007-NLR-NLR-V-19-SINNO-v.-PUNCHIHAMY.pdf
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Present : Wood Renton C.J. and De Sampayo J.
SINNO t> PUNCHIHAMY.
41—D. C. Kandy, 23,066.
Partnership—Agreement not in toriting—Capital exceeding one hundred pounds—-What is meant by “ capital ” ? .
De Sahpayo J. (obiter).—The term “ Capital ” in Section 21 of Ordinance^No. 7 of 1840 refers to the initial Capital of a partnership, and does not extendto the amount that may stand as capital, after additions and withdrawals, atany time during the course of the business.
fyi HE facts are set out in the judgment of De Sampayo J.Bartholomeusz, for plaintiffs, appellants.
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St. V. Jayewardene, for defendant, respondent.
Cur. adv. vult.
tdie.
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1916. March 10, 1916. De Sampayo J.—
Sinno v. The plaintiffs in their plaint alleged that in April, 1913, they andPunchihamy defendant agreed to carry on business in partnership as printersand publishers, and they brought this action for the dissolution ofthe partnership and for an accounting. There was no agreementin writing as required by section 21 (4) of the Ordinance No. 7 of1840, but the plaintiffs alleged that the capital of the partnershipwas under Rs. 1,000. The defendant in his answer denied thealleged partnership, and stated that he was in May, 1913, inducedby the plaintiffs to buy a printing press and other accessories, andto carry on a business in printing and publishing, and that theplaintiffs were only his servants,. having been employed by hima.s foreman and manager respectively. Certain issues arising uponthe – pleadings were submitted to Court, but when the case came onfor trial, the defendant • withdrew his denial of the partnership andconsented to the matter of accounts being referred to commissionersto be appointed by the Court. The' commissioners so appointedexamined the parties, took an account, and reported to Court theresult of their proceedings. Among other things they reportedthat the defendant’s books “ showed items amounting to a totalof Bs. 1,417.28 as representing the value of the press and pressaccessories,” and, setting off expenditure and debts against theassets and income, they found that there was a nett balance ofRs. 398.82 due to plaintiffs.
When the case came up again before the District Judge thefollowing issue, suggested by the defendant's proctor, was acceptedas an additional issue: —
” Whether, in view of the finding and report of the commis-sioners that the property of the alleged partnership isover Bs. 1,000 in value, it is competent for the plaintiffsto maintain this action.”
On behalf of the plaintiffs the report and proceedings of thecommissioners were put in evidence. The defendant called one ofthe commissioners, and produced the defendant’s ” expenditurebook, ” marked A, in which eight items relating to the purchase oftwo presses and materials appeared as of date May .15, 1913, amount-ing to Bs. 1,197. These items were followed by other items inJune (without a date), making a total expenditure of Bs. 1.308.88.The District Judge, taking May 1*5, 1913, as the day on which thepresses and materials were bought and on which the business started,said that ” i£ Bs. 1,197 was the amount the parties had to spendon the very first day, it was not unreasonable to suppose that theyhad a balance of capital for the purchase of other accessories andfor the conduct of the business,” and held that the business beganwith a capital exceeding Rs. 1,000. The plaintiffs‘ action wasaccordingly dismissed.
