A treatise on the law of partnership and joint-stock companies : according to the law of Scotland, including private copartneries, common law companies, registered companies, chartered companies, railway companies, and others, formed under the consolidation acts

Front matter

Cornell University Library

The original of tiiis book is in tine Cornell University Library.

There are no known copyright restrictions in the United States on the use of the text.

Chapter I. Preliminary

Having in the four former books examined the legal principles applicable to the formation and constitution of associations formed for the purposes of gain, the rights and obligations of their members and the public stante societate, and the judicial procedure by which these rights and obligations are enforced, we now come, in the fifth and last book, to consider the modes in which such associations are brought to an end, the consequences of dissolution, the rights and obligations which then emerge, and the legal machinery by which they are rendered effectual, and the company estate is wound up and distributed.

In prosecuting our inquiries into this important branch of the Distinction subject, it will be necessary to keep steadily in view what was porations and pointed out at an early part of the treatise, that, in the law of """P*"^®^- Scotland as in that of England, every association formed for the purposes of gain is referable to one of two radical types : viz. the simple partnership, of which the common law company is an improved variety ; and the corporation, of which the quasi corporation may be taken as an imperfect form. The legal principles applicable to dissolution, and its consequences in these two types of association, are in many respects essentially different ; and the practical rules observed in the one are only analogous to, or illns-

DISSOLUTION OF COMPANIES.

[Book V.

Similarity between English and Scottish Law.

Distinction between dissolution and rescission.

trative of, those adopted in the other. The more important and radical points of difference may be stated as follows : — Unincorporated associations may be dissolved as they were formed, by the mere will of their members; and dissolution, in whatever way brought about, does not in the least degree affect the rights of creditors. Corporations can, in general, be dissolved only by public authority, since in that way they were brought into existence ; and the rights of their creditors after dissolution may be very seriously affected, and in some cases altogether lost. Unincorporated associations may be wound up according to conventional arrangements, or at all events resorting to the machinery provided by the common law for winding up the estates of individuals. Corporations are, properly speaking, wound up only in accordance with the provisions of special or general statutes passed for that purpose.

In relation to this branch of the subject, the principles of the English and Scottish systems of law are much more similar than in many others. In so far as concerns corporations proper, they are perhaps fundamentally the same, presenting only differences in technical expression and practical working. In unincorporated associations, however, some important distinctions arise, particularly as regards bankruptcy and succession ; and the underlying similarity of principle is often much obscured by difference, as in the practical details in which it finds expression, and probably also suffers some modifications consequent on the recognition in Scotland of the quasi person of the company.

It must be observed that there is an important distinction between the dissolution of a company or of the partnership relation on the one hand, and the rescission of the instrument of formation or of the membership of some of the partners on the other. In the former case, the partnership relation has been validly constituted, and the consequences and effects to which it has given birth will continue unabated after dissolution: in the latter it has been a nullity from the beginning ; and whatever effects its apparent existence may have brought about, these are to be attributed not to the partnership relation, but to principles and agencies of a different description altogether. A want of attention to this important distinction is very apt to lead to great confusion of thought. Before,