ta hs Soa eS § oa ? : i, Sugnd ee aN Pa war | ay Low] a A ah eal a oe s ‘a ast ale wy wi iN a lla a re YSN f CORNELL UNIVERSITY LAW LIBRARY The Moak Collection PURCHASED FOR ‘ The School of Law of Cornell University And Presented February 14, 1893 IN MEMORY OF JUDGE DOUGLASS BOARDMAN FIRST OEAN OF THE SCHOOL By his Wife and Daughter A. M. BOARDMAN and ELLEN D. WILLIAMS ’ Cornel ul ry KD 2079.L74 A treatise on the TT wT THE LAW OF COMPANIES, &e., &e. LECT OE) A TREATISE ON THE LAW OF COMPANIES, CONSIDERED AS A BRANCH OF THE LAW OF PARTNERSHIP. FIFTH EDITION. BY THE RIGHT HONOURABLE ONE OF THE LORDS JUSTICES OF HER MAJESTY’S COURT OF APPEAL. ASSISTED BY WALTER B. LINDLEY, M.A., OF LINCOLN’S INN, ESQ., BARRISTER-AT-LAW. AND WILLIAM C. GULL, M.A., OF LINCOLN’S INN, ESQ., BARRISTER-AT-LAW, VINERIAN SCHOLAR IN THE UNIVERSITY OF OXFORD, 1883. LONDON : SWEET AND MAXWELL, Limirep, 8, CHANCERY LANE, AND 8, BELL YARD, Daw Booksellers and Publishers. CARSWELL & CO. TORONTO. 1889. TV LONDON BRADBURY, AGNEW, & U0., PRINTERS, WHITEFRIARS PREFACE a Tue present work is the result of an attempt to in- vestigate the Law of Companies considered as a branch of the Law of Partnership. The Statutory Law of, Partnership was long in a state of transition ; but this state may be said to have termi- nated when the Companies act, 1862, was passed, con- solidating, repealing and amending most of the statutes then in force relating to Joint-Stock Companies. The Law of Companies has so developed since that time that it has become desirable to devote a separate volume to it instead of including it in a treatise on the Law of Partnership as in former editions. The Companies acts, 1862 to 1886, and the rules promulgated under their provisions are printed in an appendix; and, to facilitate reference to them, a separate index to their sections and clauses is inserted immediately before the general index, with which the work concludes. It must always be borne in mind, that in order to determine any legal question relating to companies, it is indispensable to attend closely to the language of the statutes by which they are governed; and although for convenience, the substance of various statutory enact- Lc, eU V1 PREFACE. ments has been shortly stated in the text, the reader is warned not to rely on these abridgments, but to consult the statutes themselves in every case which he may have to investigate. Great pains have been taken to render this Edition deserving of the favourable reception accorded to those which have preceded it. The separation of the matter in this treatise from that in the volume on Partnership already published has rendered it necessary to recast the whole work. The former arrangement has been followed in the main; but those portions which relate to Fraudulent Prospectuses, Borrowing Money, the Duties of Promoters, Transfers in blank, Forged Transfers, the amalgamation and reconstruction of Companies and Building Societies, have been so de- veloped as to be practically new. Other portions, especially that relating to Contributories, have been rearranged and rewritten. ‘The whole treatise has, in short, been carefully revised throughout, and adapted to the most recent decisions. Notwithstanding, however, the labour bestowed upon the work, and the anxiety of the author to render it worthy of the profession to which he has the honour to belong, the multiplicity and difficulty of the questions with which he has had to deal are such, that he dare not venture to hope that he has always avoided error, or that his work is free from serious faults: and although it has engaged his unremitting attention for more than thirty years, he is painfully aware that it is even now but an imperfect production, PREFACE. vil ‘ It only remains to add that this dition has been prepared by the author and his son, Mr. W. B. Lindley, and Mr. W. C. Gull. They have not only revised the sheets, but have examined the decisions on all the most difficult subjects, recast some of the portions which are new, made new indexes, and have thus greatly diminished the author’s labours and contributed to the utility of the work. Roya Courts oF JUSTICE, June, 1889. ANALYSIS OF CONTENTS. —_—_e—_ PREFACE INTRODUCTORY Book I.—Or THE FoRMATION OF COMPANIES AND OF THE ALLOTMENT OF SHARES Boox II.—OF tHe RIGHTS AND OBLIGATIONS OF COMPANIES AS REGARDS Non-MEMBERS Book IIl.—Or tHe RicHts anD OBLIGATIONS oF MEMBERS oF Clom- PANIES BETWEEN THEMSELVES INTRODUCTORY. 1. Nature of a company 2. Historical sketch of the law selating to companies 3. Different sorts or companies PAGE ll 143 298 OF THE FORMATION OF COMPANIES AND OF THE ALLOTMENT OF SHARES. General observations . CHAP, I.—AGREEMENTS TO TAKE SHARES. Sct. 1.—Applications for and allotment of shares . Sect. 2.—Of the prospectus and departures from it ‘ [As to fraudulent prospectuses, see infra, Ch. IIT. af ‘11 13 19 x ANALYSIS OF CONTENTS. Sect, 3.—Of the return of subscriptions to companies on the ground of failure of consideration . [As to fraud, see infra, Ch. ITT.] CHAP. II.—Or MEMBERSHIP. SEct 1.—Who can be members and herein of . Aliens. . Convicts . . Infants . . Lunatics . 5. Married women Pw be 6. Corporations and companies Secr. 2.—What constitutes membership and herein of membership by estoppel 1, As between the company and an alleged shareholder 2, As between an alleged shareholder and a creditor . Sot. 3.—Of registers of shareholders and certificates of title to shares and herein of the correction of registers. Sect. 4.—Of serip CHAP. III.—Or MrmBersHIP INDUCED BY FaLse STATEMENTS. Srct. 1.—Effect of false statements apart from statute 1. Requisites for redress 2. Remedy against the company . ; ‘ 3. Remedy against the individuals who made fis state- ments criminal civil Sect. 2.—Statutory enactments, 30 & 31 Vict. c, 131, § 38 CHAP. IV.—OFr DIFFERENT CLASSES OF COMPANIES. Class I. Cost-Book mining companies . Class II. Companies se Eeaa or privileged by the erown, viz, :— 1. Charlered companies . ; 2, Companies formed under the Letters patent act, 7 Wm. 4 & 1 Vict.¢ 73 . Class I1I,—Companies incorporated or privileged by some special act of Parliament :— 1. Companies not incorporated, but, em- powered to sue and be sued . 2. Incorporated companies PAGE 29 36 36 38 39 40 41 43 43 49 54 57 65 68 68 74 87 88 91 93 97 99 101 102 ANALYSIS OF CONTENTS. x1 PAGE Class 1V. Companies incorporated or privileged by a general act of Parliament : — 1. Banking companies formed under 7 Geo. 4.0.46. : 5 - 109 2. Registered companies - Lil 1, Companies formed and nopidienedd under the Companies act, 1862 . 117 2. Companies registered under the Companies act, 1862, but not formed under it . ; ‘ . 126 CHAP. V.—Or ILLEGAL CoMPANIEs. Scr. 1.—What companies are illegal . ‘ : . 180 note on the Bubble act of, 1719 (6 Geo. 1, c. ‘18) : . . 130 Sect. 2. Consequences of illegality . j ‘ ; : 5 . 139 BOOK. IL. OF THE RIGHTS AND OBLIGATIONS OF COMPANIES AS REGARDS NON-MEMBERS. CHAP. I.—GENERAL PRINCIPLES OF AGENCY AS APPLIED TO COMPANIES IN THE COURSE OF FoRMATION. Sect. 1.—Of the liabilities of promoters and subscribers for the acts of each other. 2 : j ; : ‘ ; . 148 Sect. 2.—Of the liabilities of companies for the acts of their promoters 146 CHAP. II.—GerneraL PRINCIPLES OF AGENCY AS APPLIED TO COMPANIES AFTER THEIR FoRMATION. Secr. 1.—Who are agents 2 Directors . : : ; ; 3 » . 155 . Agents who are not dicvetars : i ‘ . 159 Sect. 2.—Authority of agents of companies. ; : “ . . 161 1. Of acts which are ultra vires . : ; . 162 2. Of acts which are intra vires but tstepalas . «166 3. Of imperative and directory clauses in companies’ statutes and regulations. ; . 172 Sect. 3.—Of ratification by companies . : . 175 XH ANALYSIS Ol CONTENTS. PAGE CHAP. II].—Or tae Lraniiitras or CoMPANIES FOR THE ACTS OF THEIR AGENTS IN PARTICULARS CASES. Sucr. 1.—Cases not involving any tort or fraud and herein of Admissions . ' ‘ . . 183 Amalgamation . ‘ 183 Arbitration . 3 . 18d Bills of exchange and promissory notes. ‘ 185 Bill in Parliament : 5 : s 186 Bonds : ‘ ‘ ‘ ‘ . . 186 Borrowing money . i . 186 Cheques i . 196 Compromises . ‘ : é 196 Debentures : 3 i A . 196 Deeds . ‘ i ‘ ‘ ‘ 198 Extension of business § é ‘ « » 199 Indemnity . ‘ 7 ‘ , : . 200 Insurance . : ; ; ‘ . « 201 Investments and loans . : ‘ . 201 Judicial proceedings . : ; 3 . . 201 Leases . . ‘ : : ; : : 5 . 201 Mortgages and pledges. ‘ @ ‘ ‘ » . 202 Notice . : ‘ : ‘ i : ; 204 Purchases : ‘ ‘ ‘ . » . 205 Representations. ‘ ‘ ; ; : . 206 Sales : i 5 : 5 . 207 Transfer of business —. i : ; ; G . 208 Srcr. 2.—Torts : i ; F : ; . . 208 Sect. 3.—Frauds . ‘ ‘ ‘ ‘ : : : ‘ 4 . 211 CHAP. IV.—Or rH proper Form or Contracts witH COMPANIES AND ON THE EFFECT OF Form on LIABILITY. Scr. 1.—Of the rule requiring contracts of corporations to be under seal ‘ ‘ : ‘ ‘ ‘ ‘ , ; . 221 Scr. 2.—Statutory exceptions to the foregoing rule : : - . 225 Sect. 3.—Bills of exchange and promissory notes . : ; . 230 CHAP. V.—LiaBinity oF COMPANIES IN RESPECT OF ConTRACTS NOT BINDING ON THEM BUT OF WHICH THEY HAVE HAD THE BENEFIT . s ; é 4 : . . 2385 ANALYSIS OF CONTENTS. CHAP. VI.—Or tHe Lianinity or INDIVIDUAL Memperrs or CoMPANIES TO CREDITORS. Sect. 1.—Of the liabilities of directors 1. For their own acts 2. For the acts of each other Sect. 2.—Of the liabilities of shareholders 1. As to the extent of liability a) of liability at common law and of atienes to to restrict it b) of limited liability by stibisbs 2, As to the duration of liability «) commencement of liability b) termination of liability 3. On the commencement and ieiuduation of Viability in the case of amalgamating companies CHAP. VII.—Or AcTIONS BETWEEN COMPANIES AND Non-Members. Sect. 1.—Of actions by and against companies 1. Incorporated companies : 2. Companies empowered to sue said be aed. by ithe officers ‘ , 3. Other unincorporated companies Secr. 2.—Of set-off by and against companies Sect. 3.—Of execution against companies and shareholders on judg- ments against their companies 1. Execution against the company ; Boe 2. Proceedings against shareholders upon a judgment obtained against a company or its re officer generally 3. Proceedings against eiectiee of ancien companies under a) 7 Geo. 4, c. 46 b) 7 Wm. 4 & 1 Vict. c. 73. c) 8 &9 Vict. c. 16 d) other companies Note on procedure by scire facias . XU PAGE 239 244 245 251 254 255 258 262 265 270 273 276 278 280 xiv ANALYSIS OF CONTENTS. BOOK III. OF THE RIGHTS AND OBLIGATIONS OF MEMBERS OF COMPANIES BETWEEN THEMSELVES. CHAP. I—Or rau Ricut To TAKE ParT IN THE MANAGEMENT OF ComPANIES’ AFFAIRS Sect. 1.—Of directors and their powers . Sect, 2.—Of shareholders and their powers Sect. 3.—Of the powers of majorities Sect. 4.—Of the constitution and management of eras companies 1. Cost-book mining companies 2. Companies governed by 8 & 9 Vict. c. 16 3. Companies governed by the Companies act, 1862 CHAP. II.—Or rue Fiouctary RELATION OF PROMOTERS AND DIRECTORS TO THEIR RESPECTIVE COMPANIES Secr. 1.—Of promoters . Sect. 2.—Of directors and of their position as trustees Sect. 3.—Of the right of directors and others to indemnity CHAP. III.—OF THE CaPiItaL OF COMPANIES ; OF CALLS ; OF DIVIDENDS ; AND oF ACCOUNTS Sect. 1.—General observations on the capital of companies . 1. Borrowed capital 2. Share capital varying the amount of capital the division of capital into shares nominal and paid-up capital . preferential capital increasing capital . sc 3. Statutory enactments relating to the compli of particular kinds of companies the Companies clauses acts the Companies act, 1862 Reduction of capital Sect. 2.—Of calls : 1. The persons ye dion eallts can ‘be arg 2, The purposes for which they can be made for starting the company . for carrying on the business of the company . PAGE 298 303 314 325 327 233 345 363 379 391 391 392 392 393 394 396 397 399 401 402 407 408 409 409 411 ANALYSIS OF CONTENTS. XV PAGH 3. The manner of making calls. : ‘ ‘ . . 414 the resolution making acall : ‘ : . 415 the notice that a call has been made. ‘ 417 4, The persons liable to pay calls . 2... . 419 subscribers. j ‘ ‘ : ‘ : 420 shareholders. ‘ . 420 representatives of iibacei bens nal slawalscitens . . 425 5. Actions for calls . : ; ‘ : : : 427 Sect. 3.—Of dividends . : ‘ : 429 payment of dividends ont of capital 4 431 rights of preference shareholders . . . 435 actions for : ‘ : ‘ . 437 in particular companies , : . . 437 Sect. 4.—Of accounts . 1, Of the duty to keep and the right to inspect them 439 2. Of false and fraudulent accounts. ; 446 CHAP. IV.—Or SHareEs IN CoMPANIES ; THEIR TRANSFER AND SALE Secr. 1.—Of the nature of a share . . : : . 449 Sect. 2.—Ofthe amount ofashare . ‘ ‘ ‘ 5 455 Secr. 3.—Of a company’s lien on the shares of its members. . 456 Secr. 4.—Of charging orders on shares : ‘ : 460 Sxct. 5.—Of the transfer of shares . : : : 2 464 1. Of ordinary transfers : ; 3 464 2. Of transfers in blank ‘ é ‘ i 471 3. Of forged transfers : i . 483 and herein of estoppel by eardlesmnesa . : . 486 [as to transfers on death and bankruptcy, see disfee Ch. VII. & VIII.J Sxcr. 6.—Of sales of shares, and questions arising thereon. a “48% 1. Sales not on Stock Exchange AL 491 vendor’s obligations . ‘ : , s . . 4of purchaser’s obligations . ; : P . 492 fraudulent sales . : i . ‘ . 496 sales by auction . ; s 3 . 497 actions between buyer and salieg 4 . . 498 2, Sales on Stock Exchange . : 500 1. Of the vendor and of the broker or {obit who agrees to buy from him . ‘ . 503 2, Of the vendor and the ultimate purchaser . . 505 3. Of the vendor and undisclosed and _ inter- mediate purchasers. : d : . . 508 Xvi ANALYSIS OF CONTENTS. PAGE 4, Of the vendor and purchaser as regards their respective brokers 511 CHAP. V.—Or THe SURRENDER OF SHARES Sect. 1.—Generally-. : ; 7 : ; i . . O17 Sect. 2.—In particular companies : ; ‘ ‘ . 523 SHAP. VI.—Or tue FoRFEITURE oF SHARES. Right to forfeit . ; : : ‘ ‘ ; . 528 Exercise of the right ‘ : . 532 Effect of forfeiture . : ; : . - . 533 Relief against forfeiture ; 4 j 3 . . 534 CHAP. VII.—-Or tHE Errect of THE DEATH OF A SHAREHOLDER Secr 1.—As between the executors and the company . 7 . 536 Srcr. 2.—As between the creditors of the company and the executors. 539 Sect. 3.—As regards the separate creditors and legatees of the deceased 540 GHAP. VIII.—Or tHE Errect or THE BANKRUPTCY OF A SHAREHOLDER 549 Position of trustee and disclaimer byhim . . . 553 Proof by companies for calls, &c. ‘ : » . 554 CHAP. IX.—Or Actions BETWEEN COMPANIES AND THEIR MEMBERS AND BETWEEN THE MEMBERS THEMSELVES General observations . , : j ; . . 5359 Sect. 1.—Of the parties to sue and be sued . ; ‘ 2 . 562 1, Actions by and against incorporated siotivpuinien » . 562 2. Actions by and against public officers . , 564 3. Actions by one member on behalf of himself and flies 565 Secr, 2.—Of the rule that the court will not interfere in matters of internal regulation . 4 : ‘ , : . . 574 Sect. 3.—Of the rule that the court will not interfere at the instance of persons who have been guilty of laches 2 2 . . 582 “sor, 4.—Of particular actions : : é ‘ ; . 585 1. Specific performance 5 ‘ . . 585 2. Rescission of contract and rele of depocits : . 589 3. Account and discovery . x : ‘ ; . . dd 4. Injunctions . ‘ : : : i i . 596 5. Receivers ‘ : . : . ; ‘ 602 6. Mandamus . 7 . ‘ 3 . 603 7. Other miscellaneous em. : . i ; 606 ANALYSIS OF CONTENTS. BOOK IV. OF THE DISSOLUTION AND WINDING UP OF COMPANIES. —_+— PAGE InrRopucToRY .. 3 ae oe ee 608 CHAP. I.—Winpine up BY THE Court. Sect. 1.—The Court having jurisdiction over the winding up of the Company . : : : ‘ E ‘ 5 . 615 Secr. 2.—Companies which can be wound up by the Court, or subject to its supervision . : : : : ; - . 616 Sect. 3.—Persons at whose instance a winding-up order will be made 624 Srcr. 4.—Circumstances under which a compulsory winding-up order willbe made. ‘ : : - 628 1. Circumstances under shtick a wantin ip order can be made : r : - 630 2. Circumstances filivanelne the inert of bee Court . 635 Creditors’ petitions ‘ ‘ ‘ 5 . 635 Contributories’ petitions . 3 ; 3 . . 639 3. Summary of cases ‘ ; ‘ : : ; . 644 Srct. 5.—Proceedings to obtain a winding-up order and to discharge it, and to stay proceedings underit . a . 654 Appeals from, and staying proceedings under, Windinwp order é . A : . : ‘ . . 661 Sect. 6.—Effect of winding up as regards dealings with property, &c.. 664 1, Commencement of winding up : . . 664 2. Effect of winding up on dealings with sitorieaty : . 666 3. Effect of winding up on legal proceedings against the company and its members : 669 a) As regards companies formed and ‘egittane’ ee the act of 1862 . : . 672 b) As regards companies not ae =e lint: act . 682 L.c. * D ANALYSIS OF CONTENTS. Srcr. 7.—Proceedings under compulsory winding-up orders 1. Generally 2. Extraordinary powers of fis Court 3. Mode of enforcing orders and appeals from them Sect. 8.—The liquidators of the company 1. Provisional liquidators 2. Official liquidators Scr. 9.— Proof and payment of debts 1. General observations 2. Debts provable 3. Set-off Secr, 10.—Of contributories ' 1. The list of contributories 2. Who are contributories General observations. ‘ Classification of contributories . A. Contributories as present members 1. Duly constituted shareholders . As to persons who have not ceased £6 be setae but whose shares have been sold, surrendered, or forfeited, see infra, under head B. 2, Persons estopped from denying that they are share- holders 3. Persons who are bound by anteeiient to become shareholders 4. On the repudiation of chasis after the commencement of the winding-up a) no agreement 6) illegally issued shares . c) fraud . ‘ ‘d) non-performance of cousibions 5. Holders of paid-up sbares 6. Directors in respect of their audlifieation hates 7. Subscribers of the memorandum of association 8. Holders of scrip 9. Trustees and cestuis que trustent 10 Mortgagees . 11. Persons under inability a) companies b) married women and their scents ¢) infants d) lunaties . 12. Representatives a) executors, &e. . b) trustees in bankruptcy . PAGB 684 684 689 697 699 700 701 713 713 716 738 745 745 750 750 756 756 756 757 760 767 768 774 776 778 783 790 797 799 801 806 807 807 807 809 811 812 812 815 ANALYSIS OF CONTENTS. B, Contributories as past members General observations on past members : 1. Persons who have transferred their shares to others . a) where the transferee has been accepted by the company in the place of the transferor . b) where the transferee has not been so accepted a) where the sale has taken place before the commencement of the winding up . 8) where the sale has taken place since the com- mencement of the winding up. . . 2. Persons who have surrendered their shares to the com- pany . 3. Persons whose shares oon heen forfeited Sect. 11.—Calls for debts, &c. 1. Generally ‘ 2. Calls for debts 3. Calls for the ras of the rights of a con- tributories : 4. Limit of liability to wile a) present members b) past members 5. Set-off against calls . Srcr. 12.—Costs 1. As to costs paydlile by he company 2. As to the payment of those costs . Sect. 13.—Distribution of surplus assets and final dissolution of the company . eS Note on Building Societies CHAP. IL.—-Or Winpina tr VoLUNTARILY AND SUBJECT TO THE SUPER- VISION OF THE CouRT. Sect. 1,—Differences between the various methods of winding up . Szcr. 2.—Of winding up voluntarily Srcr. 3.—Of winding up subject to the supervision of the Court CHAP. III.—Or tHk AMALGAMATION AND RECONSTRUCTION oF Com- PANIES CHAP. IV.—On THE ABANDONMENT OF RAILWAYS AND THE WINDING-UP AND DIssoLUTION OF RaILway CoMPANIES. 1, Abandonment of railways : . ar 2, Arrangements between railway companies al their creditors b2 vil PAGER 816 816 823 823 831 833 836 837 842 846 846 849 852 853 855 857 859 859 864 867 871 874 875 886 891 901 904 vill ANALYSIS OF CONTENTS. ewer APPENDIX. — oo . Foreign Companies < . Industrial and Provident Societies . Benefit Building Societies . Chronological: List of Statutes . Table of Statutes now in force . The Companies acts, 1862—1886 Companies act, 1862 . Companies seals act, 1864 Companies act, 1867 Companies arrangement act, 1870 . Companies act, 1877 . " » 1879 . » 1880 . . » 1883 Companies colonial registers act, 1883 Companies act, 1886 . Orders and Rules— Rules of 1862 » 1868 . Life assurance companies acts— Life assurance companies act, 1870 Do., Amendment act, 1872 INDEXES, INDEX TO THE ABOVE AcTS AND RULES GENERAL INDEX . 4 ; . PAGE 909 915 918 923 931 933 1015 . 1017 . 1027 . 1028 . 1030 . 1082 - 1085 . 1035 . 1037 . 1041 . 1084 . 1095 . 1108 - 11il . 1145 (ix) AUTHORITIES REFERRED TO. a gs (Those pages in which a case is particularly referred to in the text, and is not merely cited, are in the following list denoted by an asterisk. The cases in each sheet have been brought down to the latest possible moment. It ought, however, to be mentioned, that no attempt has been made to collect cases decided since the establishment of the Law Reports, and not reported therein. An attempt has been made to collect under the name of each company the cases reported in connection with its winding up ; but the references to those cases will be found, not under the name of the company, but under the names of the persons to whom they relate ; for owing to the way such cases are frequently reported, it has been found impossible to make complete lists of them under the names of their respective companies. } PAGE A’ BECKETT, ex parte 724, 863, 866 Abbott v. Rogers ‘ 117 Aberaman Iron Works Peek (4 Ch. 532) Abercorn’s case 15, 792, 793, 794* Aberdeen Railway Co. v. Blaikie 328, 368 Abraham v. Hannay . i - 564 Abrath v. North-Eastern Railway Coy ee we ee TO BIB Accidental Death Insurance Co., (7 Ch. D. 568) : 251, 866 Allin (16 Eq. 449) Chappell (6 Ch. 902) Accidental and Marine Insurance Corp. ‘ ‘5 : 691 Bridger (4 Ch. 266) Briton Medical and General Life Association (5 Ch. 428) Neill (4 Ch. 266) Accidental Marine Insurance Co. v. Mercati 3 . 263 Acland v. Lewis. 3 452 Adair v. New River Co. 272 Adam Eyton, Limited Charlesworth (36 Ch. D. 299) Adams’s case 15, 520, 521, 761, 763, 769, 770, 839, 842 Adams v. Great Western Railway Co ‘ ‘ 38, 911 Adansonia Fibre Co. Miles (9 Ch. 635) Addams v. Ferrick 544 Addie v. Western Bank ofScotland 216 Addinell’s case : a tin 16 Addison’s case (5 Ch. 294) *782, 806, 838, 840 —— (20 Eq. 620) 853 Addison v. Mayor of Preston . . 280 — v. Tate . 295, 296, 297 PAGE Addlestone Linoleum Co. 334, 396, 401, 736, 742, 754, 787, 789 Adelphi Hotel Co., Limited ‘ Best (2 De G. F. & J. 650) Adley v. Whitstable Co. 308, 322, 433*, 580*, 597 Agar v. Atheneum Life Insurance Society 165, 168*, 174, 180, 199, 224 Aggs v. Nicholson 186, 226%, 234, 240 Agra Bank’s claim 726 — and Masterman’s Bank (ex parte (6 Ch. 206) 175, 708, 712, 881 —— (12 Eq. 509) . 712, 894, 898 —— (2 Ch. 391) 5 é 727 Anderson (3 Eq. 337) Cannan (7 Eq. 102) Tondeur (5 Eq. 160) Waring (W. N. 1866, 399) Agricultural Cattle Insurance Co. 519*, 838 — (1 Mac. & G. 170) . | 631 —— (3 DeG. F. & J. 194) . 686, 702 — (10 Ch. 1) 737, 866 Baird (5 Ch. 725) Belhaven (3 De G. J. & S. 41) Brotherhood (31 Beav. 365) Bush (6 Ch. 246). Dixon (5 Ch. 79) Official Manager (10 Ch. 1) Smallcombe (3 Eq. 769) Spackman (1 De G. & Sm. 599) — (1M. &G. 170) Stanhope (1 Ch. 161) Stewart (1 Ch. 511) — v. Fitzgerald 112, 422 A. G. v. Alexander . 91l — v. Birkbeck 1387 x AUTHORITIES REFERRED TO. PAGE A.G, v. Ely, Haddenham, and Sutton Railway Co. . » 581 —— v. Great Eastern Railway Co. 161, 168, 165, 315, 317, 318, 321, 581 v. Great Northern Railway Co. . 264, 319, 321, 580", 597 ——- v. Gould ‘ » & 318 ——- v. Higgins . 454 v. Montefiore . 450 —— v. Norwich ‘ : . 598 v. Shrewsbury Bridge Co. gee Aitchison v. Lee - 618 Alabaster’s case . "774, 864 Albert Average Association 702 Blyth and Co, (13 Eq. 529) Albert Life Assurance Co. (9 Eq. 706) . j . . 249, 251 —— (6 Ch. 381) . 710, 711*, 712 Bell (9 Eq. 706) Bleackley (9 Eq. 706) Cook (9 Eq. 703) Craig’s Executors (9 Eq. 706) Kerr and Stubbs (9 Eq. 706) Western Life Assurance So- ciety (11 Eq. 164) Wilson (9 Eq. 706) Albion Life Assurance Society 737, 853 Brown (18 Ch. D. 639) Sanders (20 Ch. D. 4038) Winstone (12 Ch. D. 289) Albion Steel Wire Co. . 681, 721 v. Martin . 349, 362*, 365, 368 Albrecht v. Sussman . : 37 Alchorne v. Saville 246, 251 Aldborough Hotel Co. Simpson (4 Ch. 184) Aldebert v. Kearns 184 v. Leaf . 249 Alderson v. Clay . 812 Aldham v. Brown . 32, 83*, 420 Aldred v. North Midland Railway Co. . 5 » 150 Aldridge v. Cato” . 252, 910 Alexander’s case 747*, ’326* Alexander v. Bearne . 451 —v. Worman . . 247 Alexander Water Co. v, Musgrave 911 Alexandra Hall Co, i 708 Alexandra Palace Co. (a6 Ch. D. 58). P . 265, 714 — (21 Ch. D. 149) 375, 432, 696 — (28 Ch. D. 297) - 852 Alexandra Park Co. Hart (6 Eq. 512) Sharon (W. N. 1866, 281) Alison’s case . ‘ . 736, 774, 849 Alivon v. Furnival . 5 » . 910 Allard v. Bourne ‘ 160, 205 Allen v. Graves . 504, 509, 510 v, London and South- Western Railway Co. . 209 —— v, Sea, Fire and Life Assur- ance Co. ; 185, 226, 234* Alliance Bank 727 Alliance Society . : 872 Allin’s case. : ‘ 829 PAGE Allison v. Herring . 272 Alma Spinning Co. Bottomley (16 Ch. D. 681) Almada v. Tirito Co. 334, 396, 401, ee 8 Amazon Life Assurance and Loan Co. Blackburn (3 Dr. 409) (8 De G. M. & G. 177) Hutchinson (25 L. J.) Ambergate, &c., Railway Co. v. Coulthard é P 4 . 416 393*, 399, 408, 418 416 v. Mitchell v. Norcliffe . 5 Ambrose Lake Tin Mining Co, 369%, 695 Clarke (8 Ch. D. 635) Moss (14 Ch. D. 390) Taylor (14 Ch. D. 390) Ambrose v. The Dunmow Union 222 Amsinck’s case ; + 767 Spottiswood (6 De G. M. & G. 345) Anchor Assurance Co. (5 Ch. 682) 260*, 735 Anchor Insurance Co.’s case (2 J. & H. 408) : . 261, 735 Anderson’s case (17 Ch. Div. 373) 21%, 69, 123, 124 —— (7 Ch. D. 75) 118, 783, 799 —— (8 Kq. 337). . , » 738 — (8 Eq. 509) . . 829 Andress’s case. 2 784; 785, 789* Andrew's case (3 Ch. ae . 821, 856 —— v. Burnes 861 — v. Ellison . 248 Andrews and Alexander’ s case (8 Eq. 176). ‘ ‘ 853 Andrews or Jones v. Swansea Cambrian B. B. Soe. 922 Angas’ case . 41, 563, 750, 807, 862 Angelo, re . . 451, 469 Angerstein, ex parte : . 861 Anglesea Colliery Co. 783, 785, 852, 869, 882 Anglo-African Steamship Co. 685, 688 Anglo-Australian Assurance Co. 641, 650* — v. British Provident, &c., Society . ‘ 169, 184, 201, 586* Anglo-Australian and Universal Family Life Assurance Co. Smith (1 Dr. & Sm. 118) Anglo-Californian Gold MiningCo. 662 Lewis . 807, 879 Anglo-Danish and Baltic Steam Navigation Co. far and Carrall (3 Ch. —= v, 23) Anglo- Die iiss &e., Colliery Co. 197, 401 Walker (6 Eq. 30) Anglo-Danubian Co. v. Rogerson 264 Anglo-Egyptian Navigation Co. . 659 Anglo-French Co-operative Society Pelley (21 Ch. D. 492) Angle. French Porcelain Co. v. arris : : z » . 62 AUTHORITIES REFERRED TO. X1 PAGE PAGE Anglo-Greek Steam, &¢., Co. 632, 650*, | Atheneum Life Assurance Society 659 te. Pooley 165, 166, 168, 171, 178, Carralli and Haggard (4 Ch. 174) 180, 193, 224, 237*, 247, 249, 250, Anglo-Italian Bank and De Rosaz 883 275, 737, 740 «Anglo-Moravian, &c., Railway Co. Atheneum Life Assurance Society Dent (8 Ch. 768) . Chinnock (Johns. 714) Forbes (8 Ch. 768) Durham (4 K. & J. 517) Watkin, ex parte (1 Ch. D. 130) Eagle Insurance Co. (4 K. & J. 549) Anglo-Romano Water Co. : Hollingsworth (3 De G, & Sm. 102) Wright (5 Ch. 437) Miller (3 Ch. D. 661) Anon. (2 Str. 696). . . 604 Painter (4 K. & J. 305) Apperley v. Page . : . 565, 593 Parbury (3 De G. & S. 43) Appleton v. Binks. » 240 Prince of Wales Life Assurance So. Appletreewick Lead Mining Co. . 784 (Johns. 633) Appleyard, ex parte . ‘ . 7136 Prince of Wales Life, &c., Assurance Apps, ex parte : ‘ . 767, 839 Co. (3 De G. & J. 660) Archer v. Harrison . . 920 Richmond (4 K. & J. 305) Argus Life Assurance Co. 184, 249, 261, Sheffield (Johns. 451) 839, 899 | Atkins’ estate. é ‘ . 661 Arkwright v. Newbould 70, 73, 90, 91, | Atkins v. Cooke . 661 92 | Atkinson v. Grey 544 Armitage v. Walker . 916 v. Pocock. . ‘ 38, 34 Armstrong’s case (3 De G&S. Attenborough’s case. _ 203 140) . - . 715 | Attorneys, ex parte the Society of 98 — (1 DeG. x Sm. 565) . 814, 815 | Attree v. Hawe . 4 " as abl Armstrong v. Burnet - 426, 5388, 544 | Attwood v. Small . 6 PTF —v. Normandy . : - 706 | Atwool v, Merryweather . 309, 572, Army and Navy HotelCo. . . 655 578, 576, 578, 579, 581 Arnold v. Mayor of Poole . 221, 265 | Audley Hall Cotton Spinning Co.” 365 Arnot’s case 705, 752, 760, 762, 781, | Augusta (Bank of) v. Karle . 910 784, 788*, 795* | Auld v. Glasgow Working Men’s Art Engraving Co. . 681 Building Soc. 320, 524, 872, 918, 920 Arthur Average ‘Association 621, 623, | Austin’s case (2 Eq. 485) . 778, 792, 662, 722, 849, 8538, 859 793, 795* Hargrove & Co. (0 Ch. 542) — (W.N. 1867, 138) . . 839 Arthur v. Midland Railway Co. . 59 | Austin v. Guardians of Bethnal Artistic Colour Printing Co. . 676 Green . : 220, 223 Fourdrinier (21 Ch. D. 510) Australasia, Bank of ». Harding. 101 Ashbury’s case Z . 666, 672 v. Nias - 101 Ashbury Railway Carriage Co. v. Australian Steam Clipper Co. v. Riche 119, 163, 164*, 176, 315, 334 Mounsey . . 191, 199, 203, Ashbury v. Watson 322, "334, 344, 315, 317, 398, £06 896, 405, 435, 470, 584 | —~ Direct Steam Navigation Co. Ashby v. Blackwell . 483 (20 Eq. 325) . 674, 727 Ashley’s case : * 85, 776, 777 Miller (5 Ch. D. 70) Ashpitel v. Sercombe_. 31, 32, 33 | —— Steam Ship Co. (4K. &J.407) 264 ean v. Lord Langdale . 451, 452 | Ayers v. South Australian Banking Ashurst v. Fowler ; - 378 Co. . - 163 —— v. Mason. P - 876, 377, 378 Spey Railway Co. v. Mount 423* Ashworth’s case. 275 :. Thompson . é . 59, 423 Asiatic Banking Corporation « 7Al | Ayre’s case i : . é 80 Agra and Masterman’s Bank, (6 Ch. 206) Collum (9 Eq. 236) Royal Bank of India (7 Eq. 91) Baces, ex parte ; 487, 522, 840 (4 Ch. 252) Baglan Hall Colliery Co. . 783, 798 Symons (5 Ch. 298) Bagnall v. Carlton 347, 355*, 357, 359, Askew’s case (4 Burr. 2200) 4 98 361, 362 —— (9 Ch. 664) . - . 122, 123 | Bagnalstown and Wexford Rail- Aslatt v. Farquharson . . . 276 way Co. . : . 198, 505 Asphaltic Wood-pavement Co, Bagshaw, ex parte . 184, 323, 891, 896 Lee and Chapman (30 Ch. D. —— vv. Eastern Union Railway 216) Co. . 29, 168, 320, 321, 571, 572, Association of Land Financiers 598 (10 Ch. D. 269) . : . 703 | Bahia and San Francisco Railway —— (16 Ch. D. ae : 717, 721 Co. : : . 54, 64, 123, 484 Aston, re. ‘ 6, 138, 135, 487, 488 | Baillie v. Goodwin & Co. ~ . 909 xii PAGE Baily, ex parte (3 Ch. 592, and 5 Eq. 428) 15, 27*, 122, 769, 772 ——(15 Jur. 29)... S:529, 848 v. Birkenhead, &c., Railway Co. . 412, 577*, 600 v Macaulay _ . 145 —— v. Universal Prov. Life Asso- ciation . . 45, 54, and Leethany s case (8 Eq. 94) Bain v. Whitehaven, &c., Railway Co. . 58, 105, 106 Bainbridge v. Smith 599, 794 Baird’s case 426, 812, 848 Baird v. Ross 3 ‘i 29, 32, 33 Baker's case (1 Dr. & Sm. 55) 198, 226, 328, 382*, 384, 388, 811 Baker, ex parte(3 DeG, & Sm. 243) 686 v, Plaskitt 18, 488 v. Sutton . 452 Baldwin v. Lawrence . 440, 569 Bale v, Cleland 88, 431, 433 Balfour v. Ernest 65*, 171 Balgooley Distillery Co. 402 Ball, ex parte 555 Banco de Portugal Hooper (11 Ch. D. 317) Waddell (5 App. 161) Bangor and Port Madoc Slate Co. 400, 435, 869 Bank of Augusta v. Earle : 910 Bank of Australasia v, Breillat 190 v. Harding . 101, 266, 910, 913 v. Nias 101, 266, 294, 910, 913 Bank of England v. Anderson 136 ¥, Booth 4 » 186 ——v. Johnson 60, 110, 287, 288, 289 Bank of Gibraltar and Malta . 640 651*, 693 Bank of Hindustan v, Alison 17, 53*, 184, 774, 892 Bank of Hindustan, China, &c. Alison (15 Eq. ’394) (9 Ch. 1) Anderson (8 Eq. 509) Campbell (9 Ch. 1) (16 Eq. 417) Croom (16 Eq. 417) Fricker (13 Eq. 178) Harrison (6 Ch. 286) Higgs (2 H. & M. 657) Hippisley (9 Ch. 1) (16 Eq. 417) Kintrea (5 Ch. 95) Levick and others (5 Eq. 69) Los (11 Jur. N. S. 661) Martin (2 H. M. 669) Mitchell (5 Ch. 400) Smith (3 Ch. 125) Swan (10 Eq. 675) Bank of Hindustan, &c. v. Eastern Financial Association @ 710 Bank of Ireland ¢. Evans’s Charity Trustees 198, 224, 483, 486 —— v. Perry : 627 Bank of London, &c., Insurance Association . 114, 617 Part (10 Eq. 622) AUTHORITIES REFERRED TO. PAGE Bank of London and National, &c., Association Muggeridge (10 Eq. 443) Bank of London v. Tyrell 348, 357, 361 Bank of Montreal v. Bathune . 910 Bank of New South Wales v. Owston . . 210 Bank of Scotland v. Fenwick. . 295 Bank of South Australia v. Abra- hams . 192 Bank of Turkey ». Ottoman Co. . 372 Banks v. Parker . 569 Bannatyne v. Direct Spanish Tel. Co. . 897, 408, 406, 435, 602 Banner v. Johnston 698, 727 Banque Jacques Cartier v. La Banque, &c., de Montreal . 205 Banwen Iron Co. v. Barnett 111, 129, 422 Barangah Oil Refining Co. Arnot (86 Ch. D. 702) Barber’s case (1 De G. & S. 726). 687 —— (5 Ch. D. 963) : . 798, 795 Barber, ex parte(1 Mac. & G. 176) 623, 646*, 662, 663, 684 ——re(15 Jur. 51) . 5 ‘ 16 Barber & Co. . . 230, 729 Agra Bank (9 Eq. 725) Barclay’s case 66, 133, 464, 468, 487, 619, 621, 622, 799 Barclay v. Wainwright 3 . = 645 Bardwell v. Sheffield Waterworks Co. . . 481, 432 Bargate v. Shortridge 52, 56*, 299, 423, 466, 560 Barge’s case 744, 786 Baring v. Corrie. . 500 Barker v. Allan . 201, 243, a ». Buttress ; 540 v. Lyndon . . . . 145 v. Stead . ; 5 » . 145 Barned’s Banking Co. . Andrew (3 Ch. 161) Andrews (4 Eq. 458) Contract Corporation (2 Ch. 350) (3 Ch. 105) Coupland (8 Eq. 472) (5 Ch. 67) Forwood (5 Ch. 18) Helbert v. Banner (L. R. 5 H. L. 28) (6 Eq. 509) Joint Stock Discount Co. (19 Eq. 1) (10 Ch. 198) Kellock (3 Ch. 769) Leech (6 Ch. 388) Peel (2 Ch. 674) Shrapnell (M.R, am 1867) Thornton (2 Ch. 171) 692, 705 Barned v. Hamilton . , . 498 Barnes v. Addy 3 - . 862 —— v. Thrupp 672 Barnet v. Roi Metropolitan Junction Railway Co. Nicholay’s case (15 Jur. 420) Barnett’s case (18 Eq. 507). 521, 841 (19Eqg. 449) . . 74D Barnett, Hoares & Co. v. Smith . 483 AUTHORITIES REFERRED TO. PAGE Barnett, Hoares & Co. v. South London Trams Co. . 154, 161, 183 206, 218* Barnett v. Lambert 143, 145, 606 Barnewall vr. Sutherland . . 268, 269 Bar. n de Beville’s case : - 798 Baron Liebig’s Cocoa Works, Limited . 688 Baroness Wenlock v. River Dee Co. ‘ 112, 238*, 386 Barrett's case (3 DeG.J. & Sm. 30) . . 16, 80, 82*, 218, 214, 762 — (4 De G. J. & Sm. 416) 46, 742, 801, 803, 839 Barrett v. Blunt . 7 145 Barrow’s case (14 Ch. D. 432) 64, 369, 785, 787, 789 — (3 Ch. 784) . ‘ . 847 Barrow-in-Fumess Investment Co. 785 Barrow Haematite Steel Co. 403 Barry v. Croskey. + 218*, 488 v. Navan and King’ s venney Railway Co. : 517 Barry Railway Co... . 904 Barry’s representatives, ex parte . 860 Bartlett v. Pentland 294 Bartley, ex parte. 861 Barton’s case . 322, 528, 529, 534, 761* trust. , 545, 546 Barton v. Hutchinson. 149, 262 —— v. London and North-West- ern Railway Co. . 483 — v. North Staffordshire Rail- way Co. 483 Barwick v. “English Joint Stock Bank . . 207, 214, 217* Bass’s case . 703, 708 Bastenne Bitumen Co. . 652* Bastow & Co... 676, ae Batard v. Hawes . Bateman ~. Mayor of Ashton-under- Lyne 186, 199, 598 — v. Mid Wales Railway Co. . = 185 — vv. Service ff. 115, 909, 912, 914 Bates v. Mackinley_ . . 547 Bath’s case 196, 319, 374, 521, 842, 845, 856 Batten v. Wedgewood Coal Co, 865 Batty v. McCundie : » . 284 Bexier vy. Earl of Portsmouth . 40 Bayley v. Manchester and Sheffield Railway Co. ~ « 209 v Wilkins . 513* Bayliffe v. Butterworth . 513* Bear v. Bromley . : é . 117 Beardshaw, ex parte 766, 861 — v. Londesborough 670, 706 Beattie v. Lord Ebury 196, 242, 8 805, 806 Beaujolais Wine Co. . : 887 Beaumont v. Meredith . . 575 Beavan v. McDonnell . é 40 Beck’s case 17, 25, 26, 769, 773, ie Beck v. Dean. é ». Kantorowicz . "346, 352%, ae Beckitt v. Bilbrough . . 473, 499 Bedford v. Bagshaw 88, 496 Bedford Railway Co. v. Stanley . 151 xl PAGE Beech »v, Eyre. ‘ z . 266 Beeching v. Lloyd =. 568 Beer v. London oe Paris Hotel Co. . « = 1228 Beldon v. Campbill 192 Belfast, &c. Railway Co. v. Strange 424 Belhaven’s (Lord) case 521, 842, 845 Bell's case (4 App. Cas. 550) 42, 80%, 86, 738, 802, 808, 809, 810 (22 Beav. 35) 80*, 86 Bell v. Francis ‘: . 145 v. London and North- West: ern Railway Co. . » . 183 —— v, Mexborough . 589% v. Reid . 37 Bell and Lang’ $ case i. App. ‘Ca. 547) 758 Bellairs v. Tucker . ‘ : 69, 89* Beman v. Rufford 183, 322, 571, 580*, 598, 892, 893 Bendy v. Harding . ‘ 2 a 3295 Benham’s case 840 Bennett’s case Bennett v. Blain. Benson v. Paull 280, 603 Bent v. Young . 918 297, 377, 519, 839 452 Bentham Mills Spinning Co. 459, 468, 538, 552 Bentinck (Cavendish) v. Fenn . 369 Bentley, ex parte ‘ . 785 v. Bates . 3 3 . . 550 v. Craven . . 860 Beresford’s case 529, 843 Berkeley v. Standard Discount Co. 265, 595 Bermingham v. Sheridan 466, 491, 493, 499, 505, 511 Bernard’s case . 82%, 84, 759, 860 Berne (The City of) v. Bank of England . ‘ . : < Besley, ex parte 623, 698, 765, 766 Bessemer Steel and Ordnance Co. 711 Best’s case (2 DeG. J. & Sm. 650) 14, 15, 769 Best, ex parte (1 Sim. N. 8.193) 747 v. Pembroke F . 697 Betts v. De Vitre . 209, 240, 265 Beulah Park Estate Sargood (15 Eq. 43) Bevan v. Waterhouse . . 644 Beverley v. The Lincoln Gas Co.. 222 Beville’s case (Baron de) sa £98 Biederman v. Stone 494,501, 514 Bigg’s case (1 Eq. 309) . . 538, 844 Bigge’s case (5 Jur. N. 8.7) 82, 84%, 215 Bignold, ex parte 174, 381, 382, 387*, 389, 594, 851 Bill v. Darenth, &c., Railway Co. 332 ». Richards. 284* —— v. Sierra Nevada, &e., Co. 324, 601, 913 Bilton Hotel Co. : d 792, 793 Birch’s case 59, 60, 94, 256, 524, 748, 840 Birch Torr & Vitifer Co. ; Lawton (1 K. & J. 204) X1V AUTHORITIES PAGE Bird’s case (4 De G. J. & Sm. 200) 15, 761, 769, 791, 796 (1 Sim. N. S. 47) 111, 129, 761, 862 Bird v. Bird’s Patent Sewage Co. 894 Birkbeck Life Assurance Co. é Barry (representatives of), (2 Dr. & Sm. 321) Birkenhead, Lancashire, &c., Rail. Co. v. Brownrigg 59, 105, 425 v. Cotesworth 426, 427 —— v. Pilcher 39, 422 ». Webster . é . 416 Birmingham Banking Co. (3 Ch. 651) . ~ 156, 175, sn —— (6 Ch. 83) ‘ : Birmingham, Bristol, &e. , Railway Co. v. Locke . 49, 51, 58, 106, 421, 533, 5384 — vv. White 440 Birmingham and Lichfield Rail- way Co. (18 Ch, D.155). . 79 — {28 Ch. D. 652) . 102, 904 Bishop’s case 825, 828 Black v. Homersham . 490, 498 Black & Co.’s case , 742, 744, 754, 858, 885 Blackburn’s case. 20, 25, 84, 749, 772 Blackburn Benefit Building’ Society 872 —— v. Cunliffe, Brooks & Co. 176, 178, 187, 189, 190*, 191, 237*, 386, 919 Blain v. Agar. 593 Blake v. Mowatt - 592 Blake’s case : 81*, 842 Blakeley’s executors, exe porte . 587, 812, 848 Blakely Ordnance Co. 741* Brett (8 Ch. 800) — (6 Ch. 800) Creyke (5 Ch. 68) Lumsden (4 Ch. 31) Metropolitan and Provincial Banks (8 Eg. 244) New Zealand Banking Co. (3 Ch. 154) Needham (4 Eq. 135) Stocken (3 Ch. 412) (5 Eq. 6) Blann v. Bell . $ 542 Bleackley’s case 733 Blewitt v. Gordon - 266 Bligh v. Brent 452, 453 Blisset v. Daniel 318, 532 Blood, ex parte. «735 Bloomer #. Union, &c., Coal Co, - 192 Blount v. Hipkins . . 426, 544 Bloxam’s case (4 De G. J. & S. 447) 15, 770 — (36 L. J. Ch. 687) 691, 692 Bloxam v. Metropolitan Cab Co.. 421, 497, 592, 597 —— v. Metropolitan Railway Co. 430, 432, 442, 568, 571, 580, 597 Bluck v. Mallalue . 328, 388, 572, 586, 597, 600 Blundell, ve . ‘ . - 861 —— v. Winsor 2, 131, 1382*, 133* REFERRED TO. PAGE Blyth’s case 5 ; 783, 787 Blyth & Co.’s case . 5 - 761 Bodmin United Mines, 94, 95, 524, ye 840 Bog Lead Mining Co. v. Montague 45, 119, 129 Bolckow, Vaughan & Co. v. Fisher 595 Bolingbroke (Lord). v. Local Board of Swindon ; . 209 Bolognesi’s case. Z 881 Bolton Benefit Loan Society - 620, 628, 648* Coop v. Booth (12 Ch. D. 679) Bolton v. Madden . » .« 809 Bonar v. Mitchell 109 Bonelli’s Telegraph Co. . Collie (12 Eq. 246) Booker, cx parte 200 Booth v. Bank of England | 136 eee) of Hackney PENEEEG: 0. (3 Ch. D. 669) . 203 Potion of St. Marylebone és Buck (3 De G. & Sm. 267) Joint Stock Banking Co. Stanhope (3 De G. & Sm. 198) Bosanquet v. Graham . 283, 295, 297 v. Ransford 286 —— v. Shortridge 55*, 59, 110, 158, 288, 289, 423 -——— v. Woodford . » 110 Boston Deep Sea Fishing Co. v. Ansell. i 147, 149, 367 Boston, Newark, and Sheffield Railway Co. Williams (1 Sim. N. “s. 57) Boswell v. Gurney Bosworthon Mining Co. . 619, 646%, 654%, 659 Jones (6 Ch. 48) Bottomley’s case . 157*, 409, 582, 843 Bottomley v. Fisher 233* Bouch v. Sevenoaks Railway Co. 436 v. Sproule . « 898, 545%, 546 Boulter v. Peplow . . . 606 Boulton, ca parte 2 ‘ 205 Bourne v. Freeth 21, 144, 393 Bousfield v. Wilson 140, 488, 516 Boussmaker, ex parte. 37* Bowen v. Brecon, &c., Rail, Co. 194 Bowen & Martin’s case 767 Bowes v. Hope Mutual Life As- surance Co. 2 é 638 Bowlby v. Bell 453, 498, 513 Bowring v. Shepherd . 493, ‘501, "506, 510 Bowron, Baily & Co. Baily (5 Eq. ve) Box, re. 544 Boyce v. Green . - 453 Boyle v. Bethos Llantwit Coll. Co, 675, 677, 706, 883 Brackenbury v. Brackenbury . 140 Bradford Banking Co. v, Bri & Co. . 129, "450%, 477, 478 —— Navigation Co. 618, 647*, 658, 662 —— Tramways Co, - 102, 904 AUTHORITIES REFERRED TO. XV PAGE Bradley v. Eyre . 283, ae, 295, 297 — v. Houldsworth . 453 —— v. Warburg 295 Bradshaw, ex parte Braham v. Beachim Bramah v. Roberts 192, 197, 665 113 155, 185, 244 Brampton v. Longtown Rail. Co. "746, 904 Addison (20 Eq. 620) Shaw (10 Ch. 177) Brander v. Brander 545 Branley v. South- Eastern Railway Co. « 913 Breckenridge’s case 122, 125, 748 Breech Loading ny Co. . Eq. 453). 690 Calisher (5 Eq. 214) Merchants’ Co. (4 Eq. 453) Wragge (5 Eq. 284) Bremner v. Chamberlayne . » 145 Brentford and Isleworth Tram- ways Co. ‘ 278, 618, 905 Brentwood Brick and Coal Co. 727 Brereton v. Edwards. » . 461 Brett’s case (6 Ch. 800; 7 Ch. 200; and 8Ch. 800) 821, 856, 857, 867* 792, 793, 795 (25 Ch. D. 288). Brettell v. Dawes * 7 699, 670 Bridger’s case (4 Ch. 266) . 5384, 845 (5 Ch. 304) é y - 782 Bridgwater Navigation Co. . 396, 405, - 434, 455, 679, 681, 717, 721, 868*, 869, 870, 880, 960, 966 Bridport Old Brewery Co. - . 306 807, 877%, 879, 887 Briggs, ex ae (1 Eq. 483) 26, 28, 85 (8 W. R. 110). : 722 Bright’s case . . 765, 766 14, 623, 626, 764, 765*, 766, 901 Brighton Arcade Co. v. Dowling - 428, 744, 748, 884, 885 Bright v. Hutton — Club and Norfolk Hotel Co. 638, 686 — Hotel Co. i 636, 652* — Lewes, &c., Railway Co. 656 Conway (5 De G. & Sm. 150) Hirschel, ex parte (15 Jur. 942) Bristed v. Wilkins. . 460, 462 Bristol and North Somerset Rail- way Co. « 905, 906 Bristol and Taunton, &e. , Co. v. Amos. 3 : 57 Britannia Mills Co. 1029 British Alkali Co. Guest (5 De G. & Sm. 458) British Alliance Assurance Corpo- ration . ‘ 634, 635 British and American Steam Navi- gation Co. . % Goldsmid (16 Beav. 262) | Meyer (16 Beay. 383) Pearse (8 Eq. 506) Ward (10 Eq. 659) British and American Telegraph Co. v. Albion Bank . . 200, 205 PAGE British and American bee Co. v. Colson . ‘ 14 Fowler (14 Eq. 316) British Empire Co. v, Browne British Farmers’ Pure Linseed Cake Co. : 64, 395, 1022 British and Foreign Cork Co. Leifchild (1 Kg. 231) British Guardian Life Assurance Co. ‘ : 694, 695, 696 British Imperial Corporation . 749, 693 British India Steam Navigation Co. v. Commissioners of Inland 226 Reryenue . : 196 British Mutual Banking Co. v. Charnwood Forest Railway Co. . 209, 217*, 484, 486 British Nation, &c., Association, ex parte the Liquidators of (8 Ch. D. 679) . 43, 183, 207, 806, 807 British Nation Life Assurance Association (14 Eq. 492) 703, 878, 879, 890 British Provident Life and Fire Assurance Co... ‘ 641, 653* Coleman (1 DeG. J. & S. 495) Collins (1 Dr. & Sm. 113) De Ruvigne (5 Ch. D. 306) Grady (1 De G. J. & S. 489) Lane (1 De G. J. & S. 504) Orpen (9 Jur. N. S. 615) Rumney (4 N. R. 48) Stanley (4 De G. J. & S. 407) Teete (4 N. R. 48) British Provident Assurance So- ciety v. Norton 318, 328, 382 British Provident and Anglo-Aus- tralian Assurance Cos. ~ . 735 British Seamless Paper Box Co. 370, 695 British Sugar Co. 61, 62, 122, 306, 415 708, 129 Briton Life Association 857, 898 Briton Medical Assurance Associa- tion . 74, 676 Briton Medical and General Life Association : 126, 940, 955 British Waggon Co. v. Lea & Co. . Brittain, ex parte 766, 862 Broadbent, ex parte. a es 3000 Brockwell’s case 79*, 80*, 82, 86, 87, 861 Bromley v. Williams 566 Bromsdon v. Winter . . oo. Bl Brooke & Co. (G. F.) . . 660 Brotherhood’s case, 179, 518, ‘519°, 522, 584, 822 Broughton v. Hutt . ‘ » . 818 v. Manchester and Salford Waterworks Co. 136, 185, 220 Brown’s case (9 Ch. 102) 788*, 792, 793, 794* (19 Beav. 97) 316, 758, 831, 841* Brown’s claim (9 W. R. 366, & 10 ib. 662) . . :180, 287%, 735 Brown, Ex parte (8 De G. & Sm. 590) . : ‘ Z os « 3 XV1 AUTHORITIES PAGE Brown, ea parte (12 Ch. 823). 736, 742 : (8 De G. M. & G. 607) 839 Bayley & Dixon (18 Ch. D. 649) 680 —— v. Andrews . 156 —— v. Black . 509*, 511 v. Byers 135, 192, 244 —v. Dale . 3 . 867 v. Hall 513 v. Holt . 3 4 132 x London and North- Western Railway Co... 38 v. Savage - 205 Browne wv. Collins . Q 430, 544, 545 v. La Trinidad 148, 157, 158, 176, 302, 305, 567, 602, 792 —— v. Monmouthshire, &c., Co. 480, 572, 600 Brownlie v. Campbell. . 70, 241 v. Russell . . 524, 872, 918, 920 Browning v. Great Central Mining Co. . 149*, 160* Brumfitt v. Bremner . . 178 Brunton’s claim : . 740, 741 Bryon v. Metropolitan Saloon Omnibus Co. 190, 191*, 317, 398, 406, 600 v. Warwick and Birming- ham Railway Co. 372, 571 Buchan’s case’ 426, 549, 538, 806, 814 Buck v. Buck 131, 140, 487, 516 v. Robson 813, 848 Budd’s case 826%, 864 Budden, ex parte . 553, 815, 816 Buenos Ayres Railway Co. ». North Railway Co. of Buenos Ayres. 912 Bugg, ex parte 46, 746, 802*, 805, 860 Bulkeley v. Schutz < 115, 912 Bullock v, Caird : - 910 v. Chapman 60, 61, 596 Bulmer’s case 813, 814 Bulmer v. Norris 452 Bult v. Morell 185, 231, 232* Bunn, ex ne (3 Jur. N. 8. 1013 690 Bunn’s case (2 De G. F. “x a 2715). « - 17, 201, 759, 781* Burge, cx parte (1 De G. & S. 588) 617, 901 Burge's case (2 i.e Hi, 441) 178, 180, 199, 236, 864 Burgess’s case (15 Ch, D. 507) 755*, 776, 777 Burke v. Dublin Trunk Railway Co, ‘ 291, 292, 296 ——v. Lechmere . ‘ 19, 106 Burkinshaw v. Nicolls 64, 396, 783, : 785, 787 Burlinson’s case 42, 808 Burmester 2. Crofton 296 v. Norris 192 —— v, Von Stentz 268 Burnes v. Pennell 29, 49*, 51, "84, 87, 88, 154*, 155, 161, 206, ‘215%, 217", 298, 421, 433 Burns y. Poulsom 209 REFERRED TO. PAGE Burnside v. Dayrell 35, 146 Burstall v. Beyfus . . 3862 Burt v. British Nation Assurance Co. : . 520, 568, 584* Burton, ex parte . : a EEG. — vv. Tannahill . . 266, 268 Bush’s case (6 Ch. 246 be L. R. 6 Ho. Lo. 37) 52, 316, 466, 749, 758, 822, 824, 832, 841 —(9Ch. 554). °°... 788 Busk’s case , : é 518, 840 Butchart v. Dresser é ‘5 317 Butler v. Cumpston . : 805, 809 — v. Manchester and Sheffield Railway Co. . « « 209 v. Withers . 450 Butt v. Monteaux 135, 139, 565, 593, 912 Bwlchy Plwm Lead Mining Co. v. Baynes . 422 Byrne v. Van Tienhoven . i 4 Capiz Waterworks Co. v. Barnett 637 Cadman vy. Cadman . s . 541 Caerphilly Colliery Co. Pearson (5 Ch. D. 336) Caillaud’s, &., Co. v. Caillaud . 264 Calcutta Jute Mills Co. v. Nichol- son ‘ e . 38, 911 Caldecott, ex. parte 458, 550, 555 Calder, ke. .» Nav. Co. v. Pilling 308, 322 Caldicott v. Griffiths . i . 606 Caldow v. Pixell . ‘ wp 198 Caldwell v, Ernest , : » #12 Caledonian and Dumbartonshire Railway Co. v. Magistrates of Helensburgh 151, 152 Calisher’s case . . ; 742, 744 Callao Bis Co. . é a . 896 Calthrop, re . a ‘ . . 550 Cambrian Mining Co. . : « 690 —— Railway Co. . 904, 905, 906 Goleman (3 De G. & S. 159) Steam Packet Co. . 716 Cambridge and Colchester Rail- way Co. Marsh (1 M. & G. 302) Cameron Coalbrook, &¢., Co. 692, 849 Bennett (5 De G. M. & G. 284) Hunt (32 Beay. 387) Walter (3 De G. & S. 2) Campbell’s case (9 Ch. 1) 58, 344, 736, 175 77 —— (4 Ch. D. 470) 197, 369, 401, 475, 861 Campbell v, Compagnie Générale de Bellegarde 675, 677 --—v. London and Brighton Railway Co. . « » B99 —--v. Maund . 311 a Land Reclaiming, &e., 0. Coventry & Dixon (14 Ch. D. 660) AUTHORITIES REFERRED TO. PAGE Canadian Native Oil Co, Fox (5 Eq. 118) Canadian Oil Works Corporation. Hay (10 Ch. 593) Cane v. Chapman . , - 280 Cann v. Willson ‘ . 70, 89 Cannan’s claim 703 Cannock and Rugeley Colliery Co. Harrison (28 Ch. D. 363). Cannon, ex parte. 366, 389, 736, 742 v. Trask : 304, 309 Canwell, ex parte 550, 556, 848 Cape Breton Mining Co. (29 Ch. D. 795) . 346, 350, 358* —— (19 Ch. D. 77) 695, 815 v. Fenn : 708 Cape’s Executor’s case. 1254, 823* Capel & Co. v, Sim’s Composi- tion Co. . 92 Capital Fire Insurance Associa- tion (21 Ch. D. 209) 628, 649* —— (24 Ch. D. 408) . 668, 692 Capper, - parte (1 Sim. N. 8. 178). 765, 766, 861 (3 De G. & S. 1) 626, 627, 653 Capper’s case (3 Ch. a 123, 810, 828 Car v. Griffith . 10 Card v. Carr . : . : 156, 922 v. Hope : . 809 Carden 2. Poxenl Cemetery Co. 146, 363 Cardiff and Caerphilly Iron Co. Gledhill (3 De G. F. & J. 713) Cardiff Coal Co. . ‘ 414, 787, 854 v. Norton 278, 414, 694, 787, 854 Carew’s case (5 De G. M. &G. 04) « # ‘ » . 664 ——(7 De G M.& G. 43) 818, 851 Carew’s claim (24 Ch. D. 85) 171, 193 Carew’s Estate Act (No. 2), re (31 Beav 39) . : - 204 Cargill v. Bower . 3 "74, 89, 244 Caribbean Co, Crickmer (10 Ch. 614) Carlen v. Drury . 245, 575*, 600 Carling’s case . 368, 781, ee 788, 790. , 795 Carlisle Banking Co. v. Thompson * 920 Carlisle v, South-Eastern Railway Co. . 571, 574*, 580, 597 Carmarthen Railway Co. v. Wright 45, 46, 50, 59, 107, 420, 421 Carmichael’s case wd; 163, 767, 770 Carnelley, ex purte . : . 674 Carpenter’s and Weiss’s case . 698 Carr v. Griffith 462, 546, 547 ». London and North- West- ern Railway Co. : 48, 487 Carr’s case. . . 734 Carralli_ and Haggard’s ‘claim (4 Ch. 174) : 57, 748 Carriage Co- -operative Supply “As- sociation 367, 875, 376, 679, 696, 697, 744, 786, 790 Clemence (23 Ch. D. 154) Carrick’s case . “ . 765, 766 xvi PAGE Carroll v. Kennedy . 671 Carron Co. v. Maclaren . . 87, 912* Carshore v. North-Eastern Rail- way Co. . 483 arta Para Mining Co. 661 Carter’s case s - 696 Carter v. Dean of Ely 220, 221 Cartmell’s case 156, 161, 178, 467, 518, 522, 829 Castellan v. Hobson 509, 511 Castello’s case . . 811, 828 Catchpole v. Ambergate, &c., Railway Co. . 68, 584 Cathcart, re 5 . 691 Catholic Publishing Co. 385, 637, 638, 648* Cavendish Bentinck v. Fenn . 358, 695 Cefn Cilcen Mining Co. : 191 Central Darjeeling Tea Co. 710 Cercle Restaurant Castiglione Co. v. Lavery 637 Cesena Sulphur Co. v. Nicholson 38 911 Chadwick, ex parte . é 693, 705 Chalk, Webb & Co. v. Tennent . ° 848 Challis’s case 53, 759, 775* Chambers v. Manchester, ‘&e., Railway Co. e . 198, 235 Chancey v. May . 566 Chandelor v. Lopus m4 70 Chandler v. Howell. . 451 Chapel House Colliery Co. . 636, 648 Chapleo v. Brunswick Building Society 88, 166*, 171, 176, 189, 196, 242, 919, 920 Chapman and Barker’s case. 754, 782, 805*, 806 Chapman’s case (1 Eq. 346) . 685, 717, 730 —— (2 Eq. 567) . 13, 14, 15, 567, 795 Chapman v. Milvain v. Shepherd Chappell’s case 268, 427, 565 493, 514, 832 465, 824, 629 Chapple’s case. . 556 Chapple v. Cadell . : . 207, 208 Charitable Corporation v. Sutton. 372 Charlesworth, ex parte . 698, 702, 703, 878, 890 Charlton v. Neweastle and Carlisle Railway Co. 322, 571, 598, 892 Chatham Industrial Co-operative Society 916 Chatteris, ex parte . 687 Chartres’ case 831, 862 Cheale v. Kenward 473, 492 Cheltenham and Swansea Railway Carriage, &c., Co. (8 Ey. 580). 656 Cheltenham, &c., Railway Co. v. Daniel . 49%, 51, 108, 421 —v. Price. ‘i . 59, 105, 106 Chepstow Bobbin Mills Co. . 660, 887 Cherry v. Colonial Bank of Aus- tralasia 89, 243 Cheshire Banking Co. Duff’s Executors (82 Ch. D. 301)": Xvi PAGE Cheshire Patent Salt Co. . . 626 Chester and Manchester Direct Railway Co. Phillipps (1 Simons, N. S. 605} Child v. Hudson's Bay Co. . . 551 ——- v. Morley 5 . 513 Chillington Iron Co. . 31 China Steamship Co. Capper (3 Ch. 458) Dawes (6 Eq. 232) Drummond (4 Ch. 772) Mackenzie (7 Eq. 240) China (Imperial Bank of) v. Bank of Hindustan. . 807 Chinnock’s case (Johns. 714) "803, 826* Chippendale, ex parte. 286, 381, 384, 885, 387*, 389, 622, 851, 858, 860 Chorley, ex parte. 283, 741 Christie v. Peart. - « 269 Church and Empire Fire Insur- ance Co. Andrews (8 Ch. D. 126) Pagin and Gill (6 Ch. D. 681) Church v. The Imperial Gas Light Co. . , : ; a . 222 Churchill v. Bank of England . 460 Chynoweth’s case 95, 826, 465, 819, 825, 828 Cilfoden Benefit Building Society 700 City Bank, ex parte 171, 185, 230, 740 City and County Bank . 626, 640, 641, 653*, 655 City and County Investment Co. 208, 864, 895, 896 City of Berne v. Bank of England 909 City of Glasgow Bank. : . 962 Bell, Lang and others (4 App. 547) Buchan (4 App. 549) Ker (4 App. 549) Mitchell (4 App. 548) Rutherford (4 App. 548) City Terminus Hotel Co. South-Eastern Railway Co. (14 Eq. 10) City of Moscow Gas Co. v. Inter- national Financial Society - 268 Clack’s case & . 829, 840 Clark v. Newsam . 66 er parte (7 Eq. 550) 715, 731, 743, 865 Clarke v, Chaplin , : 30 v. Dickson. 72, 88, 496 v, Imperial Gas Light and Coke Co, - 168* Clarke’s case (Ww. N. 1866, 254) . 710 (1K. & J. 22) 664, 860 — (8 Ch. D. 635). 3 783, 784* ex parte (20 L. J. Ch. 14) . 766 —(12Jur. 471)... 90 —— re (18 Ch. D. 160). : 547 Clay v. Rufford 177, 183, 272, 322, 323, 567, 892 v. Southern ‘ : ~ 271 Cleare v. Harwas . x 4 716 Clegg v. Edmondson , 3 . 582 Cleland’s case. 7 745, 784, 789 AUTHORITIES REFERRED TO. PAGE Clemence, ex parte (28 Ch. D.154) 679 Clement’s case (13 Eq. 179) 691, 692 Clements v. Bowes. 565, 569, 593, 610 v. Hall ‘ « ~582 —— v. Todd . ‘ “ es - 83" Clemonston v. Blessig. i ; 37 Cleve v. Financial Corporation . 306, 877, 894 Cleveland Ironworks Co. v. Ste- venson 7 ‘ : a 72 Clifton’s case Pi 664, 863 Clinan v. Cooke. Z w 3 228 Clinch v. Financial Corporation . 208, 571, 580, 581, 595, 891, 892, 894, 895 Clive v. Clive 544, 545, 547 Clothworkers’ Co., ex parte 553, 554 Clough v. London and North Western Railway Co. : 584 Clowes v. Brettell 59, 288, 293, 294 Cluff v. Cluff . 451 Coal Consumers’ Association " 679, 680, 717, 720, 721 Coal Economising Gas Co. Gover (20 Eq. 114, and 1 Ch. D. 182) Coates’ case . 783—785 Coates v. Nottingham W. W. Co. 401 Cobham v. Holcombe . : . 267 Cobre Copper Mining Co. Kelk (9 Eq. 107) Pahlen (9 Eq. 107) Weston (6 Eq. 17) Cockburn’s case . 518, 840, 862 Cocker’s case . . 260* Cockerell v. Van 1 Diemen’s Land Co. x 499, 532 Coe v. Wise ‘ ‘ : - . 209 Cohen v. Wilkinson , 571, 598 Colborne and Strawbridge, ex parte 171, 230, 665, 725, 740, 878, 889 Colchester (Mayor of) v. Lowten | 198, 207, 224 Cole v. North Western Bank » 475 Coleman's case (1 De G. J. & Sm. 495) 58, 759, 781*, 841, 844, 845 ee, cx parte (3 De I. & & Ss. 39) é 664, 701 Coles v. Bristowe . 495, sa 504", 510 v. Trecothick . és 228 Collen v. Wright. F 4 « 241 Collie’s claim. ‘ 158 Collingridge, ex parte . ‘ - 613 Collingwood v. Berkeley + =. 145 Collins v. Collins 450, 541 — », South Staffordshire. Rail- way Co. . - 228 ——., ex parte (De G. Ser) . 550 (8 W.R. 170). 653* Collum, ex parte 66, 800, 843 Colman v. Eastern Counties Rail- way Co. . . 200, 571, 597 Colombia Chemical Factory Ma- nure, &c., Works Brett (25 Ch. D. 283) Hewitt (25 Ch. D. 283) Colonial Bank v. Hepworth 474, 489* v. Whinney 454*, 551 AUTHORITIES REFERRED TO. PAGE Colonial and General Co. 882 Colonial Life Assurance Co. ». Home and Colonial Assurance Co. . 113 Colonial Trusts Corporation Bradshaw (15 Ch. D. 465) Colquhoun v. Brooks . 911 Colt v. Nettervill 453 v. Woollaston 593 Coltman, re 201 Columbine ». Chichester . 500, 586, 587 Colyear v. Mulgrave - 589 Commercial Bank Corporation of India and the East . 