement.Raman Ghetty v. Vyraven Chetty.1 This case, however, is, I think,distinguishable from the case cited, because in the original agreementof partnership there is this provision:“ The business shall be carried
on even after the expiration of this deed if we agree. ” This appearsto me to amount to an agreement that the partnership shall be con-tinued if the members do not wind up the business at the expirationof the "period of five years, and I think that no further writing isrequired if they continue to carry on the business, as they, in fact,did.
(1916) 2 C. W. R. 81
1919.
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However thin may be, the ultimate determination of this casedepends on another question, namely, whether the plaintiff inFebruary, 1916, assigned his share in the partnership to the defend-ant and ceased to be a partner and to have any interest in thebusiness. The business does not seem to have prospered at anytime, and about 1915 the plaintiff was in great financial straits.The business at that time was carried on in three shops, viz., themain shop at No. 75a, and two branches at Nos. 72 and 84, Mainstreet, Colombo. The plaintiff’s financial position at this time wasso bad that he was actually obliged to seek the protection of theCourt and was adjudicated an insolvent. In the insolvency casehe disclosed the business and stock in trade of shops Nos. 72 and 84only. The plaintiff pretends that only these two establishmentssuffered losses, and that No. 75a was making profits. But it isclear from the accounts and from the evidence of the plaintiffhimself that the business of the partnership as a whole was in abad way, and that there were large unliquidated liabilities. Thecircumstances make it highly probable that the plaintiff towardsthe latter end of 1915, as the defendant says, approached thedefendant and proposed that the defendant should take over theplaintiff’s share of the partnership and of his share of the debtsand release the plaintiff from liability for the debts, and that thisproposal was accepted and given effect to in February, 1916, whenthe defendant took a lease of the premises in his name and put upa new sign board. The plaintiff even admitted to his assignee ininsolvency that he had made a transfer of his share to the defendant.The learned District Judge was satisfied on this point, and afterconsidering the evidence, I have myself come to the same conclusion.It is, however, contended that the assignment was not effectedlegally, inasmuch as there was np deed of assignment or other suffi-cient writing for transferring the plaintiff’s share of the partnershipto the defendant, the argument being that the share was “ goods, ”and was governed by sub-section (3) of section 21 of OrdinanceNo. 7 of 1840, and now by the Sale of Goods Ordinance, No. 11 of1896. I may say that even if these Ordinances applied the defend-ant, who was already in possession of the assets and stock in trade,must be taken when he agreed to the transaction, to have received“delivery ” of the plaintiff’s share, and, as he likewise took uponhimself and liquidated the obligations of the partnership, he mustalso be taken to have paid the “ price. ” Section 1 of the latterOrdinance, after defining a contract of a sale of goods, providesthat “ there may be a contract of sale between one part owner andanother. ” Constructive delivery, such as takes place when thebuyer was in possession of the goods before sale and holds them onhis own account after the sale, is sufficient in the case of a sale byone part owner to {mother. Story, section 312a. The nature of ashare in a partnership, however, shows that the argument cannot be
Db SaupayoJ.
Mohcmcdv. Warind
C 230 )
1919;
, Ss Sampato
3.
Mohamedv. Warind.
sustained for another reason. Lindley on Partnership, vol. 1, p. 377(7th ed.), says, with reference to authorities, “ what is meant by.the share of a partner is his proportion of the partnership assetsafter they have been all realized and converted into money, andall the partnership debts and liabilities have been paid and dis-charged, ” so that a partner is not the owner in the ordinary senseof a share in the individual assets and an assignment by him of hisshare is not governed by the formalities relevant to the transferof goods. His interest is rather in the nature of a chose in action,the transfer of which under our law is not required to be in writing.In Watson v. Spratley1 it was held that a share in a mining companywas not an interest in land within section 4 of the Statute of Frauds,nor goods, wares, or merchandise within section 17 of the Statute.Moreover, the defendant having, in fact, entered into the transactionat the plaintiffs request and acted upon it to his prejudice, I donot think that the plaintiff is now entitled to go behind it and makehis present claim on the footing of the old partnership.
In my opinion the dismissal of the action on the ground that theplaintiff’s interest in the partnership was assigned to. the defendantin February, .1916, and that he has now no claim to any accounting,is right, and I would dismiss the appeal, with costs.
Schneider J.—I agree.
Appeal dismissed