A partnership of fourteen persons in Great Britain and two in India carried on a business ‘for the production . . of indigo and silk and other produce, and for the sale in Calcutta, or shipment for realisation in Europe, of such produce.’
The partnership deed provided that the business in India should be conducted by managing agents in Calcutta who could not be dismissed so long as they held certain shares in the partnership, and who alone had power to use the name of the firm; and further, that all the partnership books were to be kept in Calcutta. The annual balance-sheets were prepared and the profits appropriated to the partners by the managing agents, who annually sent to London certified reports and abstracts of accounts showing the business and profits, and the interest of each partner therein, and generally executed all acts in connection with the practical working of the business.
A financial firm in London were constituted agents for the partnership in Europe, and it was agreed that on the security of a mortgage over the assets they should make the necessary advances for carrying on the business, and that the produce of the business, or, if realised in India, the proceeds thereof, should be remitted to them. The profits were paid to the partners through the London agents, who were irrevocably appointed arbiters to determine any dispute. between partners or their representatives.
The property of the partnership was vested in three trustees resident in this country in terms of the partnership deed.
Six of the parties resident in this country were constituted a committee to advise with the agents in London and Calcutta, and to decide, subject to the approval of a general meeting of the partners, on all matters affecting the partnership.
The deed also provided that on the death of a partner the partnership should not be dissolved, nor should his representatives become a partner, but the interest of such . . partner . . shall cease on the 30th September next after his decease, . . and his share . . shall be dealt with in manner following . . if his representatives shall desire to sell such share to any of the partners or to any other person, to be approved by the committee, the same may be sold for such price as may be agreed on.’ If not sold within six months the fair value of the share was to be determined by the London agents, and upon the representatives executing a transfer or assignment of the entire share, the trustees of the partnership were to pay to the representatives the sum so ascertained.
A partner of the firm, domiciled in Scotland, died, and his executors sold his shares to his three sons. The executors failed to include the value of these shares in the inventory of personal estate belonging to the deceased in this country, and they were sued by the Inland Revenue for additional inventory duty. Held ( rev. the judgment of the First Division) that the asset of the deceased’s estate for which inventory duty was sought was not of the nature of a claim for a sum of money, but was a share of a business and assets locally situated in India, and that that share was not liable for inventory duty in this country
Judges:
Lord Herschell and Lords Watson, Macnaghten, and Morris
Citations:
[1890] UKHL 1035, 27 SLR 1035
Links:
Jurisdiction:
Scotland
Company
Updated: 28 June 2022; Ref: scu.636738
