1851. LEES v. it unnecessary to say whether the Defendants were trustees or mere agents, for with respect to this matter, in either character, their duties and liabilities to the LAFOREST. Plaintiff were the same. Their duty, I apprehend, was this; to take every means in their power for getting in the debts of the old firm. The fact that they had an interest in these debts does not, in my opinion, alter or affect their duties towards the Plaintiff, who had engaged with them not to take any active part in this matter. Now what takes place? 8137. was due from Moreton; Messrs. Laforest had subsequent dealings with this gentleman, and in the month of December 1839 they took a security by way of mortgage; but for what? Not for the debt of the old firm, but for their own debt joined with the debts of the old firm. Now was that consistent with their duty either as agents, or as trustees in the fiduciary relation in which they stood? I apprehend their duty was to take every means in their power to get in the debts of the old firm before they attempted to get in their own; and if they took any step which made it impossible to get in separately and distinctly, the debt of the old firm, and united their own debt with it, they must be considered as having treated and adopted the former debt as their own. I am proceeding upon the assumption that this was done without the knowledge, sanction, or assent of the Plaintiff. The debt of 8137., due to the old firm, together with their own debt, amounted to 20687., they took a security, by way of mortgage, for this total amount of 20687., as due to them, the Defendants, without saying a word about the Plaintiff. Now after that, could the Plaintiff have sued at law? I apprehend that he could not; for, independently of the fact that he had covenanted not to do so, and that this Court would have restrained him from so doing, it is to be observed, that if he had sued at law he must have done so in the name of himself and the Laforests, and it would have appeared, that in point of fact, there was no debt due to the Defendants and the Plaintiff Lees jointly, and consequently a plea in abatement might have been effectually pleaded, so that, in substance, the Plaintiff could never have sued for his debt. It is the duty of every person acting as agent or standing in a fiduciary relation to do the best he can for his principal, or cestui que trust. The effect of this deed was to give the Defendants interest for five years upon their own debt: is it possible now to replace the parties in the same situation in which they previously stood? Is it possible to ascertain, or is any evidence given to shew, that if an action had been brought to enforce payment of the 8137. (which I think it was the duty of the Defendants to enforce) the money, which was applied in payment of the interest of the Defendants' debt, might not have been applied in the discharge of the debt of 8137.? Can it be said that if it had been so applied, and security had been taken for the debt of 8137. only, the whole might not have been liquidated? As I think it the duty of persons standing in a fiduciary relation, to do every thing in their power for the purpose of performing that duty, so I am of opinion that these Defendants were bound to disregard their own interest; and that if they so coupled their own interest with that of the person whom they represented, as to be unable to replace him in the same situation in which he was before, they must be taken to have made themselves substantially responsible to him for that, which, but for their conduct, might, and for aught the Court knows, would have been the consequence of taking proper steps. I am, therefore, of opinion, without going into any question as to the appropriation of VOL. XIV. payments, T 1851. LEES v. LAFOREST. 1851. LEES v. LAFOREST. payments, that upon the execution of that deed, the debt, in substance, became theirs; and that they became liable to pay the Plaintiff his proportion of it. It is said, and no doubt this is a material part of the case, that a person may adopt a transaction of this description; and that if he does, he cannot afterwards complain of it. Now, two letters are referred to, and only two, as having any bearing upon this subject. [His Honour here considered them in detail, but concluded that there had been no adoption.] I am of opinion, that the law would be exactly the same, if no deed had been executed upon the retirement of the Plaintiff; and that if continuing partners, who are bound to get in debts belonging to an old firm, think fit to enter into a new arrangement with the debtors of the old firm, by which those debtors become the debtors of the new firm, and the debts of the old firm become merged in that of the new firm, by a security taken for the aggregate debt, such continuing partners are liable to the retiring partners for the amount of the old debt as one of the assets received by them. The circumstance that Lees has taken no active step in this matter does not, I think, prejudice him in this respect. It is not pretended that there has been any acquiescence or sanction on his part other than that which is to be gathered from these two letters. As to the costs, it is said I ought not to follow the course that I am always desirous of following when I can: which is, to give to the party who succeeds his costs. It is said, in the first place, that the Defendants offered to do all they could be expected to do. My opinion is, they did not do so. Secondly, it is said, that they offered to refer the matter to arbitration to the two gentlemen gentlemen named in the deed. It has long been settled, that an offer to refer to arbitration is no bar to a suit; I am of opinion that this is no reason for depriving the Plaintiff of his costs, and that he had a right to come into this Court if he thought fit. My experience in arbitrations has unfortunately been, that greater expense has been incurred and greater time has been occupied in arbitrations than if the parties had come at once into court. I cannot, with that knowledge, consider that a mere refusal to refer the case to arbitration disentitles the Plaintiff to his costs. The decree I propose to make will be something in this form :-Declare that, upon and after the execution of the deed of the 5th of December 1839, the Defendants became and were liable to pay to the Plaintiff seven-sixteenths of the sum of 813l. 12s. 2d., and interest at 4 per cent.; and refer it to the Master, in case the parties differ, to calculate the amount. I think the Plaintiff is not entitled to the benefit of the security which he repudiates. Upon the execution of the mortgage, an equitable debt became due from the Defendants to the Plaintiff, and therefore they are now only liable to pay that debt and interest. 1851. LEES v. LAFOREST. proceed against A. alone, in the absence of B.'s representatives. Where one of several trustees dies which does The LONDON GAS-LIGHT Company v. SPOT- A PRELIMINARY question on this occasion was, whether the representatives of the Defendant Easton, who had died pending the suit, were necessary parties. It appeared, that the London Gas-light Company was established in 1833, and was subsequently incorporated by Act of Parliament in 1844. The relations between. the shareholders and the duties of the trustees and directors were regulated by a deed of settlement dated the 30th September 1836. This bill, which was filed by the corporation against Easton and the other former directors and trustees, stated, that a contract had been entered into with James Reid for supplying the Company with coals, for the amount of which he was to draw bills of exchange on pending a suit the Company; and it complained, that in 1842 under cover of this arrangement, the funds of the corporation had improperly, and in breach of trust, been lent to James Reid, by means of the Company accepting and paying bills drawn by Reid on the Company, to an amount far beyond the supplies of coal. According to the statements in the bill, Easton was originally an auditor; but the bill alleged, that in February 1842, A cause was he had been appointed a trustee in the place of a de not seek to charge them personally in that character, his represent atives are not necessary parties; for the trustee ship survives. ordered to stand over to ceased trustee. make the as signees of a The bankrupt Defendant parties. They were made parties by amendment. An objection raised by the co-Defendants that they ought to have been made parties by supplemental bill was over-ruled. |