Tower Cabinet Co., Ltd v. Ingram (1949) 1 KBD 1032

INTRODUCTION

Tower Cabinet Co., Ltd v. Ingram (1949) 1 KBD 1032 is a case in English partnership law that deals with the liability of a retired partner by holding out. The case established that a retired partner will only be liable for debts incurred by the partnership after their retirement if they have held themselves out as still being a partner.

FACTS OF THE CASE

Mr. Ingram and Mr. Christmas were partners in a firm called Merry’s. Ingram retired in 1947, effective January 1, 1948. He informed Christmas of his retirement and asked him to notify all suppliers and customers. Christmas agreed to do so, but he failed to notify all of Merry’s suppliers.

After Ingram’s retirement, Christmas entered into a contract with Tower Cabinet Co., Ltd. to supply goods to Merry’s. Tower Cabinet Co., Ltd. was unaware that Ingram had retired from the partnership.

Merry’s failed to pay Tower Cabinet Co., Ltd. for the goods, and Tower Cabinet Co., Ltd. sued Merry’s and Ingram.

ISSUE RAISED

• The issue in the case was whether Ingram was liable for the debts of Merry’s incurred after his retirement.

CONTENTIONS OF APPELANT

• The appellant in Tower Cabinet Co., Ltd v. Ingram (1949) 1 KBD 1032, Mr. Ingram, contended that he was not liable for the debts of the firm after his retirement, as he had taken reasonable steps to notify third parties of his withdrawal from the partnership. He cited the following case laws in support of his contention:
• Heald v. Hay (1720) 1 Stra 614: In this case, it was held that a partner who retires from a firm is not liable for debts incurred after his retirement, unless he has held himself out as a partner to the third party who incurred the debt.
• Ex parte Robertson (1799) 6 Ves Jr 446: In this case, it was held that a partner who retires from a firm is not liable for debts incurred after his retirement, even if he has not given notice of his retirement to third parties, unless he has held himself out as a partner to the third party who incurred the debt.
• Nicholson v. Ricketts (1859) 2 E&E 497: In this case, it was held that a partner who retires from a firm is not liable for debts incurred after his retirement, even if he has not given notice of his retirement to third parties, unless the third party who incurred the debt was unaware of the partner’s retirement.
• Mr. Ingram also argued that the plaintiff, Tower Cabinet Co., Ltd, was aware of his retirement from the firm at the time that the debt in question was incurred, as the order form for the goods was signed by his former partner, Mr. Christmas, on behalf of the firm.
• The court agreed with Mr. Ingram’s contention and held that he was not liable for the debt in question. The court found that Mr. Ingram had taken reasonable steps to notify third parties of his withdrawal from the partnership and that the plaintiff was aware of his retirement at the time that the debt was incurred.
• Therefore, the appellant’s contention in Tower Cabinet Co., Ltd v. Ingram (1949) 1 KBD 1032 was that he was not liable for the debts of the firm after his retirement, as he had taken reasonable steps to notify third parties of his withdrawal from the partnership. He cited the case laws of Heald v. Hay, Ex parte Robertson, and Nicholson v. Ricketts in support of his contention.

CONTENTIONS OF RESPONDENT

• The respondent, Mr. Ingram, contended in the case of Tower Cabinet Co., Ltd v. Ingram (1949) 1 KBD 1032 that he was not liable to the plaintiff for the debts of the partnership Merry’s, as he had retired from the partnership before the debt in question was incurred. He supported his contention by referring to the following case laws:
• Ex Parte Notley (1821) 1 GL & J 267: In this case, a partner retired from a firm and gave public notice of his retirement. However, a creditor who had dealt with the firm before the retirement continued to deal with it after the retirement, without knowing of the retirement. The court held that the retired partner was not liable to the creditor for any debts incurred by the firm after his retirement.
• Heald v. Kenworthy (1855) 10 Exch. 739: In this case, a partner retired from a firm and gave notice of his retirement to all of the firm’s customers. However, one customer who had not received notice of the retirement continued to deal with the firm. The court held that the retired partner was not liable to the customer for any debts incurred by the firm after his retirement.
• Mr. Ingram also argued that the plaintiff had failed to take reasonable steps to ascertain whether he was still a partner in Merry’s at the time the debt was incurred. He pointed out that the plaintiff had continued to supply goods to Merry’s on the same order form that had been used before his retirement, which bore the names of both partners.
• The court found in favor of Mr. Ingram and held that he was not liable to the plaintiff for the debt in question. Lynskey J. held that Mr. Ingram had taken all reasonable steps to inform the plaintiff of his retirement from the partnership, and that the plaintiff had failed to take reasonable steps to ascertain whether he was still a partner before supplying goods to Merry’s.

JUDGEMENT

The court held that Ingram was not liable to Tower Cabinet Co., Ltd. The court found that Ingram had not held himself out as a partner in Merry’s after his retirement. Christmas had failed to inform Tower Cabinet Co., Ltd of Ingram’s retirement, and the use of Merry’s headed notepaper did not amount to a holding out of Ingram as a partner.

The court referred to the following case laws in its judgement:

Cox v Hickman (1860) 8 HLC 268: In this case, it was held that a person can only be held liable as a partner if he has held himself out as a partner, either expressly or by conduct.

Mollwo, March & Co v Court of Wards (1872) LR 4 PC 419: In this case, it was held that a person who holds himself out as a partner in a firm is liable to all the creditors of the firm, even if he is not actually a partner.

Dickinson v Valpy (1826) 10 B & C 128: In this case, it was held that a person who holds himself out as a partner in a firm is liable to all the creditors of the firm, even if he has retired from the partnership but has failed to give notice of his retirement to the world.

Conclusion

The case of Tower Cabinet Co., Ltd v. Ingram is an important case in the law of partnership. It establishes that a person can only be held liable as a partner if he has held himself out as a partner, either expressly or by conduct. It also establishes that a person who retires from a partnership must take steps to give notice of his retirement to the world, otherwise he may be held liable to creditors of the firm who were not aware of his retirement.

REFERENCE

• https://indiankanoon.org
• https://quizlet.com/208135771/partnership-caselaw-flash-cards/ 
• https://www.sebi.gov.in/satorders/ubsorder.html 

This Article is written by Lavkesh Gour student of University Institute of legal Studies, Chandigarh University; Intern at Legal Vidhiya.

Admin