PARTNERSHIP LIABILITY.

Manawatu Herald, Volume XXXI, Issue 450, 23 February 1909, Page 4

PARTNERSHIP LIABILITY.

IMPORTANT JUDGMENT,

An extremely complicated law suit was decided by Mr Justice Cooper at Wellington on Friday, in a judgment occupying twenty minutes in the delivery. The case was that of Reed v. Simpson, and the chief point in question was liability in partnership.

The tacts summarised were these Dr. Reed, the plaintiff, of Palmerston North, entered into partnership with one George Simpson, in a flaxmilliug business. Under the agreement Simpson was to carry on the business in his own name and on a cash basis. Simpson shipped his flax to England through A. S. Paterson and Co., Wellington, from whom he obtained advances, and in February, 1905, gave a bill of sale over the whole of the chattels comprised in the paitnership. An advance of ,£3OOO was ol> taiued from Levin and Co., and was used chiefly to pay off Paterson and Co.'s mortgage. A bill of sale over the partnership chattels was given to Levin and Co. by Simpson. Dr. Reed, meanwhile, saw a notice of Simpson’s mortgage to Paterson and Co., and instituted proceedings for the dissolution of the partnership. Notice of the proceedings was actually served on Simpson two days before he obtained the advance from Levin and Co., but that firm had no notice of it. In the windingup proceedings of the ReedSimpson partnership it was found that Simpson’s half of the partnership property was insufficient to pay Levin and Co., who claimed, then, that their mortgage subsisted over the whole of the partnership property, including Dr. Reed’s share. The Chief Justice, in the original action, decided against Levin and Co. Appeal was made to the Appeal Court, and a new trial was ordered. Mr Justice Cooper heard the case in July, 1908. His Honour this afternoon made an order that Levin and Co. were entitled to rank as creditors of the firm Sgainst the assets of the firm for the full amount of their claim, and that they were secured creditors in relation to the chattels set forth in the schedule to the bill of sale, but not in relation to the firm’s interest in the Waitatapia mill site and milling rights, their security over these being limited by the bill of sale to Simpson’s interest only. They should have out of the fund in the receiver’s hands the costs of the appeal and of the present hearing. The amount of costs was deferred for further consideration.

Mr H. D. Bell, K. C. (with him Mr H, H. Ostler) appeared for Levin and Co., Mr Skerrett, K. C. (with him Mr Gifford Moore) for the plaintiff, Dr. Reed.