261, 622, Mt 34 Fernandes’ Executors (5 Ch. 314) Gledstane & Co. (1 Ch. 588) Smith, Fleming & Co. (1 Ch. 538) Wilson (8 Eq. 240) Commercial Bank of London 661 Commercial Bank of South Aus- tralia Commercial Discount Co. Commercial and General Life, &c., Assoc. Johnson (27 L. J. Ch. 803) Commercial, &c., Wine Co. . Compagnie Générale de Bellegarde Campbell (4 Ch. D. 470) Connell, re . ‘i Connop v. Levy Conquest’s case . : Consols Insurance Association Benham (13 W. R. 483). Glanville (10 Eg. ae — v. Newall v. Wood ‘ : Const v. Harris . 317, "318, 319, ee and Alexandra Hotel C Ebbett (5 Ch. 302) Reidpath (11 Eq. 86) Consterdine v. Consterdine . Continental Bank . Castello (8 Eq. 504) Contract Corporation . 692 848 284 622, 623, 636, 644*, 912 ° . 660, 701 260* , 472 713 320%, 579* 714 450 625 43, 157, 224, 225, 473, 660, 691, 692, 759, 807, 836, 846, 847, 850, 851 Baker (7 Ch. 115) Bateman (1 W. N. 878 and 466) Druitt (14 Eq. 6) Ebbw Vale Co. (5 Ch. 112) Gooch (14 Eq. 454) (8 Ch. 266) (7 Ch. 207) Head (3 Eq. 84) Hudson (12 Eq. 1) Weston (6 Eq. 17) White (3 Eq. 34) Conway’s case. c Conybeare v. New Brunswick and Canada Railway Co. Cooch v. Goodman . - 84, 590* 15, 861 131 XIX PAGE Cook’s claim (2) . 865 policy . 732 Cook v. Gregson . 541 —— v, Jones . 297 v. Ward 156, 329 Cooke ¥, Tonkin » 145 —— v. Oceanic Steam Co. . . 595 —— ex parte (3 De G. & 8. 148). 626, 627, 646* Cookney’s case - 761 Cookson, ea parte "641, 650* Cooper v. Powis . » 569 v. Shropshire Union Railway and Canal Co. 411, 600 v. Webb ‘ 566, 593 ——, cv parte (2M. D. &D. 1) 551 (10 Ch. 510) 669 Cope v. Thames Haven Co. 221, 225 Cope’s case . 247, 248 Copeland v. North-Eastern Rail- way Co. 63, 109, 469 v, Stephens - 550 | Copin v. Adamson . 2 914 Copper Miners’ Co. v. Fox . "199, 220, 222, 224, 225 Corbett 7. The General Steam Navigation Co. 911 " Corder v. The Universal Gas Light Co. 296 Cork and Bandon Railway Co. v. Cazenove . 89, 422 v. Goode. 425, 427, 537 . Cork Constitution, Limited 655 Cork Shipping and Mercantile Co. 630 Cork and Youghal Railway Co. (4 Ch. 748) . 198, 235, 237*, 385, 656, 723 —— »v. Paterson 23, 24, 107, 410, 420 Cornell v. Hay : - 91, 92 Corner v. Maxwell-Irwin . 270, 559 Cornwall Great Consolidated Mining Co. : . 318 Cornwall, &e., Mining Co. v. Bennett . ‘i - 125, 417* Corpe v. Glyn ‘278, 279, 280, 604 Corry v. Londonderry, ke. +, Co. 401, 429, 430 Cosmopolitan Life Assurance Co. Nickoll (24 Beav. 639) Costello’s case (2 De G. F. & J. 802) « ® 800, 825, 826 Cottam v, Eastern Counties Rail- way Co. ‘ - 483 Cotterell’s case . 801, 790 Cottle, ex parte . 764, 766 Coulson, cx parte. 549 County Life Assurance Co. 155, 158, 167 County Marine Insurance Co. Rance (6 Ch. 104) County Palatine Loan and Dis- count Co. Cartmell (9 Ch. 691) Teasdale (9 Ch. 54) Coupland v. Challis . 31, 901 Court Grange Silver Lead Mining ” Co. Sedgwick (2 Jur. N.S, 949) XX AUTHORITIES PAGE Coventry and Dixon’s case 694, 695, 794 Cowan’s Estate 715 Cowie v. Sterling 230 and Naylor’s case (4 K. & J, 808 and 314) . 21, 85, 772% Cox’s case (4 De G. J. & Sm. 53) 46, 59, 96, 802, 803 Cox’s case (3 De G. and S. 180) 694 Cox v. Midland Counties Railway Co. : s 161 Cragg v. Taylor 461 Craig v. Phillips . r 92 Craig’s Executor’s case 716, 732, 733 Cramer v. Bird - 565, 573 Crampton v. Varna Railway Co. oe Crawford v. North-Eastern Rail. Co. . . e . 401 Crawley’s case : Si 14 Credit Co. . 343, 658 Crédit Foncier and Mobilier of England, ex parte (7 Ch. 161) 156, 204, 205 —— (11 Eq. 356) 403, 404 Cree v, Somervail 801, 805 Crellin v. Brook . 271 —— »v. Calvert. 271 Cremetti v. Crom 697 Crenver v. Wheal Abraham United Mining Co. Wilson (8 Ch. 45) Creyke’s case 534, 845, 846 Crickmer’s case 784 Cridland v. De Mauley 593 Crisp v. Bunbury . 916 Criterion Gold Mining Co. . - 660 Cromford and High Peak Co. zw. Lacey . 3 j 24, 49, 51*, 421 Crook v. Seaford . si 2 - 228 Crooke’s Mining and Smelting Co. Gilman (31 Ch. D. 421) Crookhaven Mining Co. (3 Eq. 69) 684, 852, 869, 870, 882, 885 Cropper, ex parte 385*, 851, 860 Crosfield’s case 747, 812, 818, 814, 862 Croskey v. Bank of Wales 407, 568, 593 Cross v. Law . 286, 287 Crouch v. Crédit Foncier, &e. 230, 474 Crowe v. Crisford . 542 Crowley’s claim 514, 574 Crown and Cushion Loan Fund Society s : - “619: Croxton’s case (1 De G. M. & G. 600) . 824 -— (5 De G&S. 432), 861 Croysdill, ex parte 618 Crumlin Viaduct, &¢. Co. 669, 706, 720 Cruse v. Paine . 505, 510, 805 Cullen v. O'Meara . 149 v. Duke of Queensberry . 247, ae —— v. Thompson Cuming v. Boswell. ; a5 Cumming v. Prescott 301, 454, 545, 794 Cunliffe, Brooks & Co. v. Black- burn Building Society 190, 196, 386 REFERRED TO. PAGE Cunningham & Co., Limited Simpson (36 Ch. D. 582) Cunninghame v. etn of Gheseey Bank 758, 801 ‘ 2 64, 96, 492 301, 395, 785, 739", 791, 794, 795, 796* Curling v. Flight Currie’s case Curteis v. Anchor Insurance Co, . 226, 328 Curtis’s case (6 Eq. 455) 591, 749, 810, 828 Curzon, ex purte (3 Drew. 508) 747 Cutbill », Kingdom 308, 916 Cutts v. Riddell . 560 Da Costa v. Russia Co. 604 Dails v. Lloyd 516 Dale v. Hamilton . 589 v. Martin . ‘ 321, 989 ex parte (3 De G. '& 8. 11). 656 Dale’s case (1 De G. M. & G. 513) 805 Dalton v. Midland Railway Co. . 436, 437, 483 Daly v. Thompson . 61, 63 Daly & Co. . “i 667 Dance v. Girdler ‘ 146 Daniell v. Royal British Bank . 58, 129, 284 ex parte (1 De G. & J. 372) 776, 782*, 789, 805 Daniell’s case (22 Beav. 43) . 518, 782, 839 D'Arcy v. Tamar, &c. Railway Co. 158, 174, 224, 329 Darlington Banking Co. Riches (5 N. R. 287) Darlington Forge Co. . 123 Davidson v. Bower. . 269 v. Cooper 268, 269 —— v. Tullock . 88, 91, 496 cx parte (1 Mon. D. & De Gex, 648) . . 458, 550, 555 Davidson’s case (4 K. & J. 688) . 320 —— (3 De G. & Sm. 21) 780, 782, 801, 803, 805 Davies v. Hawkins 319, 320 v. London and Provincial Marine Insurance Co. . 70 Davies’s case (4 De G. F. & J. 78) 769, 770 Davis’ case (12 Eq. 516). 189, 385, 516, 919 Davis, ex parte (3 Ch. D. 463) 554, 558 v. Bank of chee . . 487 v. Fisk > 564 v. Haycock . 506, 510 Davison v. Gillies 432, 597 664, 843, 878, 889 303, 528, 577 Dawes’s case . Dawkins v. Antrobus Dawson v. Malley 715 — v. Morrison 145 -— v. Wrench . 248 Day v. Day « » b4e cx parte (1 Ch. D. 699) 135, 141 —— (3 Jur. N.S. 1016). — . 698, 849 Dayrell, ex parte 852, 858 AUTHORITIES REFERRED TO., PAGE Dean v. Bennett . 303, 307 — vv. Mellard . 263, 915 Deare v. Soutten 236 De Bussche v. Alt ‘ . 877 De Castro’s case . 831 Dee, ex parte . 620, 641, 647* Deffell ». White . ‘ . 203 De Gendra v. Kent 545 Delta Syndicate Forde (30 Ch. D. 153) Dendre Valley Railway, &c., Co. Moss (3 De G. & S. 599) Denham & Co. 321, 371, 374, 375, 376, 518, 696 Dent’s case 119, 798, 799 Dent v. London Tramways Co. 432. 436, 597 Denton v, East Anglian Railway Co. . a é 222 v. Great Northern Rail. Co. 88 —v. Macneil . 69 De Pass’s case 468, 800, 825, 826*, 827 Deposit and General Life Assurance Co. Ayre (25 Beav. 513) Deposit Life Assurance Co. ». Ayscough ‘ : : . 422 De Rosaz v. Anglo-Italian Bank . 896 De Ruvigne’s case 367, 696, 789*, 790 Desinge v. Beare 541 Devala Provident Gold Mining Co. 156, 183*, 206 Devereux v. Kilkenny Railway Co. 292, 294 Devon and Somerset Railway Co. 618, 692, 905, 906 De Waal v. Adler : - 490, 491 Diamond Fuel Co. (13 Ch. D. 400) 264, 626, 632, 633, 634, 645*, 662 Metcalfe (13 Ch. D. 815) Dickinson v. Valpy 144, 185 Dickson’s case : . 748, 749 Dickson v. Evans i : 739 v. Neath and Brecon Railway Co. 3 * - «+ 282 v. Swansea Vale Railway Co. 741 Diggle v. Higgs . 139 v. London and Blackwall Railway Co. 221, 225, 227 Dillon v. Arkins . 400, 541 Dimes v. Scott 2 : . 543* Dimson’s Estate Fire Clay Co. 678 Direct Birmingham, Oxford, Reading, and Brighton Railway Co. Amsinck (6 De G. M. & G. 345) Best (1 Simons, N. 8. 193) Bright (1 Simons, N. S. 602) Capper (1 Simons, N. S. 178) Hunter (1 Simons, N. 8. 435) Onions (1 Simons, N. 8S. 394) Sichell (1 Simons, N. S. 187) Spottiswoode (6 De G. M. & G. 345) Upfill (1 Simons, N. 8. 395) Direct ‘Exeter, Plymouth, and Devon- port Railway Co. Besley (2 M. & G. 176) (3 M. & G. 287) Besly (8 De G. & Sm. 224) L.c. Xxl1 PAGE Direct Exeter, &c., Rail. Co.—cont. Hall (3 De G, & Sm. 214) Hole (3 De G. & Sm. 241) Mathew (3 De G. & Sm. 234) Roberts (2 M. & G. 192) (3 De G. & Sm. 205) Tanner (5 De G. & Sm. 182) Woolmer (5 De G. & Sm. 117) —— (2 De G. M. & G. 665) Direct London & Exeter Rail. Co. D’Urban (18 Jur. 781) Hollingsworth (3 De G. & S. 102) Osborne (15 Jur. 72) Direct London & Manchester Rail. Co. Pocock (1 De G. & 8. 731) Direct London & Portsmouth Rail. Co. Goldsmith (14 Jur. 734) Direct Shrewsbury & Leicester Rail. Co. Brittain (1 Sim. N. 8S. 281). Riddell (1 Sim. N. S. 402) Direct Spanish Tel. Co... - 897 Direct West End and Croydon Railway Co. Lloyd (1 N. 8. Simons, 248) Studley (14 Jur. 539) Disderi& Co... . 786, 789, 796* District Bank of London (35 Ch. D.576). . 659 District Savings Bank . é 933 Coe (3 De G. F. & J. 335) Dixon’s case (L. R. 5 H. L. 618) 196, 521, 842, 845 Dixon’s executors, ex parte (1 Dr. & Sm. 225) 752, 758, 812 Dixon v. Evans . 842, 845 v. Wrench 4 461 Dobinson v. Hawks. : 43 Dobson, ex parte 551 Dodds v. Hills . 476 Dodgson’s case . 830, 862 Dodgson v. Bell . 41, 110, 289 v. Scott . 283, 286-8, 296 Doe v. Bold . 220 v. Jones 194 —— v. Tanniere . 220 Doman’s case . : 3 . 824, 893 Dominion of Canada PlumbagoCo. 704, 861, 864, 865 Donaldson v. Gillot 476, 487 Doncaster Permanent Building Society (4 Eq. 579) . 853, 872, 873, 918 —— (3 Eq. 158) 918 Dornford v. Dornford . 725 Dosset v. Harding Dougan’s case Douglas v. Horsfall_ . Dover and Deal Railway Co. Beardshaw (1 Dr. 226) Clifton (5 De G. M. & G. 743) Hight (1 Dr. 484) Lord Londesborough (4 D. G. M. 411) Mowatt & Elliot (3 De G. M. & G. 254) *¢ 58, 129, 295 774, 775, 891, 892 - - 272 . 670, 671 Xxil AUTHORITIES PAGE Dover, Hastings, &c., Railway Co. Carew (7 De G. M. & G. 48) Downes v. Ship . 19, 20, 26, 122, 749, 772 Dowse’s case . 260*, 261 Doyle’s case . ‘ . 814 Doyle v. Muntz . 567 Drake v. Symes 595 Dresser v. Gray . 541 Drew v. Nunn - 40 vee Patent Salt Co. v. ie Cur: ; Dronfield Silkstone Coal Co. (17 Ch. 76) . 3834, 395, 402, 520, 526 —— (No.2) (28 Ch, D. 511) 703, 861, 6 Drouett v. Taylor . 35, 145 Druitt’s case ‘ . 691 Drummond’s case (4 Ch. 772). 797, 799 Drummond, ex parte (2 Gif. 189) 802 Dry Docks Corporation of Loudon 665, 681, 699 Dublin Drapery Co. . . 208 Dublin Exhibition Co. 677 Dublin Grains Co. ‘ . 686 Dublin and Wicklow Manure Co. oe 84 Dublin and Wicklow e Eallwer Co. v. Black. . 89, 422 Ducarrey v. Gill . 231 Duce, ex parte . 310 Duckett v. Gover 563, 570 557, 743, 754 . 426, 301, 538, Duckworth, re Duff's Executors’ case 814 Duke’s case (1 Ch. D. 620) . 773, 796, 798 Duke v. Andrews . 16, 32, 410 ». Dive . 32, 33, 420, 606 v. Forbes 2 B25 33, 420, 606 Dumvile v. Birkenhead, ke. , Rail- way Co. . . 571 Duncan v. Hill : 501, 514* Duncuft.v. Albrecht . 453, 492 Dundalk, &c., sae! Co. Tapster : - 427 Dunlop v. Dunlop . 456, 457, 544 Dunne v. English . 369 Dunston v. Imperial Gas Co. a eK, 308, 366, 388 Duranty’ 8 case ‘ 84 D’ Urban, ex parte ; 847 Durham’s case . 246, 248, 250, 251, 412 Durham County Permanent, &e. , Society Davis (12 Eq. 516) Wilson (12 Hq. 516) (7 Ch. 45) Dutch West India ee ihe) » Moses, - 909 Dubie v. Marsh. 233*, 248 Duvergier v. Fellowes. ‘181, 132*, 139* Dynevor Duffryn Collieries Co. 661, 711 EscueE Co., ex parte 166, 169*, 226 Eaglesfield- v Sous of London: derry . 249 REFERRED TO. PAGE Eales v. Cumberland Black Lead Co. - 800, 337 Eardley v. Law . . 287 Earl of Lindsey v. Great Northern Railway Co. . 228, 258 Earl of Shrewsbury | v. North Staf- ford Railway Co. 147 East and West India Docks Co. 278, 618, 905 East and West Junction Railway Co. ; é ‘ ; 906 East Botallack Mining Co. . 615 Eastern Anglian Railway Co. v. Eastern Counties Railway Co. . 186 Eastern Counties Junction & South- end Rail. Co. Cooke (8 De G. & Sm. 148) Mainwaring (2 De G. M. & G. 66) Underwood (5 De G. M. &G. 677) Eastern Counties Railway Co. v. Broom. 209 Eastern Union Railway Co. 2. Cochrane . 258, 900 v. Symonds 418, 429 East Gloucester Railway Co. ». Bartholomew. 44, 50, 58, 104-6, 824 East Holyford Mining Co. . 725, 868 East India Cotton Agency Furdoonjee (3 Ch. D. 264) East Kongsberg Co. Bigg (1 Eq. 309) East London Waterworks ». Bailey p . 151, 220 East Norfolk Tramways Co. Barber (5 Ch. D. 963) East of England Banking Co. Bugg (2 Dr. & S. 452) Feltom’s Exors, (1 Eq. 219) Pearson (7 Ch. 309) East of England Banking Co.’s case (5 De G. M. & G. 505) . 426, 714 (4 Ch. 14) . - 725 Easton v. London Joint Stock Bank ‘ 481 East Pant Du “Mining Co. v. Merryweather . 809, 573 East Wheal Martha Mining Co. 61, 124 Eastwood v. Bain 939, 241 Eaton v. Busker . 222, 223 Ebbett’s case 89, 810, 829 Ebbw Vale Co.’s case (5 Ch. 112) 685, 2 eee Vale Co.’s claim (8 i, : . 204, 206, 222 Buby Vale Steel, &e., Co. e Ch. D. 827) . 403 Eberle’s Hotels, | &e., Co. ‘. E Jonas & Bros. 739 Ecclesiastical Commissioners »% Merral . . 220 Eclipse Gold Mining Co. 869 Edger v. Knapp . - . 606 Edie v. The East India Co. . . 222 Edinburgh, &., Railway Co. ».. Hebblewhite 300, 417, 425, 530, 5382—534 Edington ». Fitzmaurice 69%, 72*, 88 AUTHORITIES REFERRED PAGE Edmonds v. Blaina Furnaces Co.. 196, 198 Edwards v. Aberayron ina 916 ». Barnard 5 232 v. Buchanan 270 v. Cameron’s Coalbrook Co. 186, 225, 232, 296 — e. Grand Junction Railway Co. 150*, 151*, 152*, 1538, 258* —— v. Hall ‘ . 452 oe. Kilkenny Railway Go. 46, 59, 108, 283, 292, 293 . London and North West- ern Railway Co. v. Midland Railway Co. . —— v. TheShrewsbury and Birm- ingham Railway Co. 577, 579, 600 Egyptian Commercial and Trading 209 210 0. Kelson (4 Ch. 125) Electric Telegraph Co. of Ireland 397, 618, 635, 647* Budd (30 Beav. 143) Bunn (2 De G. F. & J. 275) (24 Beav. 137) Cookney (2 De G. & J. 170) (26 Beay. 6) Hoare (30 Beav. 225) Maxwell (24 Beav. 321) Reid (24 Beav. 318) Troup (29 Beav. 353) Eley v. Positive Assurance Co. 148 Elham Valley Railway Co. Dickson’s case (12 Ch. D. 298) Elkington’s case ‘ . 780, 781 Elliott's case 3 é 3 + 798 Elliott v. Richardson. . . 809 Ellis’s case (3 De G. & 8.172) . 847 Ellis v. Colman 201, 357, 588 ». Shinoeck 95, 294 Ellison v. Bignold . » 181, 575 Elphinstone (Lord), ex parte. . 732 —— (Lord) v. Monkland Iron Co. 732, 886, 887 Emly v. Lye . 235 Emma Silver Mining Co. . 658, 692 v. Grant . 849, 855%, 374 v. Lewis 347, 361* Emmanuel, ex parte , . 708 Emmerson’s case (1 Ch. 433) . 494, 836, 837+ —— (2 Eq. 236)... 700 Emperor Life Assurance Society 664, 665, 878, 889 Empire Corporation (17 W. R. 431); 183 Empire Assurance Corporation Bagshaw (4 Eq. 341) Challis (6 Ch. 266) Dougan (8 Ch. 540) Leeke (11 Eq. 100) Somerville (6 Ch. 266) Empress Engineering Co. . 147, 589 Empson’s case. . 769, 770 England (Bank of) v. Johnson 110 England (Mayor of the Stee of ) v. Bank of England. 198 TO. XXlil PAGE Englefield Colliery Co. . 367, 372, 375, 377, 696, 786 English Assurance Co. Holdich (14 Eq. 72) English Channel Steam Co. v. Rolt 192, 197, 395 English and ‘Trish Church and Uni- versity Assurance Society . 656, 737 Hunt (1 Hem. & M. 79) Bugis, Inish, &c., Rolling Stock J0. Lyon (35 Beav. 646) Yelland (5 De G. & Sm. 395) English Joint Stock Bank . 690, 691 Harding (3 Ey. 341). Yelland (4 Eq. 350) English and Scottish Marine Insurance Co. Maclure (5 Ch. 737) Ennis v. West Clare Railway Co. 112, 116, 148, 618, 805, 901, 980 Entwistle v. Davis 3 451, 452 Eva Assurance Society . 176, 184, 200, 258, 322, 891, 892 Anchor (2 J. & H. 400) Williams (2 J. & H, 490) Erlanger v. New Sombrero Phos- phate Co. . 847, 348%, 584 Ernest v. Croysdill . 372, 706 v. Nicholls . 154, 165, 183, 207, 225, 226, 258, 259, 322, 328, 715, 891, 892 —— v. Weiss : - . 706 Esdaile ». Lund . é . 295, 296 ». Maclean . . 269 —— ». Payne é . 698, 748 v, Smith . ‘ . . 287 —— v. Trustwell . 295, 296 Esgair Mwyn Mining Co. . 746, 748 Alexander (9 W. R. 410) | Esparto Trading Co. 518, 532, 796*, 797, 839, 843, 845 Essex Brewery Co. Barnett (18 Eq. 507) Estates Investment Co. Ashley (9 Eq. 263) MeNeill (10 Eq. 503) Pawle (4 Ch. 497) Turnley & Oliver (8 Eq. 227) Etma Insurance Co. . . 68, 123, 749 European Assurance Society Cocker (3 Ch. D. 1) Doman (3 Ch. D. 21) Dowse (3 Ch. D. 1) Grain (1 Ch. D. 307) Harman (1 Ch. D. 326) Hort (1 Ch. D. 307) Miller (3 Ch. D. 391) Ramsay (3 Ch. D. 388) Rivington (3 Ch. D. 10) European Bank Co, (2 Eq. 521) . 637, 648%, 659, 661 Agra Bank (8 Ch. 41) Baylis (2 Eq. 521) Masters (7 Ch. 292) Oriental Commercial Bank (5 Ch. 358) c2 XXIV AUTHORITIES PAGE European Bank, ex parte (7 Ch. 99 trope Central Railway Co. Gustard (8 Eq. 438) Holden (8 Eq. 444) Oriental Financial Corporation (4 Ch. D. 33) Parsons (8 Eq. 656) Sykes (13 Eq. 255) European Life Assurance Society 626, 631*, 632, 649%, 892 British Nation, &c., Associa- tion (8 Ch. c. 679) Arbitration Acts . 828, 393 Eustace v. Dublin Trunk Railway Co. . 61, 65, 107, 800 726 Evan v. Corporation of Avon 207 Evans’ case (2 Ch. 427) . 797 See also Preece and Evans Evans, ex parte (18 Ch. D. 424) . 310 (11 Eq. 151) 724 —v. Coventry . 250, 251, 308, 330, 372*, 374*, 375, 377, 388, 432, 520, 583 —— v. Hooper . . 559 ». Smalleombe "178, 179, 311, 312, 519, 522, 523, 584*, 828, 838 v Wood 491, 493, 506, 511 Evens’ claim . ‘ .. 260" Exchange Banking Co. Flitcroft (21 Ch. D. 519) Exchange Drapery Co. . 455, 736, 870, : 885 Exeter and Crediton Railway Co. v. Buller 315, 318, 573, 579, 581 Exeter, Plymouth, & Devonport Rail. Co Besley (2 Mc. & G. 176) Hall (1 Mc. & G. 307) Hole (3 De G. & Sm. 241) Mathew (3 De G. & Sm. 234) Roberts (2 Mc. & G. 192) Tanner (5 De G. & Sm. 182) Woolmer (2 D. G. M. 665) Exhall Coal Mining Co. . 674, 679 Bleckley (85 Beay. 449) Exmouth Docks Co. 278, 618, 625*, 637, 652 Eyre’s case . 831, 840 FactaGs Parisien Co. . 641, 650 Fairtitle v. Gilbert - 163 Falmouth, Helston, & Penzance Rail. Co. Clarke (12 Jur. 471) Family Endowment Society 259, 261, 620, 629, sd 645, 734 Farmer v. Giles 916 v. Mottram 295 v. Smith 920 Farrer v. Close 917 Faure Electric Accumulator Co. 364, 372, 378, 375, 377, 465, 466, 696 Faviell v. Eastern Counties Rail- way Co. . 221, 265 REFERRED TO. PAGE Fawcett v. Laurie . 482, 574, 597, 600 ». Whitehouse 346, 351, 365 Fearns v. Young 543 Fearnside, Dean, and Dobson’ case 814 Featherstone v. Cooke . 578 Featherstonhaugh v. Lee Moor Porcelain Clay Co. » « 202 Feiling and Rimington’s case 393, 402, 405, 774 Felgate’s case 118, 119*, 797* Fell v. Burchett . 262, 280 Feltom’s Executor’s case. 694, 696 Fenn’s case 94, 95, 524, 621, 840 Fenn v. Craig . 271, 272 Fennings v. Grenville . 319 Fenwick’s case 538, 802, i Fenwick v. Wood Ferguson v. Wilson 241, 587, 588 Fernandes’ Executors’ case 713 Fernihough ». Leader . . 560 Ferraro’s case 785, 861 Fewings, ex parte x «725 Ffooks v. South- Western Railway Co. . 3 . 470, 584 Field v. Lelean é . 508 v. Mackenzie 58, 110, 287, 288, 296 Fielden v. Lancashire, &c. Rail- way Co. . é . 596 Financial Corporation | . 740, 741 Adams (2 Ch. 714) Feiling and Rimington (2 Ch. 714) Holmes (2 Ch. 714) King (2 Ch. 714) Pritchard (2 Ch. 714) v. Lawrence. "i . 556, 815 Finlay v. Bristol Railway Co. 220, 227 Finlay & Co., ex parte. 749, 864 Finlay Hodgson’s case, 26 Beay. 182. 799, 804* Firbank’s Executors ». ‘Humphreys 88, 241, 243 Fire Annihilator Co. 640, 646, 986 Fisher's case (31 Ch. D. 120) . 778* Fisher, ex parte (8 DeG. & S. 116) 628, 650* v. Keane 808, 528, 577 v. Taylor 235, 397 Fishermen of Faversham 648* Fishmongers’ Co. v. Robertson 220, 224 Flagstaff Silver Mining Co. . 629, "645* Flanagan v. Great Western Rail- way Co. 328, in 368, 587 Fleet ». Murton . - 500 Fleming's case . 260*, 735 Fleming v. Self . 916, 920, 921 Fletcher v. Crosbie . . 269 v. Marshall. 512 321, 371, 374, 375, 432, 695, 696, 697, 744 Florence Land and Public Works Co. Moor (10 Ch. D. 530) Nicol (29 Ch. D. 421) aes and Ponsonby (29 Ch. D. Flitcroft’s case 301, 327, Forbes’ case (19 Eq. 353) ‘ 757, 791, 795 AUTHORITIES RHFERRED TO. PAGE Forbes’ case (8 Ch. 768) . 790, 795 Forbes and Judd’s case (5 Ch. 270) 798 Forbes v. Marshall ‘ . 185, 234 Forde, ex parte . 784 Forest, ex parte 724* Forest of Dean Coal Mining Co. 377, 695 Forrest v. Manchesterand Sheftield Railway Co. 202, 317, 318, 567, 601 Forster & Co. . . 730 Forth Marine Insurance Co. 912 Fortune Copper Mining Co. 657 Forwood’s claim 718 Foss v. Harbottle 173, 300, 304, 346, 570, 575, 576", 578, 581, 600 Foster v. Oxford Rail. Co. 308", 368 v. Wheeler . . 588 Fothergill’s case . "7835, 799 Fountain’s case . 127, 683, 855, 916 Fountaine v. Carmarthen Railway Co. . ‘ . 174, 194, 197, 198 Fourdrinier, ez parte. . 678, 674 Fourth City Mutual Benefit Build- ing Society v. Williams . - 920 Fowler’s case . . 798, 796* Fowler v. Churchill 460, 461 v. Rickerby . . 283, 296, 297 Fox’s case (3 De G. J. & Sm. 465) 46 (5 Eq. 118) . 123, 521, 777, 842 Fox, ex parte (17 Q. B.D.4) . 717 — (6 Ch. 176) 883, 894, 895, 896, 897 —— v. Clifton . 19, 21, 144, 393, 410 v, Frith . ‘ 66 France v. Clark . ‘474, 477, 479", 480*, 482 Frank Mills Mining Co. . 94, 326, 525 Frankland, re . . 697 Franklyn v. Lamond . 497, 498 Fraser v. Cooper, Hall & Co. 573 v. Whalley 581, 597 Free Fishermen of Faversham 618, 620, 636 Freehold and General Investment Co. Green (18 Eq. 428) Freehold Land and Brickmaking Co. Massey (9 Eq. 367) Freeman v. Appleyard 453 v. Gainsford 452 v. Whitbread 547 Fricker’s case . 691 Fripp v. Chard Railway. Co. 565 Frowd’s case . : 84* Fry, ex parte 714 v. Russell 129, 295 Furdoonjee’s case 557 Fyfe’s case. : . 834 Fyfe v. Swabey . 587, 596 Fyler v. Fyler 425, 426, 537 GALLOWAY’s case . . . 190 Galvanized Iron Co. v, Westoby 45, 59, 409, 420, 421 Gandy v. Gandy és : 148 Garden Gully Co. v. McLister 155, 300, 806, 409, 415, 532, 534, 843 Gardner v. London, Chatham and Dover Railway Co. . 195*, 197 XXV PAGE Garfit’s case. . 121 Garnet and Moseley Gold Mining Co. v. Sutton . 273, 742, 855, 885 Garrard v. Hardey . : . . 133 Garrick v. Taylor . 539 Garstin’s case . . 710, 825 Gartness Iron Co. Elphinstone, Lord (10 Eq. 412) Gartside v. Silkstone, &c. Iron Co. 197 Garwood v. Ede . 5 ‘ 33* Gaskell ». Chambers 3 367* Gas Light Improvement Co, v. Terrell . . 669 Gaudet Fréres Steamship Co. 710, 882 Gay’s case . 847, 852, 865, 866 General Co. for the Promotion of Land Credit 116, 468, 619, 622, 636, 645", 801 General Discount Co. v. Stokes 555, 556, 884 General Estates Co. City Bank (3 Ch. 758) Hastie (4 Ch. 274) (7 Eq. 3) Wright & agus (8 Eq. 128) General Exchange Bank 712, 743, 859, 888 Lewis (6 Ch. 818) v. Horner 367, 374, 376 General Financial Bank . 660, 686, 701 General Floating Dock Co. . 834 General International Agency Co. 640, 651*, 659 Chapman (2 Eq. 567) General Mining Co. 402 General Provident ‘Assurance Co. Bridger (5 Ch. 305) (9 Eq. 74) National Bank (14 Eq. 507) General Rolling Stock Co. 636, 637, 645* Alliance Bank (4 Ch. 423) Chapman (1 Eq. 346) Joint Stock Discount Co. (7 Ch. 646) General Share Co. v. Pottery Co. General South American ‘Co. 308, 727 Yglesias & Co. (10 Ch. 635) General Steam Heian Co. v. ee Guillan : ‘ 914 General Works Co. Gill (12 Ch. D. 755) Genesee Mutual Insurance Co. v. Westman ‘ ji - 910 Gerhard v. Bates . . 19, 88 German Date Coffee Co. ‘ . 688, 641, 645 . 236%, 381, oa Chippendale (4 De G. M. & G. io Stone (3 De G. & Sm. 120) Gibbs and West's case 191, 192, 667, 742, 744 209 German Mining Co. Giblin v. McMullen ‘ Gibraltar and Malta Bank . 640 Gibson’s case (2 De G. & J. 275) 83%, 86, 206, 860, 863 XXV1 PAGER Gibson, ex parte (4 Ch. 662) 261, oe —— re (2 Eq. 669) —— v, The East India Co. Gibson & Co. (5 L. R. Ir. 189) 736, 783, 784, 852 | 183, 323, 598, 892 877*, 394, 412, 465, 466, 748, 825, 829, 884 Gilbert v. Cooper Gilbert’s case Gilbertson v. Fergusson 3 . 911 Giles v. Cornfoot é . . 145 v. Hutt 425, 530 —— »v. Smith 247 v. The Taff Railway Co. 160%, aa Gill v. Continental Union Gas Co. ey Gill’s case . ‘ 742, 858 Gillan v. Morrison. Gillespie v. City of Glasgow Bank 801 In re 739 Gilman’s case 798 Ginger’s case. 79%, 80 Glaholme’s case . 3 ; 746 Glamorganshire Banking Co. Morgan (28 Ch. D. 620) Glanville’s case . 832, 837 Glassington v. Thwaites 319 Gleadow v. Hull Glass Co. 850 Gledhill’s case 18, 770 Gledstanes & Co.’s case - . 709, 739 Globe New Patent Iron, &c., Co. 629, 645* Glossop v. Keston Local Board 605 Gloucester, Aberystwith, &c., Rail. Co. . 723, 724 Maitland (4 De G. M. & G. 769) Glover v. Giles 4 111, 918 Goddard v. Hodges 46, 363 Goff v. Great Northern feey Co. ‘ “ . 160, 209 Gold Co. (11 Ch. D. 701) ‘640, 651*, 887 —— (12 Ch. D. 77) Gold Hill Mines 689, 690, 881, 967 624, 637, 648", 657 Goldsmid’s case (16 Beav. 262) « 215 G2, 845 Goldsmith, ex parte (14 Jur. 734) 639, 646* Gooch s case (7 Ch. 207) 692, 705 —— (8 Ch. 266) « S11, 828, 829 (W. N. 1872, p. 227) 820 Gooch v. London Banking Associa- tion : 732, 867, 886 Gooday v. Colchester Railway Co.” 220 Goodwin v. Francis ‘ - 241 v. Robarts . 67, 474, 740 Gordon’s case . . 758, 824 Gordon v. Pym . 272 —— v. Sea, Fire and Life Assur- ance Co... - 185, 226 Gore and Durant’s case 727, 780 Gorgier v. Morris - 606 Gorringe ». Irwell India- -Rubber, &Gi “Works 668, 669, 706, 720 Gorrissen’s case. i . 769 126, 335, 340, 940, 46 a * the Es . 221 | Government of Newfoundland v. AUTHORITIES REFERRED TO. PAGE 257, 288, 751, 812, 814, 817 92, 346, 847 Gouthwaite’s case . Gover’s case Newfoundland Railway Co. 276, 740 Government Security Fire Insur- ance Co. . : Mudford (14 Ch. D. 634) White (12 Ch. D. 511) — (10 Ch. D. 720) Gow v. Forster . : » 545 Gower’s case . 582, 845, 860 Grady’s case 52, 178, 313, 830, 840, 841, 844 Graham v. Birkenhead, &c., Rail- way Co. 583* —— vv. Connell . : - 462 v. Edge . ; 683, 707, 985 —— v. Van Diemen’s Land Co. . 308, 5382, 551, 552 Grain’s case O51, 260* Grand Junction Canal Co. v ‘Petty’ 163, 202 Grand Trunk Rail. Co. Apps (18 L. J. Ch. 409) v. Brodie . 705, 712, 863 Grant, ex parte s . 6501 —-— v. United Kingdom Switch- back Railway Co. 177, 178, 179 Gray’s case . 805, 806 Gray v. Chaplin . . 565, ‘582* v. Lewis. 200, 205, 372, 563, 570 v. Pearson. . . 270, 559 v. Raper. : : » 915 v. Seckham . é . . 728 Grayburn v. Clarkson . : . 547 Great Australian Gold Mining Co. Appleyard (18 Ch. D. 587) Great Berlin Steamboat Co. . 189, 722 Great Britain Mutual Life Assur- ance Society (20 Ch. D. 351) . 621, 635, 648*, 738, 1098 — (16 Ch. D. 246) . 634, 635, 663, 738, 752, 757 Great Cambrian Mining and Quarrying Co. Hawkins (2 K. & J. 253) Great Eastern and Western Rail- way Co., re ‘ 642 Great Luxembourg Railway Co. v. Magnay . 357, 360, 364 Great Munster Railway Co. Inderwick (3 De G. & Sm. 231) oe Northern and Midland Coal 0 Currie (8 De G. J. & S. 867) Great Northern Railway Co. v. Eastern Counties Bleed Co.. 892 v. Kennedy . 425, 530 v. Tahourdin . * 278, 618 Great North of England Railway Co. v. Biddulph . ‘ . 416, 419 Great North of England, ‘York- shire, &c,, Union Railway Co. Carrick’ (1 Simons, N. 8. 505) Great Oceanic Telegraph Co. Harward (13 Eq. 30) AUTHORITIES REFERRED TO. PAGE Great Ship Company Parry (4 De G. J. & S. 63) Great Western Extension Atmo- spheric Railway Co. Wryghte (2 De G. M. & G. 636) Great Western Forest of Dean Coal Consumers’ Co. (21 Ch. D. 769) 636, 652* Carter (31 Ch. D. 496) Great Western Railway Co. v. Blake ‘ . 200 v. Metropolitan Railway Co. 43 v. Rushout 818, 598, 601 Great Western Railway of Bengal 0. James (4 De G. & Sm. 183) Quilter (4 De G. & Sm. 183) Wolesey (3 De G. & Sm. 101) Great Western, Southern and Eastern Counties Railway Co. Holinsworth (3 De G. & Sm. 7) Great Wheal Busy Mining Co. King (6 Ch. 196) Green’s case (18 Eq. 428) . 793 Green, ex parte (1 Jur. N.S. aoe 698 — (12 Jur. 534) ‘i - 901 —— »v. Barrett . . 593 —— ». Britten » 543 — v. London General Omnibus Co. . F ‘ : . 209 ». Murray - 498 ». Nixon 282, 283, 295, 560 Greenhalgh v. Manchester and Birmingham Railway Co. 151 Greening & Co. Marsh (13 Eq. 288) Greenshield’s case 2 . 556, 608 Greenwood’s case (8 De G. M.& , G. 459) ‘ . 165, 246, 847 Greenwood, ea parte (9 Ch. Bll . | 667 (9 Jur. N. S. 997) 725 Gregg’s case . - 800 Gregory v. Patchett 3 322, 430, 579, 583, 584 —— v. Williams 589 Gresham Life Assurance Society « 377 Penney (8 Ch. 446) Grey’s Brewery Co. . 691 Grey's case. A 746 Griffin v. Beverley | 145 Griffith’s case : 260, 734 Griffith v. Paget . " 321, 433, 868, 895 Grimes v. Harrison 371*, 372 Grimwade, ex parte . 848 v. Mutual Society 861 Grisewood v. Blane 488 66, 133, 464, 468, 487, 619, 799 Grisewood’s case Grissell’s case (1 Ch. 528) 666, 672, 736, 742* Grissell, ex parte (3 Ch. D. 411) . 716, 865 », Bristowe . 501, 504*, 510 Groux’s Soap Co. v. Cooper . 127 Groves v. Groves é » . 140 XXVl PAGE Guardian Permanent Building Society 87, 189 Guest, cx parte 3 e 639, 651* v. Worcester Railway Co. 292, 395, 787 Guillemin, ex parte . : 667, 717 Guiness v. Harrison 920 Guinness v. Land Corporation of Ireland 119, 321, 334, 396, 432, 5y1, 597 Gunn’s case 14, 769 Gunn »v. London. and “Lancashire Fire Insurance Co. . 148, 149 Gumey v. Rawlins. . 248 Gustard’s case 16, 470, 762, 770 Guthrie, ex parte . 267 v. Fisk . ‘ ‘ ae oT — v. Walrond . 541 Gwyn, ex parte (1 Jur. N. 8. 300) 714, 715 HapersHon’s case (5 Eq. 287) 669, 3, 744 Hack v. London Building Society 921 Haddon v. Ayres Haford Lead Mining Co. Slater (35 Beav. 391) 201, 248, 522 Hagell v. Currie . 372, 675 Hague v. Dandeson ; . 456, 458 Haigh v. North Bierly Union 221, 265 Hakim’s case 825 Halford v. Cameron’s Coalbrooke, &c., Co. é 186, 225, 232 Halket v. The Merchant Traders’ Loan Association 246, 248, 250, 285 Hall’s case (5 Ch. 707) . 520, 532, 797, 839, 840, 845 —— (3 De G. & S. 80) ss . 749 (3 De G. & S. 214) 765, 766 Hall, ex parte (Mon. & Ch. 365). 550 (3 Deac. 405). 565 —— (1 Mac. & G. 315) . - 750 —— (1 Mac. & G. 307, and 3 De G.&Sm. 80). . 802 — (1 De G.M. &G.1) . 860 —., re William (2 Dr. & Sm. 284). . . 697 —— v. Bainbridge . 240, 270 —— v. Connell - d 440 v. Mayor of Swansea . 220 v. Old Talargoch, &e., Co. 674 Hall & Co., Limited (A. W.). 896, 787 Hallett v. Dowdall . Hallmark’s case . 246, 247, 248, 251 59, 376, 518, 769, 791, 795* Hallows v. Fernie 21, 69, 71, 568, 569, 593 Haly v. Barry . « 461 Hambro’ v. Hull, ke., Insurance Co. . : ; 162, 171, 201, 226 Hamer’s Devisee’s case . 812, 813, 814 Hamer v. Giles . . . 678 Hamilton v. Smith 144, 764 Hamilton’s case, Lord aah 300, "301, 790, 795* XXVill PAGE Hamilton’s Windsor Ironworks Pitman & Edwards (12 Ch. D. 707) Hamley’s case Hammersmith Town Hall Co. Hampden v. Walsh : . Hampson ». Price’s Patent Candle Co. . . . 818, 599 700 139 Hancock v. Hodgson 240, ‘248* Handley »v. Farmer . 920 Hanken v. Bourne . 192 Hankey, ex parte 710 Hannuic v. Goldner . . 498 Harben v. Phillips. 157, 175, 310, 567, 573, 599, 600 Harding, ex parte (3 ay 341) 729%, 731 Hardinge, ew parte (1 N. R. 40) . 859 v. Webster 259, 282, “ike ee 3 Hardy v. Fothergill 554, 719, 732, 816 v. csi etal Land, &e., Co. . : . 3872 Hare’s case. 26, 27, 53, 778, 775* Hare v. London and North- West- ern Railway Co. . 54, 60, 68, 108, 567, 571, 601 v. Waring . 64, 492 Harford v. Amicable, &e, , Asso. Co.. . 673 Hargrove, ex parte . 115, 135, 621, 622, 662, 722 Harman’s case ’260* Harmony and Montagu Tin and Copper Mining Co. Spargo (8 Ch. 407) Harris’s case (7 Ch. 587). 14, 16, 770 Harris, re (15 Ch. D. 561) . 451 v. Amery . A 114, 135, 450 v. North Devon Railway Co. 37 7, 520, 582, 600 v. The Royal British Bank . 282 Harrison’s vase (6 Ch. 286) . 768, 824, 825 (3 Ch. 688). 779 Harrison, ex parte (28 Ch. D. 363) 468, 538, 552 ——v. Brown - 564 - —v. Heathorn "132, 133* v. Mexican Railway Co. 822, 334, 344, t, 396, 408 . 565 —— v. Stewardson —-—v. Timmins 278, 279 v. Tysan . 286 Hart’s case 121, 128, 810, 828 Hart v. Clarke 95, 528, 529, 534%, 582 v. Frontino and Bolivia Mining Co. . . 54, 60, 63, 64, 484 Harte or Ribbons ; . 614 ‘Hartley’s case . 63, 123, 125, 842 Hartley v. Allen . » . 547 Hartridge, ex parte 601 Harvey v, Beckwith 566 ——v. Clough . . 95, 97, 127, 683 v. Collett a ‘ . 1389, 565 --~—v. Kay 64 —-— v. Scott . " 58, 60, 110, 283, 287, 288, 295 Harward’s case ‘ » 15, 761, 796* . 791, 793, 795 AUTHORITIES REFERRED TO. PAGE Harwood v. Law. » 285 Hassell +. Merchant Traders’ Loan and Insurance Association . 248, 250 Hastie’s case P 556, 815, 848 Hatcher, ex parte 42, 808, 809, 848 Hattersley v. Shelburne . 322, 598, 600, 601, 892 Hatton's case (8 Jur. N. 8. 380). 825, 826 — (10 W. R. 313) . . 864 Haven Gold Mining Co. 311, 638, 641, 645* Hawken v. Bourne . é . 159, 205 Hawkins’ case (2 K. & J. 253) 95, 761 (23 Ch. D. 452) . « SI Hawkins, ex parte (3 Ch. 787) 678, 694 v. Maltby . 498, 502, 505, 506, 510, 511 Hawtayne v. Bourne. » . 192 Hawthorn’s case (1 De G. & S. 571, and 1 Mac. & G. 49) 817, 818 (10 W. RB. 572) . ; . 840 Hay’s case 368, 786, al 798 Hay v. Willoughby . 2 5, 47 Hayes v. Stirling "35 Hayman v. Governor of f Rugby School is 303 Hayter v. Tucker 452, 453 Haytor Granite Co. . 731, 886 Head’s case 833, 834 Healey v. Chichester and Mid- hurst Railway Co. 281, 292, 294 —— v. Story. . 226, 232 Heathcote 2. North Staffordshire Railway Co. 3 824 Heaton’s Steel and Iron Co. Blyth (4 Ch. D. 140) Simson (9 Eq. 91) Hebb’s case 13, 14, 841 Heirs Hiddingh ( (The) ». De Vil- liers Denyssen. Heiron’s case . 690, 691, 692, 881, 967 Helbert 7. Banner (or Helbert’s case) 824, 846, 847, 850, 851, 856 Helby’s case . 2 316, 322, ’330* Hemming v. Maddick. 2 . 806 Henderson’s case. 759, 832, 841* Henderson v. The Australian Royal Mail Steam ee Co. . . . 222 —— v. Bank of Australasia "318, 599, 602 —— v. Gilchrist . 587, 812 ——-~ v. Lacon 76* — —v. Royal British Bank 58, 129, 284 v. Sanderson . 4 254 Hendriks v. Montagu . ‘ . 18 Henessy’s case 521, 802, 829 Henley & Co. 673, 717 Hennell v. Strong . . «548 Henry’s case (2 Ch. 431), a . 121 Henry v. Great Northern Railway Co. . 401, 571, 380, 597 Heraud ». Leaf j 148, 244 Hercules Insurance Co. (Ir. Hat, 6 Eq, 207). . AUTHORITIES REFERRED TO. PAGE Hercules Insurance Co. ae iM 321) ; 707 Brunton (19 Ey. 302) Lowe (9 Eq. 589) Pugh and Sharman (18 Eq. 566) ‘Hereford and Merthyr Tydvil, &c., Rail. Co. Maitland (3 Giff. 28) Hereford and South Wales Wag- gon, &c., Co. (17 Eq. 423) 659 — (2 Ch. D. 621) ; 722 Herefordshire Banking Co. . 725 Bulmer (33 Beav. 435) Heritage’s case (9 Eq. 5) 829 Heritage, re (Kay, App. 29) 706 v. Paine . . ~~. ~—«510, 821 Herman v. Jenchner 139 Hermann Loog, Limited 674 Herne Bay Pier Co. Burge (1 De G. & Sm. 588) ‘Herne Bay Waterworks Co. 625*, 648* Hesketh’s case . 842, 845, 856 Hespeler’s case : - . 788 Hester & Co., Limited , . 894 Heward v. Wheatley . 426, 587, 540 Hewitt’s case 792, 798, 795* Hewitt v. Price ‘ i . . 488 Heyford Ironworks Co. Forbes and Judd (5 Ch. 270) Pell (5 Ch. 11) Heymann v. European Central Railway Co. ; 2 > 76 Hibblewhite x. McMorine 472, 488 Hichens v. Congreve 346, 351*, 365, 561, 564, 566 Hickie & Co.'s case 727 Higgs’s case 46, 62, 122, 184, 208, 891, 896, 897 Higgs v. Northern Assam Tea Co. | 741 Higgins, cx parte . 714, 723 v. Hopkins . 145, 247 Hight, ex parte . 766 Hilayard y The South Sea Co. . 483 Hill’s case (9 Eq. 605) 189, 235, 385, 919 Janet (4 App. Ca. 562). 810, 835 —— (20 Eq. 585 and 595) . ‘538, 812 Hill v. Bridges . 721, 732 —— v, East and West India Docks Co. 553 v. London and County As- surance Society 670, 671 v. Manchester and Salford Waterworks Co. . 168%, 312 Hill Pottery Co. - 4 677 Hilton v. Eckersley 917 v. Giraud . 452 Hippisley’s case 53, 736, 775 Hire Purchase Co. v. Richens . ae Hirschel, ex parte (15 Jur. 942) . 766 Hirtzel, ex parte @ DeG. F. & J. 653). és » . 616 Hitchcock’s case. . 862 Hitchins v. Kilkenny Railway Co. 146, 291, 292, 294 Hoare’s case (80 Beav. 225) . . 383* xxix PAGE Hoare’s case (2 J. & H. 229) 802 (10 W. R. 381). 864 Hobbs v. Wayet 539, 589, 805 Hodge, re a 5 . . 262 Hodge’ s Distillery Co. Maude (6 Ch. 51) Hodgkinson v. Kelly . 491, 493, ee —-— v. National Life Stock Insur- ance Co. . 322, 328, 520, 578, 577, 596 Hodgson v. Powis . . 571, 598 Hodsell, cx parte A . 627 Hodson v. Tea Sone 197, 675, a Holden’s case . Holdich’s case 738 Holdsworth v. Davenport . 451 Hole’s case. 765*, 862 Holgate v. Shutt 594, 921 Holinsworth, ex parte (3 De G. & S. 7) : é 623, 626, 627, 646* Holland v. Dickson 314, 333, 440, 567, 599, 604 Hollinsworth’s case bo De G. & 8. 102) : . 694 Hollwey’s case . 522, 841 er a Copper Mining Co (5 h. 98) zi - 697 aa L. R. 3 Eq. 208) . 853, 869 (Ir. Rep. 1 Eq. 39). » . 783 Holmes’ case (2 De G. M. & G. 113) 594, 818, 823, 830*, 861 Holmes’s, Pritchard’s, and Adam’s cases (2 Ch. 714) 774 Holmes v. Binney - 268 v. Higgins 143, 363,'606 —— Vv. ene &e., Abattoir Co. - 821, 4382 —— v. Symons . 505, 511, 554, 556 Holroyd, ex parte . ‘ 698, 849 Holt’s case (22 Beav. 48) 82%, 156, 206 (1 Sim. N. S. 389) . 518, 838, 862 Home Assurance Association . 636, 645*, 659, 661 Richards’case (L. R. 6 C. P. 591) Home Investment Society . 861, 865 Homer District Consolidated Gold Mines Smith (39 Ch. D. 546) Homersham ». Wolverhampton Waterworks Co.. 221, 225, 227, 235 Hone v. O’Flahertie 282 Hoole v. Great Western Railway Co. . 396, 431, 432, 486, 563, 571, 578, 574, 580, 597 Hop and Malt Exchange Co. 650*, 659 Hope v. Croydon, &c., Trams Co. 279 v. International Financial Society 822, 334, 402, 450, 526, 528, 530, 571, 599, 840 Hope Mutual Life Assurance Co. 638, 648* lead case (4 De G. J. & Sm. : 698, 747 Figgictasl trust (18 Eq. 696) 545 Hopkinson v. Marquis of Exeter 528 Xxx PAGE Hopkinson’s and Underwood’s cases ‘ 148, 850 Horbury Bridge Coal, ke., Co. 308, 311 Horn v. ae ke., Railway Co. . . 560 Hornby v. Close 917 Horne and Hellard, in re . 197 Horsey’s case (2 Eq. 167) . 822, 830* Horsey’s claim (5 Eq. 562). 202, 732 Horsley v. Bell . 247, 254 Hort’s case 251, ’260* Houldsworth ». ‘City, of Glasgow Bank 74, 216, 217, 736, 754* — v, Evans 179, 312, 520, 522, 528, 838, 848 Houriet v. Morris p 37 Household Fire Insurance Co. ». Grant. 14 Howard’s case wa Ch. 561) . 17, 156, 771, 781* Howard and Dollman’s case (1 Hem. & M. 433) 723 Howard v. Patent Ivory Manu- facturing Co. . 147, 176, 177*, 192, 193,197 v. Shaw : - . 284 Howbeach Coal Co. ». Teague 157, 158, 300, 305, 309, 319, 336, 409, 411 Hoylake Railway Co. Littledale (9 Ch. 257) Hubbersty v. Manchester, Shef- field, &c., Railway Co. . 458, 466 Huckle v. Wilson ‘ - » 916 Huddleston v. Gouldsbury . 450, 541 Hudson’s case (2 De G. & J. 275) 83 —=(12Eg.1). «© . « 821 Hudson v. Revett . 472 Hue, ex parte. . 861 Hughes’ s case (1 De G. & Sm. 1. 606) 710 (15 W.R. 476)... 841 claim (13 Eq. 623) 725, 728 Hughes, ea parte (4 Ch. D. 34,n.) 725 v. Thorpe . 137, 561, 565 Hughes-Hallett v. Indian Mam- moth Gold Mining Co. . 589, 805 Hulett’s case - 180, 224, 741 Hull, Barnsley, &e., Railway Co. 195, 279 — Central Drapery Co. 676, 859 —— and County Bank . 659 —— Flax Co. v. Wellesley 53, 263, 407, 421, 884 —— Forge Co. 698 and London Fire and Life Insurance Co. Gibson (2 De G. & J. 275) Hudson (2 De G. & J. 275) Kemp (2 De G. & J. 275) Humber Iron Works, &c., Co. (2 Kq. 15) 658, 659, 660 —— (8 Eq. 122). . a8 Warrant Finance Co. (5 Ch. 88 — (4 Ch. 643) - William’s case (1 Ch. D, 576) AUTHORITIES REFERRED TO. PAGE 423, 472, 498, Humble v. Langston 495, 506, 510 —— v. Mitchell . 458 Humby’s case. 47, 831 Hunt’s case (82 Beav. 387) . 518, 584, 822, 838 —— (1 Hem. & M. 79) 782, 734 Hunt v. Gunn 3 ao 490 —v. Hibbs . 173 ——— vy, Wimbledon Local Board. 223 Hunter’s case (1 Sim. N. 8.485). 851, 861, 866. Hunter, ve (L. R. 8 C. P. 24) 715 — v. Stewart ‘ » . 584, 913. se ae s case (1 De G. & S. 63) 746. Hutchinson, re (16 Q. "B.D. 618) 461 —— v. Harding 670 —— v. Surrey, Gas Co. 148 Hutt v. Giles. ‘ . 411 Hutton v. Scarborough Cliff Co. . 322, 334, 343, 396, 405, 597 —— v. Thompson 144, 764, 766 » Upftill . : . 16, 764 —2. West Cork Railway Co. 318, 366, 389, 599 800, 825*, 826* 95, 270, 559 Hyam’s case Hybart v. Parker Iszorson v. Elam ; 544 I. H., ve (Ir. Rep. 3 Eq. 245) 555. Iifracombe Railway Co. v. Devon and Somerset Railway Co. 291,. 292 —— v. Lord Poltimore . 291 Imperial Bank of Chinaand Japan 640, 642, 651*, 653*, 887, 897 — Bank of China, &e. v.. Bank of Hindustan 176, 208, 264, 307, 891, 894, 895 —— Continental Water Corpora- tion . 689, 691, 692. —— Guardian Life | Assurance Society zo — Hydropathic “Hotel Co. v. Hampson 802, 344, 573, 600° — Land Co. of Marseilles 7 Colborne and Strawbridge (11 Eq. 478) Harris (7 Ch. 587) Jeaffreson (11 Eq. 109) Larking (4 Ch. D. 566) National Bank (10 Eq. 298) Townsend (13 Eq. 148) Vining (6 Ch. 96) Wall (15 Eq. 18) —— Mercantile Credit Association (12 Eq. 504) 712, 883, 889,. 894, 896, 897, 898. (5 Eq. 264) - 5 693- (W. N. 1866, 257) 652* . 643, 659: Chapman and Barkers (3 Eq. 361) Clements (13 Eq. 178 n.) AUTHORITIES RHFERRED TO. PAGE Imperial Mercantile Credit Assoc.—cont. Coleman (1 De G. J. &- Sm. 495) Curtis (6 Eq. 455) Doyle (2 H. & J. 221) Marino (2 Ch. 596) Payne (9 Eq. 223) Richardson (19 Eq. 588) —». Coleman . 367, 369*, 378, 389 —— Rubber Co. Bush (9 Ch. 554) —— Salt and Alkali Co. Slatter’s executors (5 De G. & Sm. 34 & 1D. G. M. 64) —— Wine Co. Shirreff (14 Eq. 417) Tags Hall Rolling Mills Co. . . 334, 396, 401, 787 v. Douglas Forge Co. . - 739 Inchbald v. Western Selsey Coffee Co. : . 729, 883 Ind’s case 50, 401 Independent Assurance Co. Bird (1 Simons, N. 8. 47) ne (1 Simons, N. S. 54) Holt (1 Simons, N. S. 389) Terrell (2 Simons, N. 8. 126) Inderwick v. Snell . 302, 577, 579, ns ex parte . . India and Australia Mail Steam Packet Co. 670 Maudslay and Field (17 Simons, 157) India and London Life Assurance Co. . 3 : » 261 Indian Zoedone Co. . 309, 810, 341, 878, 879 Ingate v. Lloyd Austriaco . 264 Inglis v. Great Northern Railway Co. . 106, 313, 425, 530 Inman v. Clare 727 Inns of Court Hotel Co. . 192, 669, 874, 877 International Contract Co. . 702 Hughes (13 Eq. 623) Ind (7 Ch. 485) here (8 Ch. 86 & 5 Ch. 89) Pickering (6 Ch. 525) International Life Assurance Society (9 Eq. 316) . 7 . 260% —— (2 Ch. D.) 737 Blood (9 Eq. 316) Gibbs and West (10 Eq. 312) Mclver (5 Ch. 424) International Marine drop Co. a , 470, 682 — 4. Hawes 3 . 848 International Pulp and Paper Co. 674, 962 Knowles (6 Ch. D. 556) Inventors’ Association . 638, 652, 657 Ipswich, Norwich and Yarmouth Railway Co. Barnet (1 De G. & Sm, 744) XXXi1 PAGE Ireland (Bank of) v. Trustees of Evans’ Charities . Trish Lands Improvement Society Fry (1 Dr. & Sm. 318) Irish Peat Co. v. Phillips 224 45, 50, 59, 105, 108, 421 Trish West Coast Railway Co. Carmichael (17 Simons, i Tron Shipbuilding Co. . 62. Tron Ship Coating Co. v. Blunt . a 383 Irrigation Co. of France . 632, 642, 651 Fox (6 Ch. 176) Irvine v. Union Bank of Australia 165, 168, 171, 176, 177, 178, 179*, 191, 197, 312 Irving v. Houstoun . : . 545 Isle of Wight Ferry Co. . 618, 636, 645* Isle of Wight Railway Co. v. Tahourdin . 302, 304, 305, 306, 327, 332, 578, 599, 602 Ives, re : . 451, 467, 469. JACKSON v. Cocker 66, 473, 499- —— v. Munster Bank 804, 377, 578, 599: —— v. North Wales Railway Co. 222 —-— v. Petrie : 848- —— v. Turquand 16, 770, 824 Jacques v. Chambers. 544 James, ex parte (8 Eq. 225). . 738 —— (1Sim. N.S. 140) . 623, 649* v. Eve . 299, 482 v. May 804, 805, 879 Jarrett v. Kennedy . 34 Jeaffreson, cx parte 786, 861 Jefferys v. Gurr 46, 220, 464 v. Smith 608 Jegon, ex parte 436 Jenkins v. Hutchinson : 241 Jenkinson v. Brandley pee Co. 198 Jenner v. Morris * 236: Jenner’s case. 793, 795 Jennings, re (1 Ir. Ch. 236 & 654) re 55 —— v. Baddeley , . 897 v. Broughton : 19, 72, 77* —— v. Hammond . 115, 135, 141 Jervis v. Lawrence 451 J ag S case . 522, $30, 841 Job, 847 Tahason, ex parte (27 L.J.Ch. 803) 388- ——(1 Jur. N.S. 913) . - 693 — v. Goslett : . 80, 81 —— v. Lyttle’s Iron Agency Co. 581, 532, 597 Johnston’s claim 209, 716: Johnston v. Renton . 483, 486, 487 Joint Stock Coal Co. . 638, 634, 648, 650 Joint Stock Discount Co. Fyfe (4 Ch. 768) Hill (4 Ch. 769 n.) Loder (6 Eq. 491) Nation (8 Eq. 77) Reid (24 Beav. 318) XXXii PAGE Joint Stock Discount Co.—cont. Shepherd (2 Eq. 564) (2 Ch. 16) Shipman (5 Eq. 219) Sichell (3 Ch. 119) Warrant Finance Co. (10 Eq. 113 & 5 Ch. 86) ——v.Brown . 318, 371, 875, 376, 450 Joint Stock Discount Co.’s claim (7 Ch. 646) . 728, 724 Jones’ case (6 Ch. 48) . ee) Jones, ex parte (27 L. J. Ch. 666) 801 -— v. Charlemont . 610, 901 —-— »v. Garcia del Rio . 568 —— v. Harrison . 383% ——v. Ogle . ‘ 10, 547 —— v, Rose A . 569 —— v. Scottish ‘Accident Insur- ance Co. 38, 911, 912 —— v. Victoria Graving Dock . 228 —— v. Williams . 721 ——v. Yates. ; 713 Jopp’s case. 7 F . 849 Josephs v, Pebrer . 131%, 132%, 140, 487, 516 Joy v. Campbell. : . 551 Jury v. Stoker . 88, 92 KARUTH’s case . 792, 793*, 794 Kay v. Johnson ; . 248 Kearns v. Leaf 166, 184, 249, 598, 892 Keasley v. Codd : - . 245 Keene’s executors’ case . 9315, 316, 542, 758, 812, 831, 862, 893 Kelk’s case 528, 530, 800, 819, 843 Kellock’s case 685, 716, 720 Kellock v, Enthoven 493, 506, 510, 710, 821 Kelly's executors, ex parte . . 748 Kelner v. Baxter . . 149, 248 Kelsall v. Marshall 101, 266, 910, 913 v. Tyler . : » . 916 ‘Kemp’s case ‘ 83 Kempson v. Saunders ; 131, 141, 494* 512 Kendall v. King . . _ » 279 Kennedy, ex parte . ‘ 831 —— v. Panama, &c. Mail Co. ‘76, 590 Kensington Station Act 147, 247, 904 Kent's case 428, 668, 785 Kent v. Freehold Land, &e., Co. . 73, 590, 776, 77 29, 317, 518, 577 579, 582, 594, 600 Kent Benefit Building Society - 189, v. Jackson 386*, 920 Kent Tramways Co. . ; . 147 Kentish Royal Hotel Co. . 657 Ker’s case (4 App. Ca. 549, 598). 758, 802, 806 Kernaghan v. Williams 821, 598 Kerridge v. Hesso S r 145 Kerr’s case (9 Eq. 706) . So ge POD Keynsham Blue Lias Co. 678, 674 | —— v. Barker . 38, 911 AUTHORITIES REFERRED TO. PAGE Khlut’s case . . - 42, 808, 862 ee aa (Mayor of) v. Hard- 221, 224 24, 107, 410 ick ; Widwrelley Canal Co. v. Raby . Kilkenny, &c., pee Co. v. Fielden . ! » 263 Kimber v. Barber ‘ - 860 Kincaid’s case (11 Eq. 192) * 301, 327, 757, 791 (2 Ch, 412) . 26, 28 Kinder v. Taylor . ‘i sie BD King’s case (6 Ch. 196) 802, 808, 827, 843 King, ex parte (8 Ch. 10) . . 556 v. Accumulative Ass. Co. . 247, 248, 249 v. Marshall ‘ . 192 v. Parental Endowment Co. 291 Kingchurch v. People’s Garden Co. Kingsbridge Flour Mill ». ” Ply- mouth Grinding and Banking Co. . 154, 206 King’s Cross Industrial Dwellings Co. : - 638, 645*, 652* Kingston’ $ case (Duchess of) «283 Kintrea, ex parte 123, 124, 466, 685, 827 : . 517, 525 v. Todd 54, 104, 298, 301, 517, 520, 525, 797 Kirk v. Bell . 156, 157*, 174, 200, 409 v. Bromley Union 222, 227 Kirkstall Brewery Co. . » . 408 Kisch v. Central Railway Co. of Venezuela ‘ 29, 72*, 74 Kit Hill Tunnel ‘ 713, "720, "723 Williams (16 Ch. D. 390) Kiveton Coal Co., ex parte . 698 Phillips (7 Ch. 730) Knight’s case 8138, 533, 822, 848 Kipling v, Allan Knight v. Barber 453, 469, 490 » Knight. .. BAI* Knowledge (The Society ‘of Prac- tical) v. Abbott . a 98 Knox’s and Nugent’s case . . 791 Kollman’s Railway Locomotive and Car- riage Improvement Co. Beresford (2 M. & G. 197, and 3 De G. & Sm. 175) Ellis (3 De G. & Sm. 172) Kuper’s Assignees (3 De G. & Sm. 113) La Banque Jacques Cartier ». La Banque de Montreal . (177, 180 Labouchere v. Earl of Wharncliffe 303, 528, 577 Lacey v. Hill. 205, "5u4* Lacharme v, Quartz Rock Mining Co. . 279, 595 Ladywell Mining Co. v. Brooke . 358" Laing v. Reed . 189, 919 Laird v. Birkenhead Railway Co. 228 Lake v. Argyll : . 145, 149 AUTHORITIES REFERRED TO. PAGE Lama Italian Coal Co. 698 Miller (2 Ch. 692) La Mancha Irrigation and Land Co. Lord Claud Hamilton ‘8 Ch. a Lambert v. Rendle Lambton, ex parte . 727 Lamert v. Heath 512 Lamond v. Davall . . + 497 Lamprell v. Billericay Union 221, 227 Lancashire Brick and Tile Co. 626 Lancashire and Carlisle Railway Co. v. North-Western Railway Co. $ i i q - 3824 Lancashire Co-operative Building Co. : : ‘ » « 616 Lancashire Cotton Spinning Co. . 680 Lancaster, &c., Railway Co. v. Heaton . . 173 Lancaster’s case (14 Eq. 72) : 733 Lancaster, ex parte (5 Ch. D. 911) 310 Land Credit Co. of Ireland © McEwen (6 Ch. 582) Munster (1 W. N. 252) Overend, Gurney & Co, (4 Ch. 460) Trower v. Lawson (14 Eq. 8) Weikersheim (8 Ch. 831) Land Credit Co. v. Lord Fermoy 371, 375, 376 Land Credit (General Co. for Pro- moting) . - 116, 135 Land Development Association Kent (37 Ch. D. 508) —— (39 Ch. D. 259) Landman v. Entwistle 247 Landore Siemens Steel Co. 675 Landowners’ Inclosure Co. v. Ash- ford 168, 175, 189, 191, 193 Lane’s case (1 De G. & Sm. 504) 52, 178, 301, 313, 328, 389, 517, 822, 840 Lane, re (14 Ch. D. 856). . 541 vy. Smith - 194 Langham Skating Rink Co. " 680, 633, 634*, 643, 649%, 654, 700 Langham’s trusts ; 452 Langley Mill Steel, &e., Co. . 637, 648 Lankester’s case . 829, 840 95, 97, 127, 263, 293, 683*, 819 Larking, ex parte Q . 723 Larne, Belfast, &c., Railway Co. (14 Jur. 996) P 646*, 653 Baker (3 De G. “& Sm. a Latta, ex parte . ‘ Law v. London Indisputable Life Policy Co. : . 249, 251, 412 Lawe’s case 307, 316, 518, 838, 860 Lawless ». Anglo Egyptian, &e., Lanyon v. Smith 627, 646 Co. , F 5 ‘ « 209 Lawrence’s case . . 26, 28, 771 Lawrence v. Knowles 498, 551 —— v. Lawrence ‘ . 547 v. Wynn. 416, 427, ae Lawson v. Sean of London . Lawton, ex parte 561, 627, 641, ea7® v. Hickman 453, 488 Lee v. Bude, &c. Railway Co. 292 XXXIL PAGE Lee v. Haley . - . 1s v, Neufchatel Asphalte Co.. 431, 600 ——v. Nuttall. ‘ . 720, 721 v. Sangster . 718 Lee and Chapman's case (30 Ch. D. 216) : Lee and Moor’s case (5 Eq. 368) . Leeds Banking Co... Addinell a Eq. 225) Barrett (2 Dr. & Sm. 415) Clarke (1 W. N. 254) Dobson (1 Ch. 231) Fearnside and Dean (ib. ) Howard (1 Ch. 561) Mallorie (2 Ch. 181) Matthewman (3 Eq. 781) Leeds Estate Building Society v. Shepherd 321, 371, 374*, 375, 376, 888, 4382, 433, 444 Leeds and Thirsk Railway Co. ». Fearnley . - 39, 422 Leeke’s case ‘15, 395, 786, 789, 796* Le Feuvre v. Miller . 173 Lefroy v. Gore. 145 Leggott v. Western : - 462 Leicester Club and County Race Course Co. Cannon (30 Ch. D, 629) Leicestershire peaking: Co. . - 861 Leifchild’s case 206, 783 Leishman v. Cochrane 46, 759 Leominster Canal So. v. Shrews- bury and Hereford Railway Co. 151, 739 768 418, 693, 697 223, 227 Le Tailleur v. The South Eastern Railway Co. . : . 911 Lethbridge v, Adams 249, 250, 251, 373, 854 Letterkenny ea Co. 905 Levi v. Ayers 553 Levick, re . 678 Levita’s case ‘ : 14, 796 Levy v. Abercorri’s Slate Co. 196, 198 Lewis v. Baldwin . 37, 909 v. Billing 560 v. Carr . ; é oe, 029 v. Nicholson 2 2 . 241 ——, re (6 Ch. 818) . 457, 458 Lhoneux, Limon & Co. v. Hong Kong Banking Co. . 265, 909 Licensed Victuallers’ Mutual Trad- ing Association . . 761 Life Assurance Co. of England 675, 674 Blake (84 Beav. 639) Thompson (4 De G. J. & Sm. 749) Limehouse Works Co. Coate (17 Eq. 169) Limerick, &c., Rail. Co. v. Fraser 263 Limpus v. London General Omni- bus Co. 209 Lindsey v. Great Northern Rail- way Co. . : 151, 228, 258 Lindus v. Melrose 186, 233, ‘o34", 240 Linford v. Provincial Horse and Cattle Insurance Co. . s = 6 Linley v. Taylor . 452 XXXIV PAGE Linton v, Blakeney adorn Society . . 268, 915 Lintott, ex parte . j . 847 Lion Insurance Association v. Tucker . ® ; 858, 855 Lisbon Steam Tramways Co. . 691 Litchfield’s case . . 828 467, 758, 756, 824 66, 627, 640, 800 Littledale, ex parte Littlehampton Steam Ship Co. Ellis (3 De G. & S. 172) Ormerod (5 Eq. 110) Liverpool Borough Bank Duranty (26° Beav. 268) v. Mellor «. . 617 ». Turner (2 De GF. & J. 502) Liverpool Civil Service Association Greenwood (9 Ch. 511) Liverpool Loan Co. Bullen (7 Ch. 732) Liverpool and Manchester Saw-Mills and Timber Joint-Stock Co. Ashburner (13 Jur. 691) Holt (3 De G. & Sm. 99) Liverpool Marine Assurance Co. Greenshield (5 De G. & Sm. 599) Llanfyrnach Silver Lead saan Co. ‘i - 889 Llangennoch Coal Co. 22, 668 Llanharry Hematite Iron Ore Co. Roney’s case (4 De G. J. & Sm. 426) Stock’s case (4 De G. J. & Sm. 426) Tothill (1 Ch. 85) Lloyd, ex parte . 148, 722, 860 ; . A491 v. Crispe . v. Dimmack . s » . 589 v. Lloyd . 675 Lloyd Generale Italiano 622, 652, 912 Llynir Coal and Iron Co, Hide (7 Ch. 28) Lock v. Venables . 545 Lofthouse’s case "94, 256, 524, 840 Logan, ex parte. : . 31 v. Courtown 598, 599, 601 Londesborough’s case, Lord 244, 849, 851, 860 London Armoury Co. . : - 626 London Assurance Co. v. London and Westminster Insurance Cor- poration. 113 London Bank of Scotland, ex r parte (12 Eq. 268) . ‘ 763 —— (W. N. 1867, 114) . 849, 884 Houten and Birmingham Alkali 624, 638 enon “and” Birmingham, &e. Bank . : . 124, 458 Wright (12 Eq. 331) London and Birmingham Railway Co. v. Winter. 223 London, Birmingham, and Bucks Railway Curzon (3 Dr. 509) AUTHORITIES REFERRED TO. PAGE London and Birmingham Exten- sion and Northampton, &c. Railway Co. Carpenter’s Executors (5 De G. & Sm. 402) Gay (5 De G. & Sm. 122) (1 De G. M. & G. 347) Higgins (2 Jur. N. 8. 178) Hopkinson and Underwood (7 De G. M. & G. 193) Prichard (5 De G. M. & G. 484) Weiss (5 De G. & Sm. 402) London and Bombay Bank (18 Ch. D. 581) 41, 803, 808*, 811 — (1Ch. 525) . . 701, 702 Cama (9 Ch. 686) London and Brighton Railway Co. v. Fairclough 59, 106, 313, 423, 530, 532, 533, 534 v. London and South-West- em Railway Co. . : - . 202 London, Brighton, and South Coast Railway Co. v. Goodwin. 258, 900 London, Bristol, and South Wales Railway Co.. Capper (8 De G. & Sm. 1) London and Caledonian Marine Insurance 684, 870, 882, 885 London Celluloid Co. . 787, 789 London, Chatham and Dover Rail- way Co. v. South-Eastern Rail- way Co. 184 London and Colonial Co. Clark (7 Eq. 550) Horsey (5 Eq. 561) London and Continental Assurance Society v. Redgrave . 28, 25, 411 London Conveyance Co. Wise (1 Dr. 465) London Cotton Co. ‘ 676 London and County Assurance Co. Jessopp (2 De G. & J. 638) Jones (27 L. J. Ch. 666) Wood and Brown (9 W. R 366 and 10 7b. 662) London and County Bank Co. v. London and River Plate Bank 474, 476, 477, 483 London and County Coal Co. 632, 641, 646 London and County General Agency Association Hare (4 Ch. 503) London and Devon Biscuit Co. . 677 London Dock Co. v. Sinnott 165, 220, 223 London and Dublin, &. Railway Co. 656 London and Eastern Banking Cor- poration Longworth’s Executors (Johns. 461 —— No. 2 (Johns. 465) London and Eastern ae Cor- poration . 7 613 AUTHORITIES REFERRED TO. PAGE London and Exeter Rail. Co. Holinsworth (3 De G. & Sm. 7) Parbury (3 ib. 43) London and Financial Association vo. Kelk 163, 177, 179, 200, 364, 378 London Founders’ Association v. Clarke . 467, 491, 507 London and Grand J unction Rail- way Co. v. Freeman . 88, 106 ». Graham 49, 51, 58, 108, 421 London, Hamburg, &c. Exchange Bank Emmerson (2 Eq. 236) Evans (2 Ch. 427) Preston (2 W. N. 10) Ward and Henry (2 Ch. 431) Zulueta (9 Eq. 270) —(5Ch. 444) London India Rubber Co. ie Eq. 519) 3 . 868 (1 Ch. 329) : : 3 te 806 London and Manchester Indepen- dent Railway Co. Barber (1 M. & G. 176) —— (1 DeG. & Sm. 726) Bass (1 De G. & Sm. 722) Pocock (ib. 731) London and Manchester Industrial Association : 700 London Marine Insurance Associ- ation 621, 662, 722, 849 Andrews & Alexander (8 Eq. 176) Chatt (8 Eq. 176) Cook (8 Eq. 176) Crew (8 Eq. 176) Smith (4 Ch. 611) London and Mediterranean Bank Agra and Masterman’s Bank (6 Ch. 206) Bolognesi (5 Ch. 567) Wright (7 Ch. 55) —— (12 Eq. 331) London Mercantile Discount Co. _—640, 651 London Monetary Co. v. Smith . 114 London, Newbury, & Bath Direct Rail. Co. Cookson (15 Jur. 615) London and Northern Insurance Corporation Stace & Worth (4 Ch. 682) London and North-Western Rail- way Co. v. McMichael . Ea 39 v. Price. : . 163, 165 London and Paris Banking Corpo- ration . 