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Present: Pereira J. and Ennis J.
SAIBO v. SATBO et al6—D. C. Colombo, 34,119.
Partnership—Parol evidence—Ordinance No. 7 of 1840, 8. 21.
The provision of section 21 of Ordinance No. 7 of 1840 as to thenecessity of a writing to “ establish a partnership ” means thatthe fact of the existence of a partnership cannot be proved exceptby means of a writing duly signed by the alleged partners; butwhen once a partnership has been proved to exist, the provision isnot to be construed to mean that individual transactions by, orthe settlement of any account between, the partners cannot beproved by parol evidence.
The correctness of the proposition that, after the dissolutionof a partnership, parol evidence may be led to prove its pastexistence in order to adjust accounts as between the qiiondampartners, doubted.
'J'HE facts are set out in the judgment.
Bawa, K.C., for plaintiff, appellant.
A. St. V. Jayewardene, for defendants, respondents.
Cut. adv. vult.
March 4, 1913. Pereira. J.—
In this action the plaintiff seeks a dissolution of what he terms apartnership existing between himself and the defendants, and heprays for an account of the assets and liabilities and for a distributionof any balance that may remain to the credit of the partnership.It is admitted that the capital of the allegal partnership exceedsBs. 1,000, and the question is whether the plaintiff can be allowed toprove the existence of the partnership pleaded unless he produces awriting in’ terms of section 21 of Ordinance No. 7 of 1840. Omittingimmaterial words, that section provides as follows: “ No promise,contract, bargain, or agreement, unless it be in writing and signedby the party making the same, shall be of force or avail in law forestablishing a partnership where the capital exceeds one hundredpounds, provided that this.shall not be construed to exclude parolevidence concerning transactions by or the settlement of any accountbetween partners.*' To my mind the interpretation of these wordspresents no difficulty. They mean that the-fact of the existenceof a partnership cannot be proved except by means of a writing
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duly signed by the alleged partners; but that when once a partner-ship is proved to exist, the enactment is not to be construed tomean that individual transactions by, or the settlement of anyaccount between, the partners cannot be proved by parol evidence.I take it that the concluding words of the enactment have beenadded to it merely ex abundanti cantela. There, however, areconflicting decisions on the question of the true meaning of thewords quoted above. In the case reported at page 195 of Vander-straaten’s "Reports, it was held that the section meant that a personcould not by means of parol evidence prove an agreement toconstitute a partnership. This ruling was followed in Bawa v.Mohamado Cassim,1 in Mendis v. Pieris,2 and in Pate v. Pat?.3 Onthe other hand, in Weerappa v. Alagappa* Silva v. Nelson,6 andArunasalam v. Shand 6 a contrary view was taken by this Court.The balance of authority is, I think, in favour of the view that Ihave taken above, except that it has been further laid down that,after the dissolution of a partnership, parol evidence may be ledto prove its past existence in order to adjust accounts as betweenthe quondam partners. I confess I do not understand the reasonfor this distinction. The question, however, as to the proof byparol evidence of a partnership already dissolved does not arise inthe present case. I am quite at one with my brother Wood Rentonin thevopinion that he has expressed on this point in D. C. Colombo,No. 9,731.7 For the above reasons I consider that the DistrictJudge’s decision is right, and that it should be affirmed with costs.I would reserve to the plaintiff the right to institute an action insuch other form as he may be advised for the recovery of any sumof money belonging to him that may have found its way into thehands of the defendants by reason of their having carried on businesstogether.
This was an action for partnership account and for dissolutionof partnership, and the only question on appeal is whether it ismantainable in the absence of a written agreement establishing thepartnership.
The first case on the point is that recorded in Vanderstraaten’sReports 195. In that case the Court held that the effect ofseection 21 of the Ordinance No. 7 of 1840 was that a parol contractwas insufficient to establish a partnership where a man seeks tocompel another to act as a partner; but where the partnership hasin fact been carried out and terminated, and there is on a balanceof account a sum due from one partner to another, the proviso of
11 C. L. R. 53.s 1 C. L. R. 98.
* (1907) 11 N. L. R. 264.
<* 6 S. C. C. 119.« 1 Br. 76.
• 1 Br. 6.
7 8. C. C. Min., Nov. 4, WO.
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the Ordinance clearly enables the plaintiff to prove his case byparol evidence, as well with regard to the fact that a partnershiphad existed as with regard to the balance due.
In the present case the plaintiff prayed for a dissolution ofpartnership, but it has been argued on appeal that this is a meretechnicality, as the partnership was one at will only, and that theplaintiff could to-morrow dissolve the partnership and take actionfor account.
The decision in the case reported in Vanderatraaten was dissentedfrom in Weerappa v. Alagappa,1 but followed in the case of SinghoAppu v. Amaraauriya,9 m which Hutchinson C.J.,. referring to thecase in Vanderatraaten'a Reportat said, “ that perhaps leaves noeffect to the enactment as far as regards partnership, except possiblyin the case (as to which I express no opinion) where the partnershipis still in existence when action is brought, or where the verbalagreement has. never been acted upon.**
I entirely agree with the opinion of Wood Benton J. in. the‘unreported case, D. C. Colombo, No. 9,781,® as to the constructionto be placed on sub-section (4) of section 21 of the Ordinance No. 7of 1840.
In the present case the partnership had not been dissolved at thetime of action; and all the previous cades agree that in that eventparol evidence to prove the existence of the partnership is notadmissible.
I accordingly agree with the order proposed by my brotherPereira.
1 6 8. C.C. 110.*2 Leader L. R. 87.
S. C. C. Mm., Noe. 4,1910.
SAIBO v. SAIBO et al