Cox v. Hickman (1860), 8 H.L. Cas. 268
Cox v. Hickman was decided before the enactment of the Partnership Act in 1890.
a. The Facts
In Cox v. Hickman an iron foundry business, owned by Smith & Sons and operated under the name Stanton Iron Works, developed financial problems. It could not pay its creditors in a timely fashion. Rather than force a potentially successful business into
bankruptcy at the risk of getting a very small portion of the amounts owed to them paid off, the creditors accepted an arrangement made with them by Smith & Sons. Under the arrangement Smith & Sons would transfer the assets of the business to trustees. The trustees would run the business. There is some dispute as to just who the beneficiaries of this trust were. One version of this is that Smith and his sons were the only beneficiaries.
Under this version the trustees would run the business and pay off the creditors and then return the business assets to Smith and his sons when the creditors were paid off. The other version is that both the creditors and Smith and sons were beneficiaries. Under this
version the trustees were also to pay the creditors until they were paid off and then return the assets to Smith and sons.
The grounds of the Cox v. Hickman case were a dispute over ownership of shares in a business. Specifically, the case involved whether an agreement to transfer shares was legally binding and whether the defendant had breached that agreement. Ultimately, the court ruled in favor of the plaintiff, Cox, finding that the defendant, Hickman, had indeed breached the agreement.
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US won it case