637, 648* London and Provincial Consoli- dated Coal Co. . 520, 797, 839 London and Provincial Law ‘Assur- ance Society v. London and Pro- vincial Joint-Stock Life . . 1138 London and Provincial Provident Society v. Ashton . 5 114 London and Provincial Starch Co. Gower (6 Eq. 77). London and Freund Telegraph Co. . ‘ 7 124, 551, 552 XKXV PAGE London Quays, &., Co. 702, 888, 889 London and Scottish Bank Logan (9 Eq. 149) London and Southern Counties, &ec., Land Co. 157, 158, 223, 300, 319, 409 London and South Essex Railway Co. Murrell (3 De G. & Sm. 4) London and Staffordshire Fire In- surance Co., Inre . 28, 999 London Suburban Bank (6 Ch. 641) . 634, 650 —— (15 Eq. 274) . . 832 (19 W. R. 950) . 676* London Tramway Co. . » . 483 London and Westminster Insurance Co. Phillips (3 De G. & Sm. 2) London and Westminster Wine Co. i 655, 657 London and Yorkshire Bank v. Cooper 692, 870, 970 London Wharfing a and Warehous- ing Co. s . . 637, 648 Long v. Kent - . 541 Longdendale Cotton Spinning Co. 675 Longworth’s case (7 W. R. 483). 84 Longworth’s executors’ case (1 De G. F. & J. 17, 31) 141, 142, 312, 612, 849 Looker v. Wrigley . 189, 191, 196, 919 Lord, ve é - 883 v. Copper Miners’ Co. " 208, 317, 579, 601 Loring v. Davis 489, 493, 504, 505, 511 Los’ case ' 62, 122, 896 Lovell ». Andrew . : . 573 ——v. Hicks. , : - 218 Lowe’s case . 834, 835 Lowe v. London and North West- ern Railway Co. 220, 227 Lowenthal, ex parte . ‘ - 269 Lowestoft, "Yarmouth, &c., Tram- ways Co, - 102, 904 Lowndes, ex parte : 852, 858 — vv. The Garnett and Moseley Mining Co. . 383*, 886 Luard’s case 41, 42, 685, 752, 807, 808, 809 Lucas v. Beach F . 148, 606 Luckombe v. Ashton . : . 246 Lucy’s case 710, 860 Ludlow (Mayor of) ». Charlton 185, 221 Lund’s case. : ‘ 800, 825 Lund ». Blanshard 272, 568, 573 Lumsden v. Buchanan : - 801 Lumsden’s case 39, 810, 829 Lundy Granite Co. . 679, 680 Heaven (6 Ch. 462) Lyde v. Eastern Bengal Railway Co. 3 ss : 321, 571, 598 Lydney, &c., Co. v. Bird . 347, 349, 356*, 357, 66] 29, 410, 411, 761, 771, 773 . 437, 610 157, "256, 532, 533, 843 Lyon’s case. Lyon v. Haynes . Lyster’s case . XXXVi PAGE McArvuzy v. Irish Iodine Co. . 220 Macbride v. Lindsay . 99, 593 Maccallum v. Turton. ~ « 496 McCollin v. Gilpin 240, 243, 247 McCreight v. Stevens . 422, 590 M ‘Devitt v. Connolly 508, 511 Macdougall 7. Gardiner . 311, 570, 573", 578, 581, 600 v. Jersey Hotel Co. 321, 410, 411, 432, 597, 599 MacDowell’s case 73 o* McDowell v. Davis. c . 706 v. Doyle . . 267, 706 McEwan v. yng bell 5 3 . 145 McEwen’s case @ F . 556, 815 McEwen v. London and Bombay and Mediterranean Bank . 675 vy. West London Wharves, &c., Co. 44, 104, 801, 824 ». Woods . , 512, 513 Macfarlane’s claim . 718, 716, 721, 732 McGowan & Co. v. Dyer. - 209 McGregor v. Doverand Deal Rail- way Co. ‘ : . 186, 244 v. Keiley . . _ . 670 McIntyre v. Belcher . 247, 249 ». Connell 2,9, 109, 462*, 463 ». Miller. » 269 MclIver’s claim 249, 717, 782, 738, 747, 864 MacKay’s case . 367, 694, 695, 696, 787, 790 Mackay v. Commercial Bank 216, 217* McKenna v. Rolt « 270 Mackenzie, ex parte . 740, 749, 748, 848 —— v, Sligo and Shannon Rail- way Co. 279, 670, 671, 901, 909 Mackereth 7. Glasgow and 8. W. Railway Co. . ‘* » 909 Mackley’s case ‘i ea 197: McKewan’s case . . 783, 855 Mackrell v. Glasgow & 8. W. Rail. Co. . - 909 Maclae v. Sutherland 185, 190, 234* Maclaren v. Stainton 430, 546*, 909, 911, 912 Maclean v. Dunn ‘ » 228 Maclure, ex parte . ‘ - . 731 MacMahon v. Upton . 561, 564 McNeill’s case : a . 123, 777 Maddick v. Marshall . 144, 145 Madras Irrigation and Canal Co. (16 Ch. D. 702) . » . 675 (23 Ch. D. 248) =. «662, 698 Madrid Bank Wilkinson (2 Ch. 537) v. Bayley ‘ 695, 708 v. Pelly : 367, 865 Madrid and aleiiei Railway Co. Chadwick (15 Jur. 597) James (3 De G. & Sm. 127) (2 M. & G. 169) Quilter (5 De G. & Sm. 276) Turner (2 M. & G. 169) (8 De G. & Sm. 127) Magdalena Steam Navigation Co. 180, 237 912 AUTHORITIES REFERRED TO. PAGE. Magdalena Steam ie a Co. v. Martin ; . | 86, 757 Magnus, ex parte . . - 4718 Maguire’s case. : 312, 758, 824 Mahony v. East Holyford Mining Co. . 7 157, 158, 160, 167, 196 Mainwaring’s case 16, 778, 861 Mair v. Himalaya Tea Co. . » 601 Maitland’s case (4 De G. Mac. & G. 769) 5 35, 145 (8 Giff. 28) ; : - 766 Malachy v. Soper . : - . 454 Malaga Lead Firmstone (20 Eq. sig Mallock v. Jenkins. 920 Mallorie’s case a A a 770, 814 Malone, ea: parte . 815 Manchester Bank Mellor (12 Ch. D. 917) Manchester Economic Building Society 662, 663, 698 Manchester and Liverpool District Banking Co. Littler as Eq. 249) Manchester and London Life Ass. 260* 657, 734 Manchester and Milford Railway Co. . “ ‘ ; : » 279 Mangles v. Grand Coll. Dock Co. 412 Manisty v. Churchill. ae MAE Mann’s case . : 128, 810, 828 Mansfield’s case . 761 *, Wi, 851, 860 Mant v. Smith . i . 606 March v. A. G. 3 - . 452 Mare v. Charles . ‘ . 232* v. Malachy . . 593 Maria Anna, &c., Coal and Coke Co. Hill (20 Eq. 585) McKewan (6 Ch. D. 447) Maxwell (20 Eq. a) Marine Estates Co. - . 263 Marine Investment Co. Poole’s Executors (8 Ch. 702) Marine Mansions Co. 197, 707, 865 Marino’s case . ‘ . 121, 836 Markham v. Markham fs . 570 Markwell’s case . 765*, 862 Marlborough Club Co. (1 Eq. 216) 658, 659 (5 Eq. 365) 3 694, 783 Marlow ». Pitfield , 5 . 236 Marnham, ex parte. 488 Marquis of Abercorn’s case 301 Marsden v. Kent . . 548 Marseilles, &c., Land Co. 708, 878, a Brandon (80 Ch. D. 598) Crédit Foncier, &c. of England (7 Ch. 161) Evans (11 Eq. 151) Smallpage (30 Ch. D. 598) Marsh’s case (13 Eq. 388) 7 867 Marsh, ea parte (1 Mac. & G. 302) 863 ». Keating . i A 483 Marshall, ex parte 556, 815 —— v. Corporation of Queen- borough =. - 3 - « 223 AUTHORITIES REFERRED TO. PAGE Marshall v, Glamorgan Iron Co. 526, 818, 833 Marson v. Lund. 291, 295, 670 Martano v. Mann . 661 Martin v. Lacon . 451 v. Sedgwick . 454 Martin’s case (2 Hem. & M. 669), 62, 122, 896 Martin’s claim (14 Eq. 148) 761 Martin’s Patent Anchor Co. v. Morton 4 ; 556, 815, 848 Martyn v. Gray . : 96 Marylebone J oint-Stock Bank (18 Jwr. 281) 850, 851, 852, 863, 865, 866 —— (25 L. J. Ch. 650) 852, 854, 858 Busk (3 De G. & S. 267) Davidson (7b. 21) Stanhope (7d. 198) Troutbeck (1 De G. & S. 585) Walker (1 De G. & S. 585) Masons’ Hall Tavern Co. Habershon (5 Eq. 286) Mason v. Boge . ‘ footage C0 FAO) v. Harris . 571, 572, 579 Masonic and General Life Assur- ance Co. ‘ - » 624 Massey, re. 703, 704, 865 v. Allen. . 691, 806 Master’s case 825, 828 Mather, ex parte. ee AE », National Assoc. Invest- ment Society : : 293, 794 Matheson Brothers, Limited 622, 623, 636, 644*, 912 Mathew’s case 15, 767, 770, 861 Mathew v. Blackmore . . 247 Matlock Old Bath Hydro. Co. Maynard (9 Ch. 60) Matterson v, Elderfield . 920 Matthewman’s case . 41, 809 Matthews v. Great N. orthern Rail- way Co. . - 401 Maturin v. Tredinnick | ‘ 496, 591*, 592 Maude, ex parte (6 Ch. 51). 852, ete 85 Maudslay and Field’s case 766, 860 Maughan v. Leamington Gas Co. 434” Maund v. Monmouthshire Canal Co. . ‘ i . 209 Maunder v. ‘Lloy d. . . 913, 914* Maunsell v. Midland Great West- ern Railway Co. 184, 186, 571, ae 0 Mawer’s case ‘ 848 Maxted v. Paine (No. 1, L. R. 4 Ex. 81) . (No. 2, L. R. 6 Ex. 132, and 4 ib. 203) 491, 495, 500, 501, 504*, 506, 508, 509, 510, 511 Maxwell’s case (20 Eq. 585) 783, 855 —— (24 Beav. 321) : . 811, 829 — trusts (1 Hem. & M. 610) 547 —— v. Dulwich College . . 228 v. Port Tennant, &c. 357, 585, 587 Mayhew’s caso . 94, 254, 471, 823, 831 Maynard’s case. : our Vili 85, 798 L.c. 503, 510, 512 Meader »v, Isle of Wight Ferry Co. XXXVil PAGE Maynard v. Eaton . . 509, 511 Mayor of Colchester v. Lowten 198, 207 Mayor of Kidderminster v, Hard- wick . . 221, 224 Mayor of Ludlow ». Charlton 185, 221 Mayor of Stafford v, Till. . 220 Mayor of the Staple of England ». Bank of England 198, 221, 224, 483, 484, 486, 487 282, 292, Medical Invalid, &c., Life Assur- ance Society Griffith (6 Ch. 374) Spencer (6 Ch. 362) Meek v. Wendt & Co. . 241 Meeus v. Thelusson » 914 Melbourne Banking Corporation Brougham (4 App. 7 v. Brougham ‘ 223 Melhado v. Hamilton 405 v. Porto Alegre, &c. Rail- way Co. . 147 Meliorucchi v. Royal Exchange Co. 551 Melliss v. Shirley Local Board 222 Menier v. Hooper’s Telegraph Works . 809, 321, 572 Mercantile and Exchange Bank London Bank of Scotland (12 Eq. 268) Mercantile Mutual Marine Insur- ance Association 556, 815 Mercantile Trading Co. Schroder (11 Eq. 131) Stringer (4 Ch. 475) Mercer’s case » « 690 Merchants’ Co. . 685, 690 Heritage (9 Eq. 5) Merchant Banking Co. of London v. Merchants’ Joint-Stock Bank 113 Merchant Traders’ Ship Loan and Assoc. Co. 702 Chapple (5 DeG. & Sm. 400) Talbot (5 De G. & Sm. 388) Yelland (5 De G. & Sm. 395) Merchants’ and Tradesmen’s As- surance Society 260*, 735 Meredith’s case and Conver’s case 246 Merionethshire Slate and Slate Slab Co. s a 20% Day (3 Jur. N.S. 1016) Rye (ib. 460) Merry v. Nickalls 501, 503, 504, 510 Mersey Docks Co. v. Gibbs. . 209 Mersey Railway Co. ‘ aoe 279, Mersey Steel and Iron Co. v. Nay- lor & Co. . 273, 667, 719, 728*, 738, 739 Metropolitan Bank v, Heiron 374 v. Jones ‘ 881 —— v. Pooley 210 Metropolitan ail Provincial Bank 726 Metropolitan Public Carriage, &c. Co. Brown (9 Ch. 102) Cleland (14 Eq. 387) *d XXXVI AUTHORITIES PAGE Metropolitan Railway Junction Co. Markwell (5 De G. & Sm. 528) Metropolitan Railway Warehouse Co. (15 W. R. 1121, L. J.) 628 CW. N. 1867, 94) 646* Metropolitan Saloon Omnibus Co. 635, 639, 641, 650* — v. Hawkins . 563 Meux’s Executors’ case 183, 207, oy Meux v. Maltby 266, 267, 272* Mexican and South American Co. 671, 747, 864 Aston (4 De G. & J. 320) (27 Beav. 474) Barclay (26 Beav. 182) Costello (2 De G. F. & J. 302) De Pass (4 De G. & J. 544) Finlay Hodgson (26 Beav. 183) Grisewood & Smith (4 De G. & J. 544) Hyam (1 De G. F. & J. 75) Lund (27 Beay. 465) Shewell (2 Ch. 387) Wilkinson (2 Ch. 536) Meyer’s case 21, 521, 772*, 841 a Ee Assembly Rooms . 628, 639, 649* Midland Counties Benefit Build- ing Society . 8 916, 918, 922 Midland Great Western Railway Co. v. Gordon 23, 46, 106*, 410, 420 ». Johnson 222, 227 Midland Union, &c. Railway Co. Lucy (4 De G. M. & G. 357) Norbury (5 De G. & Sm. 423) Pearson’s Executors (3 De G. M. & G. 241) Migotti's case ‘ 798 Milan Tramways Co. Theys (22 Ch. D. 122 and 25 Ch. D. 587) Milburn v. Codd 606 Mildmay v. Methven 725 Miles v. Bough - 800, 318, 330, 415, 417, 418 —— v. New Zealand, &c. Co. 459 v. Thomas . 575, 581, 601, 609 Milford Docks Co. . A » 624 Lister (23 Ch. D. ae Mill v. Hawker 240 Millard v. Bailey 541 Miller v. Thompson : 233* Miller’s case (3 Ch. D. 391) 260* (6 Ch. D. 70 & 38 ib. 661) < 789*, 793, 795*, 839, 844 Miller’s Dale, &c., Lime Co. . 805, 775 Mills v. British Provident Assur- ance Society 313 —v. Northern Railway | of Buenos Ayres Co. 278, 481, 602 Milroy v. Lord és z 500, 588 Minor v. The London and North- Western Railway Co. - 911 Mitcalfe’s case . 867, 696 REFERRED TO. PAGE 39, 802, 810 Mitchell’s case (9 Eq. 363) . (5 Ch. 400) . 556, 693, 816, 848 Mitchell’s claim (6 Ch. 822) - 723 Mitchell’s and Rutherford’s cases (4 App. Ca. 548 & 567) 466, 806, 835 Mitchell v. City of Glasgow Bank 409, 835 —— v. Moberly 3 . 451 v. Newall . 494, 512 Mitre Assurance Association 613 Eyre (81 Beay. 177) Mixer’s case 72, 80, 82, 85, 214 Moffatt v. Farquhar. . 309, 377, 464, 465, 566, 597 v. Farquharson . . 309 Mollett v. Robinson 514 Monarch Insurance Co. Gorrissen (8 Ch. 507) Monmouthshire Canal Co. » Kendall 310 and Glamorganshire Bank- ing Co. 639, 642, 653* Cape’s executors (2 DeG. M. & G. 562) Montagw’s case (Lord R.) Montreal (Bank of) v. Bathune 910 Montreal Assurance Co. v. Me- Gillivray é 187 Moody v. London and Brighton Railway Co. 156, 160, 161 Moor, cz parte. a 10% v. Anglo-Italian Bank . 197, 624 675, 720 . 14, 81 746, 834 Moore v. Garwood v. Hammond:. 307 v. Metropolitan Railway Co. 209 v. Rawlins . 117, 533, 922 Moore Gold Mining Co., Sir J ohn 7038, 878 Morgan’s case (1 Mac. & G. 235 & 1 De G. & Sm. 750) . 317, 320, 518*, 817, 838* (28 Ch. D. 620) 440, 705, 896 Morgan v. Great Eastern Railway Co. 569 Morisse v. Royal British Bank 282, 295, 671 Morrice v. Aylmer . 5 400, 541 Morris’ case G Ch. 200 & 8 Ch. 800) ma 85 Morris v. Cannan . 478, 488 v. Glynn . . 451 v. Kearsley . 492 v. Sadlier : . 537 Morrison, ex parte (De Gex, 539). ai —— (15 Jur. 346 & 20 L. J. Ch. 296). 765 v. Glover 916 Morton’s case 824 Morvah Consols Tin Mining Co. McKay (2 Ch. D. 1) Moscow Gas Co. (City of) v. Inter- national Financial Society . 263 Moseley v. Cressey’s Co. 32, 568 AUTHORITIES REFERRED TO. PAGE Moseley Green Coal and Coke Co. Barrett (4 De G. J. & 8. 756) ——(4DeG. J. & S. 416) Fox (5 Eq. 118) Moss, ex parte (14 Ch. D. 398) 359 (3 De G. & S. 599). 551 —— (14 fur. 754). 622, 654* v. Steam Gondola Co. . 45, 54*, 59 Mostyn v. Caleott Hall Mining Co. 112 Moulton v. Camroux r é 40 Mowah Consols Tin Mining Co. MeKay (2 Ch. D. 1) Mowatt v. Castle Steel Co. . . 197, 198, 723, 784 —— ex parte (1 Drew, 247) . . 851 v. Lord Londesborough . 31, 34 Mowatt and Elliott's case (3 De G. M. & G. 254) . 780, 851, 861 Mozley v. Alston . 300, 570, 573, 575, 576*, 578, 581*, 600 Mudford’s claim . ‘i 736 Muggeridge, re é . 813, 848 Muir’s case (4 App. Ca. 337) j 46 Muir v. City of Glasgow Bank S01 Mulkern v. Lord 921 Mulliner v. Midland Railway Co. 202 Munday, ex parte . 748 Municipal Permanent Building Society v. Kent . 921 v. Richards ‘i ‘ 921 Munster Bank, Limited . « « 805 v. Cammell Co. . 302, 337, 567, 599, 996 Munt’s case 201, 519, 838, 839 Munt v. Shrewsbury and Chester Railway Co. 321, 323, 571, 598 Murphy v. O'Shea . 368 Murray’s executors’ case . 193, 226, 328, 388 Murray v. Bush 300, 336, 758, 822, 824, 832, 841 v. East India Co. . 185, 222 v. Flavell iy we “O89 v. Pinkett . . 456 v. Scott . . 189, 919 Murrell, ex parte 652*, 653 Musgrave’s case 121, 500, 749, 835 Mutter v. Eastern and Midland Railway Co. 314, 333, 440, 567, 599, 604 Mutual Society —— (22 Ch. D. 714) . 692, 695, 705 —— (24 Ch. D. 425). . . 872 Grimwade (18 Ch. D. 530) Mutual Aid Building Society (29 Ch. D. 182 & 80 Ch. D. 484) . 189, 872 Myers v. Perigall ‘ . . 452 v. Rawson . . 298 Mysore Reefs Gold Mining Co. . 703 Nacupatr Gold Mining Co. . 659 Nanney v. Morgan 108, 467, 469, 472, 477, 588 Nanteo’s Consols Co. Thomas (13 Eq. 437) XXX1X PAGE Nantle Vale Slate Co. Job (27 Beav. 32) Nant-y-Glo v. Grave 367* Narborough and Watlington Rail- way Co. James (1 Sim. N.S. 140) Natal Investment Co. . 640, 651* Financial Corporation (3 Ch. 355) Nevill (6 Ch. 43) Snell (5 Ch. 22) Nathan, Newman & Co. . 685, 688, 746 Nation’s case . . 834, 835 National Alliance Assurance Co. Ashworth (10 W.R. 771) National Arms Co... 682 National Assurance and Invest- ment Association Munday (31 Beay. 206) National Bank, re (10 Eq. 298) . 694, 696 ex parte (14 Eq. 507) . 203, 726 of St. Charles v. Barnales 909 National Bolivian Navigation Co. v. Wilson . one 30 National Building Land Co. 865 National Coffee Palace Co. Panmure (24 Ch. D. 367) National Equitable Provident Society Wood (15 Eq. 236) National Exchange Co. of Glasgow v. Drew . . , 311%, 213* National Funds Assurance Co. (10 Ch. D. 118) . 321, 371, 373, 375, 378, 390, 695, 696 (4 Ch. D. 305) 662, 698 National Guaranteed Manure Co. v. Donald 199 National Insurance and Invest- ment Co. Abercorn (4 De G. F. & J. 78) Cotterell (11 W. R. 13) Davie (4 De G. F. & J. 78) Munday (31 Beav. 206) National Live Stock Insurance Co. (26 Beav. 153) . 649* National Patent Steam Fuel Co. Baker (1 Dr. & Sm. 55) Barton (4 Dr. 535) (4 De G. & J. 46) Worth (4 Dr. 529) National Permanent Benefit Build- ing Society . 237, 662 National Provincial Life Assurance Society . . 260*, 261, 645*, 734 Fleming (6 Ch. 393) National Provincial Marine Insur- ance Co. Gilbert (5 Ch. 559) Parker (2 Ch. 685) National Savings Bank . 626, 662, 863, 875, 877, 887 Hebb’s case (4 Eq. 9) Native Iron Ore Co. 203 Natle Slate Co. . 847 Nash, ex parte 3 61, 605 Nassau Phosphate Co. 39, 111 d 2 xl Natusch v. Irving Navan and Kingscourt Railway AUTHORITIES PAGE 319*, 321, 579*, 597 Co. . ‘ . 906 Naylor’s case . 85, 772 Naylor v. South Devon Railway Co. m . 585, 597 Neale ”. Turton - ~ » 185 Needham’s case . 821 Needham v. Law ‘ 268, 269, 286 ». Rivers Protection Co. 676 Neill’s case . 845 Neilson, cx parte 488, 516 v. James ‘: . 489, 511 Nelson Mitchell v. "City of Glas- gow Bank Liquidators 466 Ness, ex parte , 282 v. Angas 41, 55, 109, 289 vy, Armstrong 55, 110, 289, 540, 542 —— v. Bertram . 540 vy. Fenwick 295 Nevill’s case ; 821 Nevins v. Henderson 145 Newbigging v. Adam . 73 New Brunswick Railway Co. ». Boore 7 v. Conybeare —— v. Muggeridge » di, 719 213* 45, 119, 129, 421, 587 New Buxton Lime Co. Duke’s case (1 Ch. D. 620) Newby v. Von Oppen . - 265 New Callao ; 5 . 662, 698 Newcastle, &c., Bank, re 684, 686 Spence’s case (17 Beay. 203) Newcastle Machinists’ Co. . 655 Newcastle-upon-Tyne Marine In- surance Co. Brown’s case (19 Beav. 97) Henderson’s case (19 Beav. 107) New Chili Gold Mining Co. . 334, 401, 403 New City Constitutional Club Co 679% Purssel (84 Ch. D. 646) New Clydach Co. 197 Newfoundland (Government of) v Newfoundland Railway Co. 276, 740 New Gas Co. . ‘ . 659 New Gas Generator Co. . "640, 641, 646, 649* , 651 Newhaven Local Board v. New- haven School Board . 800, 302, 330, 336 Newington Local Board v. Eldridge 603 New London Brazilian Bank v. Brocklebank 3 . 450, 457 Newport, &c., Healey Co, vw Hawes ; . 427 New Quebrada Co. 124 Newry, &c., Railway Co. v. Coombe 39, 422 v. Edmunds 416, 419 —— v. Moss . , - 46, 421, 802 New Sombrero Phosphate Co. ». Erlanger 70, 88, 354* New South Wales Bank v. Owstori 210 REFERRED To. PAGE New Theatre Co. Bloxam (4 De G. J. & S. 447) —— (33 Beay. 529) Newton v. Belcher 145 v. Daly . v, Liddiard . "95, 205, 293 145 Newtownards Gas Co. : 852, 869 New York Exchange, Limited 636 New York Life Insurance Co. . 37 New Zealand Banking Corporation 741 Hickie & Co. (4 Eq. 226) Levi & Co. (7 Eq. 449) Sewell (3 Ch. 181) Nicholas, ex parte 556 Nicholay’s case 765* Nicholls 7. Diamond . 232* Nichols 7. Rosewarne 463 Nichols’ case ce N. 1867, 77) 26) 742 —— (29 Ch. D. 421) 124, 763, 797 —— (3 De G. & J. 387 and 420). 72 80*, 82%, 87, 156, 206, 211, 214, 215, 522, 749, 751, 824, 841, 861 Nicholson v. Bradfield Union 222 v. Gooch » 140 Nickoll’s case (24 Beav. 639) | . 782%, 789, 805 Niger Merchants’ Co. v. Capper . 687 Nister Dale Iron Co. Hughes (1 De G. & Sm. 606) Nixon v. Brownlow . 23, 106, 291, 292, 296, 393 292 291 —— v, Green A 7 —- v. Kilkenny Railway Co. v. Taff Vale Railway Co. . 227 Nockells v. Crosby 30%, 34*, 131, 132 Norbury’s case : ‘ . . (67 Norman v. Mitchell 24, 393, 410, 411, 528, 534%, 597, 599 Norrington, re . 548 Norris v. Chambers : . 912 v, Cooper . 764, 766 v. Cottle 7.64, 766 -——v. Irish Land Co. . 61, 280, 603 North American Colonial Asso- ciation of Ireland v. Bentley 424* North Brazilian Sugar Factories (56 L. T. (N. 8.) 229) 660 —— (37 Ch. D. 88) . a 705 North of England Joint Stock Banking Co. ‘ . 654, 684, 703 Angas (1 De G. & Sm. 560) Armstrong (1 De G. & Sm. 565) Bernard (5 De G. & Sm. 283) Burlinson (3 De G. & Sm. 26) Chartres (1 De G. & Sm. 581) Crosfield (4 De G. & Sm. 338) ee G. ie & G. 128) Fenwick G De G. Glaholme (1 D Gouthwaite (3 (3 De G. Hawthorne (1 (1 ) Hawthorn (1 De G 4 Sm. 571) AUTHORITIES REFERRED TO. xli PAGE North of England Joint Stock Banking Co.—continued. Holme (2 De G. M. & G. 113) — (4 De G. & Sm. 312) Hutchinson (1 De G. & Sm. 568) Mawer (4 De G. & Sm. 349) Reaveley (1 De G. & Sm. 550) Sadler (3 De G. & Sm. 26) Sanderson (3 De G. & Sm. 67) (1 M. & G 306) Straffon’s Executors (1 De G. M. & G. 576) (4 De G. & Sm. 256) Thomas (1 De G. & Sm. 579) North Hallenbeagle Mining Co. Knight (2 Ch. 321) N orthampton Coal, &e., Co. «. Midland Waggon Co. . 264 North Kent Railway, &c., Co. Kincaid (11 Eq. 192) North London Railway Co. ». Great Northern Railway Co. . 596, 598, 602 North Shields Quay and Improve- ments Co. Davidson (4 K. & J. 688) North and South Wales Bank . 203 North Stafford Steel Co. v. Ward 410, 411 North-West Transportation Co. v. Beatty . 809 North-Western Railway Co. ¥. McMichael . 106, 416, 422 North-Western Trunk Co. . 653* North Yorkshire Iron Co. . 680 Northern Assam Tea Co, . . 702 Universal Life Assurance Co. (10 Eq. 459) — Coal Mining Co. Bagge (13 Beav. 162) Northern Counties of England Fire Insurance Co. Macfarlaine (17 Ch. D. 337) Northern and Southern Connect- ing Railway Co. Mercer (5 De G. M. & G. 26) Northey v. Johnson 96, 256, 524 Northfield Iron & Steel Co. . - 694 Northumberland Avenue Hotel Co. 4 147, 176 Northumberland District Banking 112, 617 Sorhimberiana and Durham Banking Co. - + 708 Bigge (5 Jur. N.S. a Dixon’s executors (1 Dr. & Sm. 225) Luard (1 De G. F. & J. 553) Rhodes (7 W. R. 510) Totty (1 Dr. & Sm. 273) Norwegian Charcoal Iron Co. Mitchell (9 Eq. 363) Norwegian Titanic Iron Co. - 628 ace Equitable Fire Insurance ae N orwiah and Lowestoft Nz aviga- tion Co. v. Theobald . 410 PAGE Norwich and Norfolk Permanent Building Society 92] Smith’s case b Ch. D. 481) Norwich Provident Insurance Society Bath (8 Ch. D. 334) (11 Ch. D. 386) Hesketh (13 Ch. D, 693) Norwich Yarn Co. (22 Beavy. 165) 311, 381*, 382 —— (12 Beay. 366) 628, 638, 647 —— (13 Beav. 428) 715, 749 Bignold (22 Beav. 143) East of England Banking Co.’s case Nunn r. Clayton : . 295 —— ce. Lomer ‘ 296 OAKBANE Oil Co. v. Crum. 484, 455, 1022 Oakes and Peek, ex parte : (3 Eq. 576). 84 See Oakes v. Turquand. (3 Eq. 634) : 747, 862, 864 (Ww, *. 1886, 361) 849 Oakes v. Oakes ‘ . . 541 v. Turquand 26, 29, 60, 70, 73, 111, 214, 589%, 590, 753", 776, 777, 797, 810 Oak Pits Colliery Co. . - 680, 681 O’Brien’s case 104, 757, 791 O’Connor v. Bradshaw 135, 138 Odessa Tramways Co. v. Mendel. 586, 587* O’Flaherty v. McDowell . 1014 Ogle v. Knipe 450, 541 Old Wheal Neptune Mining Co. Pulbrook (2 De G. J. & S. 348) Rawlings (2 De G. J. & S. 348) Onion’s case. 15, 16, 767 Onslow’s trusts _. - 460 Oppenheimer v. British and Fo- reign Exchange, &., Bank . 732 Oriental Bank Corporation The Crown (28 Ch. D. 648) 678, 717 Guillemin (28 Ch. D. 634) MacDowall (32 Ch. D. 366) Oriental Commercial Bank (5 Ch. 358) . . 204 — (W.N. 1866, 283) . 637, 643, 659 — (7 Ch, 99) . 728 Alabaster (7 ‘Yq. 273) Barge (5 Eq. 420) European Bank (7 Ch. 99) Maxoudoff (6 Eq. 582) Morris (7 Ch. 200) (8 Ch. 800) ex parte (3 Ch. 791) 728, 804 Oriental Financial Corporation, ez parte (4 Ch. D. 33) . . 725 Oriental Hotels Co. , 865 Oriental Inland Steam Co. 4 Briggs 6, 587 Scinde Railway Co, (9 Ch. 561) Ormerod’s case 5 . 65, 800 Ornamental Pyrographic Co wm. Brown #-~ 411 xlii PAGE Orpen’s case , 467, 824, 826 Orr v, Glasgow Railway Co. . 303, 411, 568, 577*, 596 v. Union Bank of Scotland . ° 483 Orrell Colliery and Fire Brick Co. 722 Osborne, ex parte : * . 766 Osgood v. Nelson . 803, 528 Ottley v. Browne i . . 141 Oundle Union Brewery Co. Croxton (1 De G. M. & G. 600) (5 De G. & Sm. 432) Outlay Assurance Society 871, 1084 Overend, Gurney & Co., ex parte (4 Ch. 460) 165, 170*, 185, 230 Barrow (3 Ch. 784) Gibb (L. R. 5 Ho. Lo. 480) Grissell (1 Ch. 528) Lintott (4 Eq. 184) Musgrave & Hart (5 Eq. 193) Oakes & Peek (3 Eq. 576) Walker (2 Eq. 554) Ward & Garfil (4 Eq. 189) v. Gibb 872, 373, 374 v. Gurney 373, 374 Owen v. Challis . 31, 901 ». Routh . 499 —— v. Van Uster 65, 205 Oxford Benefit Building Scciety . 321, 871, 373, 374, 375, 376, 388, 432, 433, 696 Oxford and Worcester Extension and Chester Junction Railway Co. Barber (15 Jur. 61) Morrison (15 Jur. 346) Potter (1 De G. & Sm. 728) Sharp & James (1 De G. M. &G. 565) Oxford, Worcester and Wolver- hampton Railway Co. Melward (26 Beay. 571) Papstow Total Loss Association. 115, 135, 141, 621, 622, 623, 647*, 662 Page v. Cox 5 - 589 Pagin and Gill’s case 745, 784, 785, 789 Pahlen’s case, and Kelk’s case. 530, 843 Paine v. Hutchinson 493, 494, 505, 510 Paine and Layton, cx parte . 692 Paine » Strand Union . » 221 Painter’s case. 79, 86, 412, 519, 532*, 584 See Richmond and Painter’s case Painter v. Liverpool Gas Co. - 417 Palmer, ex parte 524, 736, 860 ®. The Justice Assurance Society . 295, sli Panama, &c., Vail ‘Co, , 197 Panmure, ex “parte . 241, 494, 512, 515 Panonia Leather Cloth Co. a . 656 Paper Bottle Co. . 659 Paraguassu Steam Tramroad Co. Black & Co. (8 Ch. 254) Ferrao (9 Ch. 355) AUTHORITIES REFERRED TO. PAGE Parbury’s case (8 De G. & 8. 43). 86%, 862 — (8DeG. F.&J.80) . . 556 Pare v. Clegg 272, 566 Paris v. Paris. ea B45) Paris Skating Rink Co. (6 Ch. D. 731). . 61, 608 (5 Ch. D. 959) . 637, 648* Park Gate Waggon Co. : 708, 956 Parker, ex parte 122, 128, 464) 835 ». Lewis ; : 371, 374 ». McKenna . 866%, 375, 376 Parkin vy. Fry. : ‘ - 363 Parry’s case 676 Parson’s case 123, 811, 828, 829 Parson v. Spooner. - 148 Part’s case 818, 819, 840, 861 Partridge v. Partridge . 541 Patent Artificial Stone Co. . . 626 Patent Bread Machinery Co. Valpy & Chaplin (7 Ch. 289) Patent Carriage Co. Gore & Durant (2 Eq. 349) Patent Cocoa Fibre Co. . 659 Patent Elastic Pavement, &c., Co. Armstrong (3 De G. & Sm. 140) Price & Brown (3 De G. & Sm. 146) Patent File Co. » 208, 207 Birmingham Banking Co. (6 Ch. 83) Patent Floor Cloth Co. 655, 887 Patent Invert Sugar Co. . . 344, 402 Patent Paper Manufacturing Co. Addison (5 Ch. 294) Patent Screwed Boot Co. . . 657 Patent Steam Engine Co, 626, 627 Patent Ventilating Granary Co. . 404 Paterson v. Ironside ‘ . 268 Patrick v. Reynolds . : . 145 Paul and Beresford’s case (33 Beav. 204) ‘ . 828, 346 (10 Jur. N.S. 692). . . 520 Pauling v. London and North- Western Railway Co. . Pawle’s case 128, 777 Payne’s case . : . 466, 827 Payne v. Brecon . . 173 v. New South Wales Co. , 148 Pearse’s case ' . 697, 744 Pearson’s case (8 Ch. 443) . 667, 699 (4 Ch. D. 222, aff. 5 Ch. D. 336) . 867, 694, 696, 790 —— (7 Ch. 309). : 709 Pearson’s Executors’ case (3 De G. M. & G. 241) . Pearson v. London and Croydon Railway Co. Peart v. The Universal Salvage Co. 295 Pease v. J oe 920 Peddell v. Gwy » + 288 Peek’s case (4 1 Ch, 582) ; 16, 760 Oakes & Peek 72, 73, 88, 89*, 90 Peek v, Derry ——v. Gurney . 70, 88, 89, 90%, 214, 215, 217, 470, 584 AUTHORITIES REFERRED TO. PAGE Peel’s case . 26, 29, 111, 771, 773*, 797 Peel v. Thomas . . 25, 95, 293 Peirce v. Jersey Waterworks Co.. 158, 165, 170*, 410 Pell’s case (5 Ch. 11, 8 Eq. 222). 395, 785, 799 (3 De G. & 8. 170). . 704, 861 Pellatt’s case 14, 15, 17, 744, 769, 778, 779, 780, 781* 372, 375, 696, 697, 744 Pelly, e2 parte . Pelotas Coffee Co. Karuth (20 Eq. 506) Pen’allt Silver Lead Mining Co. Fothergill (8 Ch. 270) Pender v. Lushington 309, 465, 566, 3, 597 Pendlebury v. Walker - 266 Penhale and Lomax, &., Co. . 125, 615 Peninsula Banking Co. (35 Beav. 280) ‘ 6738, 678 Peninsular, West Indian, &c., Bank Austin (2 Eq. 485) Jopp’s case (W. N. 1867) Penkivel v. Connell 232*, 670 Pennant and Craigwen Mining Co. (15 Jur. 1192) ‘ 641, 646*, 647 Fenn (4 De G. M. & G. 285) Mayhew (5 De G. M. & G. 837) Penney, ex parte. - 465 Penrose v. Martyr . 231, 240, 253 Pentelow’s case s 13, 760 Pentland v. Gibson. . 266 Pen-y-van Colliery Co. 624, ‘637, 648*, 6, 968 People’s Garden Co. 2 . . 676 Percival, ex parte . 865 Percy and Kelly N ickel, &e. +, Co. Hamley (5 Ch. D. 705) Jenner (7 Ch. D. 132) Perkins Beach Lead Mining Co. 676, 677 Perrett’s case . . 16, 773 Perrier, ex parte . 352, 852, 853 Perring v. Dunston + 138 v. Hone . 21 Perry v. Barnett . 489 ». Oriental Hotels Co. . ” 603, 675, 677, 706 Persee’s case . 773, 777 Peruvian Railways Co. Crawley (4 Ch. 322) Robinson (4 Ch. 322) Peruvian Railway Co. v. Thames, &c., Insurance Co. - 185, 204 Petre v. The Eastern Counties Railway Co. : . 150, 158 Pharnacentieal Society ». London and Provincial Assoc. . - 188 Phelps v. Lyle 270, 802, 303 Phene v, Gillan . j . 499, 806 Philipson v. Egremont 255, 288, 290 err ais ce parte (1 Sim. N.S. 4 639, 646*, 652* Pui, ew ‘parte (2DeGF.&J. aha 620, 621, 641, 647* 670, 671 634) . — (3DeG. & Sm. 3). ‘ — 7¢ (18 Beav. 629) xliii PAGE Phillips v. Turner . ; » . 54 Phillipson v, Tempest 5 » 295 Pheenix Life Assurance Co. . 176, 201, 236, 312, 319, 321 Burges & Stocks (2 J. & HL. 441) Hatton (10 W. R. 313) Hoare (2 J. & H. 229) Reeve (10 W. R. 817) Phosphate of Lime Co. v. Green . 179%, 811, 312, 520, 521, 523, 532 Phosphate Sewage Co. v. Hart- mont . 3855*, 361 Photographic Artists’ Association "264, 662 Pickering’s claim (6 Ch. 525) . 149, 240, Pickering, Ae hoa (4 Ch. 58) 556 —— v. Appleb « 453 v See iaen sa 321, 371, 598, 913 Piercy v. Roberts ‘ 713 Pierpoint v. Brewer és » 1 454 Pilbrow v. Pilbrow’s Atmospheric Co. . 111, 129, 149, 247, 262, 264 Pim’s case Pinkett v. Wright Pinto Silver Mining Co. 882, 885 Pitchford v. Davis 21, 393, 410 Pitman and Edwards, ex parte 190,197 Pitts v. La Fontaine . : . 861 Planet Benefit Building Society . 633, 638, 639, 648*, 650* . 521, 802, 813, 814, 329 456", 465, 551 684, 870, Plant, ex parte : . 456, 458 Plaskynaston Tube Co. 334, 396, 401, 787 Plas-yn-Mhowys Coal Co. . - 677 Plate Glass Co. v. Sunley . 423, 517 Playfair v. Birmingham, Bristol, &e., Co. . 520, 596, 600 Plumbe v. Neild . ; F . 545 Plumstead Water Co. . 613, 662 Hardinge (1 N. R. 40) v. Davis. . 661, 706 Pocock, ex parte . 642, 652*, "653* Pollock v. Pollock . . . 547 v. Stables : . 514* Ponsonby’s case. . 124, 763 Pool’s case (35 Ch. D. 579). . 183 Poole’s executors, ex parte (8 Ch. 702) : 712, 894, 897 Poole Fire Brick and Blue Clay Co. (17 Eq. 268) . . 673, 674 Hartley (18 Eq. 542) (10 Ch. 157) Poole v. Knott : » 540 v. Middleton " 465, 499, 500* v. National Provincial, ‘ke. , Assurance Society + 226, 328 Poole, Jackson and Whyte’s case’. 364, 377, 669, 787 Poppleton, ex parte . 114, 115, 135, 141 Port of London Assurance Co.’s case 258 Collingridge ‘(14 Jur. 1129) © Portal v. Emmens 44, 84, 59, 60, 104, 105, 107, 293, 301, 327, 422, 525, 791 xliv PAGE Portsmouth Banking Co. 594 Helby (2 Eq. 168) Horsey (2 Eq. 168) Stokes (2 Eq. 168) Pott v. Flather 498 Potteries, Shrewsbury and North Wales Railway Co. 904, 905, rie ». Minor Potter's case ‘ pe od ri Potts v. Bell 37 Poulton v. London and South: Western Railway Co. 209 Powell v. Jessopp 453 Powis v. Butler 9, 129, 256, 295, 540. 0, 812 v. Harding 58, 129, 284 Powles v. Hargreaves . ‘ - 727 — v. Page . 5 . 109, 204 Pratt v. Hutchinson . 181, 182 Preece and Evans’s case . 852, 862, 866 Prescott, ex parte : 60, 110, 288 ». Buffrey 60, 110, 288, 289 v. Hadow . . 670 Preston v. Grand Collier Dock Co. 412, 582, 571, 580*, 596, 600 — v. Liverpool, &c., Railway Co. . 151, 152*, 153, 220, 258 ». Melville . 545 Palte de Anderson . 545 — v. Great Western Railway Co. . 3 j 194 —— v. Taylor . 233%, 234 Price and Brown’s case 806 Prichard’s case (5 De G. M. & G. 484, 495) . 671, 714, 722, 850 Prichard’s claim (2 DeG. F. &J. 354) 3 715, 849 Prince v. Prince. - 228 Prince of Wales Life Assurance Society . 247, 854 v. Atheneum Insurance So- ciety : . 169% v. Harding 169 Princess of Reuss v. Bos. 111, 112, 116, 135, 468, 619, 622, 636, 645*, 912 Printing and Numerical "Register- ing Co. . 678, 719, 720 Pritchard's case (8 Ch. 956) . 895, 784 (2 Ch. 714). . 774 Pritchard v. London and Birm- ingham, &c., Railway Co., 7¢ Weiss. ; so = #06 Professional, ‘we. : “Building So- ciety 619, 633, 639, 650*, 922 Professional Life ‘Assurance Co. = 251, 737, 742, 866 Progress Assurance Co. , 681 Prosper United Mining Co. Palmer (7 Ch. 286) Pugh and Sharman’s case (13 Eq. 566) é . 59, 803, 808, 811 Pulbrook, ex parte (4 Ch. 627) 704 . 94, 826 (2 De G. J. & S. 349) 878 —— v. New Civil Service Co- operation 891 —— v. Richmond Consolidated Mining Co. . 301, 567, 599, 794 AUTHORITIES REFERRED TO. PAGE Pulsford v. Richards . 19, 70, 71, 76* Purcell’s case ‘ . 3801 Quanrz Hill Gold apis Co. v. Eyre . 614 Quebrada, &e., Copper Co. . . 408 Queen’s Benefit Building Society. 619, 655, 922 Queensbury ingests! sees e Pickles A . 268, 915 Quilter, cx parte . . ‘ . 724 RADENHURST v. Bates . . 270 Radley v. Bramall . . « 708 Rail and Electric Appliance Co. 247, 249 Railway Finance Co. . 700 Railway Sleepers Supply Co. 305, 74 Railway Steel and Plant Co., ex parte In re Taylor (8 Ch. D. 183) oy In re Williams (8 Ch. D. wy 677, 678, 719 Railway Time Tables Eee Co. Ralph v. “Harvey . 64 Ramsay’s case 127, 819, 820, 986 Ramsgate’ Victoria Hotel Co. ». Goldsmid . ——v. Montefiore. Ramskill v. Edwards 18, 15 . . 13,15 349, 374, 376, 378* 371, 414, 430, 433, 694, 695, 696, 787, 854, 88], 880 Randell v. Trimen Ranelagh v. Haynes 588, #39 Ranger’ v, Great ee Railway Rance’s case Co. . . 211, 227, 595 Ransford ». Bosanquet . 286, 294 v. Copeland 5 ; 137 Rapier v. Wright . 849 Rasbotham v. Shropshire | Union Canal Co. . 595 Rashdall v. Ford —. 242 Rastrick v. Derbyshire, &e., Rail- way Co. 60, 104, 291, 292, 293 Rawlins v. Wickham 72 Read v. Anderson 488, 489, 512 544 » Blunt Reaveley’s case . : 828, 860 Reddish v. Pinnock ‘ . 565 Redgrave v. Hurd 72, 73 Reece v. Taylor . s : . 460 Rees v: Fernie E . . 488 Reese River Co. ». Smith 125, 777 Reeve’s.case . . . 841 Reeves v. White , . 916 Regent’s Canal Ironworks Co. . 197, 401 Grissell (3 Ch. D. 411) Regent United Service Stores . 656, 679 Bentley (12 Ch. D. 850) AUTHORITIES REFERRED TO. PACE R. x. Armaud . : : : 36 — vv. Aspinall 87, 488 — v. Bank of England 604, 605 —-— v. Beard ‘ 268, 270 —— v. Rigg 220 —— v. Birmingham . 172, 173 —— Burgiss | : . 268 —— v. Cambridge . . 605 —— v, Carnatic Railway Co. 42, 61 v. Caster 268, 270 — v. Cawood . 130 —v. Cemetery Co. 469 v. Chester . 605 — v. Clear . A » . 440 —v. Cockermouth — Inclosure Commissioners . 605 —— v. Cooper é ; » . il — v. Cumberland 221, 265 v. De Berenger 488 v. The Derbyshire Railway Co. 282, 292, 296, 297, 604 — v. Dodd 131*, 245, 246 v. D’Oyly » sll —v Hastei Archipelago Co. 99 ». Esdaile . . 87, 483, 488 v. Frankland - 112 v, TheFraternity of Hostmen in Newcastle-upon-Tyne 440 —— »v. Gaskarth ‘ . 800 —— v. General Cemetery Co. 63, 109, 604 —— vo, Government Stock Invest- ment Co. . 311 —— v. Grand Canal Co. 440 —— v. Grimshaw , 3 . 807 v. Gurney ‘ 87 — v, Hammond 332 v. Harrald . : : 311 —— v. Haythorne 98 —— v. Hughes : 98 —— vv. Ingall . 173 —— v. Inns of Court Hotel Co. | 466 ». James : 268, 270 v. Kelk . » . 810 —— »v, Lambourn Valley Railway Co. x . 603, 604, 605 —— »v. Langton . : 112 —v. Larwood . 5 98 v. Liverpool, Manchester, &e. Railway Co. 61, 466, 605 —— v. London Assurance Co. 604 . Londonderry Railway Co. 416, 423, 425, 604 —— v. Mariquita Mining Co. 440, 604 — »v. Mayor of Stamford . 221 v. Mildenhall mae Bank 916 —v. Mille. 3 98 —— v. Mott. 394 —— v. Osbourne 3 99 ——v. Pasmore . : os 98 —— v. Pritchard 2 268 —— v. Registrar of Friendly So- cieties . 112, 917, 988 -— v. Registrar of Joint-Stock Companies (10 Q, B. 839)... ~—s*11, 118 (21 Q. B. D. 131) 61, 395, 605, 1022 xlv PAGE R. v. Rochester. é é 173 v. Saddlers’ Co. . - 604 v. St. Katherine Dock Co. 280, 604 —— v. Shropshire, &c. Canal Co. 604 —— vv, Shropshire Union Rail- way Co. . . 54, 61, 64 —— v. Stafford . : . 605 v, Stainer : 917 v. Stratton . ; 131 v. Tewkesbury 300 v. Thomas . F . 8ll v. Timothy F 87 —— v. Trafford . 3 916 —— v. Victoria Park Co. 280, 412, 604, 605 —v. Watson j 2 88 ——v. Webb . : 131%, 132* — v. Whitmarsh . 111, 117, 128, 131, 138 —— v. Whitstable Co. 604 —— v. The Wilts and Berks Canal Co. . 440, 604, 605 — 2. Wimbledon Local Board. ’ 311 — v. Windham . . . 605 —— v. Wing 428, 425, 604 —-v. Worcester Canal Co. . 604 —— v. York . . . 605 Reid’s case . 89, 810, 828 Reid v. Allan . 248 —— v. Explosives Co. “730°, 731 Reidpath’s case , 14 Remfry v. Butler ‘ 496 Rennie v. Clarke . 145 v. Morris 501, 508, 510 v. Wynn 145 Reuss (Prices of) ». Bos 111, 112, 116, 135, 468, 619, 622, 636, 645*, 912 Reuter v. Electric Telegraph Co.. 160 Reynell v. Lewis : 128, sa Reynolds v. Bassett Rheam v. Smith 274", 456%, 583 Rhodes, ex parte 41, 807 v. Dawson . . . 661 v. Forwood . j 247, 249 Rhydydefed Colliery Co. 638, 652* Rica Gold Washing Co. . 626, 649%, 654 Richard v. Home ‘Assurance Asso- ciation . 762 Richards & Co. 677, 678, 711, 719 Richards v. Home Assurance As- sociation 14, 770 Richardson’s case é 808, 811 Richardson v. Hastings . 565, 621 », Larpent . 877, 573 —— v. Williamson 242, 920 Richmond’s case (4 K. & J. 305). = 79, 86%, 412, 519, 582*, 534, 839, 845 Richmond’s Executors’ case (3 De G. & Sm. 96) 518, 838, 862 Richmond’s Executors (13 Jur ao 727) Siler ; Richmond Hill Hotel Co. Elkington (2 Ch. 511) King (3 Ch. 10) —— (4 Eq. 566) Pellatt (2 Ch. 527) xlvi PAGE Ricketts v. Bennett 2. 192 v. Bowhay — 295, 540 Riddell, ex parte. . 749 Riddick ». Deposit, &e. Ass. Co. . 706 Ridgway v. Philip. : : 65 v. The Security, &c. Ass. Society 291 Ridley v. Plymouth Gr inding and Baking Co. 154, 156, 200, 226 Rigby v. Connol . . 528 v. Dublin Trunk Railway Co. ca Rio Grande do Sul Steamship Co. ae 2 Risca Coal and Iron Co. -. “#10 Ritso’s case : 13, 770 River Steamer Co. Mitchell (6 Ch. 822) Rivington’s case . 824 Roberts’ case (3 De G&S. 205, 2 Mac. & G. 192 and 14 Jur. 539) z 766, 778, 861 Roberts, ea parte (1 Drew. 204) 15, 16, 766, 861, 863 v, Crowe ‘ 710, 821 —— v. Eberhardt 603 Robertson 7, Sheward 268 Robinson, &c. Brewery Co. Sidney (13 Eq. 228) Robinson’s case (4 Ch. 322) 14, 863 Robinson’s Executors’ case (2 De G. M. & G. 517) . 759, 776, 782, 812 — (6DeG. M. & G. 572) 245, 426, 428, 537, 848 Robinson v. Burbridge 461 v. Chartered Bank . ‘ 465 v. Mollett . . . 501 v. Sheward 269 — v. Thompson 317 —— v. Trevor r 3 920 Robson v. Dodds 5 z 568 ——v. The Earl of Devon . 98, 590 —— v. McCreight 251, 671, 672 Rochdale Property and General Finance Co. 684, 708 Roe v. Fuller . 269 Roffe v. Roscoe. . 475 Rogers’ case (3 Ch. 633). 17, 778* Rogers’ trusts (1 Dr. & Sm. 338) 547 Rogers, ex parte (15 Ch. D, 207. = 488 —— v. Oxford, &. Railway Co. 321, . 568, 601 Rolling Stock Co. of Ireland Shackleford (1 Ch. 567) Rolt v. Hopkinson . 459 Rome v. Young . ‘ «727 Romford Canal Co. 168, 171*, 198, 194, 741 Roney’s case 301, 313, 791, 797 Roots v. Williamson . 476, 477, 479 Rose & Co. v. Gardden Lodge Coal Co. . - 673, 674 Rosewarne ». Billing 488 Ross v. Army and Navy Hotel Co. 193, 198 —— v. Estates Investment Co. . 75* v. Moses. f : » 511 AUTHORITIES REFERRED TO. PAGE Rossmore v. Mowatt . 821, 366 Rotheram Alum, &c. Co. . 147 Rotherhithe, &c. Society . . 916 Routh v. Webster ‘ F . 596 Royal Bank of Australia Boyds (1 De G. & J. 228) Cockburn (4 De G. &Sm. 177). Connell (29 L. J. Ch. 649); Latta (8 De G. & Sm. 186) Meux’s Executors (2 De G. M. & G. 2 522) (4 De G. & Sm. 381) Robinson’s Executors (6 De G. M. & G. 572) —— (2 De G. M. & G. 517) Sutton (3 De G. & Sm. 262) Walker (15 Jur. 853) Royal Bank of India’s case 48, 167, 774, 806, 807 Royal Bank of Scotland v. Cuth- bert 912 Royal British Bank (3 Jur. N.S. 114). ; 672 Brockwell (4 Dr. 205) Frowd (9 W. R.) Mixer (4 De G. & J. 575) Nicol (3 De G. & J. 387) Walton & Hue (3 Jur. N. 8. 853) v. Turquand 165, 167*, 169*, 174, 190, 199 Royal Exchange Assurance Co. v, Moore . ‘ » . 495 v. Vaughan ‘ 98 Royal otal Co. of Great Yar- mouth : » «= 693 Royal Liver Friendly Society . 916 Ruby Consolidated Mining Co. Askew (9 Ch. 664) : Rudge v. Bowman 488, 494, 837 Rudow v. Great Britain Mutual Life Assurance Society 621, 677, 682, 985 Rugby, Warwick, &c. Railway Co. Preece & Evans (2 De G. M. & G. 374) Rule v. Jewell . 826, 535, 582 Rumball v. Metropolitan Bank 67, is Rumney’s case. ; » 785 Russell v. Croysdill 263, 706 v. East Anglian Railway Co. 603 ——v. Reece . 40 —— v. Wakefield Waterworks Co. 563, 566, 570, 571, 572 Russian (Vyksounski) Iron Works Co. 20*, 26 Kineaid (2 Ch. 412) Stewart (1 Ch. 574) Taite (3 Eq. 795) Webster (3 Eq. 740) Whitehouse (3 Eq. 790) Rutherford’s case ; . 806, 835 Ruthin & Cerrig- ieee Rail. Act. 904 Rutter v. Chapman 3 ve 198 Rye’s case . 20*, 772 Ryland ». Delisle ‘ . 428 AUTHORITIES PAGE SABLONIERE Hore. Co. . - 673 Sadler’s case . 42, 808 Sahlgreen’s and Carrall’s case 14, 841 St. George’s Building Society 619, 647* St. George Steam Packet Co. Cropper (1 De G. M. & G. 147) Hamer (2 De G. M. & G. 366 and 3 De G. & Sm. 279) Hennessey (2M. & G. 201 and 3 De G. & Sm. 191) Litchfield (3 De G. & Sm. 141) Maguire (3 De G. & Sm. 31) Pim (3 De G. & Sm. 11) St. James’s Club. . 617, 620 St. Marylebone Joint Stock Bank- ing Co. See Marylebone. Walker (8 De G. M. & G. 607) St. Nazaire Co. , 663, 698, 748 St. Thomas’ Dock Co. . 636, 637, 652* Salman v. Hamburg Co.. eg Salomans v. Laing . . 822, 571, 580, 597, 598, 892 Sander’s case Z és Sanderson, ex parte (1 Mac. & G. 806) 698 Sanderson’s case (3 De G.& 8. 66, and 3 H. 1. C. 698) . 84, 85%, 254, 698, 749, 758, 824, 830 Sanderson’s Patents Association . 641, 646*, 649 Sandy’s case 787, 789* Sangster». Cochrane. - 920 Sankey Brook Coal Co. a » 192 Kadly & Bramall (12 Eq. 472) ». Marsh a 739, 744 Sargent, ex parte 122, 124, 316, 467, 479, 500 Sargood’s claim . 725 Saunders’ case 780, 791, 795*, 805 Savin v. Hoylake Railway Co. 147 Saxon Life Assurance Society. . 184, 258, 261; 735, 864, 892 Anchor (2 J. & H. 408, and 1DeG. J. & Sm. 29) Era (2 J. & H. 408, and 1 De’ G. J. & Sm. 29) Sayles v. Blane . 472, 506 Scadding v. Lorant . 807 Scarth v. Chadwick : . . 569 Schanschieff Electric Battery oa dicate . é . 882 Schibsby v. Westenholz 914 Scholefield v. Redfern. . . 547 Scholey v. Central ee Co. of Venezuela . é 85, 777 Schomberg, ex parte . . 549 Schroder’s case (11 Eq. 131) . 895, 786 Scinde, &c., Bank Corporation 882 Scinde, Punjaub, and Delhi Corporation . 852, 869 Scinde Railway Co. 678 Scott v. Berkeley . 5 24 v. Clifton School Board 223 ». Colburn . : . 192, 199 x. Ebury (Lord) . 149, 248 —— v. Hastings (Lord) . . 461 REFERRED TO. xlvii PAGE Scott v. Izon . ; 583 v. Mayor of Manchester . 209 Scottish Petroleum Co. 21, 124, 157, 418, 777 Anderson (17 Ch. D. 373) Scottish and Universal Finance Bank . 0*, 25 Ship’s case (2 DeG. J. & Sm, 544) Scrimgeour’s claim =. . 514 Scully, ex parte 802, 803, 826, 831 Sculthorpe v. Tipper . ‘ . 547 Sea, Fire and Life Assurance Co. Greenwood (8 De G. M. & G. 459) Gwyn (1 Jur. N. 8. 300) Port of London Assurance Co. (5 De G. M. & G. 465) 279 | : » Seddon v. Connell | Sedgwick, ex parte . 737, 758, 836 | Sea, River and Marine Insurance Co. . : 4 “3 - 651* Seaton v. Grant . . 568 561, 564, 592, 595 388, 627, 646", 858 Seidler, ex parte . . 661 Selwyn v. Harrison ‘ . 882, 887* Serrell v. The Derbyshire, Staf- fordshire, &c., Railway Co. 227, 2382* Sewell’s case . . 393, 402, ie Seymour v. Bridge : Shackleford’s case . "14, 17 m8 Shackleford v. Dangerfield . 113, 419 Sharman’s case ae 59 Sharon’s claim ‘i . 762 Sharp and James’s case . 15, 765, 767, 862 Sharp v. Dawes . 805, 3809 v. Stewart & Co. 4038 v. Taylor 139 Sharpe v. Day 573 Sharpley v. South and East Coast Railway Co. 584 Sharpus’s case : : 664, 761, 771 Shaw’s claim (10 Ch. He 147, 722 Shaw, ex parte (18 Eq. 1 123 —— (2 Q.B. D. 463) . in, 128, 124, 500 —— v. Benson 115, 185, 141 —— ». Fisher . i 64, 473, 492 » Holland. ‘« . 117, 498 —— v. Port ae Gold Mantig Co. é 64, 484* v. Rowley 416, 418, 498 v. Simmons 114 Shears v. Jacob . 203 Shedden v. Patrick 283 Sheehy v. Professional Life Assur- ance Co. . 914 Sheerness Waterworks Co.” ”. Polson . 708 Sheffield’s case (Johns. 451). 73, 84*, 85*, 86%, 166, 772 Sheffield, The Earl of v. London Joint Stock Bank . . 481% Sheffield, &c., Gas Co. v. Harrison ee Sheffield and Hallamshire Ancient Order of Foresters Fountain (11 Jur. N. 8. 5538) xviii AUTHORITIES PAGE Sheffield, &c. Railway Co. v. Woodcock 49*, 51, 108, 328, 329, 416, 419, 421 Sheffield Nickel Co. vy. Unwin 165, oe Sheffield and S. York Permanent Building Society . : ot de Shepherd’s case 121, 466, 833, 835 Shepherd v. Gillespie 493, 505, 510 Sheppard v. Murphy 491, 505, 506, 510 —v. Oxenford 133, 1385, 189*, 565, 524 593, 594 —— v. Scinde, ere and Delhi Railway Co. 870 Sherrington’s case . 779 Sherwood Loan Co. : 627, 642, 647* Smith (1 Sim. N.S. 165) Shewell’s case ‘ . 747*, 799, 804 Shield v. Great Northern Railway Co. 38, 911 Shields Marine Insurance Associ- ation . 621, 655 Lee & Moor (5 ‘Eq. 368) Ship’s case . 20*, 25, 122, 625, 749, 754, 772 Ship v. Croskill 7s, 89) Shipman’s case : a . 836 Shirreff’s case. d "730%, 731 Shortridge v. Bosanquet 56*, 61, 423; 560, 596 Shrapnell’s case : - 810, 828 Shrewsbury, Earl of +. North Stafford Railway Co. 147, 150, 151, 153* Shrewsbury and Birmingham Rail- way Co. v. North Western Railway Co. 202 —— v. Stour Valley Railway ‘Co. 323 Shrewsbury and Leicester Direct Railway Co. Riddell (1 Simons, N. S. 402) Shrimpton v. Sidmouth Railway Co, 292 Shropshire “Union Railway and Canal Co. v. Anderson 59, 60, 108, 414, 421 v. Regina 54, 64, 104, 485 Sibley v. Minton . ‘ 95, 560 Sibson v. Edgworth 33, 565, 567 Sichell’s case (8 Ch. 119) 124, 125, 806, 836 Sichell, ew parte (1 Sim. N.S. 187) 765%, 860*, 861, 862 Siddall, ve . F 115, 135 Sidney’s case 761, 763, 793, 797, 889 Silber Light Co. v. Silber’ , . 573 Silkstone and Dodworth Iron Co. 680 Whitworth (19 Ch. D. 118) Silkstone Fall Colliery Co. 877 Silver Valley Mines ‘as Ch. b. 472) . 615 (21 Ch. Dz. 381) ‘ » . 863 Simm v. Anglo-American Tele- graph Co. 54, 60, 64*, 484, 787 Simons x. Patchett . . 241 Simpson’s ee (9 Eq. on noone 22 — (4 Ch. 184) : - 778 REFERRED To. PAGE Simpson’s claim (36 Ch. D. 532) —161, 185 Simpson v. Denison . 321, 323, 571, 598 —— v. Lord Howden . é «153 v. Rand. . 518 —— v. Westminster Palace Hotel Co. 5 202, 317, 566, 570, 601 Singleton v. Selwyn ij - 570 Sir John Moore Gold Mining Co. 878 Skegness Tramway Co. . » . 147 Skinner v. City of London Marine Insurance Corporation 638, 124, 470, 491 v. Lambert 267, 427, 565 Slatter’s Executors . . 688, 861 Slattery’s case. é : 13 Slim v. Croucher . . 218 Small v. Attwood 271, 566 —— v. Smith F . 200, 922 Smallcombe’s case . 519%, 522, 5238, 822 Smallpage’s case. . 861’ Smart v. West Ham Union . ae QT, Smith’s case (2 Ch. 604 &4 L. R. H. L. 64) 123, 771, 777 —— (1Ch. D. 481) 872 -——— (4 Ch. 611) 53, 759, (4 De G. & J. 544) Smith, ex parte (1 Sim. N. 8. 165) an (3 Ch. 125). 715, 743, 865 — (39 Ch. D. 546). «14, 156, 157, 158, 305 Smith, Fleming & Co.’s case . 685, Me 389 Smith, Knight & Co., re. Ashbury (5 Eq. 223) Gibson (4 Ch. 663) Weston (6 Eq. 238) —— (4 Ch. 20) Smith, Mackrill, re (3 Ch. 125) . 678 Smith v. Anderson 114, 185, 141 . 672, 691 v. Birmingham Gas Co. . 209 —v. Cannan. . 549 v, Chadwick . al, 71", 89, 590 ». Cork and Bandon 1 Railway Co, . » 401 v» Goldsworthy ‘ 267, 299, 320, 322, 393%, 427, 565 v. Hull Glass Co. . 154, 159*, 160, 161, 1638, 168*, 178*, 205 WL . Lloyd. . 916 v. Manchester (Duke of). » eel, 571, 599 v. Morgan . : » 721 v. Pilkington . : . 920 v. Reese River Co. . 73, 75*, 76, 213, 428, 597 Snell’s case Sneyds, ex parte . Snook v. Watts. ‘ ¢ 40 Société Générale de Paris Geen (8 App. 606) Walker (11 App. 20) —— v, Tramways nion Co. . 205 —— v. Walker 205, 454, 470, 472, 476, 477*, 479%, 490 Society of Practical Knowledge v% Abbott 168, 278, 815, 370* 520, 526, 840 : oe eee AUTHORITIES REFERRED TO. PAGE Somerville’s case 60, 122, 271, 769 Somes v. Currie . 98, 454, 870 Soulby v. Smith . 267 Southall v. British Mutual Life Assurance Society 367, 598, 601, 894, 895 Southampton Dock Co. 7 Arnett 409 —— v. Richards 59, 106, 313, 409*, 414 Southampton, Isle of Wight, &c., Steamboat Co. Bird (4 De G. J. & S. 201) Hopkins’ Executurs (4 De G. J. & 8. 342) Webb (9 Jur. N. S. 856) v. Rawlins . : 264 South Barrule Slate Quarry ‘Co. 663, 882, 890 South Blackpool Hotel Co. James (8 Eq. 225) Migotti (4 Eq. 238) South Carolina Bank v. Case 909 South Durham Brewery Co. 118, 261, 322 , B84, 344, 396, 405 South Durham Iron Co. Smith (11 Ch. D. 579) South - Eastern Railway Co.’s claim . . . 806 South - Eastern Railway Co. v. Hebblewhite 300, 409, 411, 414 Southern Railway Co. . 279 South Essex Estuary Co. Chorley (11 Eq. 157) Paine & Layton (4 Ch. 215) South Essex Gas Light and Coke Co. Hulett (2 J. & H. 306) Stears (Johnson, 480) South of France Co. Baron de Beville (7 Eq. 11) South of Ireland Coll. Co.: v. Waddle 220, 222, 223, 228 South Kensington Co-operative Stores 680, 681 South Lady Bertha ‘Mining Co. 619, '646* South Llanharran Colliery Co. Jegon (12 Ch. D. 503) South London Fish Market Co. 464, 620, 628, 648, 825, 829 Southport and West Lancashire Banking Co. Fisher (31 Ch. D. 120) Sherrington (31 Ch. D. 120) South Staffordshire Railway Co. v. Burnside. 551, 555, 815 South Wales Atlantic Steamship Co ok ee ye Dy OBL South Wales ey Co. v. Redmond ‘ 200 Southwark Water Co. wv. Quick 595 South Western Loan Co. wv. Robertson . « : . . 461 Spackman’s case. See Spackman ». Evans Spackman, ex parte (1 De G. & S. 599 & 1 Mac. &G.170) . 617, 649*, 901 xlix PAGE Spackman v. Evans 53, 179, 312, 519*, 520, 522, 523, 532, 538, 845 — v. Lattimore 24, 147, 598 Spargo’s case : . 743, 784, 785 spores v. Liverpool Waterworks 535 Sparling v. Parker 449, 452 Sparrow v, Farmer. - 920 Spence’s case (17 Beav. 203) . 426, 538, 814 —— (6 Ch. 362). » 260", 735 Spence’s Patent, &c., Cement Co. 650* Spencer v. Newton - « 268 Spiller v. Johnson 269 v. Maude 3 917 v, Paris Skating Rink . 149 Spittal v. Smith ‘ 569 Spottiswoode’s case 766, 767 Spurgin 7. White - . 808 Stace and Worth’s case . 17, 53, 122, 184, 323, 759, 774%, 892 Stafford (Mayor of) v. Till . . 220 Staffordshire and Shropshire Rail. Co. Bowen & Martin (20 L. J. Ch. 856) Stainbank v. Fernley . 592, 593 Standing v. Bowring . : . 467 Stanhope’s case (1 Ch. 161) . 313, 520, 523, 532, 538, 845 — (3 DeG. & Sm. 198)" ‘ 518*, 838*, 839, 863 Stanhope Silkstone Collieries Co, 678 Stanley’s case 192 Stanley v. Chester and Bir kenhead Railway Co. 150, 158, 258 Stapleford Colliery Co. Barrow (14 Ch. D. 432) Stapleton, ex parte. . 861 Stark v. Highgate Archway | Co. 186 State Fire Insurance Co. 249, 737 Meredith’s case and Conver’s case (1 N. R. 510) Times Assurance Co. (2 Hem. & M, 722) Steadman v. Arden . ‘ zZ 30 Steam Stoker Co. F 5 626 Stearic Acid Co. 307, 879 Stears, ex parte. . 226, 328 Stears v. South Essex Gas Co. 328 Steele v. Harmer . 185 v. North . Metropolitan Rail- way Co. 824 v. Sutton Gas Co. - 442 Steigenberger v. Carr . s ‘i 25 Stent v. Bailis s 494 Stephen, ve (2 Ph. 562) F 606 Stephens, ea parte (3 Ch. 753) 727 v. De Medina 498 Stevens, re (Ir. Rep. 6 Eq. 604) - 906 »v. Guppy 492 v Mid Hants Railway Co. | 906 —— v. Midland Counties Railway Co. 210 v, South Devon Railway Co. 317 401, 429, 480, 572, 600 Steveny’ Hospital v. Dyas’ : 223 ] AUTHORITIES REFERRED TO. PAGE Stevenson, ex parte (32 L. J. Ch. 97) . : , . 855 —— v. McLean i 14 Steward v. Dunn 110, 268, 269 —— v. Greaves ‘ 4 . 268, 604 Stewart’s case (1 Ch. 574). “el*, 26*, 122, 312, 772 (1 Ch. 511) ‘ ’ 520, 532 Stewart v. Anglo- Californian Gold Co. i; 45, 59, 64, 529 v. Cauty | "498, 508 Stirling’s case ‘ : " 817, 818 Stirling v. Maitland z . + 4729 Stock’s case (2 J. & H. 441) 178, 180, 199 — (22L. J. Ch. 218) . 765, 766 — (4DeG. J. & Sm. 426) . 801, 790, 795 Stocken’s case ‘ ‘ . . 584 Stocker v. Wedderburn 585*, 587 Stockton Iron Furnace Co. . 679, 721 Stockton Malleable Iron Co. 124, 458 Stoke’s case A 822, 830* Stone’s case 220, 690 Stone v. City and County Bank . 758, 776, 877, 880 Storforth Lane Colliery Co. . . 686 Storm v. Sterling . - . 230 Straffon's Executors’ case 52, 316, 751, 758*, 812, 824, 860 Straker v. Wilson . . 545, 546 Strand Music Hall Co. 193 European and American Finance Co. (35 Beav. 1538) Strang, ex parte . 557, 743 Stranton Iron and Steel Co. . 809, 464, 465, 466 Barnett (19 Eq. 449) Stratford and Moreton Railway Co. v. Stratton é . 416, 417 Stray v. Russell 467, 491, 493, 496, 501, 506*, 514 Strick v. Swansea Tin Plate Co. 528, 843 Stringer’s case (4 Ch. 475 & 493). 278, 414, 430, 433, 694, 695, 696, 787, 854, 863 Stringer, ex parte (9 Q. B. D. 486) 459, 466 Stroud v. Gwyer . 543, 546 Stuart v. Lord Bute . ¥ 441 Stuart’s Trusts, ve . 5 » . 486 Stubb’s case ‘ “ ‘ - 738 Stubbs v. Lister . 532, 535* Studdert v. Grosvenor 310, 321, 322, 571, 598, 599 Studley, ex parte zs 76 5* Stupart ». Arrowsmith 317, 583*, 594 Bie v. Eastern Union Railway Sturt & Co. . Pearcy (13 Eq. 309) Styles v. Cardiff Steamboat: Co. . 205, 210 . 682, 633, 634, 639, 641, 650* . 401, 569 Suburban Hotel Co. Suche & Co. (Joseph) . 685, 719, 720 Sudlow & Kingdom, re . r 670 Sudlow v, Dutch-Rhenish Railway Co. r 528, 909, 913 Sullivan v. ‘Mitcalfe 5 ae 92 Sunderland Universal Building Society 614, 619, 627, 876, 922 Sunderland Marine Insurance Co. v. Kearney. , $ » 246 Sunken Vessels Recovery Co., Limited Wood (2 De G. & J. 8b) Sutton’s case. » 818 Sutton v. Tatham . é a. 2g 518* Swan’s case (10 Eq. 675). - 691 Swan, ex parte (7 C. B. N.S. 400) or — v. North British Australian ‘0. . 62, 472, 486*, 487 Swansea Dock Co. v. Levien - 800, 409 Swansea Friendly Society . . 43 Sweeting v. Pearce . Z » 515 Sweny v. Smith . 532, 534, 571 Swift v. Jewsbury 207, 217 v. Pannell. ‘ = « 198 Swire v. Francis . « 2li* Sykes’ case. 3 : 377, 669, 786 Sykes v. Beadon. 114, 135, 140, 141 Symes v. Hughes 5 . 139 Symon’s case . 128, 811, 828 Tart v. Harrison Tahiti Cotton Co. Sargent (17 Eq. 273) Taite’s case. s 28 Talbot’s case . ‘250, 251, 412, 854, 862 Tal-y-Drws Slate Co. Mackley (1 Ch. D. 24) Tambracherry Estates Co. . 408 Tanner's case . 766 Taunton v. Royal Insurance Co. 161, 168, 318, 599, 601 156, 664, 665, 822, 824, 825, 832, 878 247, 466, 601 Taurine Co. Tavarone Mining Co. Pritchard (8 Ch. 956) Tavistock Ironworks Co. Lyster (4 Eq. 233) Tayler v. Great India Peninsula Railway Co, . 62, 473*, 486, 497 Taylor, Ben parte (14 Ch. D. 398) ae v. Blakelock ‘ P . 476 ». Bowers , ~ . 189 v. Chichester and Midhurst Railway Co. . v Genwi Gas Co. 38, 148, oe v. Dulwich Hospital 220, a v. Hughes 52, 56*, 61, 423, 466, ” 560, 596, — » Ifill . : ' v. Lendy . . 189 v. Pilse, &e. , Light Co. 334, 344, 402, 602 441, 595 — v. Rundell AUTHORITIES REFERRED TO. li PAGE Taylor v. Salmon . 566 —— v. Stray. 507, 513* —— »v. Taylor 813 Teasdale’s case 402, 526, 530, 840 Teete’s case . : 732, 735 Teignmouth, &c., " Shipping Asso- ciation. Martin (14 Eq. 148) Telegraph Construction Co.. 403, 732 Telegraph Despatch Co. v. McLean 247, 249 Telford v. Metropolitan Board of Works j Teme Valley Railway Co. Forbes (19 Eq. 353) Tempest v. Kilner Tenant v. Elliott . Tennant v. City of Glasgow Bank 753, 324 453, 498, fn 140 776 Tepper v. Nicholls 452 Terrell’s case . . 126, 148 Terrell v. Hutton 148, 149, 714, 722, 724 Teversham v. Cameron’s Coalbrook Co. . : 193, 226, 328, 388 Thacker v. Hardy . ‘ 488, 501 Thames Haven Dock Co. v. Hall 221, 265, 415, 428 157, 174*, 299, 409, 415, 428, 604 Thames Plate Glass Co. v. Land and Sea Telegraph Co. 673, 675, 699 Thames Tunnel Co. v. Sheldon 19, 420 Thetford School case . ‘ . 312 Theys, cx parte 697, 719, 739, 740, 744 Thomas’s case (13 Eq. 437) . 520, 840 (1 De G. J. & S. 579) . 812 —— v. Rose Thomas, ex parte (18 Bq. 17, ee 123 —— (9 C. B. 740) . 848 v. Bishop "931, 232* v. Clark 95, 254 ——v. Hobler . 254, 567 — v. Patent Lionite Co. 665, 673, 678, 680, 717, 720, 721, 878, 968, 969 v Wells : . 608, 672 Thompson v. Harding 59, 129, — —v. Norris. . 3 . 671, 850 — »v. Planet Building Society 916, 921 v. Universal Salvage Co. 185, 295, 670 —— v. Wesleyan Newspaper Asso- ciation 185 Thomson’s case (1 De G.J. & Sm. 749) . 778, 779 Thorn v. Croft . 920 Thornton, ex parte . 282, 666 v. Ellis . 542 v. Kempson. . 451 Tierney, re. 922 Tilleard, re. . (147 Tilson v. Warwick Gas Light Co. 146 Times Fire Assurance Co. 625, 628, 646*, 660 Times Life Assurance, &c., Co. (5 Ch. 381) . : . 260*, 735 —— (9 Eq. 382) 659 Timms v. Williams 916 PAGE Tipperary Joint Stock Banking Co, Ginger (5 Ir. Ch. Rep. 174) Scully (6 Iv. Ch. Rep. 72) Stirling (6 Ir. Ch. Rep. 180) ee ». Johns . 95, 96 im, ex parte 672 Todd > Wright . 