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The District Judge’s idee that the business .started on May 15,1918, is not in accordance with the case of either parly. Theplaintiffs say that the business was started in April, with , the firstpress and accessories called the “ Modem Press, ”■ which they boughtwith money contributed by all the parties for the purpose of thebusiness. This is borne out by the deed of transfer dated April 24,1918, in favour of the partners, from the former owner of the pressand accessories. The defendant stated before the commissionersthat the business started in June, intending no doubt thereby toshow that the press subsequently bought was part of the capitalof the concern. The defendant has nothing to go upon for fixinga date, and so far as the books are concerned,' the commissioners,report that the defendant’s bookB contain many erasures andalterations, and they significantly remark “ that the dates are oftentopsy-turvy, ’ ’ that the expenditure book A, upon which the DistrictJudge relies, is demonstrably false as to the date. It has theheading Spent for the Chandralankar%. Press on May 15, 1913.”The defendant at first tried to make out that this was in the hand-writing of the second plaintiff. But the commissioner who wasexamined in Court says that it was ultimately admitted to be inthe handwriting of the defendant himself, and there is more thana suspicion that it was put in by him to serve the purposes of thiscase. The first item under the heading is ” Modem Press Rs. 325,”and I have already shown by reference to deed No. 3,917 thatthat sum was spent, not on. May 15, 1913, but on April 24, 1913.Another item under the heading is ” Half-demy foolscap Victoriamachine, Bs. 440.” If that item is taken out, even assuming thatall the rest of the items in book A constitute the capital of thepartnership, the amount is less than Bs. 1,000. Now, as to the” Victoria machine,1’ the plaintiffs say that it was not bought bythe partners with their money, and they do not claim it. Thedefendant’s own evidence on the point is that he bought it forthe partners, for Bs. 440, out of his own money. He carefullyabstains from saying that it was bought on May 15, 1913, or that itwks ntended to be part of the capital of the partnership; nor dothe circumstances justify any such 'conclusion. It may indeed bepart of the assets of- the partnership, and the defendant' may beentitled to .its price as a debt due to him from the parnership, butI think it cannot be included in the capital of the partnership.Accordingly I think that the capital was under Bs. 1,000.
Having now dealt with the facts, I may point out that there is amisconception as to what is capital, on the face of the issue whichI have above quoted, and which has been tried by the DistrictJudge. The distinction between the capital and the property of apartnership does not appear to have been sufficiently realized.” By the capital of a partnership,” says Lindley (7th edition) 3S8.“ is meant the aggregate of the sums contributed by its mebers for
1910.
Ds SampayoJ.
Sinno v.Punchihamy
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1918. the purpose of commencing or carrying on the partnership business,Pb HtMPlvn and intended to he risked by them in that business. The capital ofJ. a partnership is not therefore the same as its property.” Lindley,Sinnov. P- 359, adds: “It follows from these considerations that thePuwirihamy agreed capital of a partnership cannot be either added to or with-drawn except with the consent of all the members of the partnership.”The principle is undoubted, and no further references are necessary.De Silva v. De Silva,1 cited on behalf of t^e defendant, is no authorityto the contrary, inasmuch as that case was decided clearly on theassumption that the capital of the partnership was over Rs. 1,000.The question, however, occurs to me as to whether, when section21 (4) of our Ordinance speaks of “ capital,'* ii refers to the initialcapital, or whether it extends to the amount that may stand ascapital, after additions or withdrawals, at any time during thecourse- of the business. The latter construction appears to meto render the provision of the Ordinance unworkable, and 1 thinkthat the Ordinance refers to the initial capital only, and not to thefluctuatng caiptal of a partnership. But it is unnecessary to decidethe point, because, as I have said, the “Victoria machine ” pur-chased for Us. 440 is not shown to have been brought in as part ofthe capital. The plaintiffs did not contribute to its purchase, andcertainly did not consent to its being added to the capital. Theonly reasonable conclusion to be drawn from the whole tenor of thedefendant’s evidence is that the money that went towards itspurchase was money advanced by him to the partnership. More-over, the defendant having admitted the partnership, the Court‘will exact from him the most strict proof of any facts on which hemay rely as entitling him to take refuge under the Ordinance. Inmy opinion the defendant wholly failed to discharge the heavyburden which lay on him.%
I would set aside the decree appealed from and send the case back,in order that the claim of the plaintiffs may be determined on thefooting that no writing was required for establishing the partnershipbetween the parties. The plaintiffs will have the costs of the trialin the District Court and of this appeal. All other costs will bein the discretion of the District Judge.
Wood Benton G.J.—I agree.
Ret aside.
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i (1902) 3 Bt. 236.