M'KENZIE v CLARK (Court of Session)

The parties in this action carried on business together as distillers; and, by their contract of copartnery, it was agreed, ‘that, in case any difference or dispute shall arise between the partners during the existence of the copartnery, or after the dissolution thereof, the same is hereby submitted and referred to the determination of Thomas Clark, Esq. at Auchteraw, and John Hood, Esq. factor at Invergarry, whose decision shall be final; and who shall have power to name an oversman in case of difference’.

The partnership was dissolved by mutual consent before the period contemplated at its formation; and the property of the distillery was exposed to sale, and purchased by Donald M'Donald, the son-in-law of Mr Thomas Clark, one of the arbiters named in the deed of agreement. M'Donald granted bills for the price at 3, 6, and 9 months, which were indorsed by his father-in-law, Mr Thomas Clark, in order to enable them to be put into the circle; and were then delivered to Mr John Clark, one of the partners of the company, the defender of the present action.

Some disputes had in the meantime arisen between the partners in winding up the business of the distillery; and the arbiters named in the contract of copartnery accepted the submission contained in it, by which all such differences were referred to their decision.

M'Kenzie applied by bill of suspension and interdict against both John and Thomas Clark, to prohibit them from indorsing away the bills which were in John Clark's possession, upon the ground that, by the agreement with the purchaser, one of them (that at six months) ought to have been drawn in his (M'Kenzie's) name solely, and not in the company firm; and he alleged that Thomas Clark had interfered spontaneously in the sale, and had offered to indorse the bills without any necessity or request of the partners to do so.

This interdict was refused; and the bill was passed only to try the question, and was not followed out by an action; but M'Kenzie thereafter raised an ordinary action of count and reckoning against his partner; and resiled from the submission, on the ground that Thomas Clark was disqualified from acting as an arbiter.