268 Toll v. Lee 95, 96, 294 Tomkinson v. South Eastern Rail- way Co. 322, 571, 579, 599 Tomlinson v. Tomlinson . 452 Tondeur, ex parte 729 zoe cx parte . 416 Topham v. Greenside "Fire “Brick : 196, 198 igi ext parte é . 269, 550 Torquay Bath Co. » TLS, 614, 875 Torrington v. Lowe 509 Tosh v. North British ‘Building Society 524, 861, 872, 920 Tothill’s case ; 313, 790, 795* Totterdell v. Fareham Brick Co. 156, 161, 228, 338 Totty, ex parte - 709 Touche v. Metropolitan. Railway Co. ‘ 148, 158 Towne v. London and Limerick Steamship Co. . 264 Towns Drainage Co. Morton (16 Eq. 104) Townsend’s case . 14,15 Townsend v. Ash . 451 Trade Auxiliary Co. v. Vickers 578 Traders’ North Staffordshire Carrying Co. ‘ 680 Trades Bank Co. ; 686 Traill v. Baring : 70 Transatlantic Go. v. Pietroni - 913 Tredinnick v. Oliver . 454, 463 Tredwen v. Bourne 25, 64, 95, 192, 205, 293 Trent & Humber Co. Bailey and Leetham (8 Eq. 94) Cambrian Steam Packet Co. (4 Ch. 112 and 6 Eq. 396) Trent c= Ghester, &c., Rail- way C Dale ‘3 De G. & Sm. 11) Tretoil & Messer Mining Co. 619, 646*, 670 Trevor v. Whitworth . 119, 206, 322, 334, 402, 432, 520, 526*, 527, 599, 838 Trinder » Trinder 541 Tring, Reading and Basingstoke Railway Co., re 656 Barber (1 Mac. & G. 176), Cox (3 De G. & Sm. 180) Trinity House of Hull v. Beadle. 310 Tripp v. Chard nee Co. 2 271 Troup’s case . . . 883* Troutbeck, ex parte 642, 646* Trower and Lawson's case » . 691 Trueman’s Estate . 70% Tufnell’s case . . 124, 763 Tumacacori Mining Co. . 626, 628, 632, 640, 645*, 651 lu AUTHORITIES REFERRED TO. PAGE Tunis Railway Co. . 711, 883 Tunnel Mining Co. Pool (35 Ch. D. 579) Turner, ex parte (8 De G. & J. 46) 488 (8 De G. & S. 127). 660 —— & James, ex parte (8 DeG. & 8, 127, and 2 Mac. & G. 169) 622, 623, 646*, 660 —— vv. Borlase . 593 ——v. Hill . : : - . 598 —— vv. Metropolitan Live Stock Co. : . ‘ 45 —— v. Tyacke 593 Turney v. Bayiey 440 Turnley & Oliver, ca parte . . 698 Turquand v. Kirby. . 707, 813 v. Marshall . 311, 371, 373, 374, 376, 877, 378, 389, 433, 441, 707 Twycross v. Grant 70, 90, 92, 496 Utstrer Land Co., Limited 693 Ulverstone Railway Co. v. Com- missioners of Inland Revenue. 469 Underhill v. Devereux . 281 Underwood’s case . 664, 710, 846, 849, 852, 868 Union Bank of Calcutta Watson (3 De G. & Sm. 253) Union Bank of Kingston-upon- Hull 208, 881, 8838, 896, 972 Union Bank of Manchester Jackson (12 Eq. 354) Union Bank of Scotland v. Na- tional Bank of Scotland Union Cement and Brick Co. Pulbrook (4 Ch. 627) Union Rubber Co. v. Hibbard . 910 United Kingdom, &c. Building Association : 5 - 704 United Kingdom Mutual Steam Assurance Assoc. v. Nevill 46, 428 United Kingdom Shipowning Co. Felgate (2 De G. J. & S. 456) United Ports and General Insur- ance Co. . 4 . i Adams (13 Eq. 474) Beck (9 Ch. 392) Even (16 Eq. 354) Perrett (15 Eq. 250) Wynne (8 Ch. 1002) v. Hill 3 ‘ United Service Co. . Hall (5 Ch. 707) Johnston (6 Ch. 212) United Stock Exchange, Limited Philp & Kidd (28 Ch. D. 183) Unity General Bread and Flour Co. Hirtzel (2 De G. F. & J. 653) Unity Joint-Stock Banking Assoc. King (3 De G. & J. 63) Universal Bank, ve 2S Universal Banking Corporation Gunn (3 Ch. 40) Harrison (3 Ch. 638) Rogers (3 Ch. 633) Stracy (5 Ch. 492) 459 264 665 659 662 660 ‘ PAGI Universa] Disinfector Co, . . 678 Universal Life Assurance Co. . 741 Universal Non-tariff Fire Insur- ance Co, Ritso (4 Ch. D. 774) Universal Provident Life Assoc. Bell (22 Beay. 35) Daniell (22 Beay. 43) (2) (28 Beav. 568) Holt (22 Beav. 48) Munt (22 Beav. 55) Universal Salvage Co. Mansfield (2 M. & G. 57) (3 De G. & Sm. 58) Murray (5 De G. M. & G. 746) Sharpus (3 De G. & Sm. 49) Smallbone (14 Jur. 103) Woodfall (3 De G. & Sm. 63) Universal Tontine Life Insur. Co. Dee (3 De G. & Sm. 112) Upfill’s case (Hutton v, Upfill, 2 H. L. C. 674) 764*, 765*, 767 —— (1 Sim. N. S. 395 851, 861 Upton v. Brown . . az » 545 Uruguay Central & Hygueritas Railway Co. of Monte Video . 625%, 636, 648* Vale of Neath and South Wales Brewery Co. Gordon (3 De G. & Sm. 249) Hitchcock (3 De G. & Sm. 92) Hollwey (1 De G. & Sm. 777) Keene’s Executors (3 De G. M. & G. 272) Kluht (3 De G. & Sm. 210) Morgan (1 De G. & Sm. 750 and 1 M. & G. 225) Richmond’s Executors (3 De G. & Sm. 96) Walters (3 De G. & Sm. 149) No. 2 (3 De G. & Sm. 244) White (8 De G. & Sm. 157) Vale of Neath, &c. Joint-Stock Co. Lawes (1 De G. M. & G. 421) Vallée v, Dumergue ‘ . old Valpy & Chaplin, ex parte - 208 Vance v. The East Lancashire Railway Co. 321, 323, 598 Van Diemen’s Land Co. v. Cock- erell ‘ ‘ 5 . 582 Vane v. Cobbold 3 Van Sandau v. Moore . . 88, 34 266, 561, 564*, 609* Varney v. Hickman ; - . 139 Venables v. Schweitzer : . 691 Venezuela (Directors of Central Railway Co. of) v. Kischh . . 74 Vertue v. East Anglian Railway Co. . F ‘ ‘ , . 194 Vice v. Anson 21, 65*, 96*, 205, 453 Victoria Permanent Benefit Build- ing, &e. Society Empson (9 Eq. 597) Hill (9 Eq. 605) Jones (9 Eq. 605) AUTHORITIES REFERRED TO. PAGE Vigers uv. Pike . 281, 572 Vining’s case 842, 897 Vivyan v. Mowatt . ae 97 Vollans v. Fletcher . 4, 16 Vron Colliery Co., 20 Ch. D. 1a? 677 Waa Wynaad sue Gold Min- ing Co. . - 626, 1029 Walburn ». Ingilby "9, 133*, 134, 569 Walker's case (6 Eq. 30). . 828 —(2Eq. 554) . . 886, 837, 861 — (8 DeG. M. & G. 607) 244, 839, 851 — (2Jur. N.S. 1216). . 520 Walker, ex parte (1 De G. & Sm. 585, 1 H. & T. 100, and 13 Jur. 157) 640*, 661 — (15 Jur. 853) . 704 Walker v. Banagher Distillery’ Co. 673, 676 — v. Bartlett 96, 453, 468, 472, 493, 506, 510 v, General Mutual Building Society. - 920, 921 v. Great Western Railway Co. . 161 — v. London Tramways Co. 119, 315, 334 v. Milne , : » « 452 Wall’s case (15 Eq. a 14, 770 Wallis’s case $ ‘ ‘ 14 Walsh’s case . F F -~ « #89 Walstab, ex purte Fi - 766 v. Spottiswoode ‘31, 34*, 128 Walter's case (3 De G. & Sm. 244) 518, 839 — (3 De G. & Sm. 149, and 19 L, J. Ch. 501). 791, 796*, 824 Walter, ex parte (3DeG. & S. 2). 628 Walton’s estate (23 Beav. 480) . 540 Walton, ex parte (17 Ch. D. 746). 553 —— (3 Jur. N.S. 853) . . . 861 Walton v. Edge 524, 861, 872, 920 Walton and Hue. 831 Walworth v. Holt . e 565, 594 Warburton v. Hill =. = . 461 Ward’s case (10 Eq. 659). 14, 769 (4Eq. 189). . . . 121 ——(2Ch. 431). . .. 121 (2 Eq. 226) : ‘ 833, 834 Ward and Garfit’s case Ward and Henry’s cases 833, 834, 835 470, 500, 833, 835 Ward, cx parte (L. R. 83 Ex. 180) 44, 121, 123 — (20 Ch. D. 356) . » 489 Ward v. Combe. : » = 545 v. Londesborough ‘ . 31 —— ». Sittingbourne and Sheer- ness Railway Co.. . 567 — vv. Society of Attornies 98, 323%, 598 — v. South - Eastern Railway Co. 54, 60, 61, 63, 108, 471 Ware v. Camberledge . , « 452 L.c. hii PAGE Ware v. Grand Junction Water- works 324, 601 —— v. Regent’s Canalo. . . 264 Waring, cx parte we N. 1866, 390) 1 —— (19 Vesey, 345) 12" Warkworth Dock Co. Phillips (18 Beav. 629) Warrant Finance Co.'s case (5 Ch. 88) . : . 699 — (4 Ch. 643). Lo. 785 — (No. 2), (10 Eq. 11) 725, 724 Warren’s Blacking 7 Pentelow (4 Gh. 178). Warwick and Worcester Railway Co, (13 Jur. 651). ‘ 620 ——~ (27 L. J. Ch. 735). 723 Parbury (3 De G. F. & J. 80) Pell (3 De G. & Sm. 170) Prichard (5 De G. M. & G. 495) Washoe Mining Co. v. Ferguson. 263 Waterford, Dungarvan and Lid- more Railway “Co. (5L. R. Ty 108, 584) : 436 Waterford, &e., Railway Co. (i. Rep. 4 Eq. ee : z 903 — v. Dalbiac . : » 411 —— v. Logan 422 — v. Pidcock 45, 46, 50, 59, 60*, 105, 107, 108, 426, 421 Waterhouse v. Jamieson. 395, 787 Waterloo Life Assurance Co. (31 Beav. 586) ‘ 127, 624, 678 — (4N. R. 207). ‘ . . 697 Carr (83 Beav. 542) Paul & Beresford (33 Beay. 204) Saunders (2 De G. J. & S. 101) Waterlow v. Sharp . ‘i - . Il Waters v. Taylor. 575, 600 Watkin, ex parte . . . . 704 Watkins v. Clark 3 » 275 v. Huntley 494 Watson, ex parte (re "Caleutta Bank, 3 De G. & S. 253) 561, 622, 639*, 651 —— (21 Q. B. D. 801) 163, 177, 189, 190, 191, 919 Watson v. Black. « 452 —— vv. Cave . 3 . 569, 570 —— v. Charlemont 35*, 145 v. Eales 417, 418, 424*, 532, bast, 59 —— v. Mid Wales Railway Co. . 275 ». Spratley. aj 2 9, 453 Watson, Kipling & Co. . » . 682 Watts v. Jetfryes ‘ ‘ . 461 v. Porter é a . » 461 v. Salter . : 83*, 34* Weald of Kent Canal Co. v. Robin- son . ‘ 426, 587 ‘Wear Engine Works Co.. » . 654 Wearmouth Crown Glass Co. . 681 Webb’s case . ‘ oa 62 Webb v. Commissioners of Herne Bay. < 163, 171*, 193 —— »v. Earle. i ‘ 400, 435 —v. Taylor . ‘i i . 268 *e liv AUTHORITIES REFERRED TO. PAGE Webb v. Whiffin . 394, 754, 821, 851, 856, 857 Webster’s case (2 Eq. 741) 21, 25, 26*, 122, 772 — feat J.Ch. 188), « (BMS Wedgwood Coal and Tron Co. . 711, 881 Anderson (7 Ch. D. 75). Weekley v. Weekley 452, 453 Weeks v. Propert . . 89, 242 Weikersheim’s case 59, 758, 806, 807 Weir v. Barnett . . . . 244 v Bell . . §8, 89* Weiss, re . : 268, 295, 671 Welland Railway Co, v. Berrie’ 417, 909, 910 v. Blake. 414, 427, 537 Wellington Reversionary Annuity and Life Assurance Soc. Conquest (1 Ch. D. 334). Wells v. Mayor of Hull . 2 223 v. Williams. ‘ 37 Welsh Flannel and Tweed Co. 847, 879 Welsh Potosi Mining Co. . 613 Birch (2 De G. ‘& J. 10). Clarke (2 De G. & J. 245). Lofthouse (2 De G. & J. 69). Tobin (7 W. R, 4). Wenlock Lee v. River Dee Co. 112, 162, 168, 164, 165, 176, 187, 189*, 191 Wentworth v. Chevell. 537, 544 Werle & Co. v. Colquhoun. «911 | West’s case ‘ 5 191, 192 Westbourne Grove Drapery Co. (5 Ch. D. 248) . 720, 732 —— (W. N. 1878, 195). . 885 Westcomb’s case. 5 . . 868 West Cork Railway Co... » 905 West Cornwall Railway Co. v. Mowatt . 5 ‘ 105, 192, 396 West Cumberland Iron and Steel Co. - 665 1029 West Devon Great Consols Mine (27 Ch. D. 106) 325, 658, 705 —(38Ch.D.51) . . . 699 West of England Bank . - « 720 Booker (14 Ch. D. 317) Brown (12 Ch. D. 823) Budden and Roberts (12 Ch. D. 288) Hatcher (12 Ch. D. 284) - West of England and South Wales District Bank. Swansea eel Society (11 Ch. D. 768 Dale & Co. (11 a os 772) West Ham Distillery Whittel (2 De &. a 3. 577) West Hartlepool Iron Works ae (10 Ch, 618) : 637 —— (10.Ch. 629) ; - 660 — (34L. T., N.S. 570) - . 682 Gray (1 Ch. D. 664) West India Steamship Co. . . 844 West Jewell Tin Mining Co. Weston (10 Ch. D. 579). ‘ West London Commercial Bank. 717 PAGE West London Commercial Bank ». Kitson . . 231, 242. West London Railway Co. 2. ue nard 313 West Riding Union Banking Co. Turner (19 Ch. D. 105). West Silver Bank Mining Co. . 986 West Surrey Tanning Co. 640, 645* West v. West ‘ 108, 467 Western Bank of Scotland v, Addie a 1 — v. Bairds 373* Western Benefit Building Society 657° Western of Canada Oil, &c., Co. (17 Eq. 1) 630, 635, 636, 637, 652 — (6Ch. D. 109) . 691 Carling (20 Eq. 580 and 1 Ch. D. 115) Hespeler (1 Ch. D. 115) Walsh (1 Ch. D. 115) v. Walker . : 263 Western Life Assurance Society (11Eq.164) . . 735 —— (5 Ch. 396) 702, Willett (5 Ch. 396) Western Suburban Building Society v. Martin . Westman v. Alcticbolaget &e. Fabrik 909° Westminster Silver Lead Ore Co. (Duchess of) . 749, 786 Weston’s case (10 Ch. D. 579) . 367, 696, 699 — (4 Ch. 20, and 6 Eq. 238) . 464, 465, 665, 821, 825, 827, 834, 835, 878, 889° (5 Ch. 614) 800, 803, 811, 828 Westropp v. Solomon . ‘494, "515" Wexford and Valencia Railway Co. Fisher (3 De G. & Sm. 116) Wey and Arun Junction Canal Co. 618, 647* Whaley Bridge Co. v. Green 347, 349, 356*, 361* Wheal Anne Mining Co. _ Ww. R. 330) . - . 619 (30 Beav. 601) z a 653* Wheal Buller Consols 148, 301, 792, 793, 795* Wheal Lovell Mining Co. Wyld (1 M. & G. 1) © Wheal Unity Wood Mining Co. Chynoweth (15 Ch. D. 18) Wheal Virtue Mining Co. . . 686 Wheal Vyvyan Maou Co. ‘Wescomb (9 Ch. 553) Wheatley v. Silkstone Coal Co. . 197 Wheeler 7, Van Wart ‘ . 609* Waaney) ex parte (138 Q. B.D. 476) 848° White's case GB De G. & Sm. 157) 42," 808 — ee Ch. a 511) . 785" — (3E nee . i 833, 834 White v. ais Railway Co, 198° 563 Whitehead v. Izod. . - 889 , AUTHORITIES REFERRED TO. lv PAGE Whitehead v, Whitehead » . 547 Whitehouse’s case (3 Eq. 790). 28 Whitehouse & Co., ve (9 Ch. D. 595) 742, 744 Whitfield v. South-Eastern Rail- way Co. » . 209 Whitley Partners, Limited 19, 119, 797, 935 Whittet’s case 60, 748 Whitworth’s case . é 690, 691 Wigan v. Fowler 138 Wightwick v. Lord 542 Wilby v. West Cornwall Railway Co. 200 Wilde ». Stannar 7 - : 295 Wilkins v. Roebuck 148 Wilkinson’s case 26, “28, 771, 773 Wilkinson v. Anglo- -Californian Gold Co... qi : 45, 59, 64 v. Lloyd . 467, 491, 493 Willes v. Greenhill 5 » 205 Willey v. Parratt : 3 33 Williams’ case (1 Ch. D. 576) 802, 808, 805, 827, 828 =a &H.400) 2... 785 9 Eq. 225) . 828 Williams, ex parte (2 Eq. 216) 357, 722 (1 Sim. N. 8. 57) 652*, 653* ——v. Archer . . , . 499 — vv. Aspinall . 286 v. Beaumont - 267 v. Colonial Bank 474, 475, 481*, 913 v. Harding 550, 556, 708, 848 v. Hathaway : - 247 v. Hayward - 920 v. Hopkins - 720 v, Jones . - 139 ». Pigott . 145 ». Prince of Wales’ Life Co. 440, 598 v. St. George’s Harbour Co. 152%, 224 —- v. Salmond 565, 567, 568 -— v. Swansea Harbour Trustees 88 v. Trye : - 488 Williamson, ex parte 189, 235, 236, 238", 385, 919 —— v. Barbour . A ‘ > 205 Willison v. Patteson . 37 Willmott v. London Celluloid ‘Co. 197, 669 Wills v. Bridge . . 469 —— v. Murray 58, 307, 308, 415, 496, 587 — v. Sutherland 267, 427, 565 Wilmot v. Corporation of Coventry 220, 221 Wilson’s case (8 Eq. re 123 (9 Eq. 706) . 733 — (12 Ha. 516). 694 Wilson, ex parte (8 Ch. - 45) 696 —— (7 Ch. 45) . 699 —— ». Bury (Lord) * - 364 —— v. Birkenhead, &c., Railway Co. 425, 427 v. Caledonian Bailway Co. . 103 PAGE Wilson v. Church . 80, 265, 570 —— v. Craven - 268 », Curzon . 363, 606 v. Keating . 499, 802 v. Miers Fi . 207*, 241 —— v. Natal Investment Co. . 675 v. Stanhope . 565, 593 —— v. Strugne 1 . 139 », Tumman . 149, 176 —v. Wallani.. - 553 —— v. West Hartlepool Rail. Co. 160, 223, 228 », Wilson 802, 3803 Wiltshire Iron Co. Pearson (3 Ch. 443) —— v. Great Western Rail. Co. 668%, 672, 754 Winch v. Birkenhead Rail. Co. 202, 207, 322, 572, 580, 598, 601, 892 Wincham Shipbuilding Boiler and Salt Co. Hallmark (9 Ch. D. 329) Poole, Jackson & White (9 Ch. D. 322) Winehouse v. Winehouse 720, 721 Wingfield v. Barton 293, 294 v. Peel 293, 294 Winne v. Bampton . 220 Winstone’s case 120, 737, 752, 757 Winterbottom, ex parte 550, 708 Wise, ex parte 561, 631, 632, 639, 651* Withernsea Brickworks 676, 678, of 20 Wittenbury v. Law 286 Witts v. Steere 2 ow 645 Wolesey, ex parte 622, 656 Wolverhampton, Chester and Birkenhead Junction Co. Cottle (2M. & G. 185) Dale (1 De G. M. & G. 513) Holroyd (15 Jur. 696) Roberts (1 Dr. 204) Stocks (22 L. J. Ch. 218) Wolverhampton New Waterworks Co. v. Hawkesford 59, 60, 104, 105*, 421, 427 Womersley v. Merritt . 185 Wontner v. Shai 16, 34, 145 r j Wood's case (15 Ea. 236) . . 124 — (3 De G. & J. 85) ea ES* Wood's claim (9 W. R. 366, and 10 ib. 662) 180*, 237, 735 Wood v. Argyll . 144, 145 ». Marston 269 v. Wood 534 Woodfall’s case. 4 - . 780* Woodhams v. Anglo-Australian Co. . 180, 275, 283, 560, 563, 741 Woollaston’s case 83%, 533, 822, 843, 862 Woolman v. Toby 32, 270, 607 Woolmer, ex parte 623, 646*, 664, 860, 865, 866 Worcester Corn Ex. Co. (3 De G. M. & G. 180) 235, 248, 384, 851, 862 — (15 Jur. 960). . - 684 e2 lvi AUTHORITIES REFERRED TO. PAGE Worcester, Tenbury and Ludlow Rail. Co. . . 663* Wormwell v. Hailstone 278, 279 Worth’s case (5 Ch. 682) 58, 122, 184 Worth, ex parte, (4 Drew. 529) 83, aie Worthington v. Sudlow af) DEG Wreck Recovery Salvage Co. 358, 709 Wright’s case (5 Ch. 487) 704, 889 (7 Ch. 55) . 521, 777 — (12 Eq. 331) . 4 . . 818 (12 Eq. 336, note) 3 . 526 Wright v. Campbell 3 - , 224 v. Desley . : . 916 —— v. Horton 175, 208, 726 —— v. Monarch Investment Build- ing Society 916, 921 vy. Snowe . . . 810 v. Tuckett . ‘ . . 545 v. Warren . . 544 Wright & Gamble, ex porte (8 Eq. 128) ‘ 865 Wrighte’s case Q De GM. &G. 636) . ‘ . 722, 723, 850, 860 Wrighte v. Lindsay . ; . 848 Wrysgan Co. Humby (5 Jur. N.S. 215) Wyall v. The Darenth Rail. Co. 291 Wyatt v. Metropolitan Board of Works. 146*, 147 Wye Valley Rail. Co. v. Hawes 390, 563 Wylam’s Steam Fuel Co. v. Street 555 Wyld, ex parte 561, 619, 631, 639, 649* —— v. Uopkins 128, 144* PAGE Wyley v. Exhall Coal Co. . » 674 Wynn Hall Coal Co. North and South Wales Bank (10 Eq. 515) 17, 26, 769, 773, 774 Wynne’s case 473, 499, 505, 510 Wynne v. Price Yarsoroucu % Bank of England 209 Yates v. Nash . 230 Yelland’s case (5 DeG. & Sm. 39d, and 16 Jur. 509) 47, 757, 761* — (4 Eq. 350) 731 Yetts v. Norfolk Railway Co, att, 412, 577, 600 York Buildings Co., The . . 412 York and London Assurance Co. Hodsell (19 L. J. Ch. 234) York and North Midland Railway v. Hudson 821, 364”, 365%, 388%, 394 York Tramways Co. ». Willows 157, 158, 302, 337, 409, 996 Yorkshire Fibre Co. 440, 705 Yorkshire Railway Wagon Co. v. Maclure . 191 Young v. Brompton Waterworks Co. . z 3 - 265 — v, Cole ‘ z » . 573 —v. Smith . 488 Gaon & Co. v. Mayor of Leam- ngton Spa . : . 223 Ysta ifera Gas Co... ‘ . 457 Zuiueta’s claim . . 171, 206, 728 < li) STATUTES REFERRED TO. gees PAGE PAGE 33 Hen. 8, c. 27. 315 7 Wm. 4&1 Vict. c. 73 21 Jac. 1,¢. 16 3 . . 723 $20. . 100, 437 29 Car. 2, v. 3, § 4and §17 . 228, 453 21 ‘ 100, 101, 256, 290 6 Geo. 1: G 18, gis. 7 130, 320 D2 4 270 6 Geo. v G gy 4 ‘ 130 23 3 . 270 7Geo.2,u8 . 4 ‘ 488 24 4 101, 255, 257, a 21 & 22 Geo. 3, c. 46 (Irish) . 5, 8 39 & 40 Geo. 3, uv. 28, § 15. 136 25 : * 8 270 4 Geo. 4,¢. 76,816 . > « 172 26. , 2 . 100 5 Geo. 4, c. 114 ‘ ‘ ‘ 3 27 2 : . . 100 6 Geo. 4, c. 42, § 10 187 299. . . ~~ 97, 252 6 Geo. 4, ¢. 91,§2. 3, ‘99, 252 32 2 » 99, 100 7 Geo. 4, c. 46 4, 93 | 1&2 Vict. c. 96. 268, 564 See, in ” Index, Com- §4 ‘ ‘ . 458 panies governed by 1&2 Vict. c. 106, §§ 29, 31 . . 36 7 Geo. 4, c. 46 1& 2 Vict. c. 110 460, 463, 848 $4 . 109, 269, 282, 285, 814. 6, 9, 461 286 15 . 461 5 P 109, 110 IG 4 - 462 6 « Z . . 109 17 ‘ » 725 11 5 f . 252 18. .
) Mr. Batten in his useful little
treatise, p. 31, says that a true Cost-
book company never has a fixed
capital,
(c) See 32 & 33 Vict. ¢. 19, § 9,
and 50 & 51 Vict. c. 43, §§ 28 & 24.
The rules and regulations must now
be filed with the registrar of the
Stannaries Court, 32 & 33 Vict. c.
19, § 9.
(d) 32 & 33 Vict. ©. 19, §§ 16-23.
(e) Fenn’s case, 4 De G. M. & G.
285 ; Mayhew’s case, 5 ib. 837 ; Bod-
min United Mines, 23 Beav. 370;
Bireh’s case, 2 De G. & J. 10; Loft-
house’s case, ib, 69.
COST-BOOK MINING COMPANIES. 95
nerships (f). By the Stannaries act, 1869 (82 & 88 Vict. Bk. ae 4.
c. 19, s. 25), however, a past shareholder is not liable to con- ———————
tribute to the assets of the company if he has ceased to be a
shareholder two years or upwards before the date of the
winding-up order (4).
Whoever alleges that a cost-book mining company is in any Mining customs
respect governed by a local usage which excludes the applica- st at
tion of the general law of partnership, must prove the existence
of such usage (hk) ; for the courts do not take judicial notice of
what the cost-book principle is; and they invariably apply the
general law of partnership to companies formed on that prin-
ciple, unless itis proved that the application of such law is
excluded as alleged (2).
The question whether a person is or is not a shareholder in eae
a cost-book mining company must be determined in precisely book company.
the same way as the question whether a person is or is nota
member of an ordinary partnership (k). The usual mode of
proving that a person is a shareholder in a cost-book mine is
by showing that he has signed the cost-book or an authority
for the insertion of his name in it: and it has been said to be
part of the cost-book principle that a register of shareholders
should be kept, and that every member should sign either the Signing the
bookitself or an authority for the insertion of his name in it (J). seas
At the same time, a person clearly may, as between himself
(f) Shareholders in a cost-book
mine were held liable to creditors
Beav. 370 ; Fenn’s case, 4 De G. M.
& G. 285; Hart v. Clarke, 6 ib.
for goods supplied in Tredwen v.
Bourne, 6 M. & W. 461; Newton v.
Daly, 1 Fos. & Fin. 26; Lanyon v.
Smith, 3 B. & Sm. 938; Harvey v.
Clough, 2 N. R. 204. See, too,
Ellis v. Shmeck, 5 Bing. 521 ; Peel
v. Thomas, 15 C. B. 714; Toll v. Lee,
4 Ex. 230.
(g) In re Wheal Unity Wood
Mining Co., Chynoweth’s case, 15
Ch. D. 13, at p. 21.
(h) See ante, note (a), and the
cases cited below.
(t) See Hawkins’ case, 2 K. & J.
253; Bodmin United Mines, 23
232, and 6 H. L. C. 633; Sibley v.
Minton, 27 L. J. Ch. 53, V.-C. Kin-
dersley. The purser can now sue a
shareholder for calls. See 32 & 33
Vict. v. 19, § 13. See before this
act, Hybart v. Parker, 4 ©. B. N.S.
209.
(&) See Peel v. Thomas, 15 C. B.
714; Tredwen v. Bourne, 6 M. & W.
461; Thomas v. Clark, 18 C. B. 662,
(2) See Tippett v. Johns, Tap-
ping’s Essay, p. 187; Toll v. Lee,
4 Ex. 230. Such a register is now
required, see 32 & 33 Vict. c 19,
§ 9,
96
COST-BOOK MINING COMPANIES.
Bk. i os 4. and third parties, incur the liabilities of a shareholder without
sl.
Vice v. Anson.
Transfer of
shares,
signing the cost-book or any such authority as that referred
to (m); and it is apprehended that a person may be a share-
holder as between himself and the other members although
he may not have signed the cost-book or any authority for the
insertion of his name init. Indeed there is reason for going
further, and for denying that any such signature is essential ;
for an attempt to prove it to be so is reported to have failed,
the evidence adduced amounting only to this, that it was usual
for every member to testify his acceptance of shares by writing
under his hand (n).
In Vice vy. Anson (0), the Court seems to have thought that
a person could not be a shareholder in a cost-book mining
company unless he acquired some interest in the mine, treating
it as land, and that some deed conveying him an estate in the
land was requisite. But this opinion cannot be supported ;
and it seems clear that shares in a cost-book mining company
are transferable by entries in the cost-book; and that a person
who is entered therein as a shareholder in respect of shares
accepted by him is a shareholder, although no deed or writing
at all has been executed (p). Shares in cost-book mining
companies are ordinarily transferred by a document in which
the transferor acknowledges that he has transferred, and the
transferee acknowledges that he has accepted the shares
mentioned. This document is signed by both parties, is
addressed to the purser, is sent to him by the transferee, and
is the authority to the purser to register the transferee as a
shareholder (q).
(m) See Martyn v. Gray, 14 C. B.
N. 8. 824, as to holding out; and
(p) See Tippet v. Johns, Tap-
ping’s Essay, p. 187; Reynolds v.
see Cox’s case, 4 De G. J. & Sm. 53,
where a person entitled to shares
tried to screen himself from liability
by holding them in the names of
other people.
(n) Northey v. Johnson, 19 L. T.
104, Q. B. 1852. That this is usual
there can be no doubt; it is ex-
pressly required by the rules of
most large mines.
(0) 7B, & C. 409.
Bassett, Collier on Mines, 124, note ;
Vivyan v. Mowatt, 8 L. T. Ex. 480 ;
Northey v. Johnson, 19 L. T. 104;
Toll v. Lee, 4 Ex. 230. Compare
Curling v. Flight, 5 Wa, 242; 6 ib
41; and 2 Ph. 643.
(q) Toll v. Lee, 4 Ex. 230; Walker
v. Bartlett, 18 C. B. 845. See, as to
parol transfers, Northey v. Johnson,
19 L. T. 104, Q. B. See, also, 32 &
33 Vict. c. 19, §§ 14, 15, and 35,
CHARTERED COMPANIES. 97
By 33 & 34 Vict. c. 97, s. 3; and schedule, title Transfer, a Bk. oe 4,
6d. stamp duty is imposed upon “ any request or authority to ———————
the purser or other officer of any mining company conducted ee
on the cost-book system, to enter or register any transfer of
any share or part of a share in any mine; or any notice to
such purser or officer of such transfer ”’ (r).
Companies engaged in working mines within and subject to Registration.
the jurisdiction of the Stannaries, need not be registered under
the Companies act of 1862(s); but if their capital is fixed,
and if there are seven or more shareholders, they may be so
registered, with or without limited liability. If the capital is
not fixed, the company cannot apparently be registered as an
existing company with limited liability (t). The effect of regis-
tration under the Companies act, 1862, will be considered
hereafter (uw). If not registered under that act, cost-book
mining companies working mines within the Stannaries are
subject to the provisions of 32 & 33 Vict. c. 19, and if working
metalliferous mines or tin streaming works, to the provisions
of 50 & 51 Vict. c. 43, which will be noticed in their proper
places.
Cuass II.—CompaniIES CHARTERED OR PRIVILEGED BY THE
Crown.
1. Chartered companies.
The Crown has at common law the power of incorporating Chartered
: companies.
by charter any number of persons who assent to be incorpo-
rated, and a chartered company is therefore formed as soon as
a charter is granted to, and accepted by, two or more indivi-
duals, enabling them, alone or with others, to trade as a body
corporate (x). The Crown, however, has no power to incorpo-
(r) The cost-book itself requires
no agreement stamp. See Vivyan
v. Mowatt, 8 L. T. Ex. 480.
see Lanyon v. Smith, 3 B. & Sm.
938 ; and Harvey v. Clough, 2 N. R.
204.
(s) 25 & 26 Vict. c. 89, § 4.
(t) See 25 & 26 Vict. c. 89, § 179,
cl. 3, and § 181.
(u) As to the effect of registration
with respect to retired shareholders,
LC.
(a) See, as to charters, Grant on
Corporations, pp. 9, et seg. As to
charters for a limited time, see 7
Will. 4 & 1 Vict. c. 73, § 29, and
47 & 48 Vict. c. 56.
*H
98
CHARTERED COMPANIES.
Bk. a be 4. rate persons against their will (y) ; nor can the Crown force a
Chartered com-
pany not a
partnership.
Validity of
charters.
new charter upon a corporation after it is once established. A
charter which has been confirmed by act of Parliament cannot
be varied by the Crown (z) ; but a charter which has not been
so confirmed may, without being formally surrendered (a), be
varied by a subsequent and inconsistent charter (b), provided
the new charter is accepted by the body corporate (c), t.e., by a
majority of the members composing it (d).
A chartered company is a corporation existing for the pur-
poses for which it is created and no others ; and those persons
only are members of it who are declared to be so by the charter,
or who have been admitted in compliance with the charter and
the bye-laws made in pursuance of it(e). The charter of a
company. is a law set to it and to the individuals composing it,
and they have no power by any agreement amongst themselves
to annul or legally do anything at variance with their charter(/).
This subject will be adverted to hereafter.
A chartered company, being a corporation, is not a partner-
ship, although the company may have gain for its object, and
the members of the company may share profits.
A charter is not necessarily of any legal value; for it may
have been obtained from the Crown by misrepresentation, or
it may have been granted by the Crown in excess of its pre-
rogative, and in either case the charter will be void. A
charter which has been obtained from the Crown by false and
fraudulent statements may be formally annulled by scire
(y) Grant, pp. 138 and 18; Dr. 1 Coll. 370, an injunction was
Askew’s case, 4 Burr. 2200, per granted to restrain the majority
Yates, J.; and see Rutter v. Chap- from accepting a new charter. See
man, 8 M. & W. 1. Ex parte The Society of Attorneys, 8
@) RB. v. Miller, 6 T. R. 268; but Ch. 163, for the grounds on which
see Royal Each. Ass. Co.v. Vaughan, the grant of a supplemental charter
1 Burr. 155. can be successfully opposed.
(a) BR. v. Larwood, 1 Salk. 168, (e) Dr. Askew’s case, 4 Burr. 2200,
(0) Ib.; and R. v. Haythorne, 5 per Yates, J.
B. & C. 410; Royal Each. Ass. Co. (f) See The Society of Practical
v. Vaughan, 1 Burr. 155. Knowledge v. Abbott, 2 Beav. 559.
(c) Bull. N. P. 212,c; R. v. As to giving effect to the practice of
Pasmore, 3 T. R. 240, the members and allowing that to
(d) R. v. Hughes, 7 B. & C. 708. control the charter, see Somes v.
In Ward v, The Society of Attorneys, Currie, 1 K. & J. 605.
CHARTERED COMPANIES. 99
facias (g); but although a charter which has not been thus 2k. a 4.
annulled is to be treated as valid until the contrary is proved, ——----
there is apparently no rule to the effect that its validity is not
to be disputed except in a formal proceeding instituted for the
purpose of procuring its cancellation (h). At the same time
those persons who have accepted or acted on a charter and
treated it as valid cannot, unless in a proceeding to annul it,
object that it was obtained from the Crown irregularly, or by
the misrepresentation of themselves or their fellow-members,
or of their predecessors (i). Indeed, it is said, that neither
those who have accepted a charter, nor their successors, can
dispute its validity ; but this is very doubtful (/).
Charters are obtained by petitioning the Queen in Council. Gnarters how
The petition and draft of the proposed charter are left at the preined
Council Office, and are then referred to the Board of Trade.
The Colonial Office, Foreign Office, and India Office are also
referred to, if the proposed company falls within their depart-
ments. If it is determined that a charter shall be granted, it
issues under the great seal (/). But charters are now very
seldom granted to trading companies.
A charter may be surrendered to the Crown; but a surrender
is of no effect unless accepted and enrolled in the enrolment
department of the central office of the Supreme Court of Judica-
ture (m). After the surrender has been accepted and enrolled
the corporation ceases to exist (n).
.2. Companies formed under the Letters patent act,
7 Will. 4 é1 Vict. e. 738.
Letters patent and charters are both litere patentes sealed Companies
with the great seal, and are, in fact, the same thing. But the beeen aag
Crown is empowered by the act 7 Will. 4 & 1 Vict. c. 78 (0), 2%
(g) R.v. The Eastern Archipelago Companies, p. 401, ed. 10; see, as to
Co., 1 E. & B. 310; 2 ib. 856; and advertisements, 7 Will. 4 & 1 Vict.
4 De G. M. & G. 199. See, as toc. 73, § 32.
sci. fa. to repeal patents, 2 Wms. (m) See R. v. Osbourne, 4 East,
Saund. (ed. 1871), 251, et seg. 326, and Jud. (Officers) act, 1879,
(h) Grant on Corp. 39, &c. 42 & 42 Vict. c. 78, §§ 4,6 and 12
(7) See Macbride v. Lindsay,9 Ha. and Ord. LXI.
574. (n) Grant, 46.
(A) See Grant, 20—22. (0) Repealing 6 Geo. 4, ¢. 91, § 2,
(.) See Wordsworth on Joint Stock and 4&5 Will. 4,¢, 94.
H 2
100
Bk. I. Chap. 4.
Class 2.
Company’s deed.
Such companies
not corporations.
CHARTERED COMPANIES. -
to grant by letters patent to any company or body of persons,
although not incorporated by such letters patent, any privileges
which the Crown might at common law grant to any company
or body of persons by any charter of incorporation. Letters
patent under this act are obtained on application to the Queen
in Council, and notice of the application must be inserted
three times in the “‘ London Gazette,’ and in one or more of
the newspapers, circulating in the county in which it is pro-
posed that the principal place of business of the company shall
be established, at intervals of not less than one week (p).
Every company formed under this act, is required to be
entered into by agreement under seal, in which are to be
specified the number of shares in the company, the name of
the company, the names of its members, the date of its com-
mencement, the nature of its business, the place or principal
place where such business is to be transacted, and also the
names of two or more officers to sue or be sued on behalf of
the company (q). Within three months after the grant of the
letters patent, a return is to be made to the enrolment depart-
ment of the central office (r) of all the above particulars, and of
the date of the letters patent (s) ; and returns are required to be
made of every change made in the company’s principal place of
business, and of every change amongst its shareholders (),
and of the officers by which it is to be sued (u). These
returns are directed to be registered and to be open to the
inspection of any person upon payment of a small fee (x). A
certified copy of the return is made evidence both in civil and
in criminal proceedings (y).
Companies formed under this act are not corporations, but
are essentially partnerships. Their privileges depend on the
letters patent obtained by them. The possession of a common
seal is taken for granted in the act itself (z); but there is
nothing requiring the seal to be affixed to a contract, in order
(p) 7 Will. 4 & 1 Viet. c. 73, — (t) JB. §§ 7-10.
§ 32. (u) Ib. § 13.
(q) 1b. §5 (a) Ib. § 17.
(r) In the case of an English com- (y) Ib. § 18; see, too, §§ 20 and
pany, see § 26, and 42 & 43 Vict. 91.
c. 78, §§ 4, 6 and 12, and Ord. LXI. (2) See § 27,
(s) 1b. § 6.
7 wm. 4 anp 1 vior. c. 78. 101
to bind the company; and the act is express that the members Bk. - bea 4,
of the company are to be liable to its debts and engagements, ————
except so far as that liability may be limited by the letters
patent (a).
Who are to be deemed members is not stated; that question Members.
therefore must depend in each case upon the provisions of the
deed of settlement, and of the letters patent by which the
particular company in question may be governed; but when
once a person has become a member, his liability as a member
continues, until a return of the means whereby he has ceased
to be one is registered (0).
The act does not state with any precision how shares are
to be transferred, but a transfer, by deed or writing, is evi-
dently contemplated (c).
This act is seldom had recourse to; the modern registra-
tion acts have practically superseded it.
Cuass III.—Companirs INCORPORATED OR PRIVILEGED BY
SOME SPECIAL ACT OF PARLIAMENT.
1. Companies not incorporated, but empowered to sue and be
sued.
These companies are formed by agreement, and by the acts Companies em-
which privilege them (d). Whether a person is a member or ras ue
not, depends, in the absence of any special provisions in the
act of the company which may be in question, upon the prin-
ciples applicable to ordinary partnerships.
Banking companies governed by the general act, 7 Geo. 4,
c. 46, may be regarded as the type of companies empowered to
sue and be sued, and the authorities which will be referred to
hereafter, in connection with that act (infra, Class 4), may be
(a) See §§ 2-4 and 24, be sued by a public officer, see Bank
(b) See § 21. of Australasia v. Harding, 9 C. B.
(c) See §§ 8 and 9. 661; Bank of Australasia v. Nias,
(d) As to companies empowered 16 Q. B. 717; Kelsall v. Marshall, 1
by a colonial legislature to sue and = C. B. N.S, 241.
102
Bk. I. Chap. 4.
Class 3.
Companies in-
corporated by
special act of
parliament.
Promoters not
partners.
Parliamentary
contract and
subscribers’
agreement,
The special act.
COMPANIES INCORPORATED BY SPECIAL ACTS.
usefully consulted upon questions arising upon special acts of
a similar description.
2. Incorporated companies.
A company incorporated by a special act of Parliament
exists as an incorporated company by virtue of that act, and
not otherwise. It is formed by the act, and by that alone,
and those only are members of the company who are made so
by the act.
Persons associated together for the purpose of obtaining an
act of Parliament to incorporate them into a company, are not.
partners, although the company, when formed, will have gain
for its object, and although the shareholders will divide
amongst themselves whatever profits may accrue to the com-
pany (é).
It does not fall within the scope of the present work to
detail the method of obtaining acts of Parliament, or to advert
to the rules which have to be observed in compliance with the
standing orders of the two houses(f). It may, however, be
observed, that before an act can be obtained for the incorpora-
tion of a company, a deposit must be made of a certain pro-
portion in some cases of the estimated expense of the under-
taking, and in others of the capital it is proposed to raise.
Formerly a contract had to be entered into by the subscribers,
whereby each covenanted to pay a sum set opposite his name.
This contract was commonly called the ‘“ parliamentary con-
tract,” by way of distinction from the ‘subscribers’ agree-
ment,” i.¢., the agreement entered into by the allottees of
shares for the formation of the company.
The act which each company may succeed in obtaining for
itself is called its “special act,” and governs the company as
to all matters specially provided for in it. But as to other
(e) See infra, book ii, c. 1, and
ways, c. i ed. 6; and as to the ap-
Partn. pp. 23, et seq.
plication of the deposit in payment
(f) The standing orders are pub-
lished annually, and reliance is not
to be placed on any except the last
fur the time being. See on this
subject generally, Hodges on Rail-
of debts, Bradford Tramways Co., 4
Ch. D. 18; Lowestoft, Y., & 8. Tram-
ways Co, 6 Ch. D. 484; and Bir-
minghum and Lichfield Junction
Tail. Vo., 28 Ch. D. 652.
COMPANIES CLAUSES ACT. 103
matters the company (if incorporated since the 8th of May, Bk. fo 4,
1845) is governed by the Companies clauses consolidation ——————
act (g), which is a public general act passed in May, 1845, and prrorehen eaaid
is applicable to every English (kh) company incorporated by act
of Parliament since that time, save so far as its clauses and
provisions may be expressly varied or exempted by the com-
pany’s special act. In the present place it is proposed to
notice such of the clauses of the act in question as relate to
the constitution of the companies to which it applies, and to
the evidence of membership therein.
A company is supposed to be incorporated by a special act,
to have the amount of its capital fixed thereby, and to have the
capital thus fixed, divided into shares of a certain number and
amount, and numbered progressively from one upwards, so that
each share may be distinguished by its appropriate number
(§ 6). The company is then (by § 9) required to keep a book
called the ‘“‘ register of shareholders,” in which book are to Register of
be entered, (1), the names of the persons entitled to shares in event
the company; (2), the number of shares to which such persons
are respectively entitled; (8), the distinguishing numbers of
such shares ; and (4), the amount of the subscriptions paid on
them. This book is to be authenticated by the seal of the
company (which is to be affixed at ordinary meetings), and is
prima facie evidence against a person registered therein as a
shareholder that he is so in point of fact (see § 28); and the
creditors of the company have a right to inspect it (§ 36). In
addition to the ‘‘ register of shareholders,” the company is
required to keep a “‘ shareholders’ address book ” (§ 10), which
is to be open to the inspection of every shareholder at all con-
venient times (7). On demand of the holder of any share, and
on payment of a small fee, the company is required (§ 11) to
deliver to him under its seal a certificate of proprietorship ;
and this certificate is (§ 12) required to be admitted in all Share certificate.
(y) 8 & 9 Vict. c. 16, amended by discussed in this treatise.
26 & 27 Vict. c. 118; 32 & 33 Vict. (h) See Wilson v. Caledonian Rail.
c. 48; 38 & 39 Vict. u 66; 47 & Co., 5 Ex. 822.
48 Vict. c, 48, and 51 & 52 Vict. (2) See as to inspection and taking
c. 48. The Lands clauses andthe copies, infra, book iii. c.1, § 3, &e. 3,
‘Railways clauses consolidation acts § 4.
have no connection with the topics
104
Bk. I. Chap. 4.
Class 3.
Who are share-
holders.
Effect of register.
COMPANIES INCORPORATED BY SPECIAL ACTS.
courts as prima facie evidence of the title of the person named
in it, and of his executors, administrators, or assigns to the
share therein specified (j). Provision is then made for the
transfer of shares, for the registry of transfers, for the pay-
ment of calls, for the forfeiture of shares for the non-payment
of calls, and for executing against shareholders judgments
which have been obtained against the company ; all of which
matters will be noticed hereafter.
The statute contains two definitions of the term share-
holder :—
1. It is declared in § 8, that the word shareholder shall
mean shareholder, proprietor, or member of the company;
and,
2. It is declared in § 8, that every person who shall have
subscribed the prescribed sum (k) or upwards to the capital of
the company, or shall otherwise have become entitled to a
share in the company, and whose name shall have been entered
on the register of shareholders, shall be deemed a shareholder
of the company.
Upon this section it has been decided that a person may be
a shareholder although he has not paid for his shares, and
although payment is a condition precedent to his exercising
his full rights (J).
As regards the entry on the register, it is to be ob-
served :—
1. The act nowhere says that a person not on the register is
not a shareholder. A person made a member by the special
act is clearly a shareholder although not registered (m) ; and it
is conceived that other persons may be shareholders although
not registered as such (n).
(j) The certificate only shows the
legal title, Shropshire Union Ratl. Co.
v. RB, L. R.7 A. L. 496.
(k) we, the sum prescribed in the
company’s special act, see § 2.
(1) Hast Glowcestershire Rail. Co.
v. Bartholomew, L. R. 3 Ex. 15, and
see, also, McHuen v. West Lond.
Wharves Co., 6 Ch. 655.
(m) Portal v. Enmens, 1 C. P, D-
201 & 664, where no shares were
ever issued, and no register was ever
kept. Compare Kipling v. Todd, 3
C. P. D. 350, and see O’Brien’s cuse,
Ir. R. 11 Eq. 422.
(n) See the last note, and Rastrick
v. Derbyshire, &c., Rail. Co. 9 Ex.
149, and Wolverhampton Waterw. Co.
v. Hawkesford, 6 C. B. N. S. 336, 7
ib. 795, and 11 ib. 456.
COMPANIES CLAUSES AOT.
105
2. The register is primd facie evidence that a person whose Bk. I. Chap. 4.
name is on it is a shareholder.
It follows from this, that the company may put anybody’s
name on the register, and throw upon him the burden of
showing that he is not a shareholder (0). But the register is
no evidence that a person whose name is not on it is a share-
holder ; and therefore where shares were allotted to ‘‘ Brown-
rigg and Taylor,” who were trustees for another person, and
were described on the register as ‘‘ Brownrigg and others,”
this entry was held to be no evidence against Taylor (p).
Class 3.
The leading case on the requisites of a register of share- Form of register.
holders in companies governed by the Companies clauses con-
solidation act, is Wolverhampton New Waterworks Company v. Wolverhampton
Hawkesford (q). It was there held that a sheet of paper on ee as
which were written the names of some shareholders, and the Hawkesford.
total number of shares held by them, and which paper was
sealed with the seal of the company, was not a register at all.
In this case the shares were not identified by numbers, and in
this respect the register was substantially informal; and the
Court relied much on this circumstance. But it would, per-
haps, be going too far to hold that if a company issues un-
numbered shares, and keeps a proper register of such shares,
this register is altogether useless and inadmissible in evi-
dence (r). And if the shares are numbered the register is
admissible, although it does not contain the numbers of the
shares (s).
A rough share book has been held inadmissible in evidence
as a register under the act now in question (2).
If the register is in several volumes they are all admissible
in evidence, although the company’s seal is to be found in the
(0) Waterford, Weaford, &e., Rail.
Co. v. Pidcock, 8 Ex. 279; Bain
v. Whitehaven Rail. Co, 3 H. L.
C. 1; West Cornwall Rail. Co, v.
Mowatt, 15 Q. B. 528.
(p) Birkenhead, Lancashire, cc.,
Rail. Co. v. Brownrigg, 4 Ex. 426.
(@) 6 C.B. N.S. 336, 7 ib. 795,
and 11 ib, 456. Compare Portal v.
Emmens, 1 C. P. D. 201 & 664,
(r) See the last case, and Irish
Peat Co. v. Phillips, 1 B. & Sm.
638.
(s) East Gloucestershire Ratl. Co.
v. Bartholomew, L. R. 3 Ex. 15.
(t) Birkenhead, de., Rail. Co. v.
Brownrigg, 4 Ex. 426 ; Cheltenham,
de., Rail. Co. v. Price, 9 C. & P. 55.
106
Bk. I. ere 4.
Clas:
Register not
conclusive.
Right of com-
pany to register.
COMPANIES INCORPORATED BY SPECIAL ACTS.
last of them only (u); and the register sealed with the seal of
the company is admissible in evidence without proof of the
time or place, or authority at or by which the seal was
affixed (x). Moreover, the register is, if sealed and kept sub-
stantially as required, primd facie evidence against any one
whose name is on it, although he may prove that it has been
kept irrégularly, and is in many respects inaccurate and imper-
fect (y); but the sealed register is no evidence that a person
whose name is on it was a shareholder at any given time
anterior to the day on which the seal was affixed (2).
3. The register is not conclusive evidence that a person
whose name is on it is a shareholder. It is competent for him
to rebut the primd facie case made against him by the register,
by showing that the company inserted his name in it without
any authority. An express authority from him is not, however,
requisite ; for if he has entered into a contract with the pro-
moters of the company to take shares in it, and if that contract
is binding upon both parties, he may without more be properly
registered as a shareholder, and the contract and the register
will together be conclusive against him. But if he can show
that no such contract was ever entered into, or that such a
contract, if ever entered into, had terminated before his name
was inserted in the register, then the primd facie case raised
against him by it will be at an end. The following cases
illustrate these propositions :
1. As to the right of the company to register those who
are entitled to shares. That a person who is bound to accept
shares may be properly registered as a shareholder was decided
in The Midland Great Western Railway Company v. Gordon (a).
(u) Inglis v. The Great Northern Brighton Rail. Co. v. Fairclough,
Rail. Co., 1 Macqueen, 112. ib. 674; Birmingham, Bristol, and
(x) North-Western Rail. Co. v. Thames June. Rail. Co. v. Locke,
M‘Michael, 5 Ex. 855. 1 Q. B. 256; London and Grand
(y) See East Gloucestershire Rail. June, Rail. Co. v. Graham, ib. 271.
Co. v. Bartholomew, L. R. 3 Ex. 15; (2) Cheltenham and Great Western
Bain v. Whitehaven Co. 3 H. L. Union Rail. Co. v. Price, 9 OC. & P.
C. 1; Southampton Dock Co. v. 55.
Richards, 1 Man. & Gr. 448; Lon- (a4) 16 M. & W. 804; see, too,
don and Grand Junc. Rail. Co. v. Burke v. Lechmere, L. R. 6 Q. Bz
Freeman, 2 ib. 606; London and 297; Niwon v. Brownlow, 2 H. & N.
COMPANIES CLAUSES ACT.
In that case a railway company was projected; the defendant
agreed to take shares in it; he executed the subscribers’ agree-
ment; and he received scrip certificates. He sold the scrip
before the company was incorporated. After it was incorpo-
rated the company placed his name on the register of its share-
holders, and he was held to be a shareholder, although he had
never authorised the insertion of his name in the ‘register,
except so far as his contract conferred an implied authority for
such insertion (b). But a person who has never agreed to
take shares, and who is only the holder of scrip transferable to
bearer, ought not to be registered as a shareholder against his
will (c).
2. As to the inconclusiveness of the register. A person
whose name is on the register is not a shareholder unless he
is also entitled to a share in the company; and in order to
entitle a person to a share, he must have acquired such title
by the company’s special act (d), or he must have been an
original subscriber for the share, or have obtained a title to it
from or through an original member or subscriber. An original
subscriber does not become a shareholder by being placed on
the register unless he has acquired a right to be registered ;
and therefore if he has entered into a contract which gives him
no right against the company to be considered a member
thereof until he has performed certain conditions, e.g., executed
a deed, he does not become a shareholder by being registered
as one before he has complied with those conditions ; for as the
registry would not be equivalent to a compliance with the con-
ditions for one purpose, ¢.g., as against the company if a divi-
dend were claimed, so it is not equivalent to a compliance with
them for another purpose, é.g., against him who is registered,
in an action for calls (e).
455, and 3 ib. 686; Cork and
Youghal Rail. Co. v. Paterson, 18
before the act had passed, he retired
from his contract so far as he law-
C. B. 414.
(b) In Kidwelly Canal Co. v. Raby,
2 Price, 93, an act of Parliament,
incorporating the subscribers to a
company, was held to have made
the defendant a shareholder, he
haying been a subscriber, although,
fully could.
(c) Lustace v. Dublin Trunk, cc.,
Rail. Co., 6 Eq. 182.
(d) As in Portal v. Emmens, 1 C.
P. D. 201 & 664.
(¢) Waterford, Wexford, &c., Rail.
Co. v. Pidcock, 8 Ex. 279 ; Curmar-
107
Chap. 4.
ass 3.
Bk, I.
Cl
Improper
registry.
108
Bk. I. Chap. 4.
Class 3.
Company not
estopped by its
register.
Correcting
register.
Estoppel by
conduct.
Transfers of
shares.
COMPANIES INCORPORATED BY SPECIAL ACTS.
A person who is not yet entitled to share dividends, is not a
shareholder in the company, and does not become one by
simply being put on the register, unless indeed the insertion
of his name there is the only one thing remaining to be done
to perfect his title (f).
It follows from the above that the company is not estopped
by its own register (g). But when a person is put on the
register, the company has no right to strike him off unless it
can show proper grounds for so doing (h).
The Companies clauses consolidation act contains no pro-
vision for the rectification of the register ; but it may never-
theless be rectified both by mandamus and injunction as already
pointed out (%).
The doctrine by which individuals and companies are
estopped by their own conduct from taking advantage of the
non-performance of conditions precedent, and the non-
observance of prescribed formalities, is applicable to com-
panies of the class now in question, and to shareholders in
them, as is shown by the cases of Sheffield and Manchester
Raihwoay Company v. Woodcock (k), and Cheltenham and Great
Western Railway Company v. Daniel (1), which have been
already noticed (m).
Shares in companies governed by the Companies clauses
consolidation act are transferable by deed delivered (duly
executed), to the secretary of the company (n); a form of
transfer is given by the act (0); and in order that a company
may be compelled to register an instrument of transfer, it
then Rail. Co. v. Wright, 1 Fos. &
Fin, 282. See, also, Irish Peat Co.
vy. Phillips, 1 B. & Sm. 598, noticed
ante, p. 50; and Hdwards v. Kil-
kenny Rail. Co., 14 C. B. N.S. 526.
(f) See Shropshire Union Co. v.
Anderson, 3 Ex. 401.
(g) See the last case, and Water-
ford, Weaford, dc. Rail. Co. v.
Pidcock, 8 Ex. 279. See, also, ante,
p. 60.
(h) Ward v. 8.-Eastern Rail. Co.,
2 HE. & E. 812. Compare Hare v.
Lond. and N.-W. Rail. Co., Johns.
722.
(7) Ante, p. 61.
(4) 7M. & W. 574,
(1) 2Q. B. 281.
(m) Ante, p. 49.
(rn) 8 & 9 Vict. c. 16, §§ 14 & 15;
Nanney v. Morgan, 35 Ch. D. 598
and 37 ib. 346; West v. West, 9
L. R., In 121.
(0) 8& 9 Vict. c. 16, § 14, and
Sched. B,
BANKING COMPANIES FORMED UNDER 7 GEO. 4, o. 46. 109
must be in a simple form, not differing substantially from the Bk. i oe 4.
form prescribed (p).
Crass IV.—CompanIES INCORPORATED OR PRIVILEGED BY A
GENERAL ACT OF PARLIAMENT.
1. Banking companies formed under 7 Geo. 4, c. 46.
Banking companies governed by 7 Geo. 4, c. 46, and formed Banking com-
before May, 1844, still exist, but no company can now be rae ie.
formed under that act (g). These companies are not mere
partnerships, for they possess many privileges which ordinary
partnerships do not (r). A company of this kind was formed
by agreement, and the privileges alluded to were acquired by
sending returns to the stamp office, of (inter alia) the names
and residences of the members ; and the names, residences, and
titles of office of two or more members resident in England,
who had been appointed public officers of the company, and by
any one of whom the company might sue and be sued (s). The
returns thus made are evidence that all persons named therein
as members were members at the dates of the returns in which
their names appear (?).
The act contains no definition of the term shareholder or who are share-
member ; but it has been decided that no person is a member »*!4e".
within the meaning of the act unless he has complied with
all the conditions necessary to constitute a person a member
according to the company’s deed of settlement. Thus it has
been held that the husband of a married woman who, with
his consent had become a shareholder, was not himself liable
to creditors as a member, he not being a member according to
the company’s deed (u).
(p) Copeland v. North-Eastern Rail. (s) 7 Geo. 4, & 46, §§ 4&5; an
Co, 6 E. & B. 277; R. v. General irregularity in the returns does not
Cemetery Co., ib. 415. deprive the company of the privi-
(*y 7 & 8 Vict. c, 118, § 1. leges conferred by the act; Bonar
(r) Powles v. Page, 3 C. B. 16; v. Mitchell, 5 Ex. 415,
Macintyre v. Connell, 1 Sim, N. 8. (t) 7 Geo. 4, c. 46, § 6.
225 & 252, (u) Ness v, Angas, 3 Ex, 8085;
110
Bk, I. Chap. 4.
Class 4.
Returns to the
stamp office.
Effect of return.
BANKING COMPANIES FORMED UNDER 7 GEO. 4, c. 46.
The act requires that the returns to the stamp office shal]
be made out and be verified by the oath of one of the regis-
tered public officers, and shall be sent in once a year, between
the 28th of February and the 25th of March (z). But it has
been held that a certified copy of the return is admissible in
evidence, although it may have been made out by a person
calling himself ‘ cashier,” and there may be nothing to show
that he was a public officer (y). It has also been held unneces-
sary to prove that the return was verified by the oath of a
public officer, as required by the act (z); or that the return
was made at the proper time (a). On the other hand, it has
been held that returns proved not to have been made in
compliance with the act are inadmissible; ¢.g., when it is
proved that they were not made until after the 25th of
March (8).
A person returned as a member will, until the contrary is
shown, be presumed to have been a member at the time the
return was made and subsequently (c); and if two successive
returns contain the name of the same person, the presumption
is strong that he was a member during the whole period be-
tween the times at which such returns were made (d).
There is nothing in the act which makes the returns
conclusive, either one way or the other; and a person not
returned as a member may be proved, not only to have
become a member since the making of the last return, but
to have been a member at the time of the making of that
return (e).
The act is silent as to the mode in which shares are to be
transferred.
see, too, Dodgson vy. Bell, 5 Ex. 967; compare this with the last case,
Ness v. Armstrong, 4 Ex.21; Bosun- where it was held that the act was
quet v. Shortridge, 4 Ex. 699. directory only in this respect.
(x) 7 Geo. 4, c. 46, § 5. (c) Steward v. Dunn, 12 M. & W.
(y) Harvey v. Scott, 11 Q. B. 92; 655; Ex parte Prescott, Mon. & Ch.
Field v. Mackenzie, 4 C. B. 717. 611 ; Harvey v. Scott, 11 Q. B. 106.
