SUPREME COURT.-CIVIL SITTINGS.

Hawke's Bay Herald, Volume XXXII, Issue 10657, 10 July 1897, Page 3

SUPREME COURT.-CIVIL SITTINGS.

Friday, July 9; (Before bit Honor Mr Jostlca Edwards,) DALGETY AND CO. V. I, H, LOTJGHNAN. Mr J. W. Cirtile. wich Mr A, J. Oot« teilll, appeared tor the plalntltii, and Mr Gaily, of Wellington, with Mr K. H. Williams, for tho defendant. Counsel addressed his Honor on tho law {Joints. Mr Gully argued for the defendant— The first' quesblon whloh arises in the o<»Be la whether the new oontraob of 1892 between the defendant and the plaiatlffi' agent Mr Spenoo can be enateiaed. I mast show that theto U a consideration Id the new contract. I think I oan do co. The oontraot of 1891 contained nothing bnt a bare promise to pay a certain antn 01 money. If the whole had been paid by a promissory note, that wonld in law have been eniUolent consideration to f oan d a new contraot. Eqially so If a part of the uoney be paid by promissory noto, Cumber v. Wane, I Sm. L.C. B-.h Ed. 567. Goddard v. O'Biisn, 9L.8., Q.8.D., 40. The Court has always declined to go luto the question of the value of the new consideration. Curlews v. Clarke, 3 Exoh. 375. Campbell R.C., vol. 1, 397, Foakea v. Baer, 9 L R. app. C. 605, 616. The transaction was in short a ot«itn for the larger amount, an offer of the smaller amount*, f.u'l aooeptanoe of tbe latter. Any difficulty that might arlno on the oontraot of 1892 as being widtim paitiun is got tid of by the glviog of the promissory note. Spends waa Roverned by the Idea that he could get no more from defendant, That may either have been a mistake on a nettled point oi law or a compromise of a donbbfnl one. 1 shall take the case both ways. In the first place this matter is not pleaded. They have not set up the defence that aoooid and satiifaotlon waa entered into by mistake, bat that there Was not accord at ail. If it li a date of mistake as to the legal effect of tbe agreement of 1891t it is nob of a nature such as will entitle the plaintiff to set Id aside, Mistake in law is nob sufficient to allow any party to do so in the abaenoa of frand. Pollock Contracts, she d., 434. Where mistake goes so far as to cause total failure of consideration then the party may ba. entitled to set aside the agreement, Kitchen v. Hawkins, LR. 2 C.P. 22. Stewart v, Stewart 6 oi. and Fm. 911, 966. Again, Mr SpeDce is asking for equitable relief, and the Court will consider his oondnct, and If he has bßec gnilty of negligence tbe Court will refuse relief. Mr Spence was grossly negligent. If there was a plaint point of law involved ib was easy to dltoover hiß position. There Is no authority on neglN gence In informing one's self of one's legal poiiblon, Bat to the ease with regard to mistake in fact apply Wason v. Waring, 15 Bear., 151. The next point is as to the effect of the transaction of 1891. In form the doonment was a rearrangement oi tbe agreement of 1888, If I can show that portion of the consideration was nob the property of the beneficiaries under tbe agreement of 1888, then Mr Spenoe's view of tho law was correct. Was the £3000 received by the defendant in such a way the the was accountable to the partnership for it J I submit the evldenoe shows thß contrary. If the property was worth £3000 more la 1891 than in 1888, that wonld belong nob to the partnership bat to Nelson, and he could give It to anyone beohoie. The plaintiff i have tooonneotthe Bam with the prooeeds of the sale In 1883. Nelson could not have Intended to repurchase tbe property at a higher rate, The plaintiffs muet show that what the detendanb got ho ought to have got for tbe partnership. The Court has required strict acoouot from agents in two clas663 of C 986 8; first, where one partner makes a private benefit oat of partnership business, and secondly where he enters into transactions and appropriates a benefit which he ought to have given to the co> partnership. But this is not a profit made by the defendant at the