FACTS
Benjamin and Josiah carried a business and owed a lot of money from creditors, namely Cox and Wheatcroft. A deed was executed by more than six-sevenths and value of creditors. A trust was formed, and the lease was fixed for 21 years. They were to carry business in the name of "The Stanton Iron Company". Cox never acted as trustee and Wheatcroft resiged after which no trustee was appointed.
The goods were provided by Hickman, drawing three bills of exchange which the business did not honour but accepted.
ISSUES
Whether there exist a partnership between traders who were the creditors of the firm?
JUDGEMENT
The creditors used special powers such as the continuation of trade, etc, which are the powers of partners. The creditors let the trustees carry on business. By this, they did not make themselves a partner. If they had carried out the business, they could have made sure none of the trustees accepted the bill of exchange as they would be the principals. Trustees are liable as they are the agents by the contract but the creditors are not the principals of the trustees. The defendants were held not liable.
Comments