(2) Steward v. Dunn, 12 M. & W. (d) Bosanquet v. Shortridge, 4 Ex.
655. 699.
(a) Bosanquet v. Woodford, 5 Q. B. (e) See Prescott v. Buffery, 1 C. B.
310. 41; Bank of England y, Johnson, 3
(b) Prescott v. Buffery,1C, B. 41; Ex. 598,
REGISTERED COMPANIES.
2. Registered companies,
By far the greatest number of joint-stock companies belong
to this class. They are all now governed by the Companies
acts, 1862, 1867, 1877, 1879, 1880, 1883 (ee), and 1886. These
acts, like those which they supersede, require for their prac-
tical working, a public officer in each division of the United
Kingdom. This officer (called the registrar of joint-stock
companies) is appointed by, and, to a certain extent, is subject
to the Board of Trade. His duty is to register the various
documents required by the acts to be registered, and to allow
such documents to be inspected by any one desirous of seeing
them (25 & 26 Vict. c. 89, § 174).
These duties will, if necessary, be enforced by man-
damus (/).
Registration incorporates the company (§§ 18, 191, and
192); and the registrar’s certificate of registration, which he is
required to give, is conclusive evidence that all the statutory
requisitions have been complied with (§§ 18 and 192) (g).
Even therefore if they have not, still the existence of the com-
pany as a corporate body cannot be denied in the face of the
certificate (h) ; nor does the fact that a company was formed
in fraud invalidate the certificate or deprive the company of its
corporate character (7). There is, moreover, no provision for
cancelling the registration of an improperly registered com-
pany; nor is it clear that there are any means of cancelling
such registration (k).
But the registrar has no power to extend the acts to com-
panies not within their scope; and in order that his certificate
(ce) 46 & 47 Vict, c. 28 is repealed
except as to Ireland by 51 & 52
Vict. c. 62.
(f) BR. v. Whitmarsh, 15 Q. B.
600; see, also, R. v. Registrar of
Joint Stock Companies, 10 Q. B. 839 ;
R. v. Same, 21 Q. B. D. 131.
(g) Peel’s case, 2 Ch. 674; Oakes
v. Turquand, L. R. 2 H. L. 325 &
354-369 ; Princess of Reuss v. Bos, 5
ib. 176; New Brunswick Rail. Co. v.
Boore, 3 H. & N. 249. See as to
copies of certificates, 40 & 41 Vict, c,
26, § 6.
(2) See the last note, and Glover
v. Giles, 18 Ch. D. 173; Nassaw
Phosphate Co., 2 Ch. D. 610; Ban-
wen Iron Co. v. Barnett, 8 C. B. 406 ;
Bird’s case, 1 Sim. N. 8. 47.
(i) Pilbrow v. Pilbrow’s Atmo-
spheric Co., 5 C. B. 440.
(k) Princess of Reuss v. Bos, L. R.
5 H. L. 176, 193, 197, 202. But see
Glover v. Giles, 18 Ch. D. 180, as to
Quo warranto,
111
Bk. I. Chap. 4.
Class 4,
Incorporation
of company.
Certificate of
registration
when not con-
clusive.
112
Bk. I. Chap. 4.
Class 4.
Evidence of
incorporation,
Name of com-
pany.
Power to change
name.
REGISTRATION OF COMPANIES.
may be conclusive evidence of the incorporation of a company
formed and registered under them, it is essential that the com-
pany shall be one which may be duly registered ; neither regis-
tration nor the registrar’s certificate is of any avail in the case
of a company to which the acts do not apply (().
The registrar’s certificate, although the best, is not the only
admissible evidence of registration. Registration may be suffi-
ciently proved by other evidence ; for example, as against the
company, by the production of certificates of shares sealed with
its seal(m). But this sort of evidence cannot be relied upon
when it is necessary to prove the incorporation of the company
against persons not connected with it (n).
No two companies are to be registered by the same name, or
by names so similar to each other as to be calculated to
deceive (§ 20) (0). But if a registered company is being dis-
solved, and it consents to the assumption of its name by
another company, the latter may be registered under the name
borne by the former (§ 20) (p). In the event of two companies
being inadvertently or otherwise registered by the same name
or by two names so similar as to be calculated to deceive, the
name of the company last registered may be changed (§ 20).
And any registered company may change its name, with the
sanction of a special resolution of its members, and the approval
of the Board of Trade ($18). But the change of name is not
(1) See Northumberland District
Banking Co., 2 De G. & J. 357.
See, also, Baroness Wenlock v. River
Dee Co., 38 Ch. D. 534, which turned
on a similar provision in another
act. Compare Princess of Reuss v.
Bos, ubt sup. As to companies
registered under part VII. of the
act, see Ennis v. West Clare Rail.
0o.,3 L. R., Ir. 94, where the certifi-
cate was held conclusive. See § 192.
(m) Mostyn v. Calcott Hall Mining
Co., 1 Fos. & Fin. 334. See Agri-
cultural Cattle Insurance Co. v. Fitz-
gerald, 16 Q. B. 432, as to actions by
the company. The fact of revistra-
tion is there stated to have been
proved, but how does not appear.
The certificate, however, was not
produced.
(n) See R. v. Frankland, L. & C.
276, as to the proof required in
criminal cases, and compare BR. v.
Langton, 2 Q. B. D. 296.
(0) See R. v. Registrar of Friendly
Societies, L. R. 7 Q. B. 741. As to
one company restraining the regis-
tering of another in a name like its
own, see below.
(p) Advantage is taken of this
when it is desired to reconstruct a
registered company. The company
dissolves, and a new company is
formed with a new constitution,
but with the same name as the old
company. See infra, bk. iv., ¢. 2, § 4,
THE COMPANIES AcT, 1862.
complete until a new certificate of incorporation has been
issued (q).
It is further provided that such existing companies as
register with limited liability, shall add the word limited to
their former name (§ 183, cl. 3, and § 190) But except in cases
specially provided for, a company once registered under a given
name cannot require to be registered under a new name (r).
But an unlimited company may be converted into a limited
company (see the Companies act, 1879, 42 & 48 Vict. c. 76).
A mere change of name does not affect a company’s rights
or obligations (§§ 18, 20, and 194). But as will be seen here-
after, the consequences of registering an existing company
under the acts are extremely important.
One company can restrain persons from registering another com-
pany under a name so like its own as to be calculated to deceive(s);
so a company which has been already registered under such a
name can be restrained from carrying on business under it (t).
The registrar may remove from the register the name
of any company which has ceased to carry on business (uw).
With respect to the registration of companies under the act
of 1862, it will be found that its provisions apply, first to all
companies formed under it (v) ; secondly, to some companies
existing when the act came into operation (x) ; and, thirdly, to
some companies formed subsequently to that date, but not
under the provisions of the act itself (y). It will further be
seen that many companies may be wound up under it although
not registered under it (z).
(q) Shackleford v. Dangerfield, L.
R. 3 C. P. 407.
(r) R. v. Registrar of Joint Stock
Cos., 10 Q. B. 839.
(s) Hendriks v, Montagu, 17 Ch.
D. 638.
(t) Merchant Banking Co. of London
x. Merchants’ Joint Stock Bank, 9 Ch.
D. 560. See further as to one com-
pany suing another for taking its
name with a colourable imitation,
Lee v. Haley, 5 Ch. 155; Braham v.
Beachim, 7 Ch. D. 848 ; Lawson v.
The Bank of London, 18 C. B. 84;
The Colonial Life Assurance Co, v,
L.c,
The Home and Colonial Assurance
Co, 33 Beav. 548; The London
Assurance Co. v. The London and
Westminster Insurance Corporation,
9 Jur. N. 8. 848, V.-C. S.; The
London aul Provincial Law Assur-
ance Society v. The London and Pro-
vincial Joint Stock Life Ass. Co., 17
L. J. Ch. 37, N.S.
(uw) 43 Vict. c. 19, § 7.
(v) See the first four parts of theact.
(#) See the sixth and seventh parta
of the act.
(y) See § 180.
(2) See part eight of the act.
ik
* T
118
Chap. 4.
Bk. I.
Class 4.
Rival companies.
Defunct com-
panies,
Scope of act of
1862,
114
Bk. I. Chap. 4.
Class 4.
Registration
when compul-
sory,
Carrying on
business,
For gain,
THE COMPANIES act, 1862.
Registration is compulsory—
1. In the case of insurance companies completely registered
under 7 & 8 Vict. c. 110 (see § 209 of the act of 1862) (a).
9. In the case of companies which ought to have registered
under the repealed acts of 1856—1858, but which were not so
registered (§ 209). This class includes, 1, all companies regis-
tered under 7 & 8 Vict. c. 110, except insurance companies (b) ;
9, all chartered banking companies formed under 7 & 8 Vict.
c. 113; and, 3, Scotch and Irish banking companies formed
under 10 Vict. c. 75 (c).
3. In the case of banking partnerships of more than ten
persons, formed on or after the 2nd of November, 1862, unless
formed under some other act of Parliament, or under letters
patent (§ 4).
4, In the case of companies, associations, or partnerships of
more than twenty persons (d) formed on or after the 2nd of
November, 1862 (¢), for the purpose of carrying on any other
business (except banking) for gain by the company, &c., or the
members thereof, unless they are formed under some other act
of Parliament, or under letters patent, or unless they are com-
panies engaged in working mines within and subject to the
jurisdiction of the Stannaries (§ 4) (/).
Associations of more than twenty persons carrying on busi-
ness by agents are within the act(g). But persons who are
only the cestuis que trustent of others who carry on business as
principals, do not themselves carry on business within the
meaning of the act (i).
What amounts to carrying on business for gain has been
(a) This gets rid of London
Monetary Co. v. Smith, 3 H. & N.
(d) Ie. 20 when formed or by
subsequent increase, Ex parte
543, and Lond. and Provincial Prov.
Soe. v. Ashton, 12 C. B. N. 8. 709.
The first of these cases was clearly
wrong.
(b) See 20 & 21 Vict. c. 14, §§ 26
& 27. As to insurance companies,
see the cases in the last note, and
Bank of London, &c., Ins. Assoc., 6
Ch. 421.
(c) See 20 & 21 Vict. c. 49, §§
4&5,
Poppleton, 14 Q. B. D. 379.
(e) As to older companies, see
Shaw v. Simmons, 12 Q. B. D. 117.
(f) The jurisdiction was extended
to Devonshire by 18 & 19 Viet. ¢. 32.
(g) See Harris v. Amery, L. R. 1
C. P 148, and the next note,
(h) Smith v. Anderson, 15 Ch. D,
247, overruling Sykes vy. Beadon, 11
Ch, D, 170.
REGISTRATION OF COMPANIES. 115
much discussed (2); and it is now settled that mutual marine Bk A aed 4.
ass 4,
insurance companies (j) and mutual loan societies (4) are ——-—-——
within the act; but freehold land societies ure not (J).
Registration appears to be impossible only in the following Registration
: when impossible.
cases, Viz. :
1. In the case of companies and associations of less than
seven members (§ 6).
2. In the case of companies and associations having the
liability of their members limited by act of Parliament or
letters patent, and not having a capital divided into shares or a
transferable stock (§ 179, cl. 1, and § 181), e.g. mutual incor-
porated societies, and learned societies, such as the Royal
Society.
8. In the case of Trade Unions (m).
4. In the case of foreign incorporated companies (n).
Companies which had been already registered under the Companies al-
repealed acts of 1856—8 need not register under the act of sel aa
1862, but they may do so; and whether they do or do not re- % 1856-8.
gister they are subject to its provisions, except that their own
regulations remain unchanged (compare §§ 176, 177, 206,
208) (0). For some purposes (see §§ 176, 177) however, a
distinction is made, in the case of non-re-registration, between
companies formed and registered under the acts of 1856—
1858 and those registered but not formed under them. The
former class are placed substantially on the same footing as
companies formed and registered under the act of 1862, the
old regulations being preserved (§$§ 176 and 206); whilst the
latter class are placed on the same footing as other existing
companies which have registered under the act of 1862 (§ 177).
The other clauses which authorise, but do not imperatively Registration
when optiona),
(7) See the last note and the next (m) 34 & 35 Viet. c. 31, § 5.
three. (n) Bulkeley v. Schut:, 3 L. R. P.
(j) Padstow Totul Loss Assoc., 20 C. 764; Bateman v. Service, 6 App.
Ch. D. 137; Ex parte Hargrove, 10 Ca, 386.
Ch. 542. (0) See Torquay Bath Co., 32 Beay.
(k) Jennings v. Hammond, 9 Q.B. 581. Of course without re-registra-
D. 225 ; Shaw v. Benson, 11Q.B.D. tion such a company cannot be con-
563; Ex parte Poppleton, 14Q.B.D. verted from an unlimited into a
379. limited company.
(1) Re Siddall, 29 Ch. D. 1.
12
116
Bk. I. Chap. 4.
Class 4.
Option to regis-
ter with limited
liability, or
without.
THE COMPANIES AcT, 1862.
require, registration, are the 6th and the 180th. These appa-
rently authorise any seven or more persons, associated for any
lawful purpose, to form a company by registration with the ex-
ceptions above mentioned(p). The circumstance that the
persons are foreigners and intend to carry on business abroad
does not preclude registration (q).
With a few exceptions, every company capable of being
registered may, at the option of its members or promoters, be
registered either with or without limited liability (§§ 6 and
180) ; and, in the first case, with the liability limited either by
shares or by guarantee (§§ 7 and 180). The exceptions are as
follows :
1. No company, having the liability of its members limited
by act of Parliament or letters patent, can register as an un-
limited company, or as a company limited by guarantee (§ 179,
cel. 2).
2. No company that has not a capital divided into shares, or
a transferable stock, can register as a company limited by
shares (§ 179, cl. 8, and § 181). This applies to most cost-
book mining companies.
Further a company can be formed with limited liability, but
with the liability of its directors or managers unlimited (7).
Having made these preliminary observations, it is proposed
to consider the formation of registered companies and the
evidence by which a person can be shown to be a member of
them. For this purpose it is not necessary to distinguish
limited from unlimited companies, but it is necessary to divide
registered companies into
1. Companies formed and registered under the act of 1862.
2. Companies registered under that act, but not formed
under it.
(p) The joint effect of § 179,cl.1, not intended. See Ennis v. West
and of §§ 180 & 181, seems tobe Clare Rail. Co., 3 L. R,, Ir, 94.
that railway companies incorporated (q@) Princess of Reuss v. Bos, L. R.
by act of Parliament, and having a 5H. L. 176, affirming General Co. for
capital divided into shares or a Promoting Land Credit, 5 Ch. 363.
transferable stock, may be registered (r) 30 & 31 Vict. & 131, § 4.
under the act. This was probably
REGISTRATION
OF COMPANIES.
1. Companies formed and registered wnder the Companies act, 1862.
Any seven or more persons associated for any lawful pur-
pose may form a company under this act (§ 6).
necessary that gain shall be the object of the company (s).
A company is formed under the act of 1862, by the registra- Memorandum of.
tion of a memorandum of association, bearing a deed stamp,
and subscribed by seven or more persons, in the presence of,
and attested by one witness at least (see §§ 8—11 and 17 and
18, and the forms in sched. 2).
This memorandum must contain, 1, the name of the pro-
posed company ; 2, the part of the United Kingdom in which
the registered office of the company is to be; and 3, the objects
for which the company is to be established (§§ 8—10, and
sched. 2). If the company is to be limited by shares, the
memorandum must also state, 4, that the liability of the
members is limited; and, 5, the amount of proposed capital,
and the shares into which it is to be divided (§ 8 and sched. 2,
form A.). If the company is to be limited by guarantee, the
memorandum must contain, in addition to the three things
first above mentioned, a declaration that each member will, if
necessary, contribute to a specified amount on the winding up
of the company (§ 9, and sched. 2, forms B. and C.).
company, whether limited or unlimited, has a capital divided
into shares, each subscriber to the memorandum must write
opposite his name, the number of shares he takes, and he
must take one at least (§§ 8 and 14).
A statement of the amount of nominal capital to be raised Stamp.
by shares must be sent to the registrar and be stamped with a
stamp duty of 2s. per 100I. of capital, see 51 Vict. c. 8, § 11.
The memorandum of association must, in the case of an Articles of
unlimited company, and of a company limited by guarantee,
(s) See 30 & 31 Vict. c. 131, § 23.
No questions, therefore, can arise
under the act of 1862, similar to
those which arose under 7 & 8 Vict.
c.110. See as to the application of
that act to projected railway com-
panies, Abbott v. Rogers, 16 C. B.
277 ; to companies not having gain
for their olject, R. v. Whitmarsh, 15
Q. B. 600; Bear v. Bromley, 18 in
271; Moore v. Rawlins, 6 C. B. N.
S. 289; to companies, the forma-
tion of which was commenced before
lst Nov. 1844, Shaw v. Holland, 15
M. & W. 136.
It is not even
If the
117
Bk. I. Chap. 4.
Class 4.
118
TH COMPANIES ACT, 1862.
Bk. I. Chap. 4. and may in the case of a company limited by shares, be accom-
Class 4.
Table A.
Registration of
memorandum
and articles.
Certificate of
registration.
Construction of
memoran dum
and articles,
-
pamed, when registered, hy articles of association, prescribing
regulations for the company (§ 14, and sched. 2, forms B. and
C.). These articles must be printed and be stamped with a
deed stamp, and be signed by the subscribers to the memo-
randum of association, in the presence of, and attested by one
witness at least (§§ 14 and 16). In the case of a company
having a capital divided into shares, and not being limited by
shares, the articles must state the amount of the proposed
capital; and inthe case of a company not having such a capital,
the articles must state the number of members with which the
company proposes to be registered (§ 14).
The first schedule of the act, table A., contains a set of
regulations which may be adopted, wholly or in part, by any
company, and which apply to companies limited by shares,
unless the contrary is expressed in their registered articles
(§§ 14 and 15). These regulations closely resemble those con-
tained in table B., in the repealed act of 1856. They have
been framed with care, and they should be adopted, as far as
possible, in all cases. The Board of Trade has power to alter
them, but not retrospectively (§ 71).
The memorandum of association, and the articles, if any, are
to be delivered to the registrar of joint-stock companies, who
is required to retain and register them (§ 17). Certain fees
are payable upon their registration (§ 17). After their regis-
tration, the registrar is required to certify that the company is
incorporated, and in the case of a limited company, that it is
limited ; and his certificate is conclusive evidence that all the
requisitions of the act, in respect of registration, have been
complied with (§ 18) (¢).
The memorandum of association and the articles of asso-
ciation ought to be consistent with each other, and they ought,
if possible, to be construed so as to make them consistent (uw).
But if the two conflict, the articles must give way to the
memorandum, for that is the more important document of the
two, and cannot be altered except in certain particulars specified
(t) Ante, p. 111. D. 75 ; South Durham Brewery Co.,
(u) See Felgute’s case, 2 De G. J. 31 Ch. D. 261.
& Sm. 456; Anderson’s case, 7 Ch.
MEMBERS.
in the statutes (x).
Many cases illustrating this general rule Bk. I. Chap. 4.
will be met with hereafter when considering the powers of
directors and majorities, and the liabilities of the subscribers
of the memorandum (y).
Moreover, articles of association,
which are inconsistent with the Companies acts, are invalid (2).
The articles of association may be varied by special resolu- Varying articles
tion (§ 50), and the company cannot deprive itself of its power
to alter them (a).
The act in substance declares that the subscribers of the we are mem-
memorandum of association (§§ 18 and 238) (5), and all persons as
who have agreed to become members and whose names are
entered in the register of members, shall be deemed members
of the company (§ 23).
It is conceived that persons who Subscribers of
sign copies of the memorandum before it is registered are
members under this act, as they were held to be under the act
of 1856 (c).
It is very difficult to see how any person who signs the
memorandum of association can be held not to be a member.
But in Felgate’s case (d), a person who had signed the memo-
randum and articles of association was held not to be a contri-
butory, as the articles he had signed had been tampered with
before they were registered. He was held not to be bound by
the articles, and not being bound by them he was held not
bound by the memorandum.
With respect to other persons it is to be observed that no Other members.
particular form of agreement is necessary (e); but a question
(x) See § 12 of the Companies act,
1862, and §§ 8, 9 & 21 of the Com-
panies act, 1867, and § 5 of the Com-
pariies act of 1877, and the Com-
panies act, 1879.
(y) See particularly Guinness v.
Land Corporation of Ireland, 22 Ch.
D. 349; Ashbury Rail. Carriage Co.
vy. Riche, L. R. 7 H. L. 658 ; Dent's
case, 8 Ch. p. 776.
(2) Trevor v. Whitworth, 12 App.
Ca. 409, the case of an article em-
powering a company to buy its own
shares.
(a) Walker v. London Tramways
Co., 12 Ch. D. 705.
(®) Signature by an agent is sufti-
cient, IVhitley Partners Limited, 32
Ch. Div. 337.
(c) New Brunswick Rail. Co. v.
Boore, 3 H. & N. 249.
(@) 2De G. F. & J. 456. This
case turned on the act of 1856, but
there does not appear to be any
difference between that act and the
act of 1862, so far as this subject is
concerned.
(e) This gets rid of New Bruns-
wick Rail. Co. v. Muggeridge, 4 H,
& N. 160 & 580. See Rog Lead
Mining Co. v. Montague, 10 C. BLN.
8. 481.
120
Bk. I. Chap. 4.
Several classes
of members.
Certificate of
title.
Register of
members.
Correction of
register, § 35.
Class 4.
THE COMPANIES AcT, 1862.
may arise on this act, as on the Companies clauses consolida-
tion act, whether a person may not be a member although his
name is not on the register. In considering this question
regard must be had to the right of companies to put persons
on the register (f), to the provisions for its rectification (9),
and to the extent to which a person may have acted and been
treated as a member (i).
There is nothing in the statute to prevent the existence of
two or more classes of members (2), but as will be seen here-
after (in Book III.) the rights of each class must be respected,
and this consideration may prevent the creation of another
class with special privileges.
A certificate under the seal of the company, stating that any
shares or stock are held by a member, is primd facie evidence
of his title to the shares or stock therein specified (§ 31) ().
Every company registered under the act is bound to keep at
its registered office (§ $2) a register of its members, and a
duplicate of any colonial register which it may keep under the
provisions of the Companies (colonial registries) act, 1883 (J).
The register must contain the names and addresses, occupa-
tions, and the number of the shares, if any, held by the
members, and the amounts paid, or agreed to be considered as
paid, in respect of such shares, and the dates at which the
members were registered, and the dates at which they ceased
to be members (§ 25). No notice of any trust is to be entered
on the register (§ 30) (m). The register is primd facie evidence
of all matters directed or authorised to be inserted therein
(§ 87) (n).
The 35th section provides for the rectification of the register’
and is extremely important (0). Its effect is that if the name
(f) Ante, p. 46.
(9) §§ 35 & 98.
(h) Ante, p. 47 et seq.
(t) Wainstone’s case, 12 Ch. D. 239,
where there were shareholders and
assurance members not shareholders.
(zk) The right to demand this cer-
tificate is not given by the act, but
only by Table A, Nos. 2 and 3. See
as to these certificates, ante, p. 64.
(1) 46 & 47 Vict. c. 30.
(m) See as to this, Bradford Bank-
ing Co. v. Briggs, 12 App. Ca. 29.
(n) See, as to the register when
fully paid-up shares have been re-
placed by share warrants transfer-
able by delivery, 30 & 31 Vict. c.
131, $ 21.
(0) See on the correction of
registers generally, ante, pp. 61-63.
CORRECTION OF REGISTER. 121
of any person is without sufficient cause entered in or omitted Bk. I. Chap. 4.
: a A : Class 4.
from the register of members, or if default is made or unneces- § —————
sary delay takes place in entering on the register the fact of a ae
any person having ceased to be a member of the company, he $ **
or any member of the company or the company itself may
obtain an order for the rectification of the register. The order
may be obtained from any division of the High Court; or in
the case of a colonial register from any competent court in the
colony where such register is kept (p).
A difference of opinion has been expressed as to the correct
interpretation of this section. Some consider that under it
the register may be rectified whenever it can be shown by any
person who is on or off the register himself that some other
person ought as between themselves to be in his place (q);
whilst others consider that the section does not admit of so
wide an interpretation, being confined to the cases specified in
its commencement (r), viz. :—
1. 'To cases where the name of a person is without sufficient
cause entered in or omitted from the register.
2. To cases where default is made or unnecessary delay takes
place in entering on the register the fact of any person having
ceased to be a member of the company.
The more restricted interpretation, it will be observed,
renders the section inapplicable except where the company
fails in discharging the duty imposed upon it of keeping a
proper register.
It must be borne in mind that before a company is being
wound up its register is much more readily rectified than after
the winding up has commenced and the rights of creditors
have to be considered. The rectification of the register in
connection with the settlement of the list of contributories
will be considered hereafter ; in the present place those deci-
sions only will be referred to which relate to the rectification of
the register of a going company.
(p) 46 & 47 Vict. c. 30, § 3 (3). case, 2 Ch. 431.
(q) See Ex parte Shaw, 2 Q. B. D. (r) Ex parte Ward, L. R. 3 Ex,
463 ; Ward and Garfit’s case, 4 Eq. 180; Shepherd's case, 2 Ch. 16; and
189; Musgrave and Hart's case, 5 see Lord Cairns’ judgment in Ward
Eq. 193; and the judgment of and Henry's case, 2 Ch. 431; Marino's
Turner, L. J..in Ward and Henry’s case, 2 Ch. 596.
122
Bk. I. Chap. 4.
Class 4.
Instances of
rectification,
THE COMPANIES ACT, 1862.
The 35th section not only authorises the correction of mis-
takes but also the determination of important conflicting rights,
going further in this respect than the corresponding section of
the Companies act, 1856(s). As however trusts are not
noticed (§ 30) the title to be investigated is the legal title or
the right to acquire it (t). If this legal title is clear, and there
is no difficult question of fact to be investigated, the Court
will rectify the register without directing any action to be
brought (uw); but the Court has a discretion as to whether it
will interfere summarily under the act or direct an action, and
will be guided by the nature of the facts in dispute and by the
desirability of having them investigated by a jury(x). The
circumstance, however, that the company has itself rectified
the register does not preclude the Court from ordering it to be
rectified ; an order of the Court being often of great import-
ance to the applicant (y).
Registers will be rectified at the instance of persons who
have been registered as members without having entered into
any contract to take shares (%); so where the contract they
have entered into is void (a); so where the contract being
voidable it has been duly avoided by the alleged shareholder.
Thus registers have been rectified where persons have taken
shares on the faith of a prospectus with which the company’s
memorandum of association does not correspond (b) ; so where
a person applied for shares on the faith of particular persons
(s) As to which, see British Sugar
Refining Co., 3 K. & J. 408.
669.
(2) Los’ case, 6 N. R. 327 ; Higg’s
(t) Ex parte Sargent, 17 Eq. 273 ;
Ex parte Parker, 2 Ch. 685.
(uw) Ex parte Shaw, 2 Q. B. D,
463. *
(x) See the last case ; Ashkew’s case,
9 Ch. 664, where an action was
directed to try a question of fraud ;
Simpson's case, 9 Eq. 91, where a bill
was directed to be filed. The diffi-
culty here mainly turned on the
construction of documents, and qu.
the advantage of directing an action
in such a case.
(y) Martin’s case, 2 Hem. & M.
case, 2 H. & M. 657 ; Martin’s case,
ib. 659, where the name had been
removed already; Baily’s case, 5
Ey. 428; 3 Ch. 592; Somerville’s
case, 6 Ch. 266, 271.
(a) Stace and Worth’s case, 4 Ch.
682.
(b) Stewart's case, 1 Ch. 5743
Webster’s case, 2 Eq. 741; Downes
v. Ship, L. R. 3 H. L. 343; and
Ship's case, 2 De G. J. & Sm. 544;
Breckenridge’s case, 2 Hem. & M.
642. Sce ante, p. 19 et seq.
CORRECTION OF REGISTER.
123
named in the prospectus being directors, and such persous 5k. oe 4.
refused to become directors (c) ; so where a person has been -—---—_-~
induced by the fraud of the company to become a member (d) ;
so where the company refuses to register a transferee, to whom
the company cannot object (e).
Again, where shares are transferred to an infant the infant
can have the register rectified whilst he is an infant (f), or on
his coming of age, providing he has not accepted the shares (9) ;
and the company itself can obtain an order rectifying the
register in such cases (h) if it has not accepted the infant as a
shareholder knowing the facts (7). So where a person has by
misrepresentation or fraud induced the company to register
him as a shareholder, the register will be rectified at the
instance of the company, if it applies promptly (k), and if third
parties have not dealt with the person registered and have not
acquired rights on the faith of his being a shareholder (1).
So where shares intended to be issued as fully paid up, have
been inadvertently issued as not paid up, the register has been
rectified under this section (m).
The question whether a vendor or a purchaser of shares is
entitled to be registered in respect of them can also be deter-
mined upon an application to rectify the register (n).
On the other hand, a duly registered member cannot have Application to
his name struck off the register (0); and no person is entitled Geers
(c) Anderson's case, 17 Ch. D. 373. noticed ante, p. 54. Compare
(d) Smith’s case, 2 Ch, 604, and 4
H. L. 64; Pawle’s case, 4 Ch. 497 ;
McNiel?’s case, 10 Eq. 503; Fox's
case, 5 Eq. 118.
(e) See Ex parte Parker, 2 Ch. 685,
and tnfra, Bk. IIL, c. 4, § 5, Transfer
of shares.
(f) See Mann’s case, 3 Ch. 459 n. ;
Capper’s case, ib, 458.
(g) See Hart’s case, 6 Eq. 512;
Wilson’s case, 8 Eq. 240.
(h) See Symon’s case, 5 Ch. 298.
(i) Parson’s case, 8 Eq. 656.
(k) See Ex parte Kintrea, 5 Ch. 95.
(1) See, as to this, Bahia and San
Francisco Rail. Co., L. R. 3 Q. B.
584, and other cases of that sort
Askew’s case, 9 Ch. 664, where an
action was directed,
(m) Darlington Forge Co., 34 Ch.
D. 522; Ha parte Shaw, 18 Eq.
16; Ex parte Thomas, ib. 17 note.
It seems that in these cases the com-
pany may rectify its own mistake ;
Hartley's case, 18 Eq, 542, and 10
Ch. 157 ; Re Etna Ins. Co., Ir. R. 7
Eq. 264. See as to shares issued at
a discount, Rail. Time Tubles Pub.
Co., W. N. 1888, 239.
_(n) Ex parte Shaw, 2 Q. B. D.
463.
(0) Ex parte Ward, L. R. 3 Ex.
180.
124
THE UOMPANIES ACT, 1862.
Bk. a Coa 4. to have his name put on the register until he has complied
ass 4.
Damages.
Costs,
Stannaries.
with all conditions precedent, ¢.g., proved his title to his shares
in the manner required by the company’s regulations (p); and
where a company is required to register a transfer of shares
on which it has a lien, that lien must be first discharged (q).
Neither can a person who was entitled to be on the register
have it rectified in his favour if he has allowed some one else
to be registered in his place, and such person has transferred
his share to a bond fide purchaser (r); and as will be seen
hereafter, under the head “‘ Contributories,” delay in applying
to the Court is often fatal to the application (s). Nor can a
company which has, when prosperous, persistently refused to
register a person, obtain an order to register him when the
company is in difficulties (¢).
If a person has suffered damage by reason of a company
improperly excluding him from or retaining him on its register,
the company will be ordered to pay it(u). But the company
will not be liable to pay any special damage arising from
unusual circumstances of which it had no notice (z).
So long as the company is a going concern, the Court has
apparently no jurisdiction under the 85th section, to order
costs to be paid by any one except by the company (y). But
this observation does not apply to the costs of an appeal (2).
If the application is made after the liquidation has com-
menced, the Court has jurisdiction to order costs to be paid
as it may think fit (a).
The jurisdiction conferred by this section on the Vice-
Warden of the Stannaries to rectify the register of companies
(p) East Wheal Martha Mining
Co., 33 Beav. 119.
(qg) See London, Birmingham, ce.,
Bank, 34 Beav. 332 ; Stockton Mal-
leable Iron Co., 2 Ch. D. 101.
(r) London and Provincial Tele-
graph Co., 9 Eq. 653.
(s) See Scottish Petroleum Co., 23
Ch. D. 413.
(t) See Stchell’s case, 3 Ch. 119,
Nicol’s case and Tufnell and Pon-
sonby’s case, 29 Ch. D. 421,
(u) New Quebrada Co. 36 L. J.
Ch. 903.
(x) Skinner v. City of London
Marine Ins. Corp., 14 Q. B. D. 882.
(y) Ex parte Sargent, 17 Eq, 278 ;
Lx parte Kintrea, 5 Ch. 95.
(2) Ex parte Shaw, 2 Q. B. D. 463.
(a) See Ex parte Kintrea, 5 Ch.
95. In Anderson’s case, 17 Ch. D.
373, and in Wood’s case, 15 Eq. 236,
the company was ordered to pay
costs as between solicitor and client.
REGISTER. 125
within the district of the Stannaries, does not exclude the Bk. aoe 4,
jurisdiction of the High Court for the same purpose (0). -
Notice of an order rectifying the register must in most cases
be given to the registrar (c).
By § 98 of the act of 1862 it is provided that when a Correction of
company is being wound up, the Court winding it up shall one of
have power to rectify the register of members; and this power company.
is constantly acted upon (d). In determining who are contribu-
tories, the actual state of the register is therefore of much less
importance than the state in which it ought to be.
A company can correct its own register where a Court would
compel it to do so (e).
Every person, whether a member or not, has a right to Inspection of
inspect the company’s register, and to have a copy of it, or of hs
any part of it, on payment of a small fee (§ 32). Every
member is entitled to inspect the register gratis; other per-
sons may be required to pay one shilling (§ 32).
may be temporarily closed (§ 38).
The act does not expressly require the register to be sealed Observations on
with the company’s seal; and a book kept as required by § 25 se
may, it is conceived, be evidence under § 387, though not
sealed (f).
In addition to the register of members above referred to, Annual list and
every company having a capital divided into shares is bound Spe
under penalties to keep in a separate part of its register of
members, and once a year at least to make out and transmit
to the registrar of joint-stock companies, a list of its members
and late members, and a summary showing the amount of the
company’s capital, and the number of shares into which it is
divided, and the number of shares issued and forfeited, and
the amount of calls made, received and unpaid (§§ 26 and 27,
The register
(b) The Penhale and Lomax, de., than that conferred by § 35. See
Co., 2 Ch. 398. Sichell’s case, 3 Ch. 119; Reese River
(c) § 36. Co. v. Smith, L. R. 4 H. L. 64.
(d) No special application to (e) Hartley’s case, 18 Eq. 542, and
rectify the register is necessary in
these cases; Breckenridge’s case, 2
Hem. & M. 642. The power con-
ferred by § 98 is not more extensive
10 Ch. 157. See ante, pp. 68, 123.
(f) See Cornwall, &c., Mining Co.
v. Bennett, 5 H. & N. 428, and see
ante, pp. 57-60.
126
THE COMPANIES AcT, 1862.
Bk. I. Chap. 4. and sched. 2, form E.) (g). And every company not having a
Class 4.
Inspection.
capital divided into shares is bound to keep at its registered
-office a register of its directors and managers, and to send a
copy of such register to the registrar of joint-stock companies,
and to notify all changes amongst them to him (§§ 45 and 46).
When share warrants transferable to bearer have been issued
under the Companies act, 1867, the annual return must be
varied as required by that act (hk). And when any company
has reduced its capital under the Companies act, 1880, the
annual return must contain the particulars required by sect. 6
of that act (2).
These documents when registered are open to the inspection
of every one on payment of a small fee (§ 174, cl. 5; see also
as to their inspection, § 32).
2. Companies registered under the Companies act, 1862, but not formed
under it.
Little need be said with respect to the formation of com-
panies which may be registered under the act of 1862, but
which are not formed under its provisions. Such companies,
if created already, must have been formed either under acts
now repealed, or in one of the various methods which have
been considered in preceding pages ; and companies, if created
hereafter, but not under the act, must, as the law at present
stands, be formed in one or other of the same methods, that
is to say, under some special act of Parliament, or under a
royal charter or letters patent, or, if for working mines in
Cornwall or Devonshire, on what is called the cost-book
principle.
It has been already seen that registration, under the act, of
companies not formed under it, is in some cases compulsory,
in some impossible, and in others optional (k). With respect
to existing companies which are required to register, and which
omit so to do, the consequences of non-registration are serious;
(g) See as to these sections and as and Barton, 10 L. BR. Q. B. 329.
to the powers of magistrates under (h) See 30 & 31 Vict. c. 131, § 32.
§ 27, Briton Medical and General (2) 43 Vict. c. 19, § 6.
Life Assoc, 39 Ch. D. 61; Gibson (k) Ante, p. 114 et seg.
REGISTRATION. 127
for, first, such companies cannot sue (1); secondly, no divi- Bk. oe 4.
dends can be lawfully paid to their shareholders; and, thirdly, —- -
each of their directors becomes liable to a penalty of 51. per
day (§ 210) (m).
Companies not formed under the act but capable of being Registration of
registered under it, may, subject to certain restrictions and nea ny F
qualifications (see §§ 179—188) (n), be registered either with limited ability.
or without limited liability (§ 180); and such liability, if
limited, may be limited either by guarantee or by shares
(§ 180) (0).
Every company when registered becomes incorporated under Effect of
the act (§§ 191 and 192). The incorporation, however, does "ition.
not deprive the company of its property or acquired rights
(§ 198), nor discharge it from its debts or other liabilities
(§ 194) (p). But after registration no execution upon a judg-
ment against the company can be issued against its members
(§ 195).
must, after its registration, proceed to wind up the company,
if they cannot obtain payment of their debts by execution
against the property of the company (q).
Upon compliance with certain requisitions mentioned in the
The creditors, therefore of an existing company
(D Accordingly it was held in
the case of the Waterloo Insur. Co.,
31 Beav. 586, that an insurance
company could not petition to be
wound up before it was registered.
(m) A company required to
register under the act by § 209,
and registered accordingly, is in
the same position as if it had been
registered voluntarily, Ramsay’s case,
3 Ch. D. 388.
‘(n) § 182 is repealed, and a sub-
stituted section enacted by the Com-
panies act, 1879, 42 & 43 Vict. c. 76,
§ 6.
(0) A company registered as un-
limited may be afterwards registered
as limited under the Companies act,
1879.
(p) See Grous’s Soap Co. v. Cooper,
8 C. B. N.S. 800, where a surety to
aycompany registered under 7 & 8
Vict. c, 110, and registered with
limited liability under 18 & 19
Vict. v. 188, was held not to be
discharged by such registration.
(g) The effect of registration on
the liabilities of members will be
considered hereafter. It has been
held that § 194 does not affect the
question who ought to be contri-
butories on the winding up of the
company, Fountain’s case, 11 Jur.
N. 8. 553 ; and that § 195 does not
prevent a shareholder in a cost-book
mining company, who had retired
before the registration, from being
sued in respect of a debt contracted
whilst he was a shareholder; Lanyon
v. Smith, 3 B.& Sm. 938 ; Harvey v.
Clough, 2 N. R. 204. As to what
companies cannot register, see ante,
p. 115.
128
Bk. I. Chap. 4.
Class 4.
Change of name.
Membership in
these companies.
7 & 8 Vict.
e. 110.
THE COMPANIES ACT, 1862.
act, and which need not be here specified (see §§ 109, 179, and
183—8), the registrar is required to certify that the company
is incorporated under the act, and in the case of a limited
company, that it is limited (§ 191); and his certificate is con-
clusive evidence that all requisitions have been complied with,
and that the company is authorised to be registered as a
limited or unlimited company, as the case may be (§ 192) (r).
An existing company cannot, apparently, change its name
on registration, except by adding the word “limited” to its
former name. (Compare § 183, cl. 3, and § 190.) After
registration, however, it has the power of changing its name
as if it were formed under the act. (See §§ 12, 18, 20, and
196) (s).
The question who is a member in a company registered,
but not formed under the act of 1862, depends upon the consti-
tution of the particular company, and must be determined upon
the principles which have been already considered (see § 196).
With respect, however, to companies governed by the repealed
acts of 7 & 8 Vict. c. 110, 7 & 8 Vict. c. 118, and 19 & 20
Vict. c. 47, it may be useful to add a few observations.
Companies formed under 7 & 8 Vict. c. 110, were incor-
porated by registration, but before being so incorporated they
passed through a preliminary state, viz., that of provisional
registration, the object of which was to enable the public to
ascertain the nature and objects of the proposed company and
the persons who projected it. Provisional registration did not
incorporate the company or its promoters (t), nor did it affect
their liability for each other’s acts (w). A certificate of com-
plete registration was necessary to form and incorporate the
company ; and before this could be obtained a deed of settle-
ment containing certain covenants and particulars specified by
the act was required to be executed by at least one-fourth of
the subscribers to the company. The certificate of complete
registration was conclusive evidence that all the requisitions of
(r) See, as to this certificate, ante, (t) See BR. v. Whitmarsh, 14 Q. B.
pp 111, 112. 803.
(s) See as to changing name, ante, (u) See Reynell v. Lewis, and
p. 112, and as to becoming limited, T”yld v. Hopkins, 15 M. & W. 517;
see the Commanies act, 1879 Walstab v. Spottiswoode, ib. 501,
REGISTRATION OF COMPANIES. 129
the act had been duly complied with (x). The act defined a Bk. a ae 4.
shareholder to mean any person entitled to a share, and who —————
had executed the deed of settlement or a deed referring to it ;
and it was held that no person was a shareholder who had not
executed such deed (y).
Chartered banking companies were formed under the repealed Chartered bank-
act of 7 & 8 Vict. c. 118, by letters patent and a deed of settle- rane as
ment set forth in it. This act contained no definition of the © 118.
word shareholder, but persons whose names were returned as
shareholders to the stamp office pursuant to the act were primd
facie liable as shareholders (2).
Companies were formed under the acts of 1856-8, as under Joint-stock
the act of 1862, by registration. Under 19 & 20 Vict. ¢. 47, {g56. ome
§ 19, every person who had accepted shares in a company
formed under it, and whose name was entered in the company’s
register, and no other person (except a subscriber to the
memorandum of association in respect of the shares sub-
scribed for by him) was a shareholder; and § 20 in effect
declared that a transferor of a share should be deemed a
shareholder until the transferee was registered in his place.
These enactments may still be important. Moreover, not-
withstanding the repeal of the act of 1856, the regulations
contained in table B. in the schedule to that act still apply to
those companies which were subject to them when the Com-
panies act, 1862, was passed (see § 206). These regulations,
therefore, must be consulted in order to decide who is or is
not a member of such companies; and as regards other com-
panies registered under the act of 1856, attention must be paid
to their regulations, deeds of settlement, charters, &c. (a).
(c) Banwen Iron Co. v. Barnett, 8 Butler, ib. 645, and 4 ib. 469;
C. B. 406; Bird’s case, 1 Sim. N. 8. Daniell v. Royal Brit. Bank, 1 H.
47 ; Pilbrow v. Pilbrow’s Atmospheric & N. 681 ; Henderson v. Royal Brit.
Co., 5 C. B. 440, Bank, '7 E. & B. 356.
(y) See ante, pp. 48 et seg. (a) See New Brunswick Rail. Co,
(2) Dossett v. Harding, 1 C. B. v. Muggeridge, 4 H. & N. 160 and
N. S. 524; Powis v. Harding, ib. 580, and Bog Lead Mining Co. v.
551; Thompson v. Harding, ib. 555; Montague, 8 Jur. N. 8. 310, noticed
Fry v. Russell, 3 ib. 665; Powis v. ante, p. 45, note (¢).
L.C. *k
130
Bk. I. Chap. 5.
Sect. 1.
ILLEGAL COMPANILS.
CHAPTER V.
OF ILLEGAL COMPANIES.
SECTION L—WHAT COMPANIES ARE ILLEGAL.
Tr has been said that unincorporated joint-stock companies
with transferable shares are illegal at common law, first, because
the privilege of having transferable shares can only be acquired
by charter from the Crown, or by an act of Parliament; and,
secondly, because all such companies are dangerous, mis-
chievous, and, in short, public nuisances. But this view can-
not, the writer thinks, be supported. The question has now
only an historical interest, and the following note on the
subject is reprinted for the convenience of those who may
desire information on the subject.
Note on the Bubble act.
In order to investigate this subject properly, it is necessary to advert to
the celebrated “Bubble act” of 1719, and the decisions upon it, for
although that act is repealed, the discussions to which it gave rise are
constantly referred to when the illegality at common law of joint-stock
companies is alleged or denied. The Bubble act (a) was levelled more
particularly at—
1. The acting or presuming to act as a corporate body.
2. The raising or pretending to raise transferable stock.
(a) 6 Geo. 1, ¢.18,§ 18. In the Str. 472, but that case throws no
first two editions this act was printed
at length, but it is omitted now for
the sake of gaining space. The act
was repealed by 6 Geo, 4,¢. 91. The
earliest reported decision on the
Bubble act is RB. v. Cawood or Cay-
wood, 2 Ld, Raymond, 1361, and 1
light on any question of present
importance, as it merely relates to
the punishment to be inflicted on a
person found guilty of an infringe-
ment of the act. See as to the his-
tory of this act, Collyer on Partner-
ship, p. 722, ed. 2,
UNINCORPORATED COMPANIES WITH TRANSFERABLE SHARES. 131
3. The using of charters fur purposes not warranted by them.
4, The formation of dangerous and mischievous companies, tending to
the grievance of the subjects of this realm.
1. With respect to acting or presuming to act as a body corporate, it was Assuming to act
held in R. v. Webb (b) that having a committee, general meetings, and 48 4 corporation.
power to make bye-laws, was not unequivocally assuming to act as a body
corporate ; but in the later case of Josephs v. Pebrer (c) the Court was of a
different opinion. To create transferable shares in a common stock has also
been said to amount to assuming to act as a body corporate, although only
such bodies corporate as are specially empowered so to do can lawfully
possess stock, the shares in which are transferable (d).
2. With respect to transferable stock it was held that any company not Transferable
incorporated and specially empowered to possess such stock was illegal, if it shares.
professed to have its stock divisible into shares transferable from one person
to another without restriction (e). But it was held that, if the shares were
not thus transferable, their transfer being restricted to such person as should
be approved by a committee, and as should enter into some special agree-
ment(f), or to persons already members of the company (g), the company
was not necessarily illegal. A scheme for establishing a tontine the shares
in which were to be transferable after a certain time, was held not to be
illegal, the scheme having failed before the time arrived (hk). And where a
railway company, the shares in which were to be transferable, was projected,
and the projectors issued scrip, but resolved that nothing further should be
done without the authority of Parliament, it was held that the project was
not illegal (7).
3. To use charters for purposes not authorised by them was clearly illegal, Using charters
not only by the act, but at common Jaw. This ground of illegality does not, "PP ee
however, appear to have been made the subject of any decision on the act
now in question.
4, Lastly, with respect to the general sround of illegality, for being mis- Tendency to
chievous, and tending to the grievance of the subjects of this realm. In ™schief.
R. v. Dodd (k) it was held that a company with transterable shares based Rex v. Dodd.
upon a prospectus which declared that no person could be accountable
beyond the amount of the shares for which he should subscribe, was illegal,
Bk. I. Chap. 5.
Sect. 1.
(b) 14 East, 406.
(c) 3 B. & C. 639, Adopting a
name which necessarily denotes a
corporation is assuming to act as a
corporation, R. v. Whitmarsh, 14 Q.
B. 803. So is the assumption and
use of a common seal, Cooch v. Good-
man, 2 Q. B. 580. These cases were
not decided on the Bubble act, and
do not show that an unincorporated
society which assumes to act as a
corporation is illegal.
(d) See Duvergier v. Fellowes, 5
Bing, 248.
(¢) Buck v. Buck, 1 Campb. 547;
R. v. Stratton, ib. 549, note ; Josephs
v. Pebrer, 3 B. & C. 639.
(f) #. v. Webb, 14 Hast, 406;
Pratt v. Hutchinson, 15 ib. 511.
(g) Per Lord Eldon, in Ellison v,
Bignold, 2 J. & W. 510.
(h) Nockells v. Crosby, 3 B. & C.
814.
(7) Kempson v. Saunders, 4 Bing 5,
(k) 9 East, 516, and see Blundell
v. Winsor, 8 Sim, 601,
K 2
182
Bk. I. Chap. 5.
Sect. 1.
Rex v. Webb.
Josephs ».
Pebrer.
Opinion of Lord
Eldon.
Duvergier v.
Fellowes.
Blundell v.
Winsor.
ILLEGAL COMPANIES.
on the ground that this was a mischievous delusion, calculated to ensnare
an unwary public. In R. v, Webb(l) it was held that a company, the
shares in which were transferable, but not without restriction, was not
necessarily mischievous ; and the jury having found that the company was
jn fact rather beneficial than otherwise, the company was held to be legal.
As regards the important question, how far the mere raising transferable
stock was, per se, an offence against the act, the Court inclined to think that
it was not, unless the company had in fact a mischievous tendency (m). In
Josephs v. Pebrer (n),a company, with shares transferable without restriction,
was held to be clearly mischievous, particularly because the shares were sold
at a very considerable premium. Abbott, C. J., thought that this tended to
introduce gaming and rash speculation to a ruinous extent, to the grievance
of numbers of his Majesty’s subjects.
Such are the leading decisions on this celebrated act. Juster views of
political economy, and of the limits within which legislative enactments
should be confined, have led to the repeal of the statute in question, which,
though deemed highly beneficial half a century ago, probably gave rise to
much more mischief than it prevented. But the repeal of the act still
leaves room for the contention that companies of the nature described in
the act are illegal at common law. This question is one of present
importance, especially in the colonies, and requires therefore careful
consideration.
Lord Eldon, who certainly had a great aversion to companies, seems to
have been of opinion, in Kinder v. Taylor (o), that companies with large
capitals, arising from numerous small contributions, and with transferable
shares, were injurious to the public, and were illegal, independently of the
Bubble act. The same opinion was expressed by the Court of Common
Pleas, in a case which arose after the repeal of that act(), and also by the
Vice-Chancellor Shadwell, on a still later occasion (q). In none of these
cases, however, was it necessary to decide this question. In Duvergier v.
Fellowes (r), the company was formed for an illegal purpose, viz., the work-
ing of a patent which could not be lawfully transferred to more than five
persons, and this was the ground relied on by the Court of Appeal. In
Blundell v. Winsor (s) the Vice-Chancellor thought that there was held out
to the public a false and fraudulent representation calculated to ensnare the
unwary, v7z., a representation that any shareholder when he transferred his
(1) 14 East, 406. This is the
leading case on the Bubble act,
and is well worthy of attentive
perusal.
(m) See, too, Nockells v. Crosby, 3
B. & C. 814; Pratt v. Hutchinson,
15 East, 511; Brown v. Holt, 4
Taunt. 587.
(n) 3B. & C. 639.
(0) Coll. on Part. 917, ed. 2.
(p) Duvergier v. Fellowes, 5 Bing.
248 ; affirmed 10 B, & C. 826, and 1
Cl. & Fin. 39.
(q) Blundell v. Winsor, 8 Sim.
601.
(r) 5 Bing. 248, and 10 B. & C.
826, and 1 CL. & Fin. 39.
(s) 8 Sim. 601. This case can-
not be supported. See Harrison v.
Heathorn, 6 Man. & Gr. 81. In
Blundell v. Winsor there was not in
fact any such holding out as sup-
posed by the Vice-Chancellor,
UNINCORPORATED COMPANIES WITH TRANSFERABLE SHARES.
188
shares ceased to be liable to the debts of the company; and he relied on Bk. I. Chap. 5.
this as a ground of illegality. Although, therefore, in each of these cases
the Court was of opinion that the company was illegal, inasmuch as it
trenched upon the prerogative of the Crown by assuming to do that which
cannot be lawfully done without special authority, there were additional
circumstances, rendering it unnecessary to decide on this ground alone. In
Sect. 1.
Valburn v. Ingilby (t) Lord Brougham declined to declare an unincorporated Walburn 2,
joint-stock company, with transferable shares, illegal ; although the deed of Ingilby.
settlement stated that provision was to be made, in all engagements to be
entered into by the directors, that no shareholder should be liable beyond
the amount of his share, and his lordship thought this clause was nugatory.
In Garrard v. Hardey (w) it was held that an unincorporated joint-stock Garrard v.
company, which had assumed the name of “The Limerick Marble and Lines
Stone Company,” and had a capital of 50,000I., divisible into 500 transfer-
able shares, was not illegal at common law. It was in this case declared
that the raising and transferring of stock in a company could not he held to
be in itself an offence at common law. In Harrison v. Heathorn (x), a Harrison v.
similar conclusion was arrived at. In this case the company’s deed of Heathorn.
settlement provided that a person ceasing to be a shareholder should be
entitled to a certificate declaring him discharged from all liabilities on
account of the shares formerly held by him. This was, in fact, the same
company as was held to be illegal by Vice-Chancellor Shadwell in Blundell
v. Winsor, which, though not overruled on appeal, can scarcely be sup-
ported after the decision in Harrison v. Heathorn.
Attempts have also been made to induce the Courts to declare scrip Scrip companies.
companies (i.e, unincorporated companies with shares transferable by
delivery) to be illegal at common law(y). But these attempts have
been unsuccessful. The case of Blundell v. Winsor, always relied upon
as an authority by those who contend that such a company is illegal,
has never met with approbation from the bench; nor has it ever been
followed.
Upon the whole, therefore, it appears that there is no case deciding that Conclusion from
a joint-stock company with transferable shares, and not incorporated by the cases.
charter or act of Parliament, is illegal at common law ; that opinions have
nevertheless differed upon this question ; that the tendency of the Courts
was formerly to declare such companies illegal; that this tendency exists
no longer; and that an unincorporated company with transferable shares
will not be held illegal at common law, unless it can be shown to be of a
dangerous and mischievous character, tending to the grievance of her
Majesty’s subjects. The legality at common law of such companies may
therefore be considered as finally established.
(t) 1 M. & K. 61, and Cooper, 177; Ha parte Aston, 27 Beay. 474,
temp. Brougham, 270. and 4 De G. & J. 320; Ex parte
(u) 5 Man. & Gr. 471. Grisewood, 4 De G. & J. 544. As to
(ce) 6 Man. & Gr. 81. See, too, the effect of the act of 1862 on these
Sheppard v. Oxenford,1 K.& J. 491. companies, see infra, p. 135.
(y) See Ex parte Barclay, 26 Beay.
134
Bk, I. Chap. 5.
Sect. 1.
Observations on
the illegality of
companies with
transferable
shares.
ILLEGAL COMPANIES.
It is nut easy to arrive at any other conclusion if the question is examined
without reference to the decisions which have been noticed. For
1. It is not illegal for persons, however numerous, to enter into an
ordinary contract of partnership.
2. It is not illegal for all those persons to agree that one of them shall
retire, and that a person who is not a member of the firm, but who is
willing to become one, shall take his place.
3. It is not illegal for partners, however numerous, to agree once for all
that any partner who is willing to retire shall be at liberty so to do, and to
introduce in his place any person selected by himself.
4, It is not illegal for an out-going partner of a firm established on this
last principle, to retire in favour of an in-coming partner, upon any terms
to which they both agree, provided those terms are not themselves illegal.
5. It is not illegal for an out-going and in-coming partner to agree that
the latter shall pay the former more or less than he himself paid when he
entered the firm.
6. It is not illegal tor the members of a partnership to assume a name (2),
and to agree that the management of its affairs, both external and internal,
shall be entrusted to a select few, and that those few shall have the power
to make rules which the others will obey.
If these propositions are assented to, it will, it is conceived, be found
impossible to establish the illegality at common law of unincorporated
joint-stock companies with transferable shares (a).
To say that such a partnership is illegal, because it assumes to act as a
corporation, is untrue ; for none of the above acts are characteristic of
corporations. What distinguishes corporations from other bodies is their
independent personality ; and no society which does not arrogate to itself
this character can be fairly said to assume to act as a corporation. Besides
this, it is by no means clear that it is illegal at common law to assume to
act as a body corporate (0).
To assert that unincorporated companies with transferable shares are muis-
chievous and dangerous, and therefore illegal, is to assert a proposition the
truth of which has not yet been established, and which therefore cannot be
admitted as the basis of a judicial inference. This ground of illegality
would probably not have been relied upon so much had it not been for the
technical rules of pleading which required all the members of a firm, how-
ever numerous, to be made defendants to actions and suits against the firm.
This rule undoubtedly created difficulties in dealing with large bodies of
persons unless they were incorporated ; but if the question is reduced to
this, viz., whether the rule, or a company to which it is inapplicable, most
deserves to be characterised as mischievous, the question must surely be
answered in favour of the company and against the rule. The rule, how-
(2) Ante, p. 138. See the qualifi- that presuming to act as a body cor-
cation in p. 181, note (c). porate was an offence at common
(a) See Valburn v. Ingilby, Cooper, law.” As to assuming a corporate
temp. Brougham, 270. name and using a corporate seal, sce
(6) See 6 Man. & Gr. 107, where ante, p. 131, note (c).
Tindal, C. J., says, “I am not aware
UNINCORPORATED COMPANIES WITH TRANSFERABLE SHARES.
185
ever, being established as law, the judges felt bound to adhere to it, and Bk. z Chap. 5.
then finding it difficult to deal with unincorporated companies, declared
them mischievous and illegal. The difficulty presented by the rule in
question has been to a great extent removed by the Judicature acts and
rues made under them.
ect. 1.
Assuniing an unincorporated joint-stock company not to be Effect of non-
illegal at common law, it remains to be considered whether it
is rendered illegal, by statute, if not registered.
registration.
The Companies act, 1862, is extremely important in this Companies act,
respect, for the 4th section says imperatively that no company,
association, or partnership, shall be formed after the 2nd of
November, 1862, except as therein mentioned. From this it
follows that companies, associations, and partnerships required
to register under that section, are illegal if not registered (c).
In this respect the act of 1862 differs from the Companies acts
of 1856 and 1857 (d), and resembles the older acts of 7 & 8
Vict. c. 110, and c. 118 (e).
Companies formed before the 2nd of November, 1862, and
required by the Companies act, 1862, to register under it, are
not illegal, although the consequences of non-registration are
severe (see § 210).
1862,
The question whether scrip companies formed since the act Bae com-
of 1862 are illegal, has not yet been determined (f); but it is ee
of great practical importance, and before deciding it attention
must be paid not only to the precise language of the act, but
also to the difference between agreements to form companies
(c) See acc. Hx parte Day, 1 Ch.
D. 699 ; 8. Wales Atlantic Steamship
Co.,2 Ch. D. 763; Ex parte Har-
grove, 10 Ch. 542 ; Harris v. Amery,
L. R. 1 C. P. 148; Jennings v.
Hammond, 9 Q. B. D. 225; Shaw
y. Benson, 11 Q. B. D. 563; Ea
parte Poppleton, 14 Q. B. D. 379;
Smith v. Anderson, 15 Ch. D. 247;
overruling Sykes v. Beadon, 11 Ch.
D. 170; Padstow Total Loss Assoc.,
20 Ch. D. 187 ; In re Siddall, 29 Ch.
D. 1, all noticed ante, p. 114-115.
(d) See 20 & 21 Vict. c. 14, § 3,
and c. 49, § 5.
(€) As to which see O'Connor v.
Bradshaw, 5 Ex. 882, as to banks;
and as to other companies, Butt v.
Monteauz, 1 K. & J. 98; Sheppard
v. Oxenford, ib. 491. The 7 & 8
Vict. c. 110, did not apply to com-
panies formed before the passing of
the act, Hx parte Aston, 27 Beav. 474,
and 4 De G. & J. 320; and see
Womersley v. Merritt, 4 Eq. 695.
(f) The point was discussed in
The Gen. Co. for the promotion of
Land Credit, 5 Ch. 363, and Princess
of Reuss v. Bos, L. R. 5 H. L. 176.
It is tolerably plain that shares not
paid up in full cannot be made
transferable to bearer.
136
Bk. I. Chap. 5.
Sect. 1.
Bankers.
Issue of notes.
ILLEGAL COMPANIES.
and partnerships and companies and partnerships which are
actually formed (g). Scrip companies are not, in the writer’s
opinion, illegal at common law (h).
The only other statutes to which it may be useful to allude
in the present connection are those relating to bankers (i).
By 7 & 8 Vict. c. 82, s. 21 (k), all bankers are required on
the first day of January, in every year, to make a return to the
stamp office of their names, residences, and occupations, or in
the case of a company or partnership, of the name, residence,
and occupation of every member of the company or partner-
ship, and in default a penalty of 50l. is inflicted. Upon this
act a question might arise as to the legality of a banking part-
nership, or company, composed in part of members whose
names are not returned.
By two statutes, which have since been considerably modi-
fied, it was made unlawful for banking firms of more than six
members, to issue in London or within sixty-five miles thereof,
notes payable on demand, or within six months after date (J).
(g) See Partn., p. 23, et seq.
(h) Ante, p. 133.
() As to marine insurers, see
Partn. 97.
(k) §§ 8 & 29 of this act, and
parts of §§ 9 & 23 are repealed by
37 & 38 Vict. c. 96.
(1) 89 & 40 Geo. 3, & 28, § 15;
7 Geo. 4, c 46. See Broughton v.
Manchester and Salford Waterworks
Co, 3B. & A. 1; Bank of England
v. Anderson, 3 Bing. N. ©. 589;
Bank of England v. Booth, 2 Keen,
466; and on appeal, Booth v. Bunk
of England, 6 Bing. N. ©. 415;
and 7 Cl. & Fin. 509. By a sub-
sequent act (9 Geo. 4, c. 23) the
right to issue bills and notes pay-
able on demand was extended to all
bankers (except within London or
three miles thereof), provided they
obtained a licence and gave a secu-
rity, as required by the act. By 3
& 4 Will. 4, c. 83, § 2, it was made
lawful for banking firms of more
than six persons to issue notes pay-
able in London through an agent,
or to draw bills or notes upon any
agent in London, payable on de-
mand, or otherwise, in London, and
for any less amount than 501,
Then the legislature retraced its
steps, conferring by the act of 3 & 4
Will. 4, c. 98, certain privileges on
the Bank of England, and enact-
ing (§ 2) that during the continu-
ance of those privileges no banking
firm of more than six persons
should issue in London, or within
sixty-five miles thereof, bills or
notes payable on demand, with a
proviso, as to firms carrying on
business beyond that limit, in
favour of bills and notes, payable
through an agent in London, and
for not less than 5J, Then by the
Bank Charter act of 1844 (7 & 8
Vict. c. 32, §§ 10 & 11), it is en-
acted that no person, other than a
banker, who on the 6th of May, 18H,
BANKERS.
1387
Upon these statutes, it was held, that a banking company Bk. I. Chap. 5.
of more than six persons associated for the purpose of issuing
notes payable on demand, or within six months after date, was
not illegal unless it was proved that the company issued such
notes within sixty-five miles of London (m). Upon a similar
statute relating to Ireland (n), it was held, that in order to
establish the illegality of a banking company upon the ground
that its houses of business had been, from the time of the
formation of the company until the commencement of the
suit, and then were, at places in Ireland within fifty miles of
Dublin, it was necessary to prove the existence of a place of
business within that limit for the whole time alleged (0).
The
statutes in question, moreover, have been held only to affect
was lawfully issuing his own bank-
notes, shall issue any bank-notes in
any part of the United Kingdom ;
and that it shall not be lawful for
any banker to issue in England and
Wales bills or notes payable to
bearer on demand; except that it
shall be lawful for any banker who
was, on the 6th of May, 1844, carry-
ing on the business of a banker in
England or Wales, and was then
lawfully issuing in England or
Wales his own bank-notes under
the authority of a licence, to con-
tinue to issue such notes to the
extent and under the conditions
mentioned in the act ; and by § 26,
it is made lawful for banking firms,
though of more than six members,
carrying on business in London, or
within sixty-five miles thereof, to
draw, accept, or endorse bills not
payable to bearer on demand. Such
is the state of the law on this sub-
ject at the present time. The joint
effect of the above enactments
seems to be that: (1.) The Bank of
England can alone issue, in Lon-
don, or within three miles of it,
notes payable to bearer on demand.
(2.) Beyond that limit such notes
may be issued by bankers who were
Sect. 1.
Bankers.
lawfully issuing them before May, Issue of notes.
1844, under a licence; but by no
other bankers ; and not, therefore,
by any banking firm of more than
six persons carrying on the business
of bankers within sixty-five miles
of London. In other words there
are three limits: (1.) London and
three miles round, in which the
Bank of England has an exclusive
monopoly. (2.) The district more
than three, but within sixty-five
miles of London, in which the mo-
nopoly is divided between the Bank
of England and banking firms of less
than six members, lawfully issuing
notes before May, 1844. (3.) The
district more than sixty-five miles
from London in which the mono-
poly is divided between the Bank
of England and banking firms of
six or more or less members, law-
fully issuing notes before May,
1844, See further on this subject
the note to the Cos. act, 1862, sched.
3, part 2, in the Appendix ; A.-G. v.
Birkbeck, 12 Q. B. D. 605.
(m) Ransford v. Copeland, 6 A. &
E. 482.
(n) 6 Geo. 4, c, 42, § 10.
(0) Hughes v. Thorpe,5 M. & W.
656.
138
ILLEGAL COMPANIES.
aia ue 5. partnerships formed for the purpose of carrying on the busi-
Chemists.
ness of a banker, and not to interfere with the issue of notes
by firms not carrying on such business.
By an act which prior to 1857 regulated joint-stock banks
in England (7 & 8 Vict. c. 118, § 1), it was not lawful for any
company of more than six persons to carry on the trade or
business of bankers in England under any agreement or cove-
nant of co-partnership made or entered into on or after the
6th of May, 1844 (p), unless by virtue of letters patent to be
granted by her Majesty according to the provisions of that act.
Any banking company therefore formed since May, 1844, and
not under letters patent, was altogether illegal if its members
were more than six in number (q). But the law on this head
has been altered by 20 & 21 Vict. c. 49, and by the Companies
act, 1862. The combined effect of those acts apparently is
that banking companies of ten or more members formed
between May, 1844, and November, 1862, must be registered
unless formed under letters patent, but are not illegal by reason
of non-registration (7), and banking companies of ten or more
members formed since November, 1862, must be registered,
and are illegal if not registered (s).
An incorporated company may carry on business as chemists
and druggists if the persons who actually sell and dispense
drugs are duly licensed so to do (t). The principle of the
decision which settled this is applicable to other licensed trades
and businesses.
(p) See Wigan v. Fowler,1 Stark. § 205, and sched. 3, and the note
459 ; Perring v. Dunston, Ry. & M. thereto in the Appendix.
426. (s) Companies act, 1862, § 4, and
(q) See O'Connor v. Bradshaw, 5 ante, p. 114,
Ex, 882. Compare this case with (t) Pharmaceutical Soc. v. London
R. v. Whitmarsh, 15 Q. B. 600. and Provincial Supply Assoc., 5 App.
(r) See 20 & 21 Vict. c. 49, §§ 4, Ca. 857, and 5 Q. B. D. 310; re-
5 & 12, and the Companies act, 1862, _ versing 4 ib. 313.
CONSEQUENCES OF ILLEGALITY.
SECTION II.—CONSEQUENCES OF ILLEGALITY.
139
Bk. I. Chap. 5
Sect. 2.
If a company, when it is formed, will be illegal, any contract Consequences
to form it must be illegal also. Upon this ground it was held
in Duvergier v. Fellowes (u), that a bond for the payment of
money upon the formation by the obligee of an illegal company
was invalid.
It does not, however, follow that because an agreement to Effect of ille-
form a company is illegal, those who subscribe to its formation
cannot recover back their subscriptions. If money is paid by
A. to B. to be applied by him for some illegal purpose, it is
competent for A. to require B. to hand back the money if he
B. has not already parted with it (x), and the illegal purpose
has not been carried out (y). Although, therefore, the sub-
scribers to an legal company have not aright to an account
of the dealings and transactions of that company and of the
profits made thereby (z), they have a right to have their sub-
scriptions returned; and even though the moneys subscribed
have been laid out in the purchase of land and other things for
the purpose of the company, the subscribers are entitled to
have that land and those things reconverted into money, and
to have it applied as far as it will go in payment of the debts
and liabilities of the concern, and then in repayment of the
subscriptions. In such cases, no illegal contract is sought to
be enforced; on the contrary, the continuance of what is
illegal is sought to be prevented.
In Sheppard v. Oxenford (a), a company was started for Actions for
working mines in Brazil. The members subscribed each Bue ccandld
(u) 5 Bing. 248; 10 B. & C. 826;
and 1 Cl. & Fin. 39. See, also,
Williams v. Jones, 5 B. & C. 108.
(a) See Taylor v. Lendy, 9 East,
49; Varney v. Hickman, 5 C. B.
271; Diggle v. Higgs, L. R. 2 Ex.
D. 422; Hampden v. Walsh, 1 Q.
B. D. 189; Taylor v. Bowers, ib.
291. Compare Great Berlin Steam-
bout Co., 26 Ch. D. 616.
(y) Compare Herman v. Jenchner,
15 Q. B. D. 561; Wilson v. Strugnell,
7 Q. B. D. 548 ; and the cases in the
last note.
(z) See Harvey v. Collett, 15 Sim.
332. Compare the cases in the next
note.
(a) Sheppard v. Oxenford, 1 K. &
J.491. See, too, Butt v. Monteaua,
ib. 98; Sharp v. Taylor, 2 Ph. 801;
Symes v. Hughes, 9 Eq. 475 ; Taylor
v. Bowers, 1 Q. B. D. 291. If in
these cases the companies were
really illegal, they must be re-
gality on the
right to recover
back subscrip-
140
Bk. I. Chap. 5.
Sect. 2.
Sales of shares
of an illegal
company.
ILLEGAL COMPANIES.
certain sum and received a sort of scrip certificate specifying
the number of shares to which each was entitled. Mines,
buildings, plant, and shares were bought, and at a meeting of
the subscribers the defendant and another were appointed sole
directors and trustees of the property of the association. Dis-
putes having arisen, a bill was filed against the defendant (his
co-trustee being dead) by one of the shareholders on behalf of
himself and the others for an account of the monies received
and paid by the directors, and of the debts of the association,
and for payment of those debts out of the assets, and for
a division of the profits among the shareholders, and for an
injunction to prevent the defendant from selling the property,
and for a receiver. It was contended that the company was
illegal, and that no relief could be given; but it was held that
the defendant as trustee could not dispute the trust on which
he had accepted the property ; and a demurrer to the bill was
overruled and a receiver and manager was appointed (6).
If a company is illegal, shares in it cannot be recognised,
and contracts for the sales of such shares are themselves
illegal. Therefore, a broker employed to buy shares in an
illegal company cannot recover the price he may have paid for
them from the person for whom he bought them (c) ; nor can
the buyer, if he has paid the broker, and the shares have been
bought, recover back any part of the money so paid, although
the broker may have been guilty of a fraudulent overcharge (d).
But if the purchaser of the shares has paid the broker for
them, the broker cannot retain the money against the seller (e).
Again, as a contract for the sale of shares in an illegal
company is itself illegal, it follows that a purchaser of such
shares, who may have paid for them, cannot recover back his
garded as modifying the general
infra, p. 141, note (2).
proposition, that a court of equity
(c) Josephs v. Pebrer, 3 B, & C,
will not assist a person to get back
property which he has transferred
to another for some illegal purpose.
See Brackenbury v. Brackenbury, %
J. & W. 391; Groves v. Groves, 3 Y.
& J. 163.
(6) Compare Sykes v. Beadon, 11
Ch. D. 170 ; and other cases noticed
639. The illegality in this case was
apparently treated as obvious.
(d) Buck v. Buck, 1 Camp. 548.
(e) Bousfield v. Wilson, 16 M. &
W. 185. See, also, Nicholson v.
Gooch, 5 E. & B. 999; Tenant v.
Elliott, 1 Bos. & P. 3, and Partn.
107,
CONSEQUENCES OF ILLEGALITY. 141
money if it should ultimately turn out that the company is no Bk. I. Chap. 5,
Z : : Sect. 2,
company at all, but a project which has failed (/f). aa
Again, if a company is illegal it cannot maintain any action by companies.
in respect of any transaction tainted with illegality. For
example, an illegal company cannot prove in liquidation pro-
ceedings for a debt due to it (g), nor can the trustee of an
illegal loan society recover on promissory notes given by the
borrowing members to secure the repayment of the money
advanced to them by the society (h).
Again, as no Court will lend its assistance towards carrying
out an illegal transaction, a member of an illegal association
which is regulated by a trust deed cannot maintain an action
to have the trusts administered by the Court nor compel the
trustees to pay damages for any breach of trust (2).