expense of the partnership, or by reason of his position. As a matter of fact he did not know he was Betting a benefit. Lewln on Trusts, Sth Kd. 187, Llndley on Partnership, sth Ed, 305. He bad ceased to manage the buistness for some yeara. His sole duty was to preserve the assets of the partner, ship. These aesets were defined la 18SS, so that he was freo to accept Mr Nelson's gift In 1891 in respect of his then engagemonb with Nelnon. Tho plaintiff) oau't hold him to the letter of the agreement of 1891, beoauee they have consented to an arrangement excluding that turn, If the gift had been made by a separate document or promiisory note the plaintiff* could not have claimed any share in it. He had nob done anything in detriment of his trust, but had actually Improved tho position of the partnership. In the laßt place this agreement may be considered bb a compromise of a doubtful point of law. Mr Spence had power to fffcob a compromise, and the plaintiffs should nob have repudiated the set of their agenb. The power of attorney gave him fall power to act, and the plaintiff)' letter to him confirms it. Mr Carllle argued for the plain tlrL: Up to 1888 the defendant was clearly a trusteo ot tbe Tukl Tnkl property, and of all baneDt direct or Indirect accrnloe therefrom for the partnership. Io 1888 be bbllb to Nelson for the benefit of tbe partnership. It was a very Indefinite arrangement, and at the time nothing was said abont making defendant manager for life. That was later, and was an act of kindness on Nelson's part. Tbe defendant remained trustee after 1888 of all benefits derived by the partnership from the agreement. In 1891 a new arrangement was come to, The defendant says It was more advantageous, Ib Is not certain it wbb so, and had tbe shares In Nelson Bros , Limited, not baen Bold out at once it certainly wonld not) have been go, Neleon says he was actuated In makiDg this ag'eement by the faot that he had promised to retain the defendant as manager for life. He never mentioned this at the time, and in faot only thought of this reason In 1892. Mr Loughnan's behavior proved that, Nelson knew nothing abont the other partners In 1891, and thought defendant wonld receive tbe whole benefit of the agreement made that year, When be found oat in 1892 that the other partners olaimed a share of the benefit he first told defendant that he bid meant £3000 for him. He Is seeking to protect defendanb agalost himself. (1) Any acotetlon to a trust fund masb belong to tbe fund, Koeoh v. Sandford 1 White and T.L.C. 6th Ed 53, Aberdeen Town Council v, Aberdeen University 2 app. C, 544, Sagden v, Croeslnml 3Sm and G. 192, Gftßkell'v. Chambers, 26 B?or, 360 M'Kay's oase2ChDl, Hay's ca«e 10 CbD 593. If this £3000 belongs to the trnsb Mr Spence's aofcion has not released it. Hu had no authority from his principals. The power of attorney only referred to oolonlal business, and did not oover Ibis business, It contains power tb compromise, bob thh is a gift without consideration. His Authority is contaloed in the letter ot 17 oh December, 1891, instructing him to obbatn payment without any authority to compromise. (2.) Farther, Spence did not release the £3000. Ho took what he could get and gave no receipt in full to Nelson. The plaintiffs repudiated thn arrangement as soon fib they heard cf ib. (3.) No consideration whatever wao i;ivpn by defnndant for the releane of plaintiffs' claim ou the £3000. (4 ) WbVf-vor Sponee did was doufi uudei v mistake of his legal tights. Equity will relievo In snoh cases save wbero tbe pnti'lon of partifq ban beta fillired. Hone v. Godfrey, 5 Do. M iv.d G 70; the Saxon Life Assurance Sjcl"ty, 2 J. and H. 408, 412, Lastly, If thli claim It admitted tbe partnership will receive c

third of their capital, while the defendant, the oanse (lnnobent, do doubt) of their loss, will cave the whole of his, - His Honor reserved hla decision, which, he said, he would deliver In Wellington at as early a date as poitible,