A PARTNERSHIP PROPERTY.

Gisborne Times, Volume XIX, Issue 1621, 8 December 1905, Page 3

A PARTNERSHIP PROPERTY.

J udgment was delivered in the case of James Reid v. Samuel Hesketh (administrator of the estate of John Reid,

deceased), in the Court of appeal. This was a case arising out of the terms of a deed of partnership entered into in 1880 between the appellant, James Reid, and his late brother, John Reid, as cattle farmers at Motutapu and elsewhere. The deed of partnership contained a clause under which, on the death of either partner, the surviving partner was to have the

option of purchasing the interest of the deceased partner in the partnership property if the same should be free from encumbrances at or for the price of £IO,OOO ; or, in case the said partnership property should be subject to any encumbrances, at or for tho said sum less the amount of

the principle of such incumbrance# and any then accrued interest thereon. John Reid, one of the partners, died in 1899, and the appellant, James Reid, as the surviving partner, gave notice to the respondent as executor of John Reid, exercising the option of purchase of the partnership. The property was, at tho date of the partnership deed and at the date of the death of John Reid, subject to a mortgage of £4OOO. The interest of John Reid

himself was not subject to any special encumbrance created by him. Respondent, as executor of John Reid, claimed that the clause of the partnership deed giving option of purchase to tho surviving partner ’must be read

as providing for deduction from tho prico of £IO,OOO only if the interest of the deceased partner should he sub jeet to some separate encumbrance, and that, there being no such separate encumbrance, appellant was bound to pay the full sum of £IO,OOO. Respondent, as executor, sued appellant in the Supreme Court at Auckland, and Mr Justic9 Edwards upheld this view, and gave judgment for the full amount of £IO,OOO. Appellant appealed from this decision to the Court of Appeal, and the majority of the Court, consisting of tho Chief Justice, Mr Justice Williams, and Mr Justice Denniston, gave judgmout reversing the decision of Mr Justice Edwards, and holding

that appollant was entitled to deduct from the £IO,OOO the whole amount of tlie r mortgage for £4OOO, existing upon the partnership property as a whole. Under this judgment the appellant pays £6OO only. Mr Justice Cooper [and Mr Justice Chapman dissented from the judgment, of the majority of the Court, and concurred in the view taken by Mr Justice Edwards. Costs were allowed on the highest scale, as in a case from a distance, and costs £SO in the Supreme Court, as agreed. Mr Chapman, for respondent, obtained leave to appeal to the Privy Council, terms to be settled on further application.

Mr W. Coleman was solioitor for tho appellant, and Mr Iliomas Cotter counsel ; Messrs Hoskotlx and Richmond wo ro solicitors for respondent, and Mr Martin Chapman (Wellington) counsol.