An illegal company cannot be wound up by the Court (x), Winding up.
except perhaps at the instance of a creditor ignorant of its
illegality (1). But if the company is legal, the mere fact that
it may have engaged in some illegal transaction and sustained
loss does not exclude contribution amongst the members in
respect of such loss (m).
Before quitting the subject of the consequences of the ille- Indictmen
gality of a company, the risk of criminal prosecution ought to
be mentioned. Persons engaged in an illegal business are
liable, whether incorporated or not, to be punished crimi-
nally (n); and even where the object of a company is not
(f) Kempson y. Saunders, 4
Bing. 5.
(g) Ex parte Day, 1 Ch. D. 699.
Compare Ex parte Poppleton, 14
Q. B. D. 379, where a company
after registration sued in respect of
matters which occurred before.
(h) Shaw v. Benson, 11 Q. B. D.
563; Jennings v. Hammond, 9 Q.
B. D. 225.
(1) Ottley v. Browne, 1 Ball & Bea,
360; Ex parte Mather, 3 Ves. 373 ;
Sykes v. Beadon, 11 Ch. D. 170. In
Smith v. Anderson, 15 Ch. D. 247,
this last decision so far as it declared
the association in question to be
illegal was disapproved. Had it
been illegal the decision would haye
been correct.
(&) Padstow Total Loss Assoc., 20
Ch. D. 137.
(D) See infra, hook iv., c. 1, § 2.
(m) Longworth’s Ex. case, 1 De G,
F. & J. 17, affirming S.C. Johns,
465. See Partn. 103, et seg. and
infra, book iii., e. 2, § 3, and book
iv. c.1, § 11.
(n) See the title Conspiracy in
Russell on Crimes, and Archbold’s
Criminal Law.
142 ILLEGAL COMPANIES,
Bk. x cies 5. illegal, directors and others will do well to bear in mind, that
ect. 2. we .
if they wilfully violate the provisions of an act of Parliament
they are in strict law guilty of a misdemeanor and liable to be
indicted accordingly (0).
(0) See Lord Campbell’s observa- G.F.&J.31. As to issuing fraudu-
tions in Longworth’s Ex, case,1 De lent prospectuses, &c., see ante, p. 87.
DOCTRINES OF AGENCY.
BOOK II.
OF THE RIGHTS AND OBLIGATIONS OF COMPANIES AS
REGARDS NON-MEMBERS.
CHAPTER I.
GENERAL PRINCIPLES OF AGENCY AS APPLIED TO COMPANIES IN THE
COURSE OF FORMATION,
—_—_.>——.
SECTION I.—OF THE LIABILITIES OF PROMOTERS AND SUBSCRIBERS ,
FOR THE ACTS OF EACH OTHER.
Ir was formerly held that persons engaged in establishing
companies were partners; but this doctrine is clearly not law
at the present day (a). Associations for forming partnerships,
not being partnerships, it follows that persons who hold them-
selves out as members of such associations do not thereby
hold themselves out as partners, either with each other or with
their co-members. From this it results further that, in order
that a person engaged with others in forming a company may
be liable for their acts, he must have authorised them to do
, those acts as his agent, or have ratified such acts. The autho-
rity conferred may be general or special; but unless it is held
—which it is not (b),—that the pursuit of a common object by
persons in concert gives each an authority to act as the agent
of the others in whatever he thinks tends to the attainment of
that object, it must be held that no one is liable for the acts of
(a) Partn. 23, where Holmes v. are explained.
Higgins, 1 B. & C. 74; Lucas v. (b) See, in addition to the cases
Beach, 1 Man. & Gr. 417; and cited below, Heraud v. Leaf, 5 C. B,
Barnett v. Lambert, 15 M, & W. 489, 15,
143
Bk, II. Chap. 1.
Sect. 1.
144 DOCTRINES OF AGENCY.
Bk. II. Chap. 1. the others except so far as he has, in some definite manner,
oe constituted them his agents or ratified what they have done.
Subscribers not The cases of Bourne v. Frreeth (c), Dickinson v. Valpy (d),
metry and Fox v. Clifton (e), are distinct authorities for the proposi-
tion that the allottees of shares in an unformed company are
not, as such, liable for the acts of its managers. Nor are they
liable for the acts of each other unless authority to do the acts
can be proved (jf).
Promoters of The doctrine that the promoters of companies are not, as
ia such, each other’s agents, and liable for each other’s acts,
aerule appears to have been first distinctly laid down by the Court of
Reynell v. Lewis, Exchequer in Reynell v. Lewis and Wyld v. Hopkins (g), which
Hag *. Hop- were actions brought by advertising agents and map makers
against members of the provisional committees of two railway
companies. In each of these cases prospectuses and advertise-
ments had been issued by the provisional committee, and the
name of the defendant, as a member of the committee, was
therein announced to the public. In each case the plaintiff
had been directly employed by the solicitor to the committee,
and in neither case had the defendant authorised his credit to
be pledged to any one, except so far as his being a member of
the committee, and knowing what was going on, was to be
regarded as conferring an authority to that effect. In both
cases the jury found verdicts for the plaintiffs. In both, how-
ever, the Court granted new trials, and (in a judgment well
worthy of attentive perusal) it was distinctly laid down, that
the members of provisional committees are not partners; that
they are not even primd facie each other’s agents; and that, in
order to render any member liable for the acts of the others, it
is incumbent upon those who assert that such liability exists,
to prove, to the satisfaction of a jury, the existence of an
authority cmanating from the member in question to the others
to bind him. At the same time it was as distinctly laid down
(c) 9B. & C. 632, H. L. C. 161; Bright v. Hutton, ib.
(d) 10 B. & ©. 128. 368,
(e) 6 Bing. 776 ; and 9 ib. 115. (g) Both in 15 M. & W. 517.
(f) Wood v. Argyll,6 Man.& Gr. Compare Maddick v. Marshall, 16
928; Hamuilion v. Smith, 5 Jur. OC. B. N.S. 387, and 17 ib, 829.
N.S. 32; Hutton v. Thompson, 3
LIABILITY OF PROMOTERS FOR ACTS OF EACH OTHER.
145
that a general authority, conferred by a defendant on his co- Bk. II. Chap. 1.
committee men or any other person, and sufficient to make
their acts his, might be properly inferred from public announce-
ments, and that a special authority for each act was by no
means essential to render him liable for it (kh). But no such
general authority is to be assumed from the mere announce-
ment that several persons are acting together, and endeavouring
to get up a company.
Sect. 1.
~~ —__
The principles laid down above have been since constantly Members of
provisional or
recognised and acted upon, as will be seen by reference to the managing com-
numerous cases cited below, in many of which the defendant
was a member, not only of a provisional committee, but of a
managing committee also (i). The appointment, by a pro-
visional committee, of a managing committee, does not per se
render the members of the former liable for the acts of the
latter (k).
mittees,
It follows from the same principle that the acts, statements, Acts of one no
aud letters of one member of a committee formed for getting
up a company, cannot prejudice any other member, unless the
first can be shown to be the agent of the last by some other
circumstance than their common object; nor is the receipt of
deposits by one member equivalent to a receipt of them by the
others (2).
(h) See, accordingly, Collingwood
v. Berkeley, 15 C. B. N. 8. 145;
Maddick v. Marshall, 16 ib. 387,
and 17 ib. 829; Barnett v. Lambert,
15 M. & W. 489; Higgins v. Hop-
kins, 3 Ex. 163; Lake v. Argyll, 6
Q. B. 477 ; Maitlands’ case, 4 De G.
M. & G. 769. See Newton v. Bel-
cher, 12 Q. B. 921, and Newton v.
Liddiard, ib. 925, as to mistaken
admissions of liability. See as to
contribution amongst promoters,
Lefroy v. Gore, 1 Jo. & Lat. 571.
(i) Batley v. Macaulay, 13 Q. B.
815; Barker v. Stead, 3 C. B. 946 ;
Rennie v. Wynn, 4 Ex. 691; Ne-
vins v. Henderson, 5 Ra. Ca. 684 ;
Wood v. Argyll, 6 Man. & Gr.
928 ; Patrick v. Reynolds, 1 C. B.
N. 8. 727; McEwan v. Campbell,
L.c,
2 McQu. 499; Rennie v. Clarke, 5
Ex, 292; Bell v. Francis, 9 C.& Py
66; Kerridge v. Hesse, 9 C. & P,
200; Barrett v. Blunt, 2 C. & K.
271; Barker v. Lyndon, ib. 651;
Giles v. Cornfoot, ib. 658; Griffin
v. Beverley, ib. 648; Premner v.
Chamberlayne, ib. 569.
(k) Cooke v. Tonkin, 9 Q. B. 936 ;
Williams v. Pigott, 2 Ex. 201; Daw-
son v. Morrison, 5 Ra. Ca. 62.
(1) See Burnside v. Dayrell, 3 Ex.
224; Rennie v. Wynn, 4 Ex. 691;
Watson v. Charlemont, 12 Q. B. 856;
Drouet v. Taylor, 16 OC. B. 671.
Compare Rennie v. Clarke, 5 Ex.
292; Wontner v. Shairp, 4 C. B.
404; Maddick v. Marshall, 16 C. B.
N. 8. 387, and 17 ib. 829.
ky
evidence against
the others,
146
Bk. IT. Chap. 1.
Sect. 2.
Liabilities of
companies for
acts of their
promoters.
Where liability
is imposed by
constitution of
company.
Statutory debts.
Person to sue.
DOCTRINES OF AGENCY.
SECTION IL—OF THE LIABILITIES OF COMPANIES FOR THE ACTS OF
THEIR PROMOTERS.
With respect to companies, the general principle is that
no member of an unincorporated company is liable to non-
members for acts done before he became a member, unless he
has rendered himself liable for them by some contract between
him and them (m). As regards incorporated companies, it is
obvious that they can do no act nor have any agent before
they exist themselves: whence it follows that an incorporated
company is not liable for the acts and engagements of its pro-
moters, unless it is made so by its charter, act of Parliament,
or deed of settlement, or unless it has become so by what it
has done since its formation (7).
When a company is formed by act of Parliament, the sub-
scribers are usually bound by the terms of the act obtained by
the promoters of the company (0) ; and if that act says that
the company is to be liable for debts and liabilities incurred
before its formation, of course it will be so liable, and the only
question which can arise in such a case is as to the true con-
struction of the act, and the remedy upon it. The Companies
Clauses Consolidation act renders companies governed by it
liable for the expenses of obtaiming their special act (p).
The statutory obligation thus imposed is a legal obligation
enforceable (before the Judicature acts) by an action of debt (q);
and such action could be sustained, although the plaintiff was
a member of the company (r).
The common form of enactment which imposes the obliga-
tion usually leaves in doubt the proper person to enforce it.
This point, however, was settled by Wyatt v. Metropolitan
Board of Works (s); it was there (in effect) decided that only
(m) Partn. 201, et seq. (0) See as to this, ante, p. 23, 24.
(n) See infra, c. 2, § 3, as to this. (p) 8 & 9 Vict. c 16, § 65; 27 &
As to the effect of incorporation in 28 Vict. ¢, 121, § 3, et seq.
discharging sureties, see Dance v. (q) Tilson v. Warwick Gas Light
Girdler, 1 N. RB. 34. As to pro- 00., 4 B. & C. 962; Hitchins v. Kil-
visional contracts for the purchase kenny Roal. Co., 9 C. B. 536.
of lands by the promoters of rail- (r) Carden v. General Cemetery Co.,
way companies, see 27 & 28 Vict 6 Bing. N. C, 253.
¢. 121, § 3. (s) LLCO. BLN. S. 744,
LIABILITY OF COMPANIES FOR ACTS OF PROMOTERS.
those persons can sue the company upon a clause in the usual Bk. ¥ Chap. 1.
form who have incurred expense or bestowed time and trouble
in forming the company and in getting its act passed, and who
have no other paymasters. For example, solicitors or parlia-
mentary agents who have thus acted, and who have not been
employed by other people who are liable to them, can sue the
company on such clauses (t); but solicitors or parliamentary
agents who have been employed by the promoters of the com-
pany’s act, and who are entitled to be paid by them, cannot
sue the company on such clauses (w).
It has also been decided that a person who has agreed with
the promoters of a company’s bill in Parliament to work for
nothing and not to charge the company for his services,
cannot sue the company for those services, although the com-
pany’s act contained such a clause as is here referred to (x).
Again, notwithstanding such a clause, claims which are
illegal on grounds of public policy cannot be enforced, e.g., a
claim by a peer for a sum of money agreed to be paid for his
vote (or withdrawal of opposition) in Parliament (y), or a claim
which is inconsistent with representations made to Parliament
and inducing it to pass the bill (z).
Again, a company’s articles of association or deed of settle- Adoption by the
company.
ment only affect the members inter se or the parties to the
deed, and a clause adopting an agreement made by the pro-
moters does not of itself amount to a contract on which the
company can be sued by a person with whom the company has
not, in fact, entered into an agreement (a); and the fact that
(t) Shaw's claim, 10 Ch. 177, and
see ante, note (q); Re Tilleard, 3
De G. J. & Sm. 519.
(u) Kent Tramways Co. 12 Ch.
D. 312; Wyatt v. Metrop. Board of
Works, 11 C. B. N.S. 744 ; Skegness
Tramway Co, W. N. 1888, 253.
Kensington Station Act, 20 Eq. 197,
is not consistent with these cases.
(«) Savin v. Hoylake Raal. Co., L
R. 1 Ex. 9. Observe that the terms
of the agreement were admitted by
the demurrer.
(y) Eart of Shrewsbury v. North
Staff. Rail. Co. 1 Eq. 593, noticed
infra, p. 153.
(2) Spackman v. Lattimore, 3
Giff. 16.
(a) Howard v. Patent Ivory Co.,
38 Ch. D. 156; Empress Engineer-
ing Co., 16 Ch. D, 125; North-
umberland Avenue Hotel Oo., 33 Ch.
D. 16; Rotherham Alum, de,
Co, 25 Ch. D. 103; Melhado v.
Porto, Alegre, dc., Rail. Co., L. BR. 9
C. P. 503, where the directors had
an option. And see Boston Deep Sea
Fisting Co. v. Ansell, 39 Ch. D. 339,
L2
Sect. 2.
147
148 DOCTRINES OF AGENCY.
But
such a clause may create a trust for the plaintiff which he cay
enforce (c); and if the clause entitles the promoters with whom
the agreement was made to be indemnified against the claim of
the plaintiff he can sue them and they can bring in the com-
pany as third parties (d).
The circumstance that a company has had the benefit of an
agreement entered into by its promoters is not of itself suffi-
cient to render the company lable to be sued upon it (e).
There may, however, be cases in which it may be inequitable
to allow a company to hold and enjoy property discharged
from those obligations which were contracted by the promoters
who enabled the company to acquire it (/).
But in the absence of special circumstances, such as those
above alluded to, a company is not liable for what may have
been done by its promoters. Thus, it was held that a com-
pany formed under the repealed act, 7 & 8 Vict. c. 110, was not
liable to pay for the services of agents employed by its pro-
moters (before provisional registration) for purposes connected
with the establishment of the company (g); and that agree-
ments entered into after provisional but before complete regis-
tration, only bound the company when they were expressly
made binding by the act itself (h).
Bk. I. Chap. 1. he is a member of the company makes no difference (b).
Sect. 2.
Company taking
the benefit of
the agreement.
Ordinary rule
in other cases,
(6) Browne v. La Trinidad, 37 Ch. R., Ir, 180, where promoters sought
D. 1; Eley v. Positive Ass. Co.,
L. R. 1 Ex. D. 20 & 88, in which
§ 16 of the Companies act, 1862, is
considered; and see Th heal Buller
Consols, 38 Ch. D, 42.
(c) See Touche v. Metropolitan
Rail. Co, 6 Ch. 671; Terrell v.
Hutton, 4 H. L. C. 1091; Parsons
v. Spooner, 5 Ha. 102; Wilkins v.
Roebuck, 4 Drew. 281 ; Hophinson’s
case,7 De G.M. & G.193; Gandy
v. Gandy, 30 Ch. D. 67, per Cot-
ton, L.J.
() R. 8. C. order 16, 7. 48. See
the last three notes as to the rights
of the plaintiff against the company.
(¢) See the cases in note («), and
Unnis v. West Clare Rail. Co, 15 L
to make the company pay interest on
money borrowed in order to make
the usual Parliamentary deposit.
(f) See infra, p. 149, and c. 5.
(9) Hutchison v. Surrey Gas o.,
11 C. B. 689; and 8 Car, & Kir
45.
(h) Payne v. N. 8S. Wales Co.,
10 Ex. 283; Gunn v. Lond. and
Lancashire Fire Insur. Co. 12 C. B.
N. 8. 694. These cases turned on
7 & 8 Vict. c. 110, §§ 23 & 25, as to
which, see also, Taylor v. Crowland
Gas Co.,10 Ex. 288, note; Terrell’s
case, 2 Sim. N. 8. 126; Lloyd’s case,
1 ib. 248. Tervrell’s case was re-
versed on appeal, but the principle
in which it was decided below is
LIABILITY OF COMPANIES FOR ACTS OF PROMOTERS. 149
In cases of this description the promoters themselves are Bk. aes 1.
liable on the contracts entered into by themselves (i), but not —
‘ Why companies
the company. Moreover, as will be seen hereafter, a company are not bound
cannot ratify a contract made by its promoters before its own Ree
existence (k). At the same time, an agreement by a company
to do what its promoters have undertaken it shall do, may
obviously be entered into, and such an agreement, if entered
into, and if not ultra vires, will be binding on the company.
This appears to have been the true ratio decidendi in Browning Browning v.
vy. Great Central Mining Company (1), in which a company vce
registered under the Companies act of 1856 was held liable to T"7
pay the wages of a person appointed by the promoters of the
company to be the manager of the company’s works. The
company when formed retained the manager in its service, and
there were other circumstances warranting the inference that
the company had appointed him its manager, although there
was no evidence of any formal appointment, as required by the
The jury having found a verdict for
the manager, the Court declined to disturb it. The salary
sued for appears to have been calculated from a period anterior
to the registration of the company, but upon this point there
is some obscurity.
The difficulty of holding companies bound by the acts of Liability in
their promoters has been felt as much in equity as at law (m); nee
but where a company has acquired property or exercised rights
under an agreement entered into with its promoters, there is a
strong tendency to treat such agreement as binding on the
articles of association.
not impeachable. See Terrell v.
Hutton, 4 H. L. C. 1091.
(i) Kelner v. Baater, L. R. 2 C. P.
174; Scott v. Lord Ebury, ib. 255;
Lake v. Argyll, 6 Q. B. 477 ; Barton
v. Hutchinson, 2 Car. & K. 712;
Cullen v. O'Meara, Iv. Rep. 5 Com.
L. 640.
Ebury, tb. 255 ; Spiller v. Paris
Skating Rink Co, 7 Ch. D. 368,
is overruled by later decisions re-
ferred to in note (a).
(2) 5 H. & N. 856. See, also,
Pilbrow yv. Pilbrows Atmospheric
Rail. Co., 5 C. B. 440; and Boston
Deep Sea Fishing Co. v. Ansell, 39
(k) See the cases in note («), supra,
and Wilson v. Twmman,6 Man, &
Gr. 236; Gunn v. London and
Lancashire Fire Insur. Co., 12 C.
B. N. S. 694; Kelner v. Bacter,
L. RB. 2 C. P. 174; Scott v. Lord
Ch. D. 339, where there was a con-
tract by the company with the
plaintiff.
(m) See the cases in the next two
notes; and as to contracts under
seal, Pickering’s cluim, 6 Ch. 525,
150
Bk. II. Chap. 1.
Sect. 2.
Edwards v.
Grand Junction
Railway Com-
pany.
Lord Cotten-
ham’s reasoning.
DOCTRINES OF AGENCY.
company, provided the agreement is one by which the company
would have been bound if the agreement had been entered
into on its behalf after its formation (n). The leading case
on this subject is Edwards v. The Grand Junction Railway
Co. (0), in which an agreement between the trustees of a turn-
pike road and the promoters of a railway company was entered
into, to the effect that the trustees should withdraw their oppo-
sition to the company’s bill, and that the company should, if
its bill passed, carry the turnpike road over a bridge of certain
dimensions. The trustees withdrew their opposition, the bill
passed, and the company refused to perform the agreement.
An injunction to restrain the company from violating the
agreement was granted both by Vice-Chancellor Shadwell and
by Lord Cottenham, on appeal. Lord Cottenham, in the
course of his judgment, said :—
“It cannot be denied that the act of Moss (the projector who signed the
agreement) was the act of the projectors of the railway ; it is therefore the
agreement of the parties who were seeking an act of incorporation, that,
when incorporated, certain things should be done by them. But the ques-
tion is, not whether there be any binding contract at law, but, whether this Court
will permit the company to use their powers under the act, in direct opposition
to the arrangement made with the trustees prior tu the act upon the faith of which
they were permitted to obtain such powers. If the company and the projectors
cannot be identified, still it is clear that the company hare succeeded to, and
are now in possession of, all that the projectors had before; they are entitled
to all their rights, and subject to all their liabilities. If any one had indi-
vidually projected such a scheme, and in prosecution of it had entered
into arrangements, and then had sold and assigned all his interest in it to
another, there would be no legal obligation between those who had dealt
with the original projector and such purchaser ; but in this Court it would
be otherwise. So here, as the company stand in the place of the projectors
they cannot repudiate arrangements into which such projectors had entered ;
they cannot exercise the powers given by Parliament to such projectors in their
corporate capacity, and at the sume time refuse to comply with those terms upon
the faith of which all opposition to their obtaining such powers was withheld.
(n) This condition is essential. Chester and Birkenhead Rail. Co,
See Shrewsbury v. North Staffordshire ib. 58, and 9 Sim. 264, affirmed 3
Ruil. Co, 1 Eq. 593, noticed infra, M. & Cr, 773. Compare Aldred v.
p. 153. North Midland Rail. Co.,1 Ra. Ca.
(0) 1 M. & Cr. 650, affirming 404, where the terms of the agree-
S.C.7 Sim. 337. See, also, Petre ment were held insufficient to pre-
v. The Eastern Counties Rail. Co., clude the company from doing what
1 Ra, Ca. 462, and Stanley v. The was complained of.
LIABILITY OF COMPANIES FOR ACTS OF PROMOTERS.
15k
The case of The East London Waterworks v. Bailey was cited to prove that, Bk. II. Chap. 1,
save in certain excepted cases, the agent of a corporation must, in order to
bind the corporation, be authorised by a power of attorney ; but it does not
therefore follow that corporations are not to be affected by equities, whether
created by contract or otherwise, affecting those to whose position they
succeed, and affecting rights and property over which they claim to exercise
control. What right have the company to meddle with the road at all ?
The powers under the act give them right; but before that right was so conferred,
at had been agreed that the right should only be used in a particular manner.
Can the company exercise the right without regard to such agreement? I am
clearly of opinion that they cannot.”
The passages in italics contain, as Lord Cottenham himself Theory of this
explained in a subsequent case (p), the true principle on which
Edwards v. Grand Junction Railway Co. was decided, and
may be supported. In fact, the right of the plaintiff in these
cases is not based upon the notion that there is any contract
between him and the company, but upon the principle that as
the company obtained the power to interfere with him upon
certain terms, it ought not to be allowed to exercise its powers
to his prejudice in violation of those terms.
Sect. 2.
The propriety of this decision has, however, been questioned Doubts as to
and denied more than once in the House of Lords on the
ground that persons who take shares on the faith of a com-
pany’s act of Parliament cannot be justly subjected to any
liabilities not disclosed therein or contracted by the company
after its formation (q). At the same time, the decision itself
has not been overruled; and although Lord Cottenham’s
reasoning would apply to all contracts, whether ultra vires or
intra vires, and is open to objection on that account, yet as
regards contracts of the latter class, the decision in Edwards
v. The Grand Junction Railway Co. may, it is conceived, still
be regarded as unimpeached (r). This view is supported by
(p) Greenhalgh v. Manchester and
Birmingham Rail, Co., 3 M. & Cr.
790, 791.
(q) See Preston v. Liverpool and
654; Shrewsbury v. North Stafford-
shire Rail. Co., 1 Eq. 593, infra, p.
153.
(r) See Bedford Rail. Co. v. Stanley,
Manchester Rail. Co, 5 H. Le C.
605; Caledonian and Dumbarton-
shire Rail. Co. v. The Magistrates
of Helensburgh, 2 Macqueen, 391;
Leominster Canal Co. v. Shrewsbury
and Hereford Rail. Co, 3 K. & J.
2 J. & H. 746, where it was con-
sidered that the company was bound
by the agreement sued upon. See,
also, Lindsey v. The Great Northern
fail. Co., 10 Ha, 679,
this case.
152
Bk. If. Chap. 1.
Sect. 2.
Williams v. St.
George’s Harbour
Company.
Cases to which
Edwards v.
Grand Junction
Railway Com-
pany does not
apply.
Preston v. Liver-
pool, &c., Rail-
way Company,
Agreements
which are
ultra vires.
DOCTRINES OF AGENCY.
the judgment of the Lords Justices in Williams v. The St.
George’s Harbour Co. (s). There the promoters of a railway
company had entered into an agreement with an owner of land
through which the proposed railway was to pass, for the pur-
chase of his land on certain terms. The landowner, who up
to that time had opposed the scheme, agreed to withdraw, and
he accordingly did withdraw his opposition. The company
obtained its act, took the land in question, but declined to
abide by the terms of the contract of sale; it had, however, so
far recognised that contract, that it had allowed judgment in
an action for its breach to be entered up against itself. This
recognition of the contract was held sufficient to render it
binding on the company, whatever might have been the case
had there been no such recognition.
It follows from the principle on which Edwards v. The Grand
Junction Railway Co. was decided, that if the promoters of a
company enter into an agreement with a person, and the com-
pany, after its formation, does not exercise its powers to his
prejudice, he can no more enforce the agreement against the
company on equitable than on legal grounds. This was all
that was really decided by the House of Lords in Preston vy.
Liverpool, Manchester, &c., Railway Co.(t). There the com-
pany did not take the plaintiff’s land, and was therefore held
not bound to pay for it, although the promoters had agreed to
pay him a large sum for his land if he withdrew his oppo-
sition to their bill, which he did. The plaintiff had nothing
but the agreement to rely upon, and even according to
Edwards v. The Grand Junction Railway Co., this alone is
not sufficient (w).
Again, if the contract of the promoters is one which would
be ultra vires if entered into by the company after its forma-
tion, such contract, even if attempted to be ratified by the
company when formed, cannot bind the company. For ex-
ample, agreements by the promoters of a company that the
(s) 2 De G. & J. 547, varying the (u) A similar observation applies
8. C. 24 Beav. 339. to Caledonian, de., Rail. Co. v.
(t) 5 H. L. CG, 605, atfirmins 17 9 Magistrates of Helensburgh, 2 Mace
Beay. 114, See the same case on queen, 391.
demurrer, 1 Sim. N.S. 586.
LIABILITY OF COMPANIES FOR ACTS OF PROMOTERS.
153
company, when formed, shall apply its funds to purposes for Bk. Il. Chap. 1.
which they are not subscribed, clearly do not bind the company.
Sect. 2.
Nor can the principle of Edwards vy. The Grand Junction Rail-
way Co. be applied to agreements of this description.
Shrewsbury ¥.
Tsou North Stafford-
Eurl of Shrewsbury v. North Staffordshire Railway Co. (x), an shive Railway
agreement was entered into first by the promoters of a railway
Company.
company, und afterwards by the company itself, to pay a peer
20,0001. for his countenance and support in obtaining the
company’s act, and also to compensate him for such land as
the company should take or injuriously affect.
It was held
that this agreement was ultra vires and could not be enforced
against the company, although under its statutory powers it
took land belonging to that peer (y).
(z) 1 Eq. 593, where all the cases
were most carefully examined.
(vy) This is by no means the only
authority for saying that agree-
ments by the promoters of a com-
pany to the effect that the com-
pany shall pay a large sum of
money in consideration of the with-
drawal of opposition to its bill in
Parliament are altogether ultra vires.
See Preston v. Liverpool, Man-
chester, &c., Rail, Co. 5 H. L. C.
605. The agreements in Petre v.
Eastern Counties Rail. Oo, 1 Ra.
Ca. 642, and Stanley v. Chester and
Birkenhead Rail. Uo.. ib. 58, and
9 Sim. 264, and 3 DM. & Cr. 773,
were of sich an extravagant nature Agreements for
that they might well be held ultra Withdrawal of |
+ opposition to bill
vires. In the first of these cases jn Parliament.
120,000/., and in the latter 20,0001.,
were agreed to be paid for the with-
drawal of opposition to a bill, and
for compensation for the land which
might be taken and injuriously
affected. It does not, however,
follow that such agreements are
in any other respects illegal; and
it seems that they are not, if the
person withdrawing his opposition
is personally interested in opposing
the bill. See Stmpson v. Lord
Howden, 9 Cl. & Fin. 61; 10 A.
& E, 793 & 807; 3M. & Cr. 97,
154
Bk. II. Chap. 2.
Agents of com-
panies which
are formed.
Company not
bound by the
acts of its
members.
Burnes v.
Pennell.
DOCTRINES OF AGENCY.
CHAPTER II.
GENERAL PRINCIPLES OF AGENCY AS APPLIED TO COMPANIES
AFTER THEIR FORMATION.
Tuer circumstance that a joint-stock company consists of a
large and fluctuating body of members, is itself sufficient to
prevent the application to companies of the ordinary partner-
ship rule, that each member of a firm is its agent, for the
purpose of carrying on its business. All persons dealing with
companies are supposed to know this, and to know that the
management of their affairs is entrusted to a few individuals
who, and who alone, have power to act for them (a).
Burnes v. Pennell (b), in the House of Lords, is a good illus-
tration of the doctrine that a company is not, like an ordinary
partnership, responsible for the acts of its members. In that
case a shareholder in a company, who was also its solicitor
and law agent, induced a person, by false representations as to
the flourishing state of the company, to buy shares in it. The
purchaser being afterwards sued for calls, relied upon the fraud
as a defence, and he also sought to have the transfer of the
shaves to him cancelled. But it was held, that it was no part
of the business of the company’s solicitor to make any repre-
sentations on its behalf as to its condition; and that, although
he was himself a shareholder, his statements were not the
statements of the company, he not being, in his character
of shareholder, an agent of the company for any purpose
whatever.
(a) See Ridley v. The Plymouth
Grinding and Baking Co. and
Kingsbridge Flour Mill v. Same, 2
Ex. 711; Smith v. Hull Glass Co.,
11 C. B. 897; Ernest v. Nicholls,
6 I. L. C. 418, per Lord Weus-
leydale ; Burnes v. Pennell, 2 H. L.
C. 497.
(b) 2 H. L. C. 497. See, also,
Barnett, Hoares & Co. v. The South
London Tramways Co..18 Q. B. D.
815.
AGENTS OF COMPANIES. 155
Whether the company is incorporated or not, whether it is a Bk. ee 2.
chartered company, a registered company, a company merely ——— a
empowered to sue and be sued by a public officer, or a com-
pany of some other description, is of no consequence whatever
as regards the question here alluded to; the same reason
applies to them all (c).
SECTION I—WHO ARE AGENTS.
1, Directors.
The directors then of a company, and such other persons, if Directors the
: ‘ : agents of the
any, as may be entrusted with the management of its affairs, company
are its only agents; and by the acts of its directors a company
is bound, provided those acts are within the limits of their real
or apparent authority; and provided the person dealing with
them has had no notice of the irregularity (if any) of their pro-
ceedings (d). Moreover the power of directors to bind the
company is not affected by any irregularity in their own
appointment if the person dealing with them acted bond fide
and without notice of such irregularity (e); although such
irregularity may prevent the company from enforcing what
they have purported to do as agents of the company (/).
But it by no means follows that each director is the agent of Acts done by
the company. Speaking generally, it is clear that if a person ark
appoints six others to be his agents jointly, he is not bound by ° Utectors.
the acts of any five, four, three, two, or one of them. There-
fore, if the affairs of a company are entrusted to the manage-
ment of not less than a fixed number of directors, it is primd
facie not bound by the acts of afewer number. It has been
held, for example, that two out of several directors had no
(c) See Lord Campbell’s judg- (e) County Life Ass. Co, 5 Ch.
ment in Burnes v. Pennell, 2 H. L. 288.
C. 520, et seg., and Dramah v. (f) Garden Gully Co. v. McLister,
Roberts, 3 Bing. N. C. 963. 1 App. Ca. 39; and cases quoteil,
(d) See infra, as to this. notes (y) and (z) below.
156
DOCTRINES OF AGENCY.
Bk, II. Chap. 2. power to waive a forfeiture (7), or to allot shares (h) ; that four
Sect. 1.
Majority of
board.
Delegation of
authority.
out of five had no power to compromise a large debt due to the
company and to indemnify the debtor against certain bills of
exchange (i); that six out of eight had no power to bind
the company to pay for services rendered pursuant to their
order (k); that four out of five had no power to bind the com-
pany by an agreement for a lease (J); that the representations
of one director could not be regarded as those of the com-
pany (m); that notice to one director did not affect the com-
pany (m); that instructions to sell land given to an auctioneer
by one director and by the solicitor of a company, could not,
without further evidence, be considered as having been given
by the company (0); that one liquidator out of four could not
bind the company by a bill (p).
But it must not be supposed that the majority of a duly
convened and duly constituted board ot directors cannot act for
the whole board and bind the company. Business could not
be carried on if such a rule were to prevail.
referred to above do not apply to such a case.
Directors being themselves agents, are primd facie unable to
delegate their authority to one or more of their own num-
ber (q); but in many companies, and in all which are governed
by Table A. in the schedule to the Companies act, 1862, the
directors are authorised to delegate their powers to a few,
and even to one only (r), of themselves, and such a delegation
may be presumed if one or two directors act for the company in
a matter incidental to its legitimate business (s).
The decisions
(g) Card v. Carv, 1 C. BL NLS.
197.
(h) Howard’s case, 1 Ch. 561; com-
pare Ex parte Smath, 39 Ch_D. 546.
D. 593.
(n) He parte Credit Foncier and
Mobilier of England, 7 Ch. 161.
(0) Moody y. Lond. and Brighton
(2) Kirk v. Bell, 16 Q. B. 290.
(k) Brown v. Andrews, 13 Jur.
938.
(1) Ridley vy. Plymouth Grinding
Co., 2 Ex. 711.
(m) Holt’s case, 22 Beay. 48 ;
Nicol’s case. 3 De G & J. 387.
But see as to reports made by the
chairman to a meeting of share-
holders, Devuiu Mining Co, 22 Ch.
Rail. Co., 1 B. & Sm. 290,
(p) Ee parte Birmingham Banking
Co., 3 Ch. 651.
(q) Cartmell’s case, 9 Ch. 691;
Howard's case, 1 Ch. 561; Ex parte
Bumingham Banking Co.,3 Ch. 651;
Cook v. Ward, 2 C. P. D, 255.
(r) Taurine Co., 25 Ch. D. 118.
(s) Totterdell vy. Fareham Brick
Co, I. BR. 1 OC. P. 6743 Lyster’s
AGENTS OF COMPANIES.
157
Where the power to act for a company is vested in a given Bk. tae: 2.
number of directors, and that number does not exist, and —
there is no provision in the company’s regulations enabling the
directors to act, notwithstanding a vacancy in their board (t), the
directors who do exist cannot act for the company (uv). At the
same time, if a company does in fact carry on business by
certain persons who are allowed by the shareholders to act as if
they were the duly constituted directors of the company, the com-
pany will be bound by the acts of such persons in all ordinary
matters of business, in favour of all persons bond jide dealing
with them, without notice of their insufficiency in number or
defective appointment (x). But as to matters out of the
ordinary course of business the company will not be bound.
In Kirk v. Bell (y), where a company’s deed of settlement Kirk v, Dell.
contained a clause to the effect that there should not be less
than five directors, and that three should be a quorum for the
transaction of ordinary business, and where there were in fact
only four directors, it was held that a deed executed by these
four on behalt of the company did not bind it, the deed being
of an unusual description, and not a matter of ordinary
business.
Where the pro-
per nuraber of
directors does
not exist.
In like manner, in In re Alma Spinning Company,
Bottomley’s case (z), where the articles of association provided Bottomley’s case,
that the business of the company should be conducted by not
less than five nor more than seven directors, it was held that
these words were imperative, and not merely directory, and
consequently a call made by the directors, when their number
had been reduced to four, and a resolution passed by them
forfeiting a member's shares for non-compliance with the call
were invalid.
Closely connected with the present subject is the question
case, 4 Eq. 283; Ex parte The Con-
tract Corporation, 3 Ch. 105 & 116.
(t) Scottish Petroleum Co., 23 Ch.
D. 413; and see York Tramways Co.
y. Willows, 8 Q. B. D, 685.
(u) As to giving notices to hold
meetings of shareholders, Hurben v.
Phillips, 23 Ch. D. 14; of directors,
Ex parte Smith, 39 Ch. D. 546.
Compare Browne v. La Trinidad, 37
Ch. D. 1.
(a) See Mahony v. East Holy-
ford Mining Co, LL. RB. 7 H. L.
869; Thames’ Haven Dock Co. v.
Rose, 4 Man. & Gr. 552, a case re-
lating to calls where the court was
asked to set aside a judgment.
(y) 16 Q. B. 290,
(2) 16 Ch. D. 681; see, also,
Howbeach Coal Co. v. Teague, 5 H.
& N. 151; London and Southern
Counties, dc., Lund Co.,31 Ch. D, 223,
158
Bk. II. Chap. 2.
Sect. 1.
Acts done by
directors but
not by a Board.
Quorum must
be present.
Commencement
and termination
of directors’
power to bind
the company.
DOCTRINES OF AGENCY.
whether an act which ought to be done by a Board of directors
is valid when done by the requisite number but not at a board
meeting. There certainly is authority for answering this ques-
tion in the negative (a) ; and as between the company and any
person having notice of the irregularity, that answer is probably
correct. But as between the company and persons having no
notice of the irregularity, the preponderance of authority is in
favour of holding the company bound (0).
Moreover, in order that a majority of persons present at a
meeting may exercise the powers of a meeting, the meeting
itself must not be too small (c), nor summoned at too short
notice (cc).
Prima facie, the power of the directors of a company to bind
it commences at the date of its formation or of their appoint-
ment; but the commencement of that power may be postponed
to alater period; and if it is, their previous acts will not bind
the company to a person dealing with them with notice express
or implied of their want of authority (d). Again in conformity
with the general principles of agency, the directors of a joint-
stock company continue to have power to bind it, not only as
long as their appointment lasts, but also as long as its termi-
nation is unknown to those with whom they have been accus-
tomed to deal. But this proposition must be taken in con-
nection with the rule that persons dealing with companies
are deemed to have notice of the contents of companies’ acts
of Parliament, charters, and registered deeds of settlement;
and consequently, if it is sought to make a company liable
for the acts done by its directors after their retirement from
(a) Bosanquet v. Shortridge, 4 Ex.
699; D’Arcy v. Tamar, &c., Rail. Oo.,
L, R. 2 Ex. 158, and Ex parte Smith,
39 Ch. D. 546.
(b) See Mahony v. East Holy-
ford Mining Co, L. R. 7 HL.
869 ; Collie’s clavm, 12 Eq. 246 ;
County Life Ass. Co, 5 Ch. 288.
In Collie’s claim it was said, but
surely not correctly, that D'Arcy v.
Tamar, &c., Rail, Co., turned on a
technical rule of pleading. See,
further, the cases as to irregularities
cited infra.
(ce) London and Southern Coun-
ties Land Oo., 31 Ch. D. 223 ; How-
beach Coal Oo. v. Teague, 5 H. & N.
151; Ex parte Morrison, De Gex, 539 ;
and compare York Tramways Co. v
Willows, 8 Q. B. D. 685.
(cc) Ea pte Smith, 39 Ch. D. 546;
Browne v. La Trinidad, 37 Ch. D. 1.
(d) See Peirce v. Jersey Water-
works Oo., L. R. 5 Ex, 209. Com-
pare Touche v. Metropolitan Rail.,
dc., Co., 6 Ch. 671.
AGENTS OF COMPANIES. 159
office, it must be ascertained whether, upon the principle Bk. oe 2.
alluded to, there was or was not notice of the cessation of - =
their authority to act for the company (e).
The extent to which directors are agents of each other and
liable for each others acts will be noticed hereafter (/).
2. Agents who are not directors.
The directors of a company are not necessarily its only Agents who are
agents. It may, and indeed generally must, be competent for sd
them to employ other persons to act for the company; and
where this is the case, those persons will also have power to
bind the company within the limits of their agency but not
further (g). In dealing with the agents of companies there is
ereat danger of finding their authority altogether repudiated,
on the ground that they have not been duly appointed. Now,
although directors have no implied power to delegate the
authority conferred upon themselves, yet they must necessarily
employ persons not only to do the every-day work of the
company, but also to transact special branches of business
requiring peculiar knowledge. Upon principle, therefore,
where persons are in fact employed by directors to transact
business for a company the authority of those persons to bind
a company within the scope of their employment cannot be
denied by the company, unless—1, their employment was
altogether beyond the power of the directors; or unless, 2,
the persons employed have been appointed irregularly, and
those who dealt with them had notice of the. irregularity (h).
Where the power to appoint an agent for a given purpose
exists, irregularity in its exercise is immaterial to a person
dealing with the agent bond fide and without notice of the
irregularity in his appointment. The following cases are
important on this point.
In Smith v. The Hull Glass Company (i), it was held that a smith v. Hull
company registered under 7 & 8 Vict. c. 110, was liable to pay “1 Company:
(e) See as to notice, infra, § 2. & W. 708, and the cases cited in
(f) Book ii., c. 6, § 1. the next few notes.
(g) See infra, p. 161, note (7). (i) 8 C. B. 668, aud 11 ib. 897,
(h) See Hawken v. Bourne, 8 iM.
160
DOCTRINES OF AGENCY.
Bk. JI. Chap. 2. for goods ordered by persons in its employ, and that it was not
Sect. 1.
Authority
inferred,
Giles v. Taff
Railway Com-
pany.
Browning v.
Great Central
Mining Com-
pany.
necessary for the plaintiff to prove that those persons were
authorised by the directors to order the goods in question.
Maule, J., went further than this, and his judgment is an
authority for the broad proposition that a company is bound
by the acts of persons who take upon themselves, with the
knowledge of the directors, to act for the company, provided
such persons act within the limits of their apparent authority ;
and that strangers dealing bond jide with such persons, have
a right to assume that they have been duly appointed (&).
This view is in accordance with later authorities. Thus, a
company has been held bound by a verbal contract with the
chairman of directors, although a sealed contract countersigned
by three directors was required by the company’s deed of
settlement (1); so by orders for repairs given by a secretary
instead of by iue directors (m); so by an agreement for the
sale of land made by a company’s manager who was allowed
by the directors to make such contracts (nm); so by cheques
drawn by de facto but improperly appointed directors (0). Again,
in Giles v. The Taff Railway Company (p), it was held that
a railway company was liable for a tort committed by one of
its servants in the course of his employment, although there
was no proof, except that afforded by the fact of employment,
that he was the servant of the company.
Even as between the agent himself and the company, if the
directors appoint him and allow him to act as agent of the
company, and he does so act bond fide and without notice of
any irregularity in his appointment, the company will be liable
to him for his salary although he may not have been appointed
(k) See 11 C. B. 927. The other (m) Allard v. Bourne, 15C. B. N.
judges relied more on the fact that
the directors had sanctioned and
adopted the contracts. But as the
knowledge on the part of the
directors of what was done was
assumed rather than proved, there
was little if any difference in the
views of the different members of
the Court.
(1) Reuter v. Klectric Telegraph
Co., 6 E. & B, 341,
S. 468
(x) Walson v. West Hartlepool
Rail. Co., 34 Beav. 187, affd. 2 De
G. J. & Sm. 475. Compare Moody
v. London and Brighton Rail. Co., 1
Best & Sm. 290.
(0) Mahony v. East Holyford
Mining Co., L. R. 7 H. L. 869.
(p) 2E. & B. 822; Gof v. GN.
fail. Oo, 3 E. & E. 672. See,
further, infra, e, 3, § 2
AUTHORITY OF AGENTS. 161
precisely in the manner prescribed by the regulations of the Bk. ee 2.
company (q). a
These cases must not be confounded with others in which Limits to autho-
companies have been held not bound by acts done by their ee
agents when acting beyond the limits set by the nature of their
employment (r).
SECTION IL.—AUTHORITY OF AGENTS OF COMPANIES.
Having seen who are to be considered agents of a company, Tai be the
it is necessary to examine the limits within which a company authority.
is answerable for their acts. Agents cannot have a more
extensive authority than their principals can legally confer
upon them ; and this principle at once limits the authority of
all agents of incorporated companies. The capacity of such
companies is itself limited, and they cannot be legally bound
by any acts of their directors or officers in which the companies
themselves are legally incompetent to engage. But as regards
other matters, business cannot be carried on unless the directors
of companies may be dealt with, on the assumption that they
have power to bind their companies by all such acts as can
fairly be said to be necessary for the purpose of carrying on
their legitimate businesses in the way in which such businesses
are usually carried on by other people. Such power is con-
sequently implied (s) in favour of all persons dealing bond fide,
(q) Browning v. Great Central
Mining Oo, 5 H. & N. 856. In
Rail. Co, 3 Ex. 268; Walker v.
Great Western Rail. Co., L. R. 2 Ex.
this case an appointment under the
seal of the company was not neces-
sary. See, also, Totterdell v. Fare-
ham Brick Co., L. BR. 1 C. P. 674.
(r) See as to Promissory notes,
Simpson’s claim, 36 Ch, D. 532 ; as
to buying shares, Cartmells case, 9
Ch. 691 ; as to policies of insurance
issued by local agents, Linford v.
Provincial Horse and Cattle Insur-
ance Co., 34 Beav. 291 ; as to orders
by station masters for surgical
attendance, Cox v. Midland Counties
Lc.
228 ; statements made by secretary,
Barnett, Hoares & Co. v. South Lond.
Tramways Co., 18 Q. B. D. 815;
statements by solicitors as to the
flourishing condition of the com-
pany, Burnes v. Pennell, 2 H. L. C.
497; sales by a solicitor not in-
structed to sell by the directors,
Moody v. Lond. and Brighton Rail.
Co., 1 B. & Sm. 290.
(s) See Smith v. Hull Glass Co. 8
C. B. 668 ; Taunton v. Royal Insur.
Co, 2 Hem. & M. 135; A.-G. v.
*M
162
Bk. IL. cre 2.
Sect. 2.
Distinction be-
tween acts wlira
vires and acts
intra vires, but
irregular
Acts altogether
_ ultra vires.
DOCTRINES OF AGENCY.
and without notice of its non-existence. Further it is esta-
blished that what the directors of a company have power to do,
and do in the name of the company and on its behalf (¢), binds
the company, although they may not have acted in the manner
prescribed by the regulations of the company. A distinction is
thus taken between what directors have no power to do at all,
and what they have power to do, provided certain conditions are
complied with; in other words, between acts which, as regards
the company, are altogether ultra vires and those which are
intra vires but irregular ; and whilst it is held that companies
are not bound by acts of the former class, it is held that
they may be bound by acts of the latter class in favour of all
persons dealing with their directors bond fide and without
notice of the irregularities of which they may be guilty (u).
1. Ofacts which are ultra vires
With respect to those acts which directors have no power to
do at all, it must be borne in mind that trading and similar
corporations which are created for certain definite purposes
have no greater capacity than is conferred upon them by their
constitution (x). They exist for certain purposes, more or less
well defined in the instrument incorporating them, but they
exist for no other purposes; and a corporation created for one
purpose cannot lawfully do anything which is foreign to the
purpose for which alone it was created. If, therefore, it can
be predicated of any contract entered into by or on behalf of a
body corporate, that such contract is one into which the cor-
poration, even with the assent of all its members, cannot
legally enter, such contract must necessarily be invalid. Thiy
is not the consequence of any doctrine of the law of agency,
but of the nature of corporations, and of the difference between
Great Eastern Rail. Co.,5 App. Ca.
473.
(t) See Hambro’ v. Hull,
Insurance Oo., 3 H. & N. 789.
(uw) See generally on the subject
of the ensuing pages a treatise on
the doctrine of ultra vires by Seward
Brice.
é&e.,
(z) See the judgment of Bowen,
L. J., in Baroness Wenlock v. River
Dee Co. 36 Ch. ». 684 n., where
the difference between trading
and other corporations of that kind,
and municipal corporations is pointed
out.
ACTS WHICH ARE ULTRA VIRES. 163
them and ordinary individuals (y).
joint stock companies. But there is an important difference
between incorporated and unincorporated companies, for whilst
it is competent for all the shareholders of an unincorporated
company to depart from the agreement entered into by each
with the others (z), it is not competent for all the shareholders
of a company incorporated by charter or statute to do anything
contrary thereto (a). Nor can a corporate body be estopped
by deed or otherwise from showing that it had no power to do
that which it purports to have done (0).
The constitution of a company as settled by its charter, act Powers of di-
of Parliament, memorandum of association, or deed of settle- ue cance
ment, limits, to a certain extent, the powers of its directors ; oe
for whatever it may or may not be competent for all the share-
holders to do, it certainly is not competent for the directors of
a company to bind it by entering on its behalf into trans-
actions not warranted by its constitution as settled for the
time being (c).
do whatever-is necessary for the transaction of the company’s
legitimate business in the way in which such business is
usually carried on by other people (d), but they have no power
This principle applies to Br. ut ec 2.
ect. 2.
The directors of a company have authority to
(y) See upon this subject, Pollock
on Contracts, 110, et seg. ; Att.-Gen.
v. Great Eastern Rail. Co. 5 App.
Ca, 473, and 11 Ch. D. 449; L. and
N. W. Rail. Co. v. Price, 11 Q.
B. D. 485 ; London Financial Assoc.
v. Kelk, 26 Ch. D. 107; Baroness
Wenlock v. River Dee Oo., 10 App.
Ca. 354, 36 Ch. D. 675 n., ib. 674,
and 38 Ch. D. 534; and the cases
referred to infra, notes ( f ) and (9).
See, as to dealings with land,
Grand Junction Canal Oo. v. Petty,
21 Q. B. D. 278, and cases there cited.
As to the consequences of a corpora-
tion taking securities which it ought
not to take, see Ayers v. S. Austra-
lian Banking Co., L. R. 3 P. C. 548.
(2) Partn. 408; Blackburn Benefit
Soc, v. Cunliffe, Brookes & Co., 29
Ch. D. 902.
(a) See Ashbury Railway Carriage
Co. v. Riche, L. R. 7 H. L. 653;
Society of Practical Knowledge v.
Abbott, 2 Beay. 559; Bagshaw v.
astern Union Rail. Co.,'7 Ha. 114,
and 2M. & G. 389; and Baroness
Wenlock v. River Dee Co., ubi supra.
(b) See Baroness Wenlock v. River
Dee Co., ubi supra; Ex parte Watson,
21 Q. B. D. 301 ; Fuirtitle v. Gilbert,
2 T. R. 169. Compare Webb v.
Commissioners of Herne Bay, L. R. 5
Q. B. 642, where the company had
power to issue debentures, although
they did not properly exercise the
power.
(ce) Ashbury Railway Carriage Co
v. Riche, L. R. 7 H. L. 658.
(d) Smith v. Hull Glass Co., 8 O.
B, 668 ; Taunton v. Royal Ins. Co.,
2 Hem. & M. 135.
M 2
164
DOCTRINES OF AGENCY.
Bk, II. Chap. 2. to engage in a class of business for the transaction of which
Sect. 2.
Capacity of
corporations.
Ashbury, &c.,
Co. v. Riche.
the company was not formed (e).
With respect to the capacities of trading and similar cor-
porate bodies to bind themselves by contracts, there is an
apparent difference of opinion upon the question whether the
burden of proof is upon those who assert that the power to
enter into any particular contract exists or upon those who
assert the contrary.
It is agreed on all hands that a corporation cannot lawfully
do that which its constitution does not expressly or impliedly
warrant. The difference of opinion, if there really be any, is
not as to that, but simply as to whether the act of incorpora-
tion is to be regarded as conferring unlimited powers except
where the contrary can be shown; or whether alleged corpo-
rate powers are not rather to be denied unless they can be
shown to have been conferred either expressly or by necessary
implication.
The former is apparently the correct view so far as muni-
cipal and other corporations not created for any clearly limited
purpose are concerned ( Ff); but the latter is submitted to be
the correct view with respect to trading and similar corpora-
tions which are created for certain definite purposes only (g).
That such corporations cannot do that which their constitu-
tion does not warrant admits of no doubt, and is conclusively
established by the decision of the House of Lords in Ashbury
Railway Carriage Co. v. Riche (h). In that case it was held
that a company formed and registered under the Companies
act, 1862, for contracting to supply materials for making
railways and to carry on the business of general contractors,
was not bound by a contract to make a railway, although such
(e) The cases on this head are 9Ex.224. See Lord Justice Bowen’s
excessively numerous, and will be judgment, 36 Ch. D. 684 n.; and
noticed hereafter. Lord Selborne’s judgment, L. R.
(f) See the authorities cited, L. 7 H. L, 693, both of which are in
R. 9 Ex. 262, et seq. favour of the view in the text; but
(g) The leading cases on this sub- the judgment of Lord Blackburn, 9
ject are Baroness Wenlock v. River Ex. 262, et seq., is opposed to it.
Dee Co.,10 App. Ca. 354, and 36 Ch. (h) L. R. 7 H. L. 653, S. OC, L. RB,
D.674,and Ashbury Raihway Carriage 9 Ex, 224, 249,
Co, v. Riche, L. R. 7 H. L. 653, and
ACTS WHICH ARE ULTRA VIRES.
contract had been entered into by directors of the company,
and had been afterwards approved by the shareholders (i).
Such a contract was not authorised by the company’s memo-
randum of association and could not bind the company in its
corporate character, even though every shareholder in it might
have assented to it. The rule laid down in this case applies
to all companies created by statute for a particular purpose,
and is not confined to companies created by the Companies
act, 1862(k). At the same time, whatever may fairly be
regarded as incidental to or consequential upon those things,
which the legislature has authorised, ought not, unless expressly
prohibited, to be held by judicial construction to be ultra
vires (1).
165
Bk. II. Chap. 2.
Sect. 2.
Companies’ articles of association and deeds of settlement Public bound
to notice the
usually prescribe certain limits to the powers of their directors, regulations of
rendering them much less extensive than they would be if ‘t° °™Pay:
limited merely by the purpose for which the companies are
formed ; and opinions have differed upon the question whether
the public can safely deal with the directors of companies
without ascertaining the real limits set to their authority (m).
But it is now settled that persons who deal with a company
whose regulations are registered, and are therefore accessible to
the public, cannot hold the company liable if the directors exceed
their authority as disclosed by those regulations. Accordingly
in Balfour v. Ernest (n), it was held, that an insurance company peter %
(t) Compare Sheffield Nickel Co. v.
Unwin, 2 Q. B. D. 214, where what
Ernest v. Nicholls, 6 H. L. C. 401 ;
Royal British Bank v. Turquand, 6
was done was within the scope of
the memorandum of association.
(k) Att.-Gen. v. Great Eastern Rail.
Co., 5 App. Ca. 473, and 11 Ch. D,
449; Baroness Wenlock v. River
Dee Co., 10 App. Ca. 354, and 36
Ch. D. 675 n.
(1) Att.-Gen. v. Great Eastern Rail.
Co., ubt supra; L. and N.-W. Rail.
Co. v. Price, 11 Q. B. D. 485.
(m) The difference of opinion on
this subject will be seen at once by
comparing the judgments in Green-
wood’s case, 2 Sm. & G. 95 (reversed
on appeal, 3 De G. M. & G. 459) ;
EK. & B. 327; Atheneum Life Ass.
Society v. Pooley, 1 Giff. 102, and 3
De G. & J. 294. See as to Lord
Wensleydale’s observations in 6 H.
L. C. 419; Agar v. Athenewm Life
Ins. Soc, 3 C. B. N. S. 725;
London Dock Co. v. Sinnott, 8 E.
& B. 347.
(n) 5 C. B. N.S. 601. See, too,
Irvine v. Union Bank of Australia,
2 App. Ca. 366, as to resolutions
which ought to be registered ;
Peirce v. Jersey Waterworks Co.,
L. R. 5 Ex. 209; Ex parte Overend,
Gurney & Co., 4 Ch. 460; Ex parte
nest.
166
Bk. II. Chap. 2.
Sect. 2.
Chapleo v.
Brunswick
Building
Society.
Limits of this
doctrine,
Acts intra vires,
but irregular,
DOCTRINES OF AGENCY.
was not bound by a bill of exchange accepted by its directors
on its behalf for a debt incurred by another insurance company,
which had been amalgamated with the first; for the amalga-
mation was not authorised by the deed of settlement of the
company on whose behalf the bill had been accepted, and the
holder of the bill was aware of the nature of the debt for which
the bill had been given.
Again in Chapleo v. Brunswick Building Society (0), it was
held that persons who have dealings with a building society
must be taken to know that such a society has no power of
borrowing except such as is conferred upon it by its rules; and
if the directors exceed their authority in this respect, those
who trust them and lend them money for the society, cannot
compel the society to repay it.
This doctrine is based upon the necessity of protecting
shareholders against the unauthorised acts of their directors,
and ought not to be extended to cases in which persons who
are really ignorant of the powers of directors, seek to make
them personally responsible for the assumption of powers they
did not really possess. The liability of directors in respect of
contracts entered into by them beyond their powers will be
alluded to hereafter (p) ; and it will then be seen that although
such contracts do not bind the company for which the directors
may have acted, it by no means follows that they are not
personally Liable in respect of them.
2. Of acts which are intra vires, but irregular.
Notwithstanding, however, that a company is not bound by
those acts of its directors, which as regards the company are
ultra vires, and notwithstanding the doctrine that persons
dealing with companies are affected with notice of their regis-
tered regulations, yet, as already stated, there is no necessity
on the part of such persons to see that de facto directors are
Eagle Ins. Co, 4 K. & J. 549; (0) 6 Q. B. D. 696, at pp. 712 &
Athenwum Life Ass. Soc. v. Pooley,1 713. See, further, as to borrowing
Giff. 102, and 3 De G. & J. 294; powers, infra, pp. 187, et seq.
Sheffield’s case, Johns. 451, and (p) Book ii, 6, § 1.
Keurns v. Leaf, 1 Hem. & M. 681.
ACTS INTRA VIRES BUT IRREGULAR. 167
properly appointed (q), nor to see that directors exercise the Bk. ea 2.
powers they possess in the precise manner prescribed by the
regulations of the company ; and it may be taken as now settled
that persons dealing with directors bond fide, and without
notice of an irregular or improper exercise of their powers,
are not affected by such irregularity or impropriety.
The leading authority on this head is The Royal British ee
Bank v. Turquand (r). In that case, a company’s deed, regis- quand.
tered under 7 & 8 Vict. c. 110, empowered the directors to
borrow on the bonds of the company such sums, as by a
general resolution of the company might be authorised to be
borrowed. The directors gave the bankers of the company a
bond for 10001., sealed with the seal of the company, and
signed by two directors, as a security for what might be due
from the company to its bankers on its current account. This
was not authorised by any resolution of the company, and it
was therefore contended that the bond was invalid. There
was no question here as to the form of the bond, or as to the
authority of those who issued it to act for the company. The
company was primd facie bound by the bond, and no one
looking only at the deed of settlement and the bond, could
come to a different conclusion. The only question was,
whether the bankers were bound to look further and to ascer-
tain whether the issuing of the bond had been authorised by
the resolution of a general meeting. It was held both by the
Court of Queen’s Bench and by the Court of Appeal, that
they were not, and that the excess of authority was a matter
which concerned only the shareholders and the directors.
C. J. Jervis, in affirming the decision of the Court below, said,
“We may now take for granted, that the dealings with these companies
are not like dealings with other partnerships, and that the parties dealing
with them are bound to read the statute and the deed of settlement ; but
they are not bound to do more(s). And the party here on reading the deed
of settlement, would find not a prohibition from borrowing, but a per-
(q) County Life Ass. Co, 5 Ch. H. L. 869, where there were none.
288, where there were some duly (r) 5 E. & B, 248, and 6 ib. 327,
appointed directors; Mahony v. (s) See acc. as to bye-laws, Royal
East Holyford Mining Co, L. BR. '7 Bank of India’s case, 4 Ch, 252.
168 DOCTRINES OF AGENCY.
Bk, II. Chap. 2. mission to do so on certain conditions. Finding that the authority might
Sect. 2. be made complete by a resolution, he would have a right to infer the fact of
a resolution authorising that which on the face of the document appeared t¢
be legitimately done ” (t).
Omnia presu- This was not the first occasion on which the maxim omnia
muntur rite ‘ E
presumuntur rite esse acta had been applied to such cases. In
esse acta.
Clarke». Im- Clarke vy. The Imperial Gas Light and Coke Company (u), a
eee bond given by the directors of a company under the seal of the
company for the payment of an annuity to a retired servant,
was presumed to have been executed after due compliance with
Hilly. Man- all conditions; and in Hill v. The Manchester and Salford
chester Water- ; we
works Company, Waterworks Company («), the same principle was acted upon;
although that case rather turned on the inadmissibility of the
evidence by which it was sought to show that the requisite
pal ee ae formalities had not been complied with. In Smith v. The Hull
* Glass Company (y), Maule, J., whilst recognising the doctrine
that all persons who contract with the directors of a registered
company must be taken to be cognisant of the extent of the
authority conferred upon them, added, ‘‘ But it by no means
follows that they are to be taken to be cognisant of all the
proceedings of the board of directors; ” and that learned judge
held, that the public were entitled to assume that a person
acting as the agent of a company had been duly appointed by
the directors; for by the company’s deed of settlement, they
had power to appoint persons to carry on its business. Again
A okgroneae in Agar v. The A theneum Life Asswrance Society (z), the directors
Society. had power to borrow, but only with the consent of an extra-
ordinary general meeting of shareholders. They did borrow
by issuing debentures sealed with the seal of the company, and
signed by two of themselves ; and it was held, that these deben-
tures were binding on the company, although no such authority
to borrow had been conferred by a general meeting as was con-
(1) See as to this Irvine v. Union (u) 4B. & Ad. 315.
Bank of Australia, 2 App. Ca. 366, (x) 5 B. & Ad. 866.
where the resolution, if any, would (y) 11 C. B. 897.
have been registered. See, also, (%) 3 C. B. N.S. 725. Compare
Landowners’ Inclosure Co. v. Ashford, this with Atheneum Life Ass, Soc. v.
16 Ch. D. 411; Rumford Canal Uo, Pooley, 3 De G. & J. 294, and 1 Giff.
24 Ch. D. 85. 102
ACTS INTRA VIRES BUT IRREGULAR. 169
templated by the company’s deed of settlement. In The Bk. ou 2.
Prince of Wales Assurance Society v. The Atheneum Insurance —————
Society (a), the Court of Queen’s Bench held, that a policy of oe
insurance issued under the seal of an insurance society and ewe
signed by three of its directors, was binding upon the society, Society.
although the issue of the policy had not been authorised by a
previous resolution of directors as required by the company’s
deed.
The same principles have frequently been approved and Eagle Company’s
acted upon in chancery. In Hz parte The Eagle Company (0) i
a claim was made against the Atheneum Assurance Society in
respect, not of a policy under its seal, but of an agreement to
grant such a policy entered into on behalf of the society by its
directors. The Court allowed the claim. The Vice-Chancellor
Wood, in delivering judgment, approved of the observations
made in The Royal British Bank v. Turquand and of the dis-
tinction there drawn, between that which upon the face of it is
manifestly imperfect when tested by the requirements of the
deed of settlement of the company, and that which contains
nothing to indicate that those requirements have not been
complied with.
“Thus, where the deed requires certain instruments to be made under
the common seal of the company, every person contracting with the com- ;
pany can see at once whether that requisition is complied with, and he is
hound to do so; but where, as in the case I have last referred to, the con-
ditions required by the deed consist of certain internal arrangements of the
company, for instance, resolutions at meetings and the like, if the party
contracting with the directors finds the acts which they undertake to do, to
be within the scope of their power under the deed, he has a right to assume
that all such conditions have been complied with. In the case last sup-
posed, he is not bound to inquire whether the resolutions have been duly
passed or the like, otherwise he would be bound to go further back and to
inquire whether the meetings have been duly summoned and so ascertain a
variety of other matters into which, if it were necessary to make such
inquiry, it would be impossible for the company to carry on the business
for which it is formed.”
(a) 3 C. B. N.S. 756, note. See, Australian, dc., Ass. Co. v. British
too, Prince of Wales Assurance Soc. Provident, &e., Society, 8 Giff. 521,
v. Harding, E. B. & E. 183. varied on appeal,4 De G.F. & J,
(|) 4K.&J.549,. See, too, Anglo- 341.
170
Bk. II. Chap. 2
Sect. 2.
Ex parte Over-
end, Gurney &
Co.
Peirce v. Jersey
Waterworks
Company.
DOCTRINES OF AGENCY.
Again in Ex parte Overend, Gurney & Co. (c), @ company
was held bound by bills accepted by its chairman, although he
had only been authorised to accept them on certain conditions
which had not been complied with. The bill holder in this
case had no notice of the conditions, but even if he had had
such notice it would have been no part of his business to see
that they had been complied with ; he would have been entitled
to assume that they had (d).
Further ilustrations of the same principle are afforded by the
cases already noticed in which companies have been held bound
by the acts of agents irregularly appointed (¢).
In connection with these cases it is necessary to allude to a
decision apparently in direct conflict with them, viz., Peirce v.
Jersey Waterworks Company (f). In this case a company was
formed and registered under the Companies’ act, 1862, with
articles which provided in substance that when 8,000 shares
had been allotted the members should be associated for the
objects of the company and be all bound by its regulations, as
if all the shares had been allotted. Before 3,000 shares were
allotted the directors appointed the plaintiff to be the engineer
of the company; and he sued the company for his salary, and
although he had no notice that the 8,000 shares had not been
allotted, he was held not entitled to recover. The Court con-
sidered that until 3,000 shares had been allotted no such com-
pany existed as the plaintiff could contract with. But the
company unquestionably did exist as a corporate body (g) ; and
although the allotment of 3,000 shares may have been a con-
dition precedent to the commencement of the directors’ power
to bind the company, the cases already alluded to go far to
show that the plaintiff was entitled to assume that the condi-
tion had been performed. There is, however, a difference
between assuming that an agency has commenced and assuming
that persons whose agency has commenced are pursuing their
authority, and this difference is perhaps sufficient to render the
decision in question consistent with those alluded to above (h).
(c) 4 Ch. 460, : ; (9) Ante, p. 111.
(d) See per L. J. Giffard, ib. 474. (h) See the end of Mr. Baron
(e) Ante, pp. 158, 160. Bramwell’s judgment.
(f) L. RB. 5 Ex. 209
ACTS INTRA VIRES BUT IRREGULAR. 171
The principles established by the foregoing cases apply, not Bk. ee 2.
only as between companies on the one hand and strangers on =
the other, but also between companies and their members ; and ae
it has been held over and over again, as will be seen hereafter, ee "
that as between one shareholder and the others the validity of
the acts of their directors depends in any particular case much
more on the power of the directors to do the acts in question,
than on the regularity or irregularity of the manner in which
those acts may have been done (2).
A person who knows or is to be treated as knowing that Effect of notice
directors or agents are acting irregularly and improperly cannot Benen
‘hold the company bound by their acts (x); and instruments
signed by directors on behalf of a company, in a name which
is not that of the company, are improper on the face of them,
and do not bind the company (i).
In connection with the subject of notice, it must not be for- Travsferees of
gotten that transferees of bonds and other ordinary choses in a
action of that kind, not being negotiable instruments, are primd
facie in no better position than their transferors(m). But a
company may be estopped from denying as against a transferee
of a security what it might have denied as against the trans-
feror. For example, in Webb v. Commissioners of Herne Webb v. Com-
Bay (n), a corporation was empowered by statute to issue aia
debentures but not to members of its governing body. Deben-
tures however were issued to one of such members, and were
assigned to a bond jide holder for value without notice of the
impropriety in the issue, and it was held that the corporate
body was bound by the debentures, and was estopped from
denying their validity as against the plaintiff.
Again in the case of the Romford Canal Co. (0), some deben- Romford Cana]
: ‘ Company.
tures were issued to a contractor without the sanction of a meet- ne
(i) See in book iv. under the head (m) Athenewm Life Ass. Soc. v.
Contributories. Pooley, 1 Giff. 102, and 3 De G.&
(k) See Chapleo v. Brunswick J, 294; and other cases noticed
Building Society, 6 Q. B. D. 696; infra, p. 180.
Balfour v. Ernest, 5 C. B. N.S. 601; (n) L. R. 5 Q. B. 642.
Zulueta’s claim, 5 Ch. 444; Irvine v. (0) Carew’s claim, 24 Ch. D. 85,
Union Bank of Australia,2 App.Ca. See, also, Hx parte The City Bank, 3
366. Ch. 758; Ex parte Colborne and
(l) Hambro’ v. Hull, &c., Ins. Co., Stranwbridge, 11 Eq. 478.
3H. & N. 789.
172
Bk. II. Chap. 2.
Sect. 3.
Formalities
required by
law.
Examples of di-
rectory statutes,
R. v, Birming-
ham,
DOCTRINES OF AGENCY.
ing at which an insufficient number of shareholders was present
and he knew this. : s ; f directors who
kinds of agents (n). But with respect to directors, it must excel ther
not be forgotten that in most cases the limits of their authority Fowe™
can be readily ascertained, and are supposed to be known (0) ;
and a person who deals with directors whom he knows, or is
supposed to know, to be exceeding their authority, cannot
complain of them if he finds that their acts are repudiated.
(1) See on this subject the cases
referred to in the next ten notes,
and Jenkins v. Hutchinson, 13 Q. B.
744; Lewis v. Nicholson, 18 Q. B.
503; Randell v. Trimen, 18 C. B. 786;
Collen v. Wright, 7 E. & B. 301, and
Campbell, 5 App. Ca. p. 952, where
the difficulty of drawing the line
between warranty, fraud, and es-
toppel is pointed ont. See, also,
Pollock on Contracts, Appendix,
note L. ; Holmes on the Com. Law,
8 ib. 647; Simons v. Patchett, 7 ib.
568 ; Eastwood v. Bain, 3H. & N.
738, where the plaintiff had not sus-
tained damage. As to the measure
of damages, see Ex parte Panmure,
24 Ch. D. 367; Meek v. Wendt &
Co., 21 Q. B. D. 126.
(m) See ante Bk. I. c. 3, § 1, and
Firbank’s exors. v. Humphreys, 18 Q.
B. D. 54. See, also, Lord Black-
burn’s observations in Brownlie v.
L.C.
130.
(n) Godwin v. Francis, L. R. 5 C.
P. 295 ; Ferguson v. Wilson, 2 Ch.
77.
(0) See as to this, ante, p. 165.
Wilson v. Miers, 10 C. B. N. 8. 348,
was an action against directors for
exceeding their authority, but the
Court was of opinion that there was
no excess, and decided against the
‘plaintiff on that ground.
*R
242
LIABILITY OF DIRECTORS
Bk. II. Chap. 6. He runs the risk of such repudiation. In the absence, there-
Sect. 1.
Liability for
acts ultra
CWS:
fore, of fraud on their part, such a person will be unable to
obtain any redress against them. Moreover, they are not
liable for honest mistakes as to the legal extent of their
authority (p).
Thus, where a person advanced money to a company on the
security of an invalid Lloyd’s bond of the company, the
directors who issued it were held not to be personally lable
to repay the money advanced (q). So where a person bought
new preference stock of a railway company which both he and
the directors bond jide believed they had power to issue, but
which in truth they had not, it was held that he had no
remedy against them, for there was nothing more than a
common mistake of law (r).
But directors, like other agents, impliedly warrant all facts
necessary to confer the authority which they profess to exer-
cise. And if the company is governed by a private act of
Parliament the contents and effect of that act are regarded as
matters of fact (s). Therefore directors who had accepted
bills on behalf of a company, which had no power under its
private acts of Parliament to accept bills, were held liable to
the holders who had no notice in fact that the company was
not empowered to accept bills (s). So where a company had
power to borrow, but the power had been already exhausted,
and the directors nevertheless raised more money, they were
held personally liable to repay it (t). So where the directors of a
benefit building society had power to borrow if a rule enabling
them to do so had been passed, and they borrowed money for
the society in the absence of any rule enabling them so to do,
it was held that they were personally liable to repay it (uw). So
where directors of a company authorised the manager to over-
draw the company’s account, they were held liable for the
(p) Beattie y. Lord Ebury, L.R. v. Kitson, 12 Q. B. D. 157, and 13
7 Ch. 777, and 7 H. L. 102. Com- Q. B.D. 360.
pare the cases in the next four notes, (t) Weeks v. Propert, L. BR. 8 C.
(q) Rashdall vy. Ford, 2 Eq. 750. P. 427; Chapleo v. Brunswick Build-
See on this case, 13 Q. B. D. 363. ing Soc., 6 Q. B. D. 696.
(r) Eaglesfield v. Marquis of Lon- (u) Richardson v. Williamson, L.
donderry, 4 Ch. D. 693. R. 6 Q. B. 276, explained by Mel-
(s) West London Commercial Bank lish, L. J., in'7 Ch. 801.
FOR THEIR OWN ACTS.
243
over-draft, for although the company had no power to borrow Bk. II. Chap. 6.
without the consent of a meeting of shareholders, they had
power to do so with such consent (2). So wherea company had
power to issue debenture stock to a limited extent, and the
directors, after the power was exhausted, issued more deben-
ture stock, they were held personally liable to the holders of the
unauthorised stock. The damages were held to be the value
which the stock would have had if it had been authorised (y).
Further, where a person purports to contract as an agent,
Sect. 1.
Contracts with
promoters of
and he has in truth no principal, so that the contract, unless companies.
binding on the party to it, is wholly void, he is treated as
haying contracted on his own behalf, and is personally liable
accordingly. Thus, if a person contracts on behalf of a com-
pany not yet formed, he is liable on that contract; and he is
not relieved from such liability by the subsequent adoption of
the contract by the company when formed (z); unless the con-
tract is so worded as to exclude personal liability.
Again, if directors contract as principals, which is quite Express persuaa!
consistent with their acting on behalf of the company (a), they
will be bound personally by their contract provided it is not
actually illegal. The fact that the contract is one which would
not bind the company is not per se sufficient to render it void
as against the directors personally. ‘Therefore, where the
directors of a company disagreed and divided into two parties,
and one party retired, and the other party covenanted to
indemnify them, this covenant was held binding on the direc-
tors who entered into it, irrespectively of the question how far
the whole transaction was one which the directors had power
to enter into on the part of the company (0). But if the con-
tract is illegal no action can be maintained upon it; and there-
fore where the directors of a railway company agreed that it
(x) Cherry v. Col. Bank of Aus-
and the cases on promissory notes,
tralasia, L. R. 3 P. C. 24.
ante, p. 232 et seg. See, also, Kay v.
(y) Firbank’s exors. v. Humphreys,
18 Q. B. D. 54,
(2) Kelner v. Baater, L. R. 2 C. P.
174 ; Scott v. Lord Ebury, ib, 255.
(a) McCollin v. Gilpin, 5 Q. B.
D. 390, affirmed 6 Q. B. D. 516,
Dutton v. Marsh, L. B. 6 Q. B, 361,
Johnson, 2 Hem. & M. 118, in which
a decree for the specific performance
of an agreement for a lease was nade
against directors personally.
(b) Haddon v. Ayers, 1 E. & H.
118; Barker vy, Allan, 5 H. & MN,
61.
R2
liability.
244
Bk, IT. a 6.
Sect. 2.
Directors not the
agents of cach
other,
LIABILITY OF SHAREHOLDERS.
should pay the expenses which might be incurred by another
company in attempting to obtain an act of Parliament for the
tormation of a line which, when made, was to be handed over
to the first company, it was held that this was an agreement
to the effect that the first company should do that which was
altogether illegal, and that an action against the directors for a
breach of the agreement could not be sustained (c).
2. For the acts of each other.
Although the directors of a company are the agents of the
company, and although, as a member of the company, each of
the directors is liable for the acts of its agents on the same
ground as other members, still, unless a director has done
something to make his co-directors his agents in some other
sense than this, he is no more liable for their acts than any
other shareholder. In this respect directors are like pro-
moters, each being answerable for his own acts and for the
acts of the others so far as he has made them his agents, but
no further (d). It must however be borne in mind that the
liability here referred to is liability to persons dealing with
directors as representing their company. The duties and
liabilities of directors to shareholders will be referred to here-
after in Book III.
SECTION I.—OF THE LIABILITIES OF SHAREHOLDERS. }
Passing now to the consideration of the personal liabilities
ot shareholders of companies in respect of transactions which
impose liabilities on the companies of which they are members,
it is necessary to distinguish one company from another, and
especially unincorporated from incorporated companies.
(c) Macgregor v. Dover and Deal case, 4 De G. M. & G. 411; Walker's
Rail. Co., 18 Q. B. 618. case, 8 De G. M. & G. 607. See,
(d) See Brown v. Byers, 16 M. & also, Wreir vy. Barnett, 3 Ex, D. 32
W. 252; Heraud v. Leaf, 5 C. B. and 238 ; Curgill v. Bower, 10 Ch.
157; Bramah y, Roberts, 3 Bing. D. £02.
N. C. 963; Lord Londesborough’s
EXTENT OF LIABILITY.
1. As to the extent of liability.
a.) Of liability at Common Law and of attempts to restrict it.
By the common law of this country every member of an
unincorporated partnership, whether it be an ordinary firm or
a joint-stock company with transferable shares, is personally:
liable for all the debts and engagements of the partnership
contracted whilst he is a member of it (c). As may be sup-
posed, many attempts have been made from time to time
to restrict the application of this rule and to form com-
panies on such terms as to prevent their members from being
_Yuined in the event of the companies suffering serious loss.
‘These various attempts have ceased to be of much practical
importance owing to the facilities of forming incorporated
companies by means of registration; but they have still great
historical interest and deserve notice on that account: more-
over, there are still insurance companies which issue policies
on the terms that they are to be paid solely out of the funds
of the companies.
The attempts referred to may be ranged under two heads,
according as there has or has not been some special agreement
with the creditors.
So inflexible is the doctrine of unlimited liability, and so
important is it that no doubts shall be cast upon it, that judges
have frequently denounced in the strongest terms the conduct
ot those who have endeavoured to inyveigle the public into
taking shares in companies by asserting that ‘‘no one shall be
liable beyond the amount of his subscription.” Nothing can
be more delusive or worthless than such statements as applied
to unincorporated bodies, or to bodies not governed by special
acts of Parliament; for although the subscribers themselves
may stipulate with each other for such a restricted liability,
nothing is more clear than that, as to the rest of the world,
each shareholder is liable for the whole amount of the debts of
(ec) Partn., bk. ii. c. 2, and see,as V.& B. 157; RB. v. Dodd, 9 East,
to companies, Keasley v.Codd,2 Car. 516; Robinson’s Executor’s case,6 De
& P. 408, note; Carlen v. Drury, 1 G.M. & G. 572,
245
Bk. TI. Chap. 6.
Sect. 2.
Attempts to
limit liability
Without special
contract with
creditors.
246 EXTENT OF SHAREHOLDERS’ LIABILITY.
Bk. eres 6. the company (f). Nor will notice that a stipulation of this
—___-.--- kind has been entered into between the shareholders prevent a
crecitor from holding each of them Hable to the full extent of
his demand (4).
By special con-
tract with credi-
tors.
Notwithstanding, however, this general rule, if a person
chooses to deal with a company upon the terms that its funds,
and they only, shall be available to make good his demands,
he cannot afterwards depart from those terms and hold the
members individually liable as if no such restriction had been
agreed to (h).
It is, however, to be borne in mind, that members of unin-
corporated companies, like other partners who contend for
restricted liability, have the onus probandi on themselves, and
if, owing to any circumstance, they fail in establishing their
contention, the general rule of unlimited liability applies to
them as a matter of course (?).
The ordinary mode of restricting liability, is to contract
that the funds of the company shall alone be liable to the
demands against it. Upon contracts in this form, it is to be
observed that—
1. A contract by a person to pay out of his own property
without limitation, is in fact an absolute contract to pay; for
expressio corum que tacite insunt nihil operatur.
2. Upon the same principle, a contract by a corporation to
pay out of its funds generally is, as regards the corporation,
neither more nor less than a contract to pay absolutely; for
a corporation as such has nothing except its funds to pay
out of (k).
3. An express contract to pay out of certain specified
Limiting liability
to funds of com-
pany.
(f) See BR. v. Dodd, 9 East, 516,
and the cases in the last note and
the next.
(g) See Greenwood’s case, 3 De G.
M. & G, 459. The State Fire Ins.
Co., Meredith’s case, and Conver’s
case, 1 N. R. 510, V.-C. W.
(h) Alchorne v. Saville, 6 Moo.
202 ; Halket vy. The Merchant
Traders’ Loan Assoc., 13 Q. B. 960 ;
Hallett v. Dowdall, 18 Q. B. 2 (the
judgment on the bill of exceptions) ;
Durham’s case, 4K. & J. 517.
(t) See Luckombe v. Ashton,
2 Fos. & Fin. 705, and ante,
note (4).
(k) Sunderland Marine Insur. Co.
v. Kearney, 16 Q. B. 925, in which
the liability of the individual mem-
bers of the company was not in
question,
ATTEMPTS TO LIMIT LIABILITY.
247
funds, excludes an implied contract to pay in some other Bk. HU. Chap. 6.
manner (/).
4. But a person who undertakes to pay out of certain funds,
is absolutely bound to pay if those funds exist and are avail-
able; so that if, the funds existing and being available, he
does not choose to pay out of them, he must pay out of his
own property (m).
5. On the other hand, a person who undertakes to pay out
of certain funds, is under no obligation to pay unless those
funds exist (mn), or unless their non-existence is owing to his
own default (0), or unless he has also undertaken that they
shall exist ; in which last case his undertaking to pay amounts
to an absolute undertaking, and the qualification as to the
funds goes for nothing (p).
Sect. 2.
In conformity with these principles, it has been held that Success of
attempt so to
the promoters of a company are not liable to persons employed jimit liability.
by them upon the terms that such persons shall look for pay-
ment to certain specified funds, and not to the promoters
individually (q) ; that upon a contract to pay out of the funds
of a joint-stock company, all those who in point of law are
bound by the contract, are personally liable to satisfy the
(2) See Alexander v. Worman, 6
H. & N. 100; Giles v. Smith, 11
Jur. 334, C. P-; Landman v. En-
tovistle, 7 Ex. 632; Mathew v. Black-
more, 1 H. & N. 162; Taft v.
Harrison, 10 Ha. 489. Compare
Cope’s case, 1 Sim, N. 8. 54.
(m) Higgins v. Hopkins, 3 Ex.
163 ; Hallett v. Dowdall, 18 Q. B.
2. But if an incorporated company
promises to pay out of its funds
only, and it bas funds, it does not
follow that the shareholders are
personally liable, Re the Atheneum
Society, and Prince of Wales Society,
Johns. 80, affirmed 3 De G. & J.
660.
(n) The Statute of Limitations
does not begin to run until they do
exist, See in re Kensington Station
act, 20 Eq. 197.
(0) As in McIntyre v. Belcher, 14
C. B. N. 8. 654, where the defendant
discontinued the business, out of
the profits of which he was to pay
the plaintiff. See, also, Telegraph
Despatch Co. v. McLean, 8 Ch. 658 ;
Worthington v. Sudlow, 2 B. & Sm.
508. (Compare King v. Accumulative
Ass. Co., 3 C. B. N.S. 151; Rhodes
v. Forwood, 1 App. Ca. 256; Rail-
way and Electric Appliances Co., 38
Ch. D. 597, noticed infra, p. 249,
note (a).
(p) See Pilbrow v. Pilbrow’s At-
mospheric Co., 5 C. B. 440.
(q) Giles v. Smith, 11 Jur. 334,
C. P.; Landman v. Entwistle, '7 Ex.
632. Compare Cope’s case, 1 Sim.
N.S. 54; Cullen v. Duke of Queens-
berry, 1 Bro. C. C. 101, and Horsley
vy. Bell, ib. in the note; $.’°C. 2 Am.
770; Williams v. Hathaway, 6 Ch.
D. 544,
248
EXTENT OF SHAREHOLDERS’ LIABILITY.
Bk. II. Chap. 6. demands to which those funds are applicable, if any such funds
Sect. 2.
Failure of at-
tempt where
contract is not
clear.
Hancock 7.
Hodgson.
there be (r); but that if there are no such funds, then the
event on which alone payment has to be made not having
arisen, no one is liable to pay (s).
The latter proposition, however, supposes that the contract
is not so framed as (notwithstanding what is said about the
funds of the company) to amount to an undertaking to pay at
all events. The importance of attending to this point appears
from Hancock v. Hodgson (t). In that case, the projectors
of a mining company purchased a copper and tin mine, and
covenanted to pay the purchase money by quarterly instal-
ments out of the funds of the company; but it was provided
that in case there should not have been received by the
bankers of the company or by the directors for the time being,
the deposits or instalments due from the several shareholders,
so as to enable the directors to pay the purchase money at the
times therein before mentioned, then and in such case the said
directors shall be allowed a further time to pay such balance,
until six months after the time or times when the said quar-
terly instalments became due. Upon this covenant and
proviso it was held, that the covenantors were personally liable
to pay the whole purchase moneys, although the company had
no funds; for that whatever might have been the case without
the proviso, that clearly showed that after the expiration of the
further period therein mentioned, the payment was to be made
by the covenantors at all events, whether the company had
funds or not.
Having made the above general observations, it is necessary
to examine with greater particularity the effect of contracts by
companies to pay out of particular funds, on
1. The rights of creditors against the funds themselves;
(r) See Andrews v. Ellison, 6 B. Loan anid Insurance Association, 13
Moore, 199; Gurney v. Rawlins, 2 Q. B. 960; Hassell v. Ditto, 4 Ex.
M. & W. 87; Dawson v. Wrench, 3 523; The Worcester Corn Exchange
Ex. 359 ; Reid v. Allan, 4 Ex. 326; 00,3 De G.M. & G. 180; King v.
Hallett v. Dowdall, 18 Q. B. 2, the The Accumulative Assurance Co., 3
judgment on demurrer. C. B. N.8. 151; and compare Cope’s
(s) See, in addition to the above case, 1 Sm. N.S. 54.
cases, Durham’s case, 4 K. & J. 517; (t) 4 Bing, 269,
Hulket v. The Merchant Traders’
249
ATTEMPTS TO LIMIT LIABILITY.
and 2, Their rights against the members individually where > 1 oe 6.
those funds have been exhausted. Pe aaa
1. With respect to the rights of creditors against the funds,
it may now be considered as settled, that a contract by a com-
pany to paya person out of its funds does not give the creditor
any specific charge or lien on those funds, nor any preference
over other creditors (a) ; but it nevertheless entitles him, even
before the time for payment arrives, to prevent the funds from
being misapplied (x). Where therefore an insurance company
had issued policies and made them payable out of its funds, a
policy holder whose policy had not become payable was held
entitled to an injunction to restrain the company from amal-
gating with and transferring its funds to another company,
such amalgamation and transfer not being warranted by the
deed of settlement of the first company (y). It has, however,
been held (z) that a contract to pay a policy out of particular
funds does not amount to a contract to carry on business, nor
toa contract not to hand over the funds to other persons (a) ;
and that a policy holder whose policy is not due cannot sup-
port an action for damages which he fears he will sustain, but
which possibly he will not. The last ground is perhaps the
most satisfactory, and has the advantage of rendering the de-
cision in equity consistent with that at law.
It is, however, by no means uncommon for an unlimited ae
insurance company to limit its liability to policy holders and b transfer its
annuitants to its funds, and to have in its deed of settlement * er
Right against
the funds.
(u) Albert Life Ass. Co., 9 Eq. 706 ;
McIver’s claim, 5 Ch. 424, and the
cases in the next note.
(a) See Kearns v. Leaf, 1 Hem. &
M. 681; State Fire Insur. Co.,
ib. 457, and 1 De G. J. & Sm. 634;
Atheneum Life Insurance Socvety,
Johns. 80 & 633, and 3 De G. & J.
660; Low v. London Indisputable
Life Policy Co.,1 K. & J. 223. These
cases will be adverted to hereafter,
when the winding up of companies
is being considered.
(y) Kearns v. Leaf, 1 Hem. & M.
861; Aldebert v. Leaf, ib. Compare
Argus Life Ass. Society, 39 Ch. D.
571.
(2) King v. Accumulative Life
Assur. Co., 3 C. B. N.S. 151. See,
also, Lethbridge v. Adams, 13 Eq. 547.
(a) See, also, Rhodes v. Forwood,
1 App. Ca. 256, where an agent of a
colliery contended in vain that his
employer was bound to carry it on.
Soin Re Railway and Electric Ap-
pliances Co., 38 Ch. D. 597, there was
no implied covenant to carry on
business in order to work a patent.
Compare Telegraph Despatch Co. v.
McLean, 8 Ch. 658, and McIntyre v.
Belcher, 14 C. B. N. 8S. 654, noticed
ante, p. 247, note (0).
250
EXTENT OF SHAREHOLDERS’ LIABILITY.
Bk. II. Chap. 6. oy articles of association as originally framed, or as altered in
Sect. 2.
Extent of mem-
bers’ liability.
(a) Where the
company is
incorporated.
accordance with a power therein contained, power to transfer
its funds and its business to another company. Where this
occurs, a transfer of the funds cannot be prevented; and upon
a proper transfer being made and in the case of life insurance
companies confirmed by the Court, the policy holders and
annuitants cease to have any claims against the transferring
company (0).
2. With respect to the extent of the liability of the members
of a company upon contracts in which it is specially stipulated
that the funds of the company alone shall be answerable, and
that no member shall be liable beyond the amount of his share,
the limit set by contract is the limit of liability :—
Where the company is an incorporated company, there never
was any difficulty in giving effect even at law to all the terms
of the contract ; and in the case of companies registered under
the act 7 & 8 Vict. c. 110, it was held that the members were
not liable to have execution issued against them upon judg-
ments obtained against the company on a contract of the
description in question; but that the property of the company
was alone liable to make good the demands of the judgment
creditor; and this was held at law even in cases where the
subscribed capital had been exhausted but the whole capital
had not been paid up (c).
The same principle was acted on in equity, except that a
Court of equity compelled the shareholders to pay up rateably so
much of the capital as had not already been subscribed (d).
This can now be done by a properly constituted action.
In all these cases, however, it must be borne in mind that
the liabilities which are limited to the funds of the company,
are those only which are expressly so limited by the contracts
(b) See infra, § 3, p. 258, &., and
as to life assurance companies, see
The Life Assurance Companies act.
1870, 33 & 34 Vict. c. 61, § 14,
(c) Halket v. The Merchant Tra-
ders’ Loan and Insurance Assoc., 13
Q. B. 960 ; Hassell v. The Same, 4 Ex.
525 ; Durham’s case,4 K. & J. 517;
3
Re the Atheneum Life Soc., Johns.
80, and 3 De G. & J. 660, on appeal;
Lethbridge v. Adams, 13 Eq. 547.
(d) Talbot's case, 5 De G. & Sm.
386 ; Durham’s case, 4 K. & J. 517;
Evans v. Coventry, 8 De G. M. & G.
835. See clause 7 of the decree.
LIABILITY LIMITED BY STATUTE. 251
with the creditors; the liabilities to other persons are un- Bk. ea 6.
limited (e). Sea
Companies governed by the Companies act, 1862, may, Companies go-
although unlimited, limit their liability by special contract (f), ae
and where they do so the principles above adverted to will be
applicable. But as under the Companies act, 1862, judgments
against a company cannot be enforced against its members,
questions as to their individual liability can scarcely arise
except when a company is being wound up.
As regards unincorporated companies, it was extremely dif- oe
ficult, if not impossible, before the passing of the Judicature incorporated.
Acts, to enforce by action at law a contract limiting their
liability to their funds (g). It was practically necessary to sue
in equity. But now itis apprehended that an action can be
maintained against the persons having the control of the funds
and the persons lable to contribute to them, to enforce the
liability to contribute, and the due application of the funds
when raised (h).
(b.) Of limited liability by Statute.
Passing now to the subject of limited liability by statute, pe
the first point which has to be borne in mind is that the
moment a society of any kind is incorporated, its members
cease by common law to be in any way liable for the debts and
engagements of the body corporate. Moreover, although by
common law it has always been lawful for the Crown to create
corporations, the Crown has no power by common law to create
a corporation and at the same time to render its members indi-
(e) See the Albert Life Ass. Co., 9
Eq. 706 ; Professional Life Ass. Co.,
3 Eq. 668, and 3 Ch. 167 ; Lethbridge
y. Adams, 13 Eq. 547.
(f) See § 38, cl. 6, Accidental
Death Ins. Co., 7 Ch. D. 568.
(g) See Hallett v. Dowdall, 18 Q.
B. 2, and the observations of Mellish,
L. J., in Grain’s case, 1 Ch. D. 322;
Alchorne v. Saville, 6 B. Moore, 202,
note. Hallett v. Dowdall was noticed
at length in the earlier editions of
this treatise, but it has not been
thought necessary to reproduce the
former observations on it.
(h) See Law v. The London In-
disputable Life Policy Co., 1K. &
J. 223; Talbot's case, 5 De G. & Sm.
386 ; Durham’s case, 4 K. & J. 517;
Robson v. McCreight, 25 Beav. 272 ;
Evans v. Coventry, 8 De G. M. &
G. 835. See, as to the effect of a
transfer by the company of its busi-
ness, Hort’s case, 1 Ch. D. 307.
252 EXTENT OF SHAREHOLDERS’ LIABILITY.
bk. II. Chap. 6. yidually liable for its debts (i), the whole of that branch of
Bis > che, law aelticld vélates to: the liability, as distinguished from
the non-liability, of the members of incorporated companies
for the debts and engagements of such companies, is of modern
growth and is based upon statutory enactments. These enact-
ments will be examined hereafter in connection with the
subjects of execution and winding up, but it may be useful to
state generally in the present place that—
Chartered com- 1. The liability of the members of a company governed by
mone the Letters Patent act depends on the terms of its charter or
letters patent, the Crown being empowered by the act in ques-
tion to limit their liability or not. (See 7 Will. 4 and 1 Vict.
c. 78, §§ 4 & 29.)
Companies go- 2. The liability of the members of a company governed by
verned by 8 & 9 ‘ . ‘5 ‘ sal ge
Viet. us 16. the Companies clauses consolidation act is limited to the
extent of their unpaid-up shares in the capital of the company
(8 & 9 Vict. ce. 16, § 36).
Companies em- 3. ‘Vhe liability of the members of a company empowered by
powered to sue
and be sued. a special act of Parliament to sue and be sued by a public
officer depends on the terms of such act, but will almost inva-
riably be found to be unlimited (k).
Banking com- 4. The liability of the members of a banking company
panies governed i ce
by 7 Geo. 4, governed by 7 Geo. 4, c. 46, is unlimited. (See 7 Geo. 4,
ae c. 46, §§ 11, 12, 13.)
fo act, 5. Subject to the exceptions presently to be noticed, the
extent of the liability of the members of a company formed
and registered under the Companies act, 1862, depends upon
whether the company is registered with limited liability or not.
If the company is registered with limited liability, its members
are not liable beyond the amount for which they have under-
taken to be responsible; but if the company is not so regis-
tered, its members are liable to the full amount of the com-
(¢) This power was conferred upon member of a company empowered
the Crown by 6 Geo. 4,¢. 91, § 2, to sue and be sued, but not incor-
which was followed by 4&5 Will. — porated. The Colonial ordinance in
4, c. 94, and was with it repealed that case was held not to have in-
and replaced by 7 Will. 4&1 Vict. corporated the company, and the
c. 73. case may be usefully referred to on
(k) See Aldridge v. Cato, L. R. 4 the construction of such documents,
P. C. 313, as to the liability of a
LIABILITY LIMITED BY STATUTE. 258
pany’s debts and engagements, whatever that may be (J). The Bk. ae 6.
liability, however, of each member is merely a lability to oe
contribute with others; and such liability can only be en-
forced by winding up the company. No execution can issue
against a member upon a judgment obtained against the
company.
The exceptions above referred to are as follows :— Exceptional
(1.) Even if the company is registered with limited liability, tae
the liability of the directors will be unlimited if the memo-
randum of association so provides (m).
(2.) If a company carries on business for six months with
less than seven members, all the members cognisant of the fact
are severally liable for the debts contracted by the company
during that time, and may be sued accordingly (n).
(8.) The act contains stringent provisions to compel limited
companies and their officers to use the word “limited” as part
of the name of the company in matters relating to its busi-
ness (0) ; and persons signing or authorising the signature on
behalf of such a company of any bill of exchange, promissory
note, cheque, or order for money or goods, in which the word
limited is not used as directed, are themselves liable for the
amount, unless the same is duly paid by the company (7p).
(4.) The liability of limited banking companies issuing
notes is unlimited in respect of such notes (q).
(5.) Although a company may be registered without limited
liability, the liability of its members may be limited by special
contract (r).
(6.) The liability of the members of companies not formed Companies regis-
under the act but registered under it, is as to all matters oa
occurring after registration the same as the liability of mem- 2° *** 186
bers of companies formed and registered under the act. But
as to other matters the extent of liability is the same as if no
registration had taken place(s). Existing companies with
(1) See 25 & 26 Vict. c. 89, § 38. (q) 42 & 48 Vict. ©. 76, § 6.
(m) 30 & 31 Vict. c. 131, §§ 4 (r) 25 & 26 Vict. c. 89, § 38, cl. 6.
and 5. (s) See §§ 179 and 196, cl.5. The
(n) 25 & 26 Vict. c, 89, § 48, liability under the repealed act of
(0) §§ 41 and 42. 7 & 8 Vict. c. 110, was unlimited ;
(p) § 42. See Penrose v. Martyr, see § 25. So wee the liability under
E. B, & E. 499. the repealel act 7 & 8 Vict. ¢. 113;
254
COMMENCEMENT OF SHAREHOLDERS’ LIABILITY.
Bk. II. Chap. 6. ynlimited liability, whether registered as such under the act of
Sect. 2.
Commencement
of shareholders’
liability.
1862 or not, may be registered as limited companies, and if
so registered, the liabilitiy of their members as to matters
ocewring after registration becomes limited also (¢). But
banking companies existing at the date of the passing of the
act and registering under it as limited companies, are bound
to give certain notices to their customers before the privilege
of limited liability can be claimed as against them (u).
2. As to the duration of liability.
(a.) Commencement of liability.
In ordinary partnerships a person who joins a firm does not
become liable to its existing creditors simply by the act of
joining it, although he may have been admitted into partner-
ship upon the terms that as between him and his co-partners
he shall contribute to the existing debts of the firm (x). The
same rule applies to the members of unincorporated companies
when there is no statutory provision to the contrary. There-
fore, where a creditor sued a shareholder in a cost-book mining
company for goods supplied to the company before the de-
fendant became a shareholder, the creditor was held not
entitled to recover (y).
When, however, a person takes shares in a company, he, as
between himself and other shareholders, takes those shares
with all the rights and liabilities attaching to them, so that
his co-shareholders have a perfect right to insist upon his
contributing with them towards the liquidation of debts con-
tracted before he joined the company (2).
see $7. The liability under the acts
of 1856 and 1857 was substantially
the same as that under the Com-
panies act, 1862.
(t) See §§ 179, 180, and 42 & 43
Vict. c. 76, §§ 4 & 5.
(u) See § 188.
(x) Partn., bk. ii., c. 2, § 3, p. 201,
et seq.
(y) Thomas v. Clarke, 18 ©. B.
662. See, too, Thomas v. Hobler, 4
And even as regards
De G. F. & J. 199.
(2) Taylor v. Ffill, 1 N. RB. 566,
V.-C. W.; Cape’s Executor’s case, 2
De G. M. & G. 562; Mayhew’s case,
5 ib. 837. See, too, Horsley v. Bell,
1 Bro. C. C. 101, note. Sanderson’s
case, 3 De G. & S. 66, contra, cannot
be regarded as correct on this point.
See Henderson v. Sanderson, 3 H.
L. C. 698.
TERMINATION OF SHAREHOLDERS’ LIABILITY. 255
creditors, the liability of a shareholder to them seldom depends Bk. ea a e
upon the ordinary principles of partnership law ; for most com-
panies are governed by statutory enactments, which must not
be overlooked. These enactments will be examined hereafter,
but it may be stated generally, that in all companies regulated
by 7 Geo. 4, c. 46, by 8 & 9 Vict. c. 16, or by the Companies
act, 1862, an incoming shareholder is, so long as he remains a
shareholder, liable to creditors in respect of debts incurred by
the company before he became a shareholder (a). The Letters
Patent act (7 Will. 4 and 1 Vict. c. 78, § 24) is so worded as
to be capable of receiving a different construction in this
respect ; but probably a different construction would not be
put upon it; for it would be highly inconvenient to apply
different principles to different companies if it can be avoided,
and there certainly is no sufficient reason for any distinction
between them with reference to the liability alluded to (0).
(b.) Termination of liability.
. dinar . : “4 1. Termination
a
A member of an ordinary partnership may, even during the a aes
continuation of the partnership, determine the authority of his liability in re-
: ‘i Pea : -_. spect of future
co-partners to bind him, by giving proper notice (c). This is, acts,
in truth, only an instance of the more general proposition,
that an agent’s authority is determinable by his principal at
any time before the authority has been acted on. But as the
directors of an incorporated company are the agents of the
company, and not of the individual members, a notice by one
of them to the effect that he will not be responsible for the
future acts of its directors, would, it is conceived, be simply
inoperative. As regards incorporated companies, the only
mode in which a shareholder can escape liability for future
acts of the directors is by duly severing his connection with
the company.
When a shareholder ceases to be such, he obviously deter-
mines the authority conferred by himself upon the company
(@) The same was true of com- tended to be raised in Philipson v.
panies governed by the repealed Hyremont, 6 Q. B. 587, but it was
acts, 7 & 8 Vict. cc. 110 and 113, not decided.
and the Joint Stock Companies acts, (c) Partn., bk. ii, c. 2, § 3, p. 210,
1856 and 1857. et seq.
(b) This point was apparently in-
256 TERMINATION OF SHAREHOLDERS’ LIABILITY.
If he is a shareholder in a com-
pany which has no register of its members accessible to the
public, he is in the position of a dormant partner, and conse-
quently he cannot be made liable for what occurs after his re-
tirement; and no notice of retirement is necessary except to
Effect of continu. those who knew him to be a shareholder (d).
ing on register.
Bk. if oo 6. and its agents to bind him.
Ct. 2.
But a person
who is a shareholder in a company which has a register of its
members accessible to the public, is primdé facie in a different
position; and reasoning from analogy, a retiring shareholder
ought in such a case to take care to have his name removed
from the register, for so long as it is there he holds himself
out as a shareholder (ec). But here, as in other cases, the
liability of shareholders turns on the statutes applicable to the
companies in which they are shareholders, and reliance
must not be placed upon the general principles applicable to
partnerships.
The Letters Patent act expressly enacts that a person ceas-
ing to be a shareholder in a company to which that act applies,
shall for all purposes of liability be considered as a continuing
shareholder until the fact that he is not so has been regis-
tered (f). But as regards companies governed by other
statutes, it will be found that their liability for future debts
depends not so much on what appears from the company’s
register, as on the fact of membership, of which the register is
only prima facie evidence (4).
Again, with respect to the liability of a late shareholder in a
company for those debts and engagements of the company to
which he was liable when he was a shareholder, it is necessary
to consult the statute or charter by which the company in
question is governed. Without referring to particular enact-
ments at length, it may be stated generally that the ordinary
Statutes must
be looked to,
2. Termination
of shareholders’
liability in re-
spect of past
acts.
(d) See, Ace. Northey v. Johnson, Birch’s case, 2 De G. & J. 10; Loft-
19 L. T., 104 Q. B. 1852, the case of
a shareholder in a cost-book mine.
(ec) This is consistent with the
cases which show that a person
whose name is put on a register of
sharehoiders without lis authority
does not hold himself out as a share-
holder. See Lystei’s case, 4 Eq. 233 ;
house’s case, ib. 69; Powis v. Butler,
4C. B. N.S. 469, affirming &.C.,3
ib. 645. See, alse, Partn., p. 40 et seg.
(f) 7 Will. 4 & 1 Vict. c. 73, §
21.
(g) See the section in the next
chapter on Execution against Com-
panies and their Shareholders,
TERMINATION OF SHAREMOLDERS LIABILITY. 257
principles of partnership and corporation law have not been Bk. Ee 6
materially departed from in the case of companies, except as —
regards time (/).
The Joint-stock banking act, 7 Geo. 4, c. 46, § 18, contains Summary of
provisions continuing the liability of shareholders in respect of cs
past debts until the lapse of three years after they had ceased
to be shareholders (2).
The Letters Patent act, 7 Wm. 4 & 1 Vict. ¢. 78, § 24, con-
tinues the liabilities of late shareholders, but it does not con-
tain any provision limiting the duration of such liabilities.
The Companies clauses consolidation act contains no pro-
vision continuing the liability of a shareholder, after he has
ceased to be such (8 & 9 Vict. c. 16, § 36).
The liability of shareholders in a company formed under the
Companies act, 1862, is continued, as to debts contracted be-
fore their retirement, for one year after they have ceased to
hold shares (25 & 26 Vict. c. 89, § 38).
The liability of a retired shareholder to contribute to the Liability to con-
debts of a company must not be confounded with his liability Sinlocia ite
to creditors. For notwithstanding the continuance of his Bahiity
liability to creditors, he may be entitled to a complete in-
demnity from the other shareholders, and may not therefore
be a contributory with them, and this is a common case. On
the other hand, a shareholder may be freed from liability to
creditors, but not be freed from liability to the other share-
holders, to contribute with them to the payment of debts for
which they only are directly liable. This, although not so
common a case as the other, is still a possible case, and affords
a striking illustration of the difference (constantly lost sight
of by non-lawyers) between direct and indirect liability to the
debts of a company (k). This subject will be examined here-
after.
for debts contracted whilst he was
a shareholder. The act of 1856
rendered him liable for debts con-
(h) See, as to partners, Part., bk.
li., c. 2, § 3, pp. 2238 et seg.
(t) The repealed acts, 7 & 8 Vict.
c. 110, § 66; c. 113, § 10; and 19
& 20 Vict. c. 47, § 62, as to un-
limited companies, contained similar
provisions. But the 7 Geo. 4, c. 46,
and 7 & 8 Vict. c. 110, and c. 113,
only render a late shareholder liable
LC.
tracted before he became a share-
holder, and whilst he continued to
be so.
(k) See Ha parte Gouthwaite, 3
Mac. & G. 187.
Ks
258
Bk. TI. Chap. 6.
Sect. 2.
Commencement
of liability.
COMMENCEMENT OF SHAREHOLDERS’ LIABILITY
8. On the commencement and termination of liability in the
case of amalgamating companies.
The position of a company which amalgamates with another
by agreement is analogous to that of a man who enters into
partnership with another. As the two partners do not become
jointly liable to their respective separate creditors, and neither
partner becomes liable to the debts of his co-partner, so the
two companies do not become jointly liable for each other’s
engagements, nor do the shareholders in the one company
become debtors to the creditors of the other company. If the
agreement to amalgamate is valid, it will bind the two com-
panies as between themselves ; but such an agreement will not
per se give the creditors of either any locus standi against the
other: and if the agreement to amalgamate is wltra vires and
invalid as between the two companies, securities given by one
company in respect of the debts of the other will be invalid
also (2).
Where companies are amalgamated by statute, special provi-
sion is always made with respect to these matters.
The principle of Edwards vy. The Grand Junction Railway
Co. (m) applies to the case of two companies amalgamating.
The amalgamating company will not be allowed to exercise
powers acquired by means of agreements with its component
companies or their projectors, except upon the terms of com-
plying with those agreements, provided they are such as the
amalgamated company would itself have been bound by if it
had entered into them (n).
() See Partn. pp. 239 et seq., the
Fira Ass. Co., 2 J. & H. 400, and the
Saxon Assurance Society, 2 J. & H.
408, and Ernest v. Nicholls, 6 H. L.
C. 401. As to the effect of amalga-
mation in discharging sureties, see
The Eastern Union Rail. Co. v.
Cockrane, 9 Ex. 197, and The London,
Brighton, and South Coast Rail. Co.
v. Goodwin, 3 Ex. 320. In these
cases the surety was not discharged ;
but the statute amalgamating the
two companies contained an express
provision on the subject.
(m) Ante, p. 150.
(n) See The Earl of Lindsey v.
Great Northern Rail. Co., 10 Ha.
664 ; Preston v. Liverpool and Man-
chester Rail. Co., 1 Sim. N. 8. 586,
on demurrer ; Stanley v. Chester and
Birkenhead Rail. Co. 9 Sim. 264,
and 3 M. & Cr. 778. See, also,
Port of London Assur. Co.’s case, 5
De G. M. & G. 465, reversed in 6
259
IN CASES OF AMALGAMATING COMPANIES.
Partners cannot get rid of their liabilities to creditors by Bk. wate 6.
retiring from the firm (0) ; and it is wholly immaterial whether ——-
all retire, so as to put an end to the firm altogether, or whether Tee cates
some only retire; the principle in each case being that a
creditor is not affected by agreements come to between his
debtors. Precisely the same principle renders it impossible
for the members of a company to get rid of their liabilities as
between themselves and their creditors, by simply agreeing to
dissolve, or by transferring their rights and (so far as they can)
their liabilities to some other company. Although, therefore, Amalgamating
a company may have transferred all its assets and liabilities to er eayetearees
another company, the transferring company will still remain
liable to those of its creditors who have not expressly or im-
pliedly released it from their claims (p). What amounts to an
implied release is often very difficult to determine; nor are all
the cases on the subject easy to reconcile (q).
In the first place, holders of policies of insurance must not Position of
be confounded with ordinary creditors. The holder of a sub- ee
sisting policy is not a creditor at all; and in order that he may
become a creditor of the company which issued the policy, he
must keep up his policy with the company, and the event in-
sured against must happen whilst the policy is so kept up.
Consequently it was held in many cases that if.an insurance
office had transferred its business to another company, a
holder of a policy who had notice of the transfer and who paid
his future premium to the new office, ought to be treated as
having agreed to accept the new office in lieu of the old; and
unless this inference could be rebutted he was held to have
discharged the old office. The following cases illustrate
this :—
H. L. C. 401, sub nom. Ernest v.
Nicholls on the ground that the
amalgamation was altogether in-
valid.
(0) Part. 223 et seq.
(p) See, in addition to the cases
cited below, Hardinge v. Webster, 1
Dr. & Sm. 101, in which the cre-
ditor was a member of the trans-
ferring company, and the defendant
was a member of both companies,
(q) As pointed out by Lord
Hatherley, in Re The Family Endow-
ment Soc., 5 Ch, 118, see p. 133,
clear proof is required to show that
a person having a claim against one
company on a written contract has
abandoned it for a claim against
another company which it may be
difficult to prove,
8 2
260
Bk. II. Chap. 6.
Sect. 2.
35 & 36 Vict.
vw. 41, § 7.
TERMINATION OF SHAREHOLDERS’ LIABILITY
A. Original company held to be discharged.
(a) The original having had, by its deed of settlement, express
power to transfer its business, and the policies having been
issued subject to this power.
Hort’s case, 1 Ch. D. 307.
Grain’s case, ib.
Harman’s case, ib. 326.
Cocker’s case, 3 Ch. D, 1.
Dowse’s case, ib, 384, A case of an annuity.
(b) The policy-holder having accepted the new office after notice
of the transfer.
National Provincial Life Ass. Soc., 9 Ey. 306.
International, de., Life Ass. Soc., 9 Eq. 316.
Merchants’ and Tradesmen’s Ass. Soc., 9 Eq. 694.
Times Life Ass. Soc., 5 Ch. 381.
Anchor Ass. Co., 5 Ch, 632.
Spencer’s case, 6 Ch. 362.
Fleming’s case, 6 Ch. 393.
Evens’ claim, 16 Eq. 354,
Miller’s case, 3 Ch. D. 391.
B. Original company held not to be discharged.
(a) The policy-holder having had no sufficient notice of the
transfer.
Manchester and London Life Ass., 9 Eq. 643, and
5 Ch. 640.
Conquest’s case, 1 Ch. D. 334.
(b) The policy-holder having refused to accept the new company.
Griffith’s case, 6 Ch. 374.
In order, however, to remove the difficulty of determining in
these cases whether a policy-holder has or has not released the
old office, it has been enacted by 35 & 86 Vict. c. 41, § 7, as
follows :—
§ 7. Where a company, either before or after the passing of this act, has
transferred its business to or been amalgamated with another company,
no policy-holder in the first-mentioned company, who shall pay to the
other company the premiums accruing due in respect of his policy, shall
by reason of any such payment made after the passing of this act, or by
reason of any other act done after the passing of this act, be deemed to
have abandoned any claim which he would have had against the first-
mentioned company on due payment of premiums to such company, or to
have accepted in lieu thereof the liability of the other company, unless
such abandonment and acceptance have been signified by some writing
signed hy him or by his agent lawfully authorised.
IN CASES OF AMALGAMATING COMPANIES.
But even in the case of policy-holders who have apparently
accepted the new office, in lieu of the old, if it should appear
that the amalgamation was ultra vires so that the new com-
pany is not liable to pay the policy, the old office will not be
discharged (r).
As regards persons who are actually creditors of the trans-
ferring company, they are not held to have released their ori-
ginal debtor simply by receiving payments from the new
company and giving receipts to it(s); there must be some
clear and distinct agreement to accept the new company as
the debtor in lieu of the old; and where an annuitant who
knew of the amalgamation had done nothing more than for
several years receive his annuity from the new company and
give receipts to it, the Court held that he had not ceased to be
a creditor of the old company (¢). But creditors whose claims
are limited to the funds of a company which has power to
transfer those funds and its business, lose their rights against
the company after it has transferred its funds and business to
another (2).
The amalgamation of Life Insurance Companies is now
regulated by 338 & 384 Vict. c. 61, § 14, which prohibits
amalgamation otherwise than by an order of the High Court
to be obtained as there mentioned (wv).
(r) See Re Saxon Life Assurance
Soctety ; The Anchor’s case, 2 J.& H.
408, and on appeal, 1 De G. J. &
Sm. 29.
(s) India and London Life Ass.
Co. 7 Ch. 651, a case of an annuitant ;
Commercial Bank Corp. of India
and the East, 16 W. R. 958, where
there was no sufficient notice of the
transfer of the business ; and see Lz
parte Gabson, 4 Ch. 662, where there
was notice, but a refusal to accept
the new company.
(t) Family Endowment Society, 5
Ch. 118 ; Nat. Prov. Life Ass. Soc.,
9 Eq. 306.
(uw) Dowse’s case, 3 Ch. D. 384,
(v) See Re Argus Life Ins. Co., 39
Ch. D. 571.
261
Bk. II. Chap. 6.
Sect. 2.
Actual creditors,
33 & 34 Vict.
¢.261,
262
Bk. II. Chap. 7.
Sect. 1.
General obser-
vations.
Actions by
and against
incorporated
companies.
ACTIONS BY AND AGAINST COMPANIES.
CHAPTER VII.
OF ACTIONS BETWEEN COMPANIES AND NON-MEMBERS.
In order to complete the subjects discussed in the preceding
chapters it is necessary to examine the remedies by which the
obligations and liabilities already alluded to can be enforced.
The remedies which alone are of sufficient importance to
require consideration in a treatise like the present are actions,
defences by way of set-off, proceedings to enforce judgments,
and proceedings to wind up companies. The subject of wind-
ing up will be discussed hereafter, and the present chapter will
be confined to actions, set-off, and execution.
SECTION I.—ACTIONS BY AND AGAINST COMPANIES.
1. Incorporated companies.
An incorporated company, whether it is incorporated by
charter, special act of Parliament, or registration, must sue
and be sued by its corporate name (a); and as a general rule
an incorporated company cannot sue or be sued in respect of
any contract entered into or act done prior to its incorpora-
tion (b). But to this rule there are statutory exceptions,
and by the Companies act, 1862, a company formed before
(a) See Re Hodges, 8 Ch. 204; Fell
v. Burchelt, 7 E. & B. 537, where a
shareholder in a registered company
was unsuccessfully sued. Compare
Barton v. Hutchinson, 2 Car. & K.
712. The company should be sued
in its corporate name simply. _Pii-
brow v. Pilbrow’s Atmospheric Ratl.
Co.,3 C. B. 730. As to service of
writs, &c., see R. S. C. 1883, Ord. ix.,
r, 8, and Companies act, 1862, § 62.
(b) See ante, p. 146, and the next
note.
INCORPORATED COMPANIES. 2638
November, 1862, but registered under the act, may apparently Bk. ee 7.
sue and be sued in its corporate name in respect of such ————~—
matters as it might have sued or have been sued for if no
registration had taken place (c).
The law relating to actions by and against companies which Actions by and
are being wound up, will be examined in that portion of the abe
treatise which relates to the winding up of companies; but it Y™' "?
may be observed here generally, that when a company regis-
tered under the Companies act, 1862, is being wound up,
actions, whether by or against it, must be brought in its
registered name(d), and not as under the Winding-up acts
of 1848-9, in the name of the official manager or liqui-
dator (e).
A foreign company (f), and also a limited company if there Sccurity for costs
when company
is reason to suppose that its assets will be insufficient to pay
the defendant’s costs, can be compelled to give security for the
costs of actions instituted by it (9).
An affidavit, showing
reasonable ground for supposing that the company cannot pay
the costs, will, if unanswered, induce the Court to order secu-
(c) This it is conceived is the
general effect of 25 & 26 Vict. c. 89,
§§ 193-195. In Hull Flax Co. v.
Wellesley, 6 H. & N. 38, calls made
before registration were sued for
afterwards in the company’s re-
gistered name, aud were recovered.
So in Queensbury Industrial Society
v. Pickles, L. R. 1 Ex. 1, where a
society registered under 25 & 26
Vict. c. 87, recovered in its regis-
tered name a debt owing to it be-
fore registration ; and compare that
case with Dean v. Mellard, 15 C. B.
N. 8. 19, and Linton v. Blakeney
Industrial Society, 3 H. & C. 853,
where societies registered under the
same act were held not liable to
be sued in their registered names
in respect of debts contracted before
registration. The only general con-
clusion to be drawn from these cases
is that the exact language of each
act must be closely attended to,
See, further, Lanyon v. Smith, 3
Best & Sm. 938.
(D) 25 & 26 Vict. c. 89, § 95.
(ec) 11 & 12 Vict. c 45, § 50, et
seg. There were, however, some
cases in which he could not sue.
See, as to this, Re Weiss, 15 C. B.
331; Russell v. Croysdill, 11 Ex.
123.
(f) Kilkenny, dc, Rail. Co. v.
Fielden, 6 Ex. 81; Limerick, ce.,
Rail. Co. v. Fraser, 4 Bing. 394.
(g) IVestern of Canada Oil Co. v.
Walker, 10 Ch. 628; 25 & 26 Vict.
c. 89, § 69. City of Moscow Gas Co.
vy. International Financial Soc., 7
Ch. 225; Washoe Mining Co. v,
Ferguson, 2 Eq. 371. The section,
however, did not apply to pure
cross suits; Accidental and Marine
Insur. Co. v. Mercati, 3 Ey. 200 ;
nor to petitions of appeal, Le
Marine Estates Co, Jan. 1867,
L. J.J.
sues.
264
Bk. II. Chap. 7. rity to be given (i).
Sect. 1.
Actions by the
Attorney-
General.
Actions after
amalgamation,
ACTIONS BY AND AGAINST COMPANIES.
And in the absence of any evidence to
the contrary, the fact that the company is in liquidation affords
a sufficient reason for ordering security (i). The amount and
kind of security are in the discretion of the Court, and depend
on the nature of the case (k). In injunction actions a limited
company’s undertaking to abide by such order as the Court may
make as to damages is not sufficient (I).
An unlimited company, although it is insolvent and being
wound up, cannot be ordered to give security for costs of an
action (m).
Actions by the Attorney-General to restrain companies from
exceeding their statutory powers may be brought in cases
where, owing to the absence of any special injury to a par-
ticular individual, an action by a stranger will not lie (n).
Where companies are amalgamated by act of Parliament, it
is generally enacted that actions pending against either com-
pany may be continued against the amalgamated company, and
in such cases it is only necessary to state the amalgamation on
the proceedings (0).
At common law incorporated companies act in legal pro-
ceedings by their agents, appointed under seal (p).
(h) Southampton Steamboat Co. v.
Rawlins, 9 Jur. N. 8. 887, and 2N.
R. 544, in which Caillaud’s, &c., Co.
v. Caillaud, 26 Beay. 427, contra, was
not followed.
(t) Northampton Coal, &e., Co. v.
Midland Waggon Co.,'7 Ch. D. 500 ;
and as to appeals, see Diamond Fuel
Co., 18 Ch. D. 400; Photographic
Artists’ Ass., 28 Ch. D. 370.
(k) B.S. C.-Ord. Ixv. r. 6, as to the
old practice, see Imperial Bank of
China v. Bank of Hindustan, 1 Ch.
437, modifying Australian Stean
Ship Co., 4 K. & J. 407.
(2) Anglo-Danubian Co. v. Roger-
son, 3 N. R. 185, and 10 Jur. N.S.
87.
(m) United Ports Co. v. Hill, L.
R.5 Q. B. 395. This does not apply
to appeals.
(n) See Att.-Gen, v, Shrewsbury
Bridge Co., 21 Ch. D. 752; Att.-Gen.
v. Great Northern Rail. Co., 1 Dr. &
Sm. 154, and Ware v. Regent’s Canal
Co, 3 De G. & J.212, It may be
inferred from the judgment in the
latter case that a definite injury to
the public need not be proved in
order to support such an action.
(0) See 26 & 27 Vict. c. 92, § 43.
(p) See, as to bankruptcy, 46 &
47 Vict. c. 52, § 148. As to regis-
tered companies, see 25 & 26 Vict. c.
89, § 64. See, as to the service of
writs on companies, R. 8. C. Ord. ix.
x. 8, Pilbrow v. Pilbrow’s Atmospheric,
&c., Co., 3 C.B. 730; and as to com-
panies registered under the Com-
panies act, 1862, see 25 & 26 Vict.
c. 89, § 62, and Towne v. London
and Limerick Steam Ship Co., 5 C. B.
N. 8.730; and as to foreign com-
panies, see Ingate v. Lloyd Austriaco,
COMPANIES EMPOWERED TO SUL AND BI SUED. 265
As between the parties to an action instituted by an incor- Bk. ee 7.
porated company, a retainer under seal of the solicitor acting —————-—
for it will, if necessary, be presumed (qg) ; but in an action by ae
that solicitor against the company for his costs, it is question- Preswed.
able whether a proper retainer under seal must not be
proved (r), if such retainer is essential, which depends on the
nature of the company (s).
The directors of a company have, it is conceived, power to
institute and defend actions in the name of the company, and
to do for it whatever may be necessary, having regard to the
ordinary course of legal proceedings. It has been held that a
bond given by an incorporated company as a security for costs
in an action to which it is party, and in the ordinary course, is
not ultra vires (t).
In a case where a company was restrained from infringing a
patent the directors were ordered to pay the costs (1).
In an action by or against an incorporated company, any Directors may be
member or officer may be examined on interrogatories (a); and "sated.
he need not be made a party to the action for purposes of
discovery only (y).
2. Companies empowered to sue and be sued by public officers.
Cost-book mining companies are empowered to sue for calls Statutory enact-
: : : ments enabling
by their purser (z). Banking companies governed by the companies to sue
and be sued.
4 C.B.N.5S. 704; Newby v. Von
Oppen, L. R. 7 Q. B. 293; Lhoneux
Limon & Co. v. Hong Kong Banking
Corp., 33 Ch. D. 446.
(q) Thames Haven Dock Co. v.
Hall, 5 Man. & Gr. 274.
(r) Compare Arnold v. Mayor of
Poole, 4 Man. & Gr. 860, with Haigh
v. North Bierley Union, E. B. &E. 873.
(s) RB. v. Cumberland, 5 Ra. Ca.
332. See as to companies registered
under the act of 1862, § 37.
(t) Young v. Brompton Waterw.
Co., 1 Best & Sm. 675. See as to
references to arbitration, Faviell v.
Eastern Counties Rail. Co,, 2Ex. 344,
(u) See Betts v. De Vitre, 5 N. R.
165, V.-C. Wood, and 3 Ch. 429 and
441.
(«) R.S. C. Ord. xxxi. rr. 1 and 5.
As to the person to examine, see
Berkeley v. Standard Discount Co., 9
Ch. D. 643 ; 12 Ch. D. 295, and 13
Ch. D. 97; Re Alexandra Palace
Co., 16 Ch. D. 58.
(y) Wilson v. Church, 9 Ch. D.
552.
(2) See 32 & 33 Vict. . 19, § 13;
but this enactment only applies to
calls and to companies subject to
the jurisdiction of the Stannary
Courts,
266
Bk. II. Chap. 7.
Sect. 1.
Who are repre-
sented by public
officers,
Whether public
officers must be
sued,
ACTIONS BY AND AGAINST COMPANIES.
7 Geo. 4, c. 46 (extended by 27 & 28 Vict. c. 32), and com-
panies formed under the Letters Patent act, 7 Wm. 4 & 1
Vict. c. 78 (a), are empowered by statute to sue and be sued in
the name of an individual appointed to sue and be sued on
their behalf; and there is a large number of private acts (b)
enabling particular companies to sue and be sued in like
manner. It is customary to designate such companies as
companies empowered to sue and be sued (c), and amongst them
will be found most existing unincorporated companies formed,
for other than mining purposes, before the passing of the
Joint-stock companies registration act of 1844.
A company which, without being incorporated, is empowered
to sue and be sued by a public officer, is sufficiently repre-
sented by that officer in all actions between the company as a
body on the one side, and a stranger on the other(d). But, as
will be seen hereafter (e), a public officer does not represent
one set of shareholders as against another set ; for he is only
the representative of the shareholders as a body.
It does not follow that, because a company is empowered by
some private statute to sue and be sued by a public officer,
therefore a creditor may not sue any one or more of the share-
holders. Creditors are not deprived of their common law
rights by an act of Parliament which is consistent with their
retention of those rights; and there are several instances of
special statutes under which it has been held, that, although a
creditor might sue the public officer, it was not incumbent on
him to do so (f).
(a) § 1, repealed by 37 & 38 Vict.
c. 35. Industrial and Provident
Societies were formerly empowered
to sue and be sued by a public
officer, Burton v. Tannahill, 5 E.
& B. 797. By 39 & 40 Vict. c. 45,
§ 11, such societies are incorporated
by being registered under that act.
(b) There are also some colonial
statutes to the same effect. The
validity of one of them was unsuc-
cessfully disputed in Bank of Aus-
tralasia v. Nias, 16 Q. B. 717. See,
too, Bank of Australasia v. Harding,
9 C. B. 661; and Kelsadl v. Marshall,
1C.B.N.S. 241.
(©) A good account of the pro-
gress of legislation relating to these
companies will be found in Van
Sandau v. Moore, 1 Russ. 441.
(d) See Pendlebury v. Walker, 4
¥. & C. Ex. 424; Meua v. Maltby, 2
Swanst. 277.
(¢) See book iii., ¢. 9, § 3.
(f) Blewitt v. Gordon, 6 Jur. 825,
per Coleridge, J.; 8. C., 1 Dowl.
N. 8. 815; Pentland vy. Gibson, 1
Ale. & Nap. 310; Beech v. Eyre, 5
Man. & Gr. 415.
COMPANIES EMPOWERED TO SUF AND BE SUED.
267
Another observation to be made with respect to these private Bk. ete: 7.
acts is, that the public officers created by them have no powers :
except those expressly conferred upon them.
Where, there-
fore, a company was empowered to sue and be sued in the
name of its secretary, and to institute actions and suits in his
name, it was held that he had no power to petition on behalf
of the company for a commission of bankruptcy against one of
its debtors (g).
Questions sometimes arise as to whether a public officer
can
1.
Powers of
public officers.
On what con-
tracts public
sue or be sued in respect of a contract not expressly entered officers may sue
into with the company. These questions will all be found to
turn on the language of the act applicable to the company to
which the questions relate ; but speaking generally, it may be
said that a public officer may sue or be sued upon contracts
which are contracts of the company in point of substance,
although not in point of form (h).
A promissory note payable to the order of a person who is Bills and notes.
in fact a trustee for a company empowered to sue by a public
officer ought, if unindorsed, to be sued upon by the payee and
not by the public officer (2).
and be sued.
A public officer may sue for a libel on the company repre- Libels.
sented by him (k).
By far the greater number of decisions to be met with in the Public officers
books relating to public officers, have turned upon the Banking
act of 7 Geo. 4, and to these decisions, so far as they relate
to actions between companies governed by the act on the one
hand, and strangers on the other, it is now proposed to direct
the reader’s attention.
(g) Guthrie v. Fisk, 3 B. & C.
178; and see Ex parte Guthrie, 1
GL & Jam. 245. Some of the older
acts only empower companies to
sue by their public officers, and are
altogether silent about their being
sued. See the act which was in
question in Meux v. Maltby, 2
Swanst. 277. More modern acts
are much more comprehensive in
their terms. See now Bankruptcy
Rules 1886, r. 258.
(h) Soulby v. Smith, 3 B. & Ad.
929 ; Smith v. Goldsworthy, 4 Q. B.
430; Wills v. Sutherland, 4 Ex.
211, and on appeal, 5 Ex. 715;
Skinner v. Lambert, 4 Man. & Gr.
477. See, also, Cobham v. Holcombe,
8C.B.N.S. 815. —
(i) See MDowell v. Dayle, 7 Ir.
Com. Law Rep. 598. See as to bills
payable to officers for the time being,
45 & 46 Vict. c. 61, § 7, cl. 2, ante,
p. 230.
(k) Wilkams v. Beaumont,
Bing. 260.
10
ot banking
companies.
268 ACTIONS BY AND AGAINST COMPANIES.
Bk. IT. Chap. 7.
en The Banking act of 7 Geo. 4, c. 46 (J), has been decided to
ect. I.
= require imperatively, that all actions by or against companies
aL = 4g, governed by it shall be brought by or against their public
officers, and not otherwise (m). What is to be done if there is
no public officer is not clear (n) ; perhaps now, in such a case,
a creditor could sue the company in its mercantile name; or
sue some of the members on behalf of the whole company (0).
The fact that the company has stopped payment does not
prévent it from suing and being sued by its public officer (9) ;
and if a banking company changes its name, the public officer
Whatever
number of public officers a company may have, one only should
sue or be sued (r). The bankruptcy of a public officer does not
prevent his being sued as such (s).
The change of a public officer pendente lite does not affect
the action (¢). If an action is brought by a public officer, and
he dies or is removed, and no steps are taken by his successor
of the new company represents the old company (q).
Effect of chang-
ing public
officer.
to prosecute the action, it may, after the lapse of the usual
time, be dismissed with costs for want of prosecution (u).
It is to be observed, that if a person who is not a public
officer, sues as if he were, the company which he assumes
to represent is not a party to the action, and consequently
Action by a per-
son who assumes
to be a public
officer.
(2) Amended by 1 & 2 Vict. c. 96,
3 & 4 Vict. c. 11, and 27 & 28 Vict.
c. 32.
(m) Steward v. Greaves, 10 M. &
W. 711; Chapman v. Milvain, 5
Ex. 61. Compare Robertson v.
Sheward, 1 Man. & Gr. 511. See
as to laying intent to defraud in
indictments for forgery, 2. v. Curter,
1 Car. & K. 741; R. v. Beard, 8
Car. & P. 148; R. v. James, 7 Car.
& P. 553; and BR. v. Burgiss, ib.
490 ; and as to an affidavit to hold
to bail, Spencer v. Newton, 6 A. &
E, 630. The Industrial Provident
Societies act, 17 & 18 Vict. c. 25,
was also imperative, Burton v. Tan-
nahill, 5 E. & B. 797.
(n) See Steward v. Greaves, 10 M.
& W. 711. An indictment will lie
for stealing the property of the com-
pany although there is no public
officer, R. v. Pritchard, 7 Jur. N.S.
557.
(0) See B.S. C. Ord. xvi. rr. 9 and
14,
(p) Davidsen v. Cooper, 11 M. &
W. 778 ; Needham v. Law, ib. 400.
(q) TFilson v. Craven, 8 M. & W.
584,
(r) Holmes v. Binney, 4 Bing. N.
C. 454.
(s) Steward v. Dunn, 11M. & W.
63.
(t) See Webb v. Taylor, 8 Jur. 39 ;
Todd v. Wright, 11 Jur. 471; Barne-
wall v. Sutherland, 9 C. B. 380, and
Paterson v. Ironside, 14 Jur. 722, note.
(u) Burmester v. Von Stentz, 23
Beay. 32.
COMPANIES EMPOWERED TO SUE AND BE SUED.
269
will not be affected by the judgment in it; hence the fact,
that the plaintiff is what he pretends to be, is material and
traversable (x); and declarations and affidavits by public
officers have been held bad for not stating with sufficient
precision the character in which the plaintiff on the record
Bk. If. Chap. 7.
Sect. 1.
was suing, and the existence of the company he assumed to
represent (y).
Although, as has been seen, a public officer may sue on Co
behalf of a company which has stopped payment, there can be business.
no public officer under the 7 Geo. 4, c. 46, of a company which
has not begun to carry on the business of bankers under that
act (2).
In an action against a public officer as a nominal defendant, Plea that person
he may deny that he fills the office he is assumed to fill (a). waliegtear
But this defence will be of no avail, if the only evidence
to support it is that the company has ceased to carry on
business (b). A plea of the bankruptcy of a person sued as a
public officer will not be allowed to stand, if the plaintiff will
give an undertaking not to issue execution against the person
or property of the defendant himself (c).
Under the 7 Geo. 4, c. 46, public officers are appointed by Appointment of
public officers
under 7 Geo. 4,
made to the Stamp Office, in the form given in the schedule ~ **
to the act, stating the names and places of abode of the persons
so appointed (d). The most formal evidence of the appoint-
ment of a particular individual to be a public officer of a com-
their respective companies; and returns are required to be
(z) See Barnewall v. Sutherland, 9
C. B. 380; Steward v. Dunn, 11 M.
& W. 63.
(y) See Esdaile v. Maclean, 15
M. & W. 277; McIntyre v. Miller, °
13 ib. 725; Fletcher v. Crosbie, 9 ib.
252; Christie v. Peart, 7 ib. 491 ;
Spiller v. Johnson, 6 ib. 570; David-
son v. Bower, 4 Man. & Gr. 626.
See as to affidavits Ex parte Tor-
kington, 9 Ch. 298; Ex parte Lowen-
thal, ib. 324. Compare Robinson v.
Sheward, 1 Man. & Gr. 511, where
the character in which the plaintiff
was suing did not appear on the
record, and was not in issue.
(2) Roe v. Fuller, 7 Ex. 2920;
Steward v. Dunn, 11 M. & W. 63;
Fletcher v. Crosbie, 9 M. & W. 252;
and compare Davidson v. Bower, 4
Man. & Gr. 626.
(a) Qu. whether the denial must
not be supported by affidavit, Woud
v. Marston, 7 Dowl. 865.
(b) See Needham v. Law, 11 M. &
W. 400; Davidson v. Cooper, ib. 778.
(c) Steward v. Dunn, 11 M. & W.
63; Wood v. Marston, 7 Dow]. 865.
(d) 7 Geo. 4, ¢. 46, § 4.
270
Bk, IT. Chap. 7.
Sect. 1.
Interrogating
public officer.
Public officers
of companies
governed by
7 Wm. 4&
1 Vict. c. 73.
Difficulty of
suing before the
Judicature Acts.
ACTIONS BY AND AGAINST COMPANIES.
pany, is the return made by the company to the Stamp Office
in pursuance of the statute. Butit has been frequently decided
that the appointment may be proved otherwise than by such
returns, ¢.g., by parol testimony, and that an informality in a
return is of no importance, if satisfactory evidence aliwnde of
the alleged appointment is forthcoming (¢).
It has been decided that if a public officer brings an action,
he may be interrogated by the defendant (f).
The law relating to public officers of companies formed
under the Letters Patent act, 7 Wm.4 & 1 Vict. c. 78, will
be found in §§ 8, 18, 22, 23, 24 and 25 of that act. There
have been no decisions upon it bearing upon the present
subject, but it seems clear that a company governed by it
must sue and be sued by its public officer, if there is one;
but if there is not, then any member of the company may be
sued.
8. Other unincorporated companies.
Unincorporated companies not empowered by statute to sue
and be sued by a public officer, must sue and be sued like
ordinary partnerships (g). This observation applies to unin-
corporated cost-book companies (i). Consequently, before the
passing of the Judicature acts, it was extremely difficult for
unincorporated and unprivileged companies to sue at law at
all, and various unsuccessful attempts were made to avoid the
necessity of joining all the proper persons as co-plaintiffs (i).
(ce) Edwards v. Buchanan, 3 B. &
Ad. 788; R. v. Carter, 1 Car. & K.
741; R. v. Beard, 8 C. & P. 148; RB.
v. James, 7 C. & P. 553.
(f) M‘Kenna v. Rolt, 3 Jur. N. 8.
714, Ex.
(g) As to which, see Partn. book
lL, ¢. 3, pp. 264, e¢ seq.
(hk) Such companies can sue for
calls by their purser, ante, p. 265,
but there is no statutory enactment
enabling them to sue and be sued
generally by that officer.
(t) See as to all such attempts,
Radenhurst v. Bates, 3 Bing. 470;
and as to agreements to enable
actions to be brought by the chair-
man for the time being of the direc-
tors of a company, Hall v. Bain-
‘bridge, 1 Man. & Gr. 42; by the
directors for the time being of a
company, Phelps v. Lyle, 10 A. & E.
113 ; TVoolmer v. Toby, 4 Ra. Ca.
713; by the purser for the time
being of a cost-book company,
Hybart v. Parker, 4 C. B. N. 8. 209 ;
by the managers of a mutual marine
insurance society, Gray v. Pearson,
L. R. 5 C. P. 568; Corner v. Maz-
well-Irwin, Ir. R. 10 C. L. 354, On
COMPANIES EMPOWERED TO SUE AND BE SUED. 271
But even as the law stood before those acts, there was no great Bk. ee 7.
difficulty in the way of a creditor who sought to obtain payment
of a debt owing by the company. For although if he did not
sue all the shareholders who in strictness ought to have been
sued, he might have been met by a plea in abatement, yet
inasmuch as such a plea was of no avail unless it disclosed the
names of all the persons who ought to have been made defen-
dants, and unless it was verified by affidavit, and unless it
was strictly proved if issue was taken upon it, it was practi-
cally impossible for a member ofa large company seriously
to obstruct or embarrass a creditor by having recourse to a plea
in abatement, founded on the non-joinder of the other share-
holders (j).
The alterations made in the law respecting parties to actions i beg hea
by the Judicature acts and rules, have, however, removed the ture Acts.
difficulty in the way of unincorporated companies suing; for
an action may now be maintained by or against some of the
shareholders on behalf of themselves and others having a
common interest in the action (4); or, where no change has.
occurred amongst the shareholders, an action may be brought
in the name of the company (J).
Actions in this form will have to be adverted to hereafter Actions by some
on behalf of
when treating of actions between companies and their mem- themselves and
bers; but it may be observed here that even before the pS
Judicature acts, suits in equity by some persons on behalf of
themselves and’ others having a common interest, were fre-
quently instituted to enforce equitable rights, CoUfes to enforce
the rights of the mortgagees of a company’s undertaking (m) ;
to rescind a contract for fraud (nm); to enforce specific per-
the other hand a contract made with _
an agent of acompany might be sued
on by the agent, unless the contract
- was on the face of it made with the
company through its agent. See
Clay v. Southern, 7 Ex. 717, and so
it may now.
(j) Crellin v. Calvert, and Crellin
v. Brook, 14 M. & W. 11, may be
referred to as illustrating the above
observation.
(k) B.S. C. Ord. xvi. x. 9.
(1) Tb. rr. 14 & 15. See Partn.
book ii., ¢. 3, § 1, p. 265 et seq.
(m) Tripp v. Chard Rail. Co., 11
Ha. 241.
'(n) Small vy, Attwood, Younge,
457 et seq.; Fenn v. Craig, 3 Y.&
C. Ex. 213,
272
Bk. IT. Chap. 7.
Sect. 1.
Some on behalf
when firm is
sued,
Meux v. Maltby.
ACTIONS BY AND AGAINST COMPANIES,
formance of an agreement (0); to obtain an account (p), or an
injunction (q).
So a suit against some of the members of a numerous part-
nership or unincorporated company, might be maintained to
enforce an equitable right if it was a right against the whole
body, and one which all the members thereof had a common
interest in opposing (r). But suits in this form could not be
maintained to enforce purely legal rights, on the ground that
it was inconvenient to sue at law (s).
Now actions in this form are maintainable in all the divisions
of the High Court. Such actions, however, are occasionally
attended with inconvenience, for although judgment may be
obtained, it may be found practically useless.
The case of Meux v. Maltby (t) illustrates this. A suit
was there instituted against the treasurer and the directors of
a company, to obtain the benefit of an agreement made with
the plaintiff by the former owner of property which had
become vested in the company. The agreement was an agree-
ment for a lease, and the Court made a decree in the plaintiff’s
favour, but found itself unable to decree the execution of any
lease to him. The defendants had no power to convey the
legal estate in the land, and all the Court could do was to
declare the plaintiff entitled to a lease, and to restrain the
officer from bringing any action to disturb the plaintiff’s
possession.
(0) Clay v. Rufford, 8 Ha. 281;
and see Douglas v. Horsfall, 2 Sim.
& Stu. 184.
(p) Gordon v. Pym, 3 Ha. 223,
(q) Lund v. Blanshard, 4 ib, 290.
(r) See Pare v. Clegg, 29 Beav.
589, where a suit was instituted by
the creditor of a benefit society
against its trustees, and one of each
class of its members. See, also,
Adair v. The New River Co., 11 Ves.
429; Meux v. Maltby, 2 Swanst.
277; Fenn v. Craig, 3 Y. & C. Ex,
216 ; Cullen v. Duke of Queensberry,
1 Bro. C. C. 101, and 1 Bro. P. C.
396; The City of London y. Rich-
mond, 2 Vern. 421,
(s) Allison v. Herring, 9 Sim. 583.
(t) 2 Swanst. 277. See, too, Lund
v. Blanshard, 4 Ha. 290, where an
injunction restraining a defendant
from suing the plaintiffs, was held
not to preclude the defendant from
suing other persons on behalf of
whom the plaintiffs filed their bill.
SET OFF.
SECTION II.—OF SET-OFF BY AND AGAINST COMPANIES.
In actions between companies on the one hand and non-
members on the other, there is little to be said upon the
subject of set-off, except that the ordinary rules are applicable ;
the most important rule being that joint debts cannot be set-
off against separate debts (u), and that the debts of a body
corporate cannot be set-off against the separate debts of its
members. Unliquidated damages may be set-off in an action
by the company although it is being wound up (2).
273
Bk. II. Chap. 7.
Sect. 2.
It is only when a company sues or is sued by one of its own Set-off where a
company sues a
members, or by some person claiming under him, or when one member.
member of a company, having obtained judgment against it,
seeks to enforce such judgment against a co-member, or when
a company is being wound up, that questions of set-off present
peculiar difficulties. These are matters, however, which will
be more conveniently discussed hereafter, and the only obser-
vation which requires to be made here is, that in actions
between a company on the one hand and one of its own
members on the other, the member is so far treated as a
stranger to the company, that cross debts existing between
him and the company may be set off against each other (y),
but that cross demands between himself and other members
individually cannot be gone into. As regards incorporated
companies, this follows from the circumstance that they are
distinct from the members composing them; and as regards
unincorporated companies, it follows from the doctrine that a
debt due from or to several persons jointly, cannot be set off
against a debt due to or from some or one of them only.
Moreover, if a member of an unincorporated joint-stock Set-off where
one member sucs
company is a creditor of the company, and is in a position to another for a
sue the other members or any of them, it is no defence that if
the company were wound up, and its accounts taken, the
plaintiff would be found indebted to the company as a share-
holder thereof. In such a case as that now supposed, the
(u) Partn. book ii, «. 3, § 2, p. App. Ca. 434,
290, et seq. (y) Garnet Mining Co. v. Sutton,
(«) Mersey Steel and Iron Co. v. 3B, & Sm. 321.
Naylor & Co., 9 Q. B. D. 648, and 9
L.C. * op
debt owing by
the company.
274
Bk. IT. Chap. 7.
Sect. 2.
Rheam v. Smith.
ACTIONS BY AND AGAINST COMPANIES.
plaintiff sues as a non-member; and if his demand is one
capable of being enforced, he will not be prevented from
enforcing it, simply because in his character of member, he is
indebted to his co-shareholders. This is well illustrated by
a case before Lord Cottenham, which may be conveniently
noticed here, although it will have to be referred to again in
connection with another subject. In the case in question,
Rheam v. Smith (z), the plaintiff and one of the defendants
were members of an unincorporated joint-stock company; the
defendants were the bankers of the company, and had sued the
plaintiff for a debt due by the company to the defendants as
bankers. The plaintiff thereupon filed a bill against the
bankers and the company, upon the ground that he ought not,
as between himself and the bankers (one of whom was a share-
holder), to pay more than what, on taking the accounts of the
company, would be found to be due from the plaintiff in
respect of the debt in question. The bill accordingly prayed
that the accounts of the company might be taken, and its
affairs wound up, and that provision might be made for due
payment of the debts of the company, and that in the mean-
time the action, and all proceedings therein, might be stayed.
A demurrer to the bill was overruled by the Vice-Chancellor,
who, it is said, treated the case as one in which a partnership
of A. and B. was suing a partnership of A., C., and D., in
which case it would be contrary to equity to allow the debt to
be recovered without first ascertaining for what proportion of
it A. was himself liable (a). But on appeal to the Lord Chan-
cellor, the decision below was reversed, and the demurrer was
allowed: the Lord Chancellor observing,—
“It really seems to me that, if the principle upon which this demurrer is
said to have been overruled by the Vice-Chancellor were admitted, it might
lead to the most frightful consequences; for it comes to this, that if a
railway company, or any company carrying on great works, and who may
have become indebted to some contractor in half-a-million of money for
work done, upon that contractor applying for payment of his debt, can find
(2) 2 Ph. 726. clear that although one partner
(a) The fact that such an action might under certain circumstances
could not be maintained at law, is sue another at law, A. and B. could
not noticed in the report. But itis not possibly have sued A. and C.
SET OFF. 275
out that he, or any one connected with him in business, holds a single share Bk. II. Chap. 7.
in the company, they may say, No, we cannot pay our debt : you must Sect. 2.0
first break up the company, and ascertain whether its assets are sufficient Rheam v, Smith.
for payment of its debts, for if not, you or the persons connected with you
will be liable to contribute to the very sum which you seek to recover. It
is impossible to stop short of that if the principle be once admitted. After
some difficulty a rule has been established at law, enabling creditors of
these great companies to enforce their claims against individual share-
holders, leaving them, of course, to their right to contribution against their
co-partners. The rule, no doubt, leads sometimes to hardship upon the
party sued, but the balance of convenience is in its favour, and for that
reason it has been adopted : because it would be a still greater hardship
upon parties dealing with such companies, if the enforcement of their
claims were to be embarrassed by the necessity of treating all the members
of the company as jointly responsible. This suit, however, is an attempt
to induce a court of equity to interfere with that rule, for the plaintiff, by
his bill, asserts in effect nothing short of this proposition :—If I can find
out that you, who are suing me at law, have a single share in the company
against whom the claim is made, then there is an end to your legal right ;
equity will interfere, and though your money may have contributed to the
establishment of the company, you shall not be permitted to recover a
single farthing against any member of the company until the concern is
altogether wound up.”
It must not, however, be inferred from this case, that if a
member of a company has a demand against it, and seeks to
enforce that demand against some member of it, he may not
be met by some defence based on the rights of the members
inter se. This subject will be examined in the third book,
when the rights of members inter se are discussed (0).
The general rule that an assignee of a debt is in no better Set-off against
Sis : : j holders of
position than his assignor, is undoubted ; and, as a general securities,
rule, where a debt due from a company is assigned, the assign-
ment cannot defeat the right of the company to set off against
the assignee, what may be due from the assignor to the com-
pany before the company has notice of the assignment, and
when payment by the company is demanded (c) ; nor defeat the
(b) See Woodhams v. Anglo-Aus- 102, and 3 De G. & J. 294. See,
tralian Co., 2 De G. J. & Sm. 162, also, Watkins v. Clark, 12 C. B. N.
(c) Ashworth’s case,10 W.R.771, 8. 277; Watson v. Mid Wales Rail,
V.-C. W.; and see Atheneum Life Co, L. R.2C, P. 593,
Assurance Society v. Pooley, 1 Giff.
r2
276
Bk. II. Chap. 7.
Sect. 3.
Judgments
against com-
panies.
Modes of exe-
cuting such
judgments
against the
members.
First mode.
EXECUTION AGAINST COMPANIES AND SHAREHOLDERS.
company’s right to set off what may become due after such
notice under the same contract as created the debt assigned (d).
At the same time, it is possible for a company to deprive itself
of this right of set-off; and if, being indebted, it gives to
its creditor a document which shows that the debt is to be paid
without reference to the state of other accounts which may
exist between him and the company, the company cannot, when
sued for such debt, set off demands which it may have against
him for other matters. The decisions on this subject will, how-
ever, be more conveniently referred to hereafter when treating
of the proof of debts in winding-up proceedings (e).
SECTION IIL—EXECUTION AGAINST COMPANIES AND SHARE-
HOLDERS ON JUDGMENTS AGAINST THEIR COMPANIES.
By the common law, a judgment against an incorporated
company can only be executed against the property of
the company; and a judgment against an individual
cannot by common law be executed against any person or
property, except the person or property of the individual
named in the judgment. In order, however, to give creditors
a more extensive remedy than they would have at common
law upon a judgment obtained against companies, either in
their corporate names or in the names of their public officers,
the legislature has rendered such judgments enforceable
against the individual members of the companies. For this
purpose three schemes have been had recourse to.
The first in point of time was applicable to companies
empowered to sue and be sued, and was as follows:—A credi-
tor having obtained judgment against the public officer, was
allowed to proceed upon that judgment by scire facias against
any of the shareholders in the company at the time the judg-
ment was obtained ; and, if necessary, also against such of the
(d) See, as to this, Government of (e) See infra, book iv. c. 1, § 9,
Newfoundland v. Newfoundland Rail. and Aslatt v. Farquharson, 10 W.
Co., 13 App. Ca. 199; and Partn. 364. R. 458.
EXECUTION AGAINST COMPANIES AND SHAREHOLDERS. 277
late shareholders as were members of the company when the Bk. II. Chap. 7.
debt was contracted. ==
The next device was a mere modification of the last, and Second mode.
consisted in the application of it to judgments against com-
panies by their corporate names, which judgments were made
enforceable against shareholders and former shareholders in
substantially the same manner as that above explained: a
qualification, however, was added, to the effect that recourse
should not be had against individual shareholders until efforts
had been made in vain to obtain payment from the company,
and as to some companies, that recourse should not be had
against any shareholder except to the extent of his shares.
The third and last device was altogether different, and was Third mode.
the result of the course adopted by creditors, who, when they
could not obtain satisfaction from companies, singled out some
unfortunate shareholder, and compelled him to pay the whole
amount for which judgment had been recovered. This course
was in the highest degree cruel; and Parliament was induced,
when legislating on joint-stock companies, in 1856, to leave out
all those clauses, found in the preceding acts, enabling creditors
to execute judgments against individual shareholders, and to
provide, instead, that creditors should have the power, upon
non-payment of the debts due to them from the company, to
cause it to be wound up. The same view prevailed when the
acts relating to joint-stock companies were remodelled in 1862.
Consequently, a creditor of a company registered under the
Companies act, 1862, can only execute a judgment obtained
against the company by proceeding against the corporate pro-
perty, and, if necessary, by having recourse to a petition for
winding up the company.
Such is a general outline of the manner in which a creditor
of a company has been enabled to obtain satisfaction of a
judgment recovered against it. To fill up this outline so far
as is possible, without alluding to repealed statutes and to the
winding up of companies, is the object of the remainder of the
present section.
278
Bk. II. Chap. 7.
Sect. 3.
Execution
against cor-
poration.
Fraudulent
dispositions
of company’s
property.
Protected
property.
EXECUTION AGAINST THE COMPANY.
1. Execution against the company.
A judgment against a corporation is executed against the
corporate property in the same way as a Judgment against an
individual is executed against his property; and a judgment
against a public officer may, it is conceived, be executed
against him and his property as if he were an ordinary indi-
vidual, where the right of the judgment creditor is not in this
respect modified by statute (f).
What is property of a company must be determined by
ordinary principles of the law of property. It must be borne
in mind that unsecured creditors of companies, whether limited
or unlimited, have no lien on their assets (g) ; and cannot pre-
vent a sale or other disposition thereof (h) ; and it is clearly
competent for all companies to divide profits amongst their
shareholders, and to that extent to convert what was property
of the company into the separate estates of the members.
But any division of the property of a company amongst its
members which is not warranted by the constitution of the
company can be impeached by the company itself (i); and
any division of the assets of a company which would not leave
enough to pay the creditors of the company, would primd
facie be a fraud upon them; and even if not a fraud upon
them would probably be wlétra vires (k).
The rolling stock and plant of railway companies (1) are
protected from seizure by statute(m); but a judgment creditor
(f) See Harrison v. Timmins, 4
M. & W. 510; Wormwell v. Hail-
stone, 6 Bing. 668, where the no-
minal defendant was held not liable
to execution ; and Corpe v. Glyn, 3
B. & Ad. 891, where he was held
not liable to an attachment. See
infra, as to particular companies.
(g) But see, as to cost-book com-
panies, 32 & 33 Vict. c. 19, §§ 24 &
36, and 50 & 51 Vict. c. 43, § 4,
giving miners a lien for their wages,
(h) Mills y. Northern Rail. of
Buenos Ayres Co., 5 Ch. 621.
(2) See Society of Practical Know-
ledge v. Abbott, 2 Beav. 559.
(k) See, as to this, Stringer’s case,
4 Ch. 475 ; Cardiff Coal Co. v. Norton,
2 Eq. 558, affirmed by Lord Chelms-
ford, 2 Ch. 405. The decision in this
case was probably right under the
peculiar circumstances affecting the
real plaintiff, but some of the prin-
ciples laid down in the case deserve
serious reconsideration.
(1) The term includes railway and
dock companies, see East and West
India Docks Co., 38 Ch. D. 576; Gt.
North. Rail. Co. v. Tahourdin, 13 Q.
B. D. 320. Compare Exmouth Docks
Co, 17 Eq. 181. As to tramway
companies, see Brentford, &c., Tram.
Co., 26 Ch. D. 527.
(m) 30 & 31 Vict. c. 127, § 4,
made perpetual by 38 & 39 Vict.
c. 31,
‘EXECUTION AGAINST THE COMPANY.
279
of such a company can obtain a receiver of the carnings of Bk. II. Chap. 7.
the company (n), and can issue execution against its unpro- a
tected property, and obtain a sale of its surplus lands (0).
A corporation cannot be attached for contempt or for dis- Attachments,
obedience to an order made upon it(p). But if an order is
made upon a corporation, and its directors or officers set the
order at defiance, an attachment against them personally will,
if necessary, be granted (q). By the Rules of the Supreme
Court, 1883, Ord. XLII. r. 31, it is provided that :—-
“ Any judgment or order against a corporation wilfully disobeyed, may, Executions
by leave of the Court or a judge, be enforced by sequestration against the ®gaimst com-
corporate property, or by an attachment against the directors or other officers me i
thereof, or by writ of sequestration against their property ” (r). ee
Acts of Parliament are sometimes met with which empower Under Acts
a company to sue and be sued by a public officer, but which, Sea ate
instead of giving any remedy against him or the other share- alone liable.
holders individually, render the funds of the company alone
liable to its creditors. In such a case no execution against
the public officer of the company, or against any of its share-
holders, can be issued (s); but an action against the public
officer will nevertheless lie, even although there may be no
funds, and the plaintiff may consequently have no means of
enforcing his judgment after he has obtained it (¢). If there
are funds they can be got at; but before the Judicature act it
was said that the only mode in which a creditor could get at
them was by mandamus, or by a bill in equity (u).
award.
(gq) Lacharme v. Quartz Rock
(n) Manchester and Milford Rail.
Co., 14 Ch. D. 645; Southern Rail.
Co.,5 L. R., Ir. 165. The line must
have been begun, see Birmingham
and Lichfield Rail. Co., 18 Ch. D.
155. Only one receiver will be
appointed, Mersey Rail. Co., 37 Ch.
D. 610, which see as to priorities.
(0) Hull, Barnsley, de., Rail. Co.,
40 Ch. D. 119. See as to debenture
holders, where one sues on behalf of
himself and others, Hope v. Croydon
and Norwood Tramways Co., 34 Ch.
D. 730.
(p) Mackenzie v. Sligo and Shannon
Rail. Co.,9 C. B. 250, a case of an
Mining Co. 1 H. & C. 134, and see
Salman v. Hamburg Co.,1 Ch. Ca. 204,
(r) This rule takes the place of
§ 33 of the C. L. P. act, 1860 (23 &
24 Vict. e. 126), which was repealed
by 46 & 47 Vict. c. 49.
(s) See Harrison v. Timmins, 4 M.
& W. 510; IVormwell v. Hailstone,
6 Bing. 668 ; Corpe v. Glyn, 3 B. &
Ad. 801.
(t) See Kendall v. King, 17 C. B.
483.
{u) See the cases in the last two
notes. Actions have been brought
280 EXECUTION AGAINST SHAREHOLDERS.
Bk. oo 7. Even before the Common law procedure act of 1854, the
ace 68th section of which considerably extended the power of
such cases, courts of law to grant a mandamus (x), it had been held that a
creditor of a company, who by virtue of its act of Parliament
had no remedy against its shareholders, but only against the
funds of the company, was entitled to a mandamus to its
treasurer and directors, after establishing his debt in an ac-
tion (y). If there are no funds, and the company is not under
an obligation to provide any, no mandamus can be granted (z) ;
but if the company is under an obligation to provide funds,
and it will take no measures to raise them, it seems that a
mandamus will go(a). It has, however, been held that a writ
of mandamus will not be granted if the only reason why pay-
ment cannot be obtained by execution in the ordinary way, is,
that there is nothing to seize (0).
The effect of winding up a company upon executions against
it will be examined hereafter in the Fourth Book.
2. Proceedings against shareholders upon a judgment obtained
against a company or its public officer, generally.
Shareholder can If a company is incorporated, or if it must be sued by a
only be pro- : ‘ ; *
ceeded against public officer, a creditor cannot proceed by action against a
oe shareholder; but must obtain judgment against the company
company. and then proceed upon that judgment (c). It seems to be
doubtful, whether a county court judgment against a company
can be executed against its shareholders; hence the prudence
of suing companies in one of the superior courts (d).
in such cases, asin Canev. Chapman, ib. 360.
5 A. & E. 647; but see Addison v. (2) BR. v. The Victoria Park Co., 1
The Mayor of Preston, 12 C. B. 108. Q. B. 288.
(x) See Norris v. The Irish Land (a) Ib. ; and see R. 8. C. Ord. liii.
Co., 8 E. & B. 512, correcting Benson rr. 1.
v. Paull, 6 E.& B.273, The section (b) See R. v. The Victoria Park
was repealed by 46 & 47 Vict.c. 49. Co. 1 Q. B. 288.
The Supreme Court Rules of 1883, (c) Fell v. Burchett, 7 E. & B. 587;
Ord. liii. rr. 1 to 4, have taken its and see as to public officers, ante, p.
place. 265, et seq.
(y) See Corpe v. Glyn, 3 B. & Ad. (d) See Taylor v. The Crowland
801 ; R, v. St. Katherine Dock Co., 4 Gas Co., 11 Ex. 1.
EXECUTION AGAINST SHAREHOLDERS. 281
By the common law, a judgment against A. cannot be exe- Bk. ees 7.
cuted against B. without a scire facias, which, though a judicial —— ~~
writ, is in the nature of an action, and may be pleaded to vee _
accordingly. So, before a judgment in the Chancery division Judgment in
* @ 3 ‘ 4. 48. the Chancery
against a public officer can be enforced against individual pivision,
shareholders, an order against them personally must be ob-
tained (e). The object of the sci. fa. was technically to make
the execution conformable to the judgment; but substantially
its object was to give the person against whom the judgment
was sought to be enforced an opportunity of defending himself;
for, ex hypothesi, he had not had that opportunity before (f).
Proceedings by sci. fa. have not been abolished; but a much Order XLII.
simpler mode of proceeding has been introduced by the Rules * Pa
‘of the Supreme Court, 1888, Ord. XLII. r. 28, which pro-
vides that—
“ Where a party is entitled to execution against any of the shareholders
of a joint stock company upon a judgment recorded against such company,
or against a public officer or other person representing such company, the
party alleging himself to be entitled to execution may apply to the Court
or a judge for leave to issue execution accordingly, and such Court or judge
may, if satisfied that the party so applying is entitled to issue execution,
make an order to that effect, or may order that any issue or question
necessary to determine the rights of the parties shall be tried in any of the
ways in which any question in an action may be tried. And in either case
such Court or judge may impose such terms as to costs or otherwise as shall
be just.”
This improvement in procedure renders it unnecessary to
refer at length to the old rules of practice relating to sci. fa. ;
but as they may be still useful in some cases, a short account
of them is given in a note at the end of the present chapter.
A judgment or writ of execution against a company or its Registry of judg-
public officer may be registered like any other judgment or aa eae
writ of execution ; and in those cases in which a judgment
is equivalent to a judgment against all the members of the
company individually, and is enforceable against them, it has
been supposed to affect them as if it had been in form a judgment
(e) Vigers v. Pike, 8 Cl. & Fin. Com. Dig. Pleader,3 L.; Bac. Ab.
652 ; Healey v. Chichester and Mid- Sci. fa., and the note to Underhill v.
hurst Rail. Co., 9 Eq. 148. Devereux, 2 Wms. Saund. 71.
(f) See, generally, as to sct. fa.
282
Bk. II. Chap. 7.
Sect. 3.
Discovery of
shareholders.
Right of creditor
to proceed against
individual share-
holders.
EXECUTION AGAINST SHAREHOLDERS.
But
as a judgment against a company or its public officer could
not be executed against an individual shareholder of the com-
pany without a sci. fa., it could not be reasonable to make that
judgment a charge on his property before execution against
him could lawfully be sued out (hk). A judgment registered
against a company governed by the act of 1862 obviously does
not affect the property of its members.
against them individually and registered accordingly (4).
In order to enable a creditor who has obtained judgment
against a company to discover the persons against whom such
judgment may be executed, provision has been made by the
various statutes relating to companies compelling them to
make periodical returns, or to keep registers, of the names and
residences of their shareholders, and directing such returns or
registers to be open for inspection (i).
A creditor who has obtained judgment against a company,
and is in a position lawfully to execute such judgment against
the individual members of that company, cannot be restrained
from proceeding to execute it against any member or members
he may choose to select, provided he acts bond fide for the
purpose of obtaining payment of what is due to him (k). But,
(g) See Ex parte Ness, 5 C. B.
155.
(hk) See Harris v. The Royal
British Bank, 2 H. & N. 535. It
has been held in Ireland that a
sary ; R. v. The Derbyshire Rail. Co.,
3 E. & B. 784, where a mandamus
was obtained. As to examining the
directors, see Dickson v. Neath and
Brecon Rail. Co., L. R. 4 Ex. 87.
judgment obtained against a com-
pany ought not to be registered
against a former shareholder. See
Hone v. O’Flahertie, 9 Ir. Ch. 119,
where relief against such registra-
tion was given. See, also, Lx parte
Thornton, 2 Ch. 171, as to register-
ing winding-up orders. See now 51
& 52 Vict. ¢. 51.
(i) See 7 Geo. 4, c. 46, § 4, et seq.;
7 Wm. 4 & 1 Vict. « 73, § 6, et
sey. ; 8 & 9 Vict. c. 16, §§ 9, 10, 36;
and as to the mode of obtaining in-
spection, see Meader v. I. of Wight
Ferry Co. 9 W. R. 750, Ex., where
a mandamus was held not neces-
See, also, R. 8. C. Ord. xlii. r. 32,
at seq. as to discovery in aid of
execution.
(k) See Morisse v. The Royal
British Bank, 1 C. B. N. 8. 67;
Green v. Nixon, 23 Beav. 530. See,
also, Hardinge v. Webster, 1 Dr. &
Sm. 101, where it was held that a
member of a company who had ob-
tained judgment against it could
not be restrained from enforcing
that judgment against another
member of the same company.
The company was governed by 7
& 8 Vict. c. 110, and had become
amalgamated with another com-
EXECUTION AGAINST SHAREHOLDERS. 283
as will be seen hereafter, neither a judgment creditor, nor a Bk. eg 7.
purchaser from him, will be allowed to use the judgment for
the dishonest purpose of aiding some members of the company
against the others (I).
Upon a proceeding against a shareholder to enforce a judg-
ment already obtained against a company or public officer, the
shareholder is bound by the judgment, and cannot impeach it,
except on the ground that the judgment itself was obtained by
fraud (m). A judgment obtained by default is, in the absence
of fraud, as conclusive against the shareholders as any other
judgment (n).
A judgment obtained by fraud and collusion is however Exception in
always impeachable by innocent parties affected by it; and ee haa
however high the tribunal in which the judgment has been ‘editor.
pronounced may be, its invalidity on the ground of fraud may
be examined by any inferior court which may happen to be
called upon to give effect to it (0). If, therefore, a shareholder
is proceeded against upon a judgment obtained by fraud on the
part of the creditor, the judgment may be impeached ; and it
seems that the shareholder may at his option either apply to
the Court in which the judgment was obtained to have it set
aside, or rely on the fraud as a defence toa sci. fa., or to an
application for leave to issue execution as the case may be (7p).
It is to.be observed that the fraud here referred to as Frand by com-
affording a defence to the sci. fa., is fraud on the part of the ae De
judgment creditor in obtaining the judgment. Fraud on a Pt7tect him from
sci. fa.
shareholder by the directors of the company, and to which
pany in which the defendant was a
shareholder, but the plaintiff was
ston’s case, in 2 Sm. L. C., and
the admirable dissertation upon it
not.
(1) See Woodhams v. Anglo-Aus-
tralian Co., 2 De G. J. & Sm. 162.
(m) See Peddell v. Gwyn, 1 H. &
N. 590; Bradley v. Eyre, 11 M. &
W. 432; Fowler v. Rickerby, 2 Man.
& Gr. 760.
(n) Green v. Nixon, 23 Beav. 530.
See, also, Hx parte Chorley, 11 Eq.
157.
(0) See Shedden v. Patrick, 1
McQu. 535; The Duchess of King-
there.
(p) See Dodgson v. Scott, 2 Ex.
457; Edwards v. The Kilkenny Co.,
2C. B. N. 8. 397; Philipson v.
Egremont, 6 Q. B. 587; Bosanquet
v. Graham, 6 Q. B. 601, note ; Green
y. Nixon, 23 Beav. 530. The first
two of these cases, and Harvey v.
Scott, 11 Q. B. 92, show that it is
not proper to raise the question of
fraud upon a motion for leave to
issue a sct. fa.
284
Bk. JJ. Chap. 7.
Sect. 3.
Creditor pro-
ceeding against
shareholder after
inducing him to
become such.
Bill v. Richards.
No remedy by
creditor whose
right is limited
to company’s
funds.
EXECUTION AGAINST SHAREHOLDERS
is not privy, affords no defence to pro-
This was decided in
fraud the creditor
ceedings by him against the shareholder.
several cases arising out of the failure of the Royal British
Bank, and is a necessary consequence of the principles of the
law of partnership (q).
A shareholder in a company cannot escape from the liability
to its creditors which is imposed upon him as a shareholder,
except by virtue of some act of theirs: and nothing short of
fraud on their part, or of some contract or conduct of theirs
precluding them from treating him as their debtor, will afford
him a defence as against them so long as their demand exists
as between them andthe company. This is well illustrated
by Bill v. Richards (r), where a shareholder in a railway com-
pany pleaded to a sci. fu. issued against him by a creditor who
had obtained judgment against the company, that he, the share-
holder, had at the request of the plaintiff taken shares in the
company as a trustee for others, and upon the faith of the
plaintiff’s statement that by so doimg no responsibility in
respect of the shares would be incurred. It was not alleged
that the plaintiff had been guilty of any fraud; his statement
did not relate to any matter of fact; it did not amount to a
contract of indemnity, nor to a contract that if he were a
creditor of the company he would not endeavour to obtain pay-
ment from the defendant. It was quite consistent that all that
was meant was, that if the defendant would allow shares to be
taken for others in his name they would indemnify him against
the consequences, and the defence was therefore held insufii-
cient, although pleaded as a defence on equitable grounds.
The effect which a contract by a company to pay out of its
funds, and those only, has in limiting the liability of the share-
holders, has been already examined (s). Where such a contract
has been entered into, no execution on the judgment against
(q) Henderson v. Royal British
Bank, 7 E. & B. 356. See, too,
Daniell v. The Royal Brit. Bank, 1
H. & N. 681; Powis v. Harding,
1C. BLN. 8. 533. Howurd v. Shaw,
9 Ir. Law Rep. 335, shows that a
shareholder sued for a debt of the
company cannot escape payment on
the ground that the company was
concocted in fraud, and that its deed
of settlement was invalid.
(r) 2 H. & N. 311. Compare
Batty v. McCundie, 3 Car. & P. 208 ;
Connop v. Levy, 11 Q. B. 769.
(s) Ante, p. 246, et seq.
IN COMPANIES GOVERNED By 7 GEO. 4, c. 46. 285
the company will go against the shareholders at the suit of a Bk. ee 7.
person seeking to enforce that contract (2).
The effect of winding up proceedings on executions against
members of companies will be noticed in the Fourth Book.
Having made these preliminary remarks on the subject ot
executions against shareholders generally, it is proposed to
examine more in detail the law relating to proceedings against
shareholders in companies governed by the Banking act of 9
Geo. 4, the act of 7 Wm. 4 & 1 Vict. c. 78, the Companies
clauses consolidation act, and other companies.
8. Proceedings against members of particular companies.
a) Execution against members of companies governed by 7 Geo. 4, c. 46.
The Banking companies act of Geo. 4 requires the public Execution _
officers of a company governed by that act to be members of Goende
the company (uw), and enacts that execution upon any judgment CSS ele Ses
obtained against a public officer may be issued against any
member of the company (x). From this it follows that a public
officer of a company governed by the act in question is per-
sonally liable upon every judgment obtained against him; and
that writs can issue against him grounded on such judgment,
and that, so far as he is concerned, no intermediate proceeding
is necessary (y). If, indeed, the public officer named in the
judgment has ceased to be a member of the company, then, by
the act, he is only liable like other former shareholders ; and
upon an affidavit by him, the court will stay execution against
him until after he has been proceeded against by scire facias or
its modern equivalent (z).
The act in question, 7 Geo. 4, c. 46, allows a creditor, who Liability of
. 2 < i shareholders
has obtained judgment against the public officer to execute under 7 Geo. 4,
that judgment— 6 40.
1. Against any member for the time being of the company ;
and in case any such execution shall be ineffectual, then
(t) Halket v. The Merchant Traders’ (y) Harwood v. Law, 7 M. & W.
Ass., 13 Q. B. 960. 203,
(u) 7 Geo. 4, ¢. 46, § 4. (2) See Harwood v. Law, 7M. & W.
(x) § 13. 203.
286 EXECUTION AGAINST SHAREHOLDERS
Bk. 1, Chap, 7. 2. Against any person who was a member of the company
’“"____ at the time the contract sued upon was entered into; or
3. Against any person who became a member at any time
after such contract was entered into, but before it was exe-
cuted ; or
4, Against any person who was a member at the time when
the judgment was obtained.
But persons who are not members for the time being, and
so do not fall within the first class, are only liable for three
years after they have ceased to be members (a).
Members for the It appears, therefore, that a creditor must go first of all
a ae, against the members for the time being, and that until he has
done so he cannot go against late members (V) ; and by members
for the time being are meant, not members at the time judgment
was obtained against the public officer, but members at the time
a sci. fa. or summons on the judgment is issued (c). Members
for the time being in this sense can be proceeded against at
once, and the statute expressly allows proceedings to be taken
against any one or more of them. Their liability, it will be
observed, is much more extensive than the liability of ordinary
partners; not being confined to debts incurred after they
become partners.
A sci. fa. (or now a summons under R. f. C. Ord. XLII.
r. 23) is the proper mode of proceeding against shareholders
under this act (d).
The names of the shareholders can be ascertained from the
returns made to the Stamp Office (e).
Rovere A creditor is not bound to proceed against all the members
hers, for the time being before having recourse to former members ;
(a) 7 Geo. 4, c. 46, § 18, ll A. & E. 520, and Cross v. Law,
(4) Hence a late member was a 6M. & W. 217; Wittenbury v. Law,
competent witness for the public 6 Bing. N. C. 345; Williams v.
officer. Needham v. Law, 12 M. & Aspinall,'7 Scott, 822, contra, is not.
W. 560. to be relied upon. The rule for a
(c) See Dodgson v. Scott, 2 Ex. set. fa. against present members is
457. See, too, Bradley v. Eyre, 11 absolute in the first instance, and
M. & W. 482, which turned on a need not be moved for in open
private act in which similar words court, Harrison v. Tysan, 1 Bail Ct.
occurred. Ca. 111.
(d) Ransford v. Bosanquet, 2 Q. (e) See 7 Geo. 4, c, 46, § 4, et seq.,
B, 972, and Bosanquet y. Ransford, and see ante, p. 110.
IN COMPANIES GOVERNED BY 7 aro. 4, c. 46. 287
but he must make every reasonable effort to obtain payment Bk. nor 7.
from the first before he acquires a right to proceed against the
last. Acting upon this principle, the Court allowed a sci. fa.
to issue against a late member, although proceedings against a
member for the time being were pending, evidence being given
to show that nothing was to be got from him, and that evi-
dence being uncontradicted (f). So in another case, a late
member was allowed to be proceeded against, although some
only of the members for the time being had been sued ineffec-
tually, uncontradicted evidence being given that inquiry had
been made as to the solvency of the others, and that there was
reason for believing that payment could not be obtained from
any of them (g). So it was unnecessary for the creditor to
issue writs of ca. sa. against the existing shareholders before
proceeding against former members (i). Moreover, a mort-
gagee who has obtained judgment for his debt, and has done
his best to obtain payment by executing that judgment against
the members for the time being, is, it seems, entitled to
proceed against former members, even without realising his
mortgage (i). On the other hand, the Court will refuse a
creditor leave to proceed against a late member where there is
reason to believe that satisfaction can be got with diligence
from existing members (k); and a return of nulla bona to a
writ of fi. fa. issued against the public officer, together with a
loose affidavit as to the insolvency of the members for the time
being, will not of itself be sufficient to satisfy the Court that
payment from them cannot be obtained (2).
With respect to late members, the act, as has been seen, Classes of former
makes three classes of them liable, and renders it lawful for ad
the creditor to proceed against any or all of them, not con-
fining him to one class before having recourse to another (m).
(f) Dodgson v. Scott, 2 Ex. 457. 802. See, too, Cross v. Law, 6 M.
(g) Harvey v. Scott, 11 Q. B. 92;
Field v. Mackenme, 4 C. B. 705,
(h) Field v. Mackenzie, 4 C. B.
732.
(i) Ib. 4 C. B. 725. The mort-
gage in that case could not be
realised at once without great loss.
(k) Eardley v. Law, 12 A. & E.
& W. 217.
(2) Bank of England y. Johnson, 3
Ex, 598,
_ (m) Arule for a sci. fa. against a
late member must be served per-
sonally, or be shown to have reached
him, Esdatle v. Smith, 18 L. J. Ex,
120.
288
EXECUTION AGAINST SHAREHOLDERS
Bk. II. Chap. 7. The liability of late members is, in some respects, more ex-
Sect. 3.
Evidence of
membership.
tensive than the liability of retired partners at common law,
inasmuch as these last are not liable to be sued in respect of
debts contracted before they became members. But, on the
other hand, the statute limits the duration of a late member’s
liability to creditors to three years after retirement (mn). More-
over, there is one class of late members who cannot be pro-
ceeded against by one class of their former creditors at all,
viz., those members who did not become such until after the
creditors’ debts had arisen, and who had ceased to be members
before judgment obtained against the public officer. Whether
the omission of all members of this class to creditors of
this class was designed or accidental is not known; but being
omitted, their freedom from liability towards such creditors is
complete (0).
A creditor, being entitled to issue execution only against
members for the time being, or, if necessary, against certain
classes of late members, must, before he can obtain leave to
proceed against any particular person, adduce some evidence
to show either that such person is a member for the time
being, or that he was a member at the time when the contract
with the creditor was entered into, or before the same was
executed, or at the time judgment was recovered(p). For this
purpose recourse is usually had to the memorial of share-
holders, directed to be returned to the Stamp Office, which is
held to be sufficient if uncontradicted, even although it may
be in some respects informal (q) or inaccurate as regards the
name of the shareholder proceeded against (r). ‘I'he memorial
(n) This limitation applies only to
creditors, and does not prevent a late
shareholder from being a contribu-
tory, although three years may have
elapsed since he retired from the
company. Gouthwatte’s case, 3 Me.
& G. 187.
(0) See Dodgson v. Scott, 2 Ex.
457, and Harvey v. Scott, 11 Q. B.
92.
(p) In The Bank of England v.
Johnson, 3 Ex. 598, the Court let
a sci. fa, issue against a person
although there was strong evidence
against his having been a member at
the time alleged.
(q) See Ex parte Prescott, Mon. &
Ch. 611; Harvey v. Scott, 11 Q. B.
92; Field v. Mackenzie, 4 C. B. 705
and 717; Bosanquet v. Shortridge,
4 Ex. 699. Compare Prescott v.
Buffery, 1 C. B. 41, ante, p. 110.
(r) Clowes v. Brettell, 11 M. & W.
461, decided on a private act. See
too, Thompson v. Harding, 1 C. B,
N.S. 555.
UNDER THE LETTERS PATENT ACT. 289
is not, however, conclusive, nor is it the only evidence of Bk. oe 7.
membership; and it has been decided that a person whose
name is omitted from the last return may nevertheless be
proved, aliunde, to have been a shareholder when the return
was made, and that, if there is a dispute as to the fact of mem-
bership, proper steps must be taken in order to have that
question tried (s).
As between a creditor and an alleged shareholder, the ques- oe ee
tion of membership or no membership depends entirely upon requisite for-
whether the requisites, which, by the company’s deed, have ™™!***
to be complied with before a person becomes a member, have
been complied with or not; and it may happen that one and
the same person is not a member for the purpose of being
proceeded against by a sci. fa., although he may be a member
for the purpose of being made a contributory on the winding
up of the company (i).
b) Evecution against members of companies governed by the Letters Patent act.
The Letters Patent act (7 Wm. 4 & 1 Vict. c. 78) does not ion i
alns Ube
require the public officers of a company governed by it to be ater under
members of the company; and even if they are members their : 7 ae
liabilities are restricted to the extent specified in the letters
patent of their respective companies. These circumstances
alone, it is conceived, render it improper for a creditor to issue
execution against a public officer of a company governed by
the Letters Patent act without an order of a court or judge (w)
or a sci. fa. ; for it isclear from the act that he cannot be made
personally liable unless he is or has been a member, and in
neither case is he liable to the extent to which he would be
liable at common law.
ict. c. 73.
The act in question appears to empower a creditor who has Liability of
3 ; ; . shareholder
obtained judgment against the public officer of a company Sa eed
governed by it, to execute that judgment against all or any of ©! Vit % 7.
(8) Bank of England v. Johnson, strong, 4 ib. 21; Bosanquet v. Short-
3 Ex. 598 ; Prescott v. Buffery, 1 C. ridge, tb. 699, there cited. See, too,
B. 41. Dodgson v. Bell, 5 Ex. 967.
(t) See ante, p. 54, and Ness v. (u) Under R.8.C, Ord. xlii,, r. 23,
Angas, 3 Ex. 805; Ness v, Arm- ante, p. 281.
L.c. Ky
290
Bk. II. Chap. 7.
Sect. 3.
EXECUTION AGAINST SHAREHOLDERS
the shareholders, or late shareholders whom he might have
—.——.-— gued for payment at common law; the only qualifications
Under 8 & 9
Vict. ¢. 16,
creditor must
first go against
the company ;
and show that he
cannot obtain
payment from it.
being: 1, that a shareholder who transfers his shares con-
tinues a shareholder for all purposes of liability until the
transfer has been registered; and 2, that the extent of a
shareholder’s liability is limited or unlimited, according to
the letters patent granted to the company (7). This act has
not received any judicial interpretation throwing light upon
the liabilities imposed by it, and it is by no means clear,
that the liability of an incoming shareholder is not more
extensive than the ordinary liability of an incoming partner.
The names of the shareholders can be ascertained from the
returns made under the act (y).
c) Bvecution against members of compunies governed by 8 d& 9 Vict. c. 16.
With respect to companies governed by the Companies’
clauses consolidation act (8 & 9 Vict. c. 16), there is one im-
portant rule which has no analogy with anything met with in
the jaw applicable to ordinary partnerships, or in that ap-
plicable to companies governed by the Banking act of 7 Geo. 4,
c. 46, or by the Letters Patent act of 7 Wm. 4 & 1 Vict.
c. 73. The rule referred to is, that the creditors of a company
governed by the Companies’ clauses act, are not entitled to
proceed against the shareholders personally, if payment can be
obtained from the company. In other words, the creditors
must have recourse to the assets of the company before they
can have recourse to the shareholders individually. When,
therefore, an application is made for leave to issue a sci. fa. or
execution against a shareholder in a company governed by the
act in question, evidence must be adduced to satisfy the Court
that payment cannot be obtained from the company itself as a
body (z). The creditor need not show that there is no possi-
(«) 7 Wm. 4 & 1 Vict. c. 73, §§ 21 (y) Ib. § 6, et seq.
& 24; and see upon it Philipson v. (z) The same rule applied to com-
Egremont, 6 Q. B. 587. The writer panies governed by the repealed acts
supposes that the returns are now of 7 & 8 Vict. cc. 110 and 113. It
made to the High Court instead of seems that the sci. fa. need not con-
to the Court of Chancery. tain any averment that nothing can
UNDER THE COMPANIES CLAUSES CONSOLIDATION ACT. 291
rap. 7.
bility of the company ever paying him: all that the Court Bk. os a
requires is to be satisfied that the creditor applying for leave —-
to proceed against the shareholder has no means of obtaining
present payment except from them individually. In order to
satisfy the Court upon this head, the creditor must prove that
he has made reasonable attempts to obtain payment from the
company, and to discover assets presently available for his
satisfaction, and that such attempts have been unsuccessful.
A mere general assertion by a solicitor’s clerk that writs of
ji. fa. have been issued against the company and returned
nulla bona, is not sufficient; for it is consistent with such an
assertion that no attempt has been made to ascertain whether
the company has any assets or not(a). But if attempts have
been made to discover assets, and those attempts have been
fruitless, and a writ of ji. fa. has issued against the company
and been returned nulla bona, that will be sufficient until it
is shown affirmatively that the company has assets (b); and
even if the company has assets which have not been taken in
execution, still, if the Court is satisfied that they are insuffi-
cient to satisfy the plaintiff, the sci. fa. will go, or leave to
issue execution will be given under R. S. C. Ord. XLIL.,
r. 23 (c).
By the Companies’ clauses consolidation act, a judgment Liability of
recovered against a company to which such act applies, may, a reo
if necessary, be executed against any of the shareholders. Yi » 16
But no shareholder is liable to a greater extent than the
amount unpaid up of his shares in the company (d).
be got from the company, Hitchins
v. The Kilkenny Rail. Co., 15 C. B.
459; but if it does, the averment
may be traversed, Marson v. Lund,
16 Q. B. 344. See Nixon v. Brown-
low, 1 H. & N. 405.
(a) See Hitchins v. The Kilkenny
Rail. Co., 10 C. B. 160, and 15 1.
459 ; King v. The Parental Endow-
ment Co., 11 Ex, 443.
(b) Rastrick v. The Derbyshire
Rail. Co., 9 Ex. 149; Nixon v. The
Kilkenny Rail. Oo, 1 H. & N. 47;
Hitchins v. The Kilkenny Rail. Co.,
15 C. B. 459 ; Wyall v. The Darenth
Rail. Co, 2 C. B. N.S. 110; Ridg-
way v. The Security, &c., Ass. Soc.,
18 C. B, 686. The return by the
sheriff need not be filed when the
set. fa. is moved for; Ilfracombe
Rail. Co. v. Devon and Somerset Rail.
Co., L. RB. 2C. P. 15 ; and see infra
notes (e) and (q).
(c) Ilfracombe Rail. Co. v. Lord
Poltimore, L. R. 3 C. P. 288 ; Rigby
v. Dublin Trunk Rail. Co., L. R. 2
C. P. 586.
(d) 8 & 9 Vict. c. 16, § 36. See
Burke v. Dublin Trunk Rail. Co., L. R.
3 Q. B. 47; Guest.v. Worcester Rutl.
v2
292
Bk. II. Chap. 7.
Sect. 3.
“« Any of the
shareholders.”
Evidence of
membership.
EXECUTION AGAINST SHAREHOLDERS.
The expression, ‘‘ any of the shareholders,” has been decided
to mean any of the shareholders at the time execution against
the company is found to be ineffectual, i.c., in ordinary cases,
at the time of the sheriff’s return of nulla bona (e). Conse-
quently, not only all persons who have ceased to be share-
holders before judgment against the company has been
recovered, but also all who have ceased to be so after that
time, but before it has been ascertained that execution against
the company on such judgment will prove ineffectual, are
wholly exempt from liability to the judgment creditor (/).
The act requires that every shareholder intended to be pro-
ceeded against, is to have sufficient notice in writing before
application for leave to issue a sci. fa. against him is made (9).
Leave to issue a sct. fa. will be refused if the Court is of
opinion that there is a clear defence to it(h). On the other
hand a sci. fa. may be dispensed with if the shareholder does
not desire to contest his liability (¢). How far these rules apply
to proceedings under R. 8. C. Ord. XLII, r. 28, has not been
decided.
The meaning of the word shareholder in this act of Parlia-
ment has been already examined (k); and it is only necessary
here to observe that the company’s register of shareholders,
which a creditor who has obtained judgment against the
company has a right to inspect (/), is, in the absence of evi-
Co, L. R. 4 C. P. 9. In the last case
the shares were not in fact paid up.
(ce) Nixon v. Green, 11 Ex. 550,
and 3 H. & N. 686; Nixon v.
Brownlow, 3 H. & N. 686.
(f) Ibid.
(g) 8 & 9 Vict. c. 16, § 36. See
Hitchins v. Kilkenny Rail. Co., 10
C. B. 160; Devereue v. Kilkenny
Rul. Co, 5 Ex, 834. See Ilfra-
combe Rail. Co. v. Devon and Somer-
set Ral. Co, L. R, 2 C. P. 15, and
Edwards v. Kilkenny Rail. Co. 1
C. B. N.S. 409, as to serving the
notice and rule nisi on the share-
holder. See, as to enforcing decrees
in equity without a sci. fa. Healey v.
Chichester and Midhurst Rail. Co.,
9 Eq. 148.
(h) See as to the discretion of the
Court, Shrimpton v. Sidmouth Rail,
Co., L. R. 3 C. P. 80; Lee v. Bude,
&e., Rail. Co. L. R. 6 C. P. 576;
Burke v. Dublin Trunk Rail. Co.,
L. R. 3 Q. B. 47. However, in Guest
v. Worcester Rail. Co., L, R. 4 C. P.
9, the Court allowed a sci. fa. to go
although the case was clear.
(t) Burke v. Dublin Trunk, &c.,
Rail. Co, L, R. 3 Q. B. 47.
(k) Ante, p. 104.
(2) 8& 9 Vict. c. 16, § 36. Rv.
The Derbyshire, &c., Rail, Co., 3 E.
& B. 784; Meader v. Isle of Wight
Ferry Co., 9 W. R. 750, which shows
that a mandamus is not necessary.
EXECUTION AGAINST SHAREHOLDERS. 293
dence to the contrary, sufficient proof that a person whose Bk. Be 7.
name is on it is a shareholder (m). But the register is not ——————
conclusive evidence, and leave to issue a sci. fa. (or, it is
presumed, execution, under R. 8. C. Ord. XLII. r. 23) against a
person who is on it will not be given if he can show that he is not
a shareholder (n). Neither is the register the only evidence that
a person is a shareholder; and a person made a member of the
company by its special act, may be proceeded against accord-
ingly, although no shares have been issued (0), unless he is to
be regarded as having ceased to be a member(p). In a case
where a creditor was prevented from seeing the register, a sci.
Ja. was allowed to issue against a person sworn to be a: share-
holder to the belief of the deponent, and which belief was
founded on information from officials connected with the
company (q).
d) Execution against members of other companies.
Companies empowered by special acts to sue and be sued, oe
and the shareholders in which are liable for the debts of the in other com-
companies, will generally be found to resemble companies
governed by 7 Geo. 4, c. 46 (r).
Execution against partners or shareholders under judgments
obtained against them in the name of their tirm or company, is
governed by R. 8. C. Ord. XLII., r. 10, as to which see Part.,
Bk. II., c. 3, § 3, p. 298 et seq.
Unregistered cost-book mining companies are partnerships, Cost-book
and shareholders in them may be proceeded against ac- oe
cordingly (s). But by the Stannaries act, 1887 (50 & 51 Vict.
(m) See 8&9 Vict. c.16,§§ 8and & W. 506; Wingfield v. Barton, 7
29.
(n) Edwards v. Kilkenny Rail. Co.,
14 C. BL N.S. 526; Mather v. Nat.
Assoc. Investment Soc., ib, 676.
(0) Portal v. Emmens, 1 C. P. D.
201 and 664, ante, p. 104.
(p) Kipling v. Todd, 3 C. P. D.350.
(q) Rastrick v. The Derbyshire, &e.,
Rail. Co., 9 Ex. 149. See ante, p.
104 et seq.
(r) See Clowes v. Brettell, 10 M.
Jur. 258; Wingfield v. Peel, 13 L. J.
N.S. Q. B. 102; and as to friendly
societies, Myers v. Rawson, 5H, & N.
99. The 17 & 18 Vict. ¢. 25, on
which the last case turned, was re-
pealed by 25 & 26 Vict. c. 87 (since
repealed by 39 & 40 Vict. c. 45, § 4).
(s) Lanyon v. Smith, 3 Best &
Sm. 939; Tredwen v. Bourne, 6 M.
& W. 461; Newton v. Daly, 1 Fos.
& Fin, 26; Peel y. Thomas, 15 C.
294
Bk. IL. Chap. 7.
Sect. 3.
Companies
governed by
act of 1862.
Necessity of
sci, fa.
Sci. fa. under
7 Geo. 4, c. 46,
and 8 & 9 Vict.
vc. 16,
Under 7 Wm. 4
& 1 Vict. c. 73.
Under 7 & 8
Viet. tg 110
and 113.
EXECUTION AGAINST SHAREHOLDERS.
c. 48), § 6, in the case of execution against any company to
--—— which the act applies, the sheriff is to levy sufficient to pay all
wages due at the date of the levy in addition to the judgment
debt, and such wages are payable in priority to the judgment
debt.
Shareholders in companies governed by the Companies act,
1862, are not liable to execution on judgments against the
company, but must be proceeded against under the winding-up
clauses, which will be examined hereafter (t).
The law respecting execution against members of companies
governed by the repealed acts of 7 & 8 Vict. ec. 110 and 118,
is now obsolete, and is therefore omitted (w).
Note on procedure by Scire facias.
In those cases in which a judgment against a company or a public officer
was sought to be enforced against a shareholder, a scire facias was a neces-
sary preliminary, unless there was some statutory enactment to the
contrary (a), and a provision that execution should not issue without leave
obtained by motion in open court, was not suflicient to dispense with a
set. fa. (y).
A set. fa. was necessary in the case of banking companies governed by
7 Geo. 4, c. 46 (z), and of companies governed hy the Companies’ clauses con-
solidation act (a) ; and probably also in the case of companies governed by
the Letters Patent act, 7 Wm. 4 & 1 Vict. c. 73.
Under the repealed acts 7 & 8 Vict. cc. 110 and 113, leave to issue execu-
tion against a shareholder might be obtained without any suggestion or sci.
je. But this did not render a sez, fa. improper; and in point of fact it
was very commonly had recourse to for the purpose of executing judg-
B. 714; Toll v. Lee, 4 Ex. 230; Q.B.
Ellis v. Schmoeck, 5 Bing. 521, are (y) See the last three cases. A
instances of successful actions against judgment obtained in a colony may
individual shareholders in cost-book be sued upon in this country in an
mining companies. action in the ordinary form : Bank
(t) 25 & 26 Vict. c. 89,§§ 180 and of Australia v. Nias, 16 Q. B. 717.
195. (z) Ransford v. Bosanquet, 2 Q. B.
(w) It will be found in the first 972,
edition of the present treatise, vol. i. (a) 8&9 Vict. ¢.16, § 36 ; Hitchins
pp. 458-462. v. The Kilkenny Rail. Co., 10 0. B.
(2) Bartlett vy. Pentland, 1 B. & 160; Devereuw v. The Kilkenny Rail.
Ad. 704; Clowes v. Brettell, 10M. & Co., 5 Ex. 834. See, as to enforcing
W. 506; Wingfield v. Barton, 2 decrees in equity, Healey v. Chichester
Dowl. N. S. 355, and 7 Jur. 258; and Midhurst Rail, Co., 9 Eq. 148,
Wingfield v. Peel, 12 L. J. N.S, 102,
PROCEDURE BY SCIRE FACIAS. 295
ments obtained against companies to which these acts applied ()). A sez. fi., Bk. IL. Chap. 7.
however, did not lie against the executors of a deceased shareholder (c). : Sect. 3.
A writ of scire facias is a judicial writ, and is the commencement of a new Nature of sci. fa.
action, founded on a judgment already obtained. The writ states the
recovery of the judgment, and whatever facts are necessary to show that the
person against whom the writ is issued is liable to be proceeded against on
that judgment ; and the shareholder against whom the writ is issued is
commanded to appear to show why the plaintiff ought not to have execution
against him, The writ is set out in a declaration or statement of claim,
which prays that execution may issue against the defendant (d) ; and which
may be pleaded or demurred to in the ordinary way (e). Issue having been
joined, the cause proceeds to trial(f). A judgment obtained against a
defendant in a sct. fa. is executed like any other judgment. But the Court
will compel the creditor to limit the amount for which execution is sued out
to what may then be really due to him. This is done by putting the creditor
on terms when leave to issue a sev. fa. is granted (9).
A sct. fa. issued irregularly, e.g., without leave, where leave is required, Irregular sei. fa,
will be set aside ; but a plea to it, alleging merely an irregularity for which
it might be set aside, is bad (i).
A judgment creditor of a company may issue as many concurrent writs Concurrent writs
of sci. fa. against as many shareholders as he thinks proper ; and so long as his ° 8". fa.
demand is unsatisfied, a defence by any shareholder that the plaintiff is pro-
(b) See as to 7 & 8 Vict. c. 110,
Palmer v. The Justice Assurance Sv-
Ex. 371; Bank of Scotland v. Fen-
wick, ib. 792; Ness v. Fenwick, 2
ciety, 6 E. & B. 1015 ; Peart v. The
Universal Salvage Co., 6 C. B. 478 ;
Thompson v. The Universal Salvage
Co., 3 Ex. 310; Re Weiss, 15 C. B.
331. And as to 7 & 8 Vict. c. 113,
see Bendy v. Harding, 1 C. B. N.S.
551; Thompson v. Harding, ib. 555 ;
Dossett v. Harding, ib. 524 ; Morisse
v. The Royal British Bank, 1 C. B.
N. 8. 67; Wilde v. Stanner, 1 H. &
N. 873. See, too, Powis v. Butler, 3
C. B. N.S. 645, and 4 ib. 469 ; Fry
v. Russell, 3 ib. 665.
(c) Powis v. Butler, ubt supra.
(d) See the pleadings in Ricketts
v. Bowhay, 3 C. B. 889, where the
writ and declarations are set out in
full. See, too, Bradley v. Eyre, 11
M. & W. 482; Nunn v. Clacton,
3 Ex. 712. In some of the forms
the writ is directed to the sheriff,
but in others it is directed to the
individual shareholder.
(e) See Esdaile v. Trustwell, 1
Ex. 598; Nunn v. Claxton, 3 Ex.
712, in each of which the declara-
tion was demurred to. Several
matters may he pleaded : Phillipson
v. Tempest, 8 Jur. 60. As to the
practice and forms, see 2 Chitty’s
Archbold’s Practice, and Chitty’s
Forms thereto.
(f) The jury must not be share-
holders, Esdaile v. Lund, 12 M. &
W. 734,
(g) See Harvey v. Scott, 11 Q. B.
92; Green v. Nixon, 23 Beay. 530 ;
Addison v. Tate, 11 Ex. 250.
(h) Marson v. Lund, 16 Q. B.
344; Bradley v. Warburg, 11 M. &
W. 452; Ricketts v. Bowhay, 3 C. B.
889 ; Bank of Scotland v. Fenwick,
1 Ex. 792 ; Bosangnet v. Graham, 7
Jur. $31, Q. B. See as to suing out
a sci. fa. on a judgment entered up
for costs, Farmer v. Mottram, 6 Man.
& Gr. 684.
296
PROCEDURE BY SCIRE FACIAS.
Bk, IJ. Chap. 7. ceeding against others is bad («), Even the circumstance that judgments have
Sect. 3.
Applications for
rule for sci. fa.
Sei. fa. after
elegit.
4
beenalready obtained against them on the writs issued against them, affords no
ground of defence ; for such judgments do not extinguish the right conferred
upon the creditor by the prior judgment obtained against the company (h).
Even before pleas in abatement were abolished it was decided that to a set.
fa. against a shareholder the non-joinder of other persons liable to be pro-
ceeded against, could not be pleaded in abatement ; andif one sect. fa. issued
against several shareholders, a declaration upon it against some of them only
was not bad on demurrer, even if it were irregular(/). Neither is it any
objection to a sci. fa. by a creditor against a shareholder that other creditors
are suing him or are in a position to issue execution against him (m) ;
although when he has paid the full amount to which he is liable, no other
creditor can extract more from him (7).
A rule for a sez. fa., or an application for leave to issue execution (in those
cases in which no sez. fa. is necessary) may, it seemis, be moved for, or made,
more than once by the same creditor against the same shareholder for the
same debt, if the same rule or application has been allowed to drop for any
satisfactory reason, or has been refused upon some technical ground which
has been removed. At the same time the maxim, nemo debet bis vexari pro
eddem causd, is applicable, unless some good reason to the contrary can be
shown (0). :
A judgment against a company, the shareholders of which are liable to
execution on the judgment, may be executed against them, although the
creditor has issued an eleyit against the company, and has obtained partial
satisfaction by an extent under the writ (p). The extent does not, in these
cases, satisfy the debt. If the creditor has received nothing from the extent,
he is entitled to execution for his whole demand ; and if he has obtained any
fruits from the extent, he is still entitled to execution for so much as remains
due (gq). Ifthe land extended is of small value compared with what is due
to the creditor, he is entitled to execution against the shareholders without
delay ; but if the land is of such a value that the creditor will in a short
time be able to obtain payment without having recourse to the shareholders,
(t) See Rigby v. Dublin Trunk (0) See upon this, Corder v. The
Rail. Co., L. R. 2 C. P. 586 ; Nixon
v. Brownlow, 1 H. & N. 405; Nunn
v. Lomer, 3 Ex. 471. Compare
Esdaile v. Trustwell, 2 Ex. 312, and
Lisdatle v. Lund, 12 M. & W. 607.
(k) Burmester v. Crofton, 3 Ex.
397.
(1) Fowler v. Rickerby, 2 Man. &
Gr. 760, decided on 7 Geo. 4, c. 46.
See the argument in Esdaile v.
Lund, 12 M. & W. 607.
(m) Rigby v. Dublin Trunk Rail.
Co, L. R. 2 C. P. 586.
(n) Burke v. Dublin Trunk Rail.
Co, LR. 3 Q. B, 47,
Universal Gas Light Co.,6 C. B. 190
and 554; Field v. Mackenzie, ib.
384; Dodgson v. Scott, 2 Ex. 457.
Edwards v. Cameron’s, &c., Rail.
Co., 15 Jur. 470, Ex., is a strong
authority for not allowing two
applications.
(p) Addison v. Tate, 11 Ex. 250 ;
R. v. The Derbyshire Rail. Co., 3 E.
& B. 784.
(q) See Addison v. Tate, 11 Ex.
250, from which it appears that the
set. fa. should state what has been
done under the elegit, and the
amount if any obtained by it.
PROCEDURE BY SCIRE FACIAS. 297
the Court will not, as a matter of course, let immediate execution against Bk. II. Chap. 7.
them be issued (7). Sect. 3.
Except where judgment has been obtained by fraud, the validity of a Validity of judg-
judgment which has been recovered against a company or its public officer, ment cannot be
cannot be impeached by a shareholder who is proceeded against by sci. fa. a i oe
for, excepting in cases of fraud, nothing is admissible asa defence toa sez. fa." *
which might have been relied on as a defence to the action on the judgment
in which the set. fa. issues(s). The judgment is conclusive, and nothing
can be set up as a defence to a set. fa. upon it, except some matter which is
consistent with the validity of the judgment itself (¢).
Upon the same principle it seems that if judgment is obtained against a Bradley v. Eyre.
person sued as a public officer, a shareholder cannot plead as a defence to a
sct. fa., that the person against whom the judgment has been obtained was
not the representative of the company(w). In such a case application
should be made to set aside the judgment (z).
(r) See Addison v. Tate, 11 Ex. (u) See Bradley v. Eyre, 11 M. &
250. W. 432 ; Fowler v. Rickerby, 2 Man.
(s) See per Lord Mansfield in & Gr. 760.
Cook v. Jones, Cowp. 727. (x) Tbid., and Bosanquet v. Gra-
(t) See the cases noticed, ante, ham, 7 Jur. 832, and 6 Q. B. 601,
p. 283. note. :
298
Bk. III. Chap. 1.
Sect. 1.
Managing body.
MANAGEMENT OF COMPANIES.
BOOK III.
OF THE RIGHTS AND OBLIGATIONS OF MEMBERS OF
COMPANIES BETWEEN THEMSELVES,
CHAPTER I.
OF THE RIGHT TO TAKE PART IN THE MANAGEMENT OF THE
AFFAIRS OF A COMPANY.
—~—-
One of the peculiarities of companies, as distinguished from
partnerships, is that the management of a company’s business
is entrusted to a few chosen individuals, and that the share-
holders are deprived of that right of personal interference
which is enjoyed by the members of ordinary firms (a). The
members of companies form two bodies, whose interests are
or should be the same, but whose powers and functions are
different ; the one body consists of the directors, in whom the
general powers of management are vested; and the other body
consists of the shareholders, to whom the directors are ac-
countable, and by whom they are generally appointed. Each
of these bodies has its own sphere of action, and its own rights
and duties, as will be seen more particularly hereafter.
SECTION I.—OF DIRECTORS AND THEIR POWERS.
Where there is no statutory or other provision regulating
the constitution and powers of the managing body, the majority
of the shareholders of the company must determine how its
(a) See Burnes v. Pennell, 2H. L. C. 520 and 521,
DIRECTORS. 299
affairs are to be conducted, and to whom, and under what Bk. eae 1.
restrictions, the management of those affairs shall be en-
trusted (b). This is the rule which prevails in cost-book
mining companies (c), and it is not easy to conceive what,
except the will of the majority, can determine a matter of this
description under the circumstances now supposed.
The number of persons composing the managing body of a Number of
company is generally fixed by the company’s special act, cee
charter, deed of settlement, or regulations, and the number
making a quorum is also usually thereby fixed. As a general
rule, a power entrusted to a given number of individuals
cannot be properly exercised by any less number; and there
are several cases in which this rule has been applied to
companies, and in which the acts of directors have been held
invalid on the ground that they were not done by the requisite
number of directors (d). But it does not therefore follow that Varying the
the number of directors, as originally fixed, cannot be altered by ae
the majority of a meeting of the shareholders; and where
the number is not fixed by the legislature or the Crown, it
seems that the shareholders may alter it (¢). ven where the
number is fixed by an act of Parliament or a charter, the act
or charter may be so worded as to be in this respect directory
only (f).
It is to be observed that the directors of a company are all Sato
those persons who are constituted directors by a company’s :
act, charter, or deed of settlement, and not only such of them
as choose to act.
Sometimes provision is made for the transaction of business Persons deemed
by persons who are to be deemed to be directors until directors rere
are appointed. Such a provision does not necessarily make
such persons directors for all purposes; and a clause to the
(b) Agreements by directors de- the power of directors to delegate
priving the shareholders of this their authority, see p. 156,
power are invalid, James v. Eve, L. (e) Smith v. Goldsworthy, 4 Q. B.
R. 6 H. L. 335. The powers of 430.
majorities will be examined here- (f) Thames Haven, Dock, &e., Co.
after. v. Rose, 4 Man. & Gr, 552. See,
(c) See Tapping on the Cost- too, Bargate v. Shortridge, 5 H. L, ©.
Book, p. 64. 297.
(d) See ante, p. 155; and as to
300
MANAGEMENT OF COMPANIES.
Bk. IIT. Chap. 1. effect that two directors shall be a quorum has been held not
Sect. 1.
Qualifications
of directors.
Irregular
appointments,
to apply to persons who were to be deemed to be directors (9).
So a clause as to the qualification of directors has been held
not to apply to similar persons (h).
Generally speaking, the members of the managing body are
required to possess certain qualifications, and to be appointed
in some prescribed manner (t). But it by no means follows
that persons who are in fact acting as duly qualified directors
will be prevented from doing so, simply because they have
been irregularly appointed (k). Still less does it follow that
the irregularity of their appointment will render all their acts
null and void. Persons dealing with them as directors bond
Jide, and without notice of the irregularity, are entitled to
treat them as the agents of the company, and to hold the
company bound by their acts, as if they were its duly appointed
directors (1). But, as between themselves and the share-
holders, the irregularity is of greater importance; and it has
been held that persons de facto, but not de jure, directors
cannot allot shares, make valid calls or forfeit shares, even
where there is a provision rendering valid what may be done
by persons acting as directors, notwithstanding the subsequent
discovery of a defect in their appointment (im).
(g) London and Southern Counties
Land Co., 31 Ch. D. 223.
(h) Lord Claud Hamilton’s case,
8 Ch. 548, and others of that class
noticed infra, bk. iv., under the
head Contributories.
(i) As to disqualification by hold-
ing other offices, see Iron Ship
Coating Co. v. Blunt, L. RB. 3 C. P.
484; Hales v. Cumberland Black Co.,
6 H. & N. 481, or by being in-
terested in contracts, see Reg. v.
Gaskarth, 5 Q. B. D. 321. As to
the effect of giving votes for dis-
qualified persons, see R. v. Tewkes-
bury, L. R. 3 Q. B. 629.
(k) See Foss v. Harbottle, 2 Ha,
461, and Mozley v. Alston, 1 Ph.
790. These cases will be noticed
hereafter. For a discussion as to
the effect of a clause giving validity
to the proceedings of a board not-
withstanding any vacancy among its
members or defect in their election,
see Newhaven Local Board v. New-
haven School Board, 30 Ch. D. 350.
(2) See as to this, ante, pp. 161
and 166.
(m) See London and Southern, &c.,
Land Co. 31 Ch. D. 228; as to
allotments, Garden Gully, &c., Co. v.
McLister, 1 App. Ca. 39 ; as to calls
and forfeiture, Howbeach Coal Co. v.
Teague, 5 H. & N. 151; and Miles
v. Bough, 3 Q. B. 845; Edinburgh,
cdc., Rail. Co. v. Hebblewhite, 6 M.
& W. 707; South-Eastern Rail. Co.,
v. Hebblewhite, 12 A. & E. 497;
Swansea Dock Co. v. Levien, 20 L. J.
Ex. 447. Compare Murray v. Bush,
L. R. 6 H. L. 37, turning on 7 & 8
Vict. c. 110, § 30.
DIRECTORS. 301
Directors are supposed to know the regulations of their own Bk. oe ere 1.
company (n); and it might be supposed that if a person —._ -
became a director and acted as such, he would not be allowed oe a
to take advantage of the fact that he was not duly qualified to
act in that capacity ; but as will be seen hereafter the decisions
on this subject are not all in accordance with this view. There
are several decisions to the effect that a person may act as a
director and be required to hold a certain number of shares
as a qualification for his office, and still be at liberty to show
that he did not in fact hold such shares, or agree to take
them (0). Where, however, a company’s special act is so
worded as to make a director a shareholder, in respect of the
number of shares necessary to qualify him, he will be a share-
holder in respect of that number of shares whether any
definite shares have been allotted to him or not (p).
A provision that no person shall be eligible as a director
unless he holds a certain number of shares, does not apply to
persons who sign a company’s memorandum of association,
and who by that fact alone are the persons to act as directors
until others are appointed (q).
Where a person is required to hold a certain number of Effect of mort-
shares as a qualification for the office of director, those shares ee acne S
must not be nominally paid-up shares (r); but a director
having the requisite number of shares is not disqualified for
the office simply because he may have mortgaged his shares(s);
it is sufficient if he retains the legal title to them. This was
held in a case where the qualification shares were to be held
by the directors in their own right (¢).
(n) See per Lord Westbury in
Lane’s case, 1 De G. J. & 8. 506.
Compare Marquis of Abercorn’s case,
4DeG.F. & J. 78,
(0) Wheal Buller Consols, 38 Ch.
D. 42, and other cases of that sort.
See infra, bk. iv., c. 1, Contri-
butories.
(p) Portal v. Emmens, 1 C. P. D.
664 and 201, and see also Kincaid’s
case, 11 Eq. 192; Forbes’ case, 19
Eq. 353; Purcell’s case, 29 W. R.
170. Compare Kipling v. Todd, 3
C. P. D. 350,
(q) Stock’s case, 4 De G. J. & Sm.
426; and see Cotterell’s case, 11 W.
R. 13; and Lord Claud Hamuilton’s
case, 8 Ch. 548.
(r) Roney’s case, 4 De G. J. & Sm.
426 ; Currie’s case, 3 De G. J. & Sm.
367.
(s) Cumming v. Prescott, 2 Y. &
C, Ex. 488.
(t) Pulbrook v. Richmond Consoli-
dated Mining Co., 9 Ch. D, 610.
302
Bk. III. Chap. 1.
Sect. 1.
Vacancies.
Removal of
directors.
MANAGEMENT OF COMPANIES.
Whether a person once a director has or has not ceased to
be so depends (except in the case of his death) upon the
regulations of the company (uw). A director who becomes
bankrupt or ceases to attend to his duties does not thereby
necessarily vacate his office (x).
The power to fill up casual vacancies is frequently given to
the remaining directors; in such a case they can fill up a
vacancy although a general meeting of shareholders has been
held since the vacancy occurred (y). But if the number of
continuing directors is less than the minimum number requisite
for the transaction of any business, they cannot fill up the
vacancy (z). The rules of the company may, however, allow
the continuing directors, however few, to fill up a vacancy,
although not to transact any other business until the vacancy
is filled up (a).
Power to remove directors is often expressly conferred on
the shareholders(b). It has not yet been decided whether
when there is no such express power there is an implied power
in the shareholders of a company to remove a director from
his office by a resolution duly passed at a meeting properly
convened for the purpose, but the better opinion seems to be
that there is (c). If, however, a director is appointed for a
definite period, he cannot be removed before that period has
expired unless there is some special provision to that effect (d).
Where the shareholders have power to remove a director for
“any reasonable cause,” the shareholders are themselves the
judges as to what is and what is not a reasonable cause for
removal ; and their decision will not be interfered with if they
act fairly and in good faith (e).
(u) Phelps v. Lyle, 10 A. & E.
113.
(x) Tb., and see Wilson v. Wilson,
6 Scott, 540.
(y) Munster v. Cammell Co, 21
Ch. D. 183.
(2) See Newhaven Local Board v.
Newhaven School Board, 30 Ch. D.
350.
(a) As in York Tramways Co. v.
Villows, 8 Q. B. D. 685.
(6) There is power to remove
under the Companies’ clauses act,
1845. See Isle of Wight Rail. Co. v.
Tahourdin, 25 Ch. D. 320.
(c) See Browne v. La Trinidad,
387 Ch. D, 1, and the last case.
(d) Imperial Hydropathic Hotel Co.
v. Hampson, 23 Ch. D,1. Compare
the last note.
(e) Inderwick v. Snell, 2 Mc. & G.
216. See as to becoming bankrupt,
POWERS OF SHAREHOLDERS. 803
Directors have no power to vote themselves fees for salaries Bk. ae
for their services beyond what the constitution of the company ~-
5 Remuneration
may provide (). of directors.
The powers of directors as agents of the company have been
already examined (Bk. II. c. 2 & 8): their powers to call
meetings, allot shares, make calls, forfeit shares, will be
noticed hereafter when treating of those subjects.
SECTION II.—OF SHAREHOLDERS AND THEIR POWERS.
The shareholders of a company cannot usually exercise any
control over the management of its affairs, except at meetings
duly convened ; for the directors of a company are the servants,
not of the individual shareholders, but of the company; and
where the management of the directors is complained of, an
aggrieved shareholder should seek redress through the company,
and induce it to call the directors to account(g). As will,
however, be seen hereafter, if the directors are doing that
which the shareholders cannot sanction, or that which they
have by a proper resolution forbidden, the dissentients may
obtain redress by legal proceedings (h).
It may, however, happen that the constitution of a company
is such that the shareholders are deprived of all control over
the managing body in matters not foreign to the objects of the
company. Where this is the case, the managers have it in
their power to disregard the wishes of the shareholders as to
all such matters (7).
Phelps v. Lyle, 10 A. & E. 118;
absconding from creditors, Wilson
v. Wilson, 6 Scott, 540. See the
cases as to expelling members of
clubs, Dawkins v. Antrobus, 17 Ch.
D. 615 ; Fisher v. Keane, 11 ib. 353;
Labouchere v. Wharncliffe, 13 ib.
346; and as to removing persons
from offices, Osgood v. Nelson, L. R.
5 H. L. 636; Dean v. Bennett, 6
Ch. 489 ; Hayman v. Gov. of Rugby
School, 18 Eq. 28.
(f) See Evans v. Coventry, 8 De
G. Mc. & G. 835, decree, clause 3.
See infra, ch. 2, § 3.
(g) See Orr v. Glasgow Rail. Co.,
3 McQu. 799.
(h) See infra, ch. 9, § 2.
(t) Spurgin v. White, 2 Giff. 473,
is an instance.
304
Bk. III. Chap. 1.
Sect. 2.
Meetings of
shareholders.
Interference of
court with
meetings.
MANAGEMENT OF COMPANIES.
Individual shareholders, being comparatively powerless, pro-
~— vision is generally made for bringing them together at meet-
ings, and it is not a little important that the right to convene
them should to some extent, at all events, be exercisable by the
shareholders themselves. If matters are in such a state that
nothing can be done without a meeting, and there is no express
power to call one, it would seem necessary to imply a power in
any shareholder to convene one. This, however, is a case
which can seldom happen. It more commonly happens that
there is a power to convene a meeting, but that those who have
the power will not exercise it. In cases of this kind it has
been held that, where those who have the right to call a
meeting of the shareholders refuse to exercise that right, for
the express purpose of preventing the shareholders from duly
assembling, the Court will, if necessary, interfere to protect the
shareholders against an abuse of power on the part of those
entrusted with the management of the affairs of the company (k).
So where directors give notice that a meeting will be held on a
day when they know that a large number of shareholders will
not be in a position to vote, the Court will interfere and
restrain such an abuse of power (1). Again, if directors con-
vene a meeting to pass resolutions favourable to themselves on
questions in which the interests of the directors are opposed to
those of the shareholders, by a circular which is misleading,
and which contains statements calculated to obtain proxies in
their favour without giving the shareholders the information
necessary to enable them to form a just judgment as to who are
the proper persons to whom to entrust their votes, the Court
will grant an injunction to restrain the holding of the meeting
or to restrain the directors from laying such resolutions before
the meeting (1).
The Court, however, is very reluctant to interfere with the
holding of meetings of shareholders, especially when they are
called for the purpose of investigating and controlling the con-
duct of the managing body ; and the Court will not interfere to
restrain such a meeting simply because the notice convening it
(k) Foss v. Harbottle, 2 Ha. 461 ; (1) Cannon v. Trask, 20 Eq. 669.
Isle of Wight Rail. Co. v. Tuhourdin, (m) Jackson vy. Munster Bank, 13
25 Ch. D. 320. L. R. Tr. 118.
MEETINGS OF SHAREHOLDERS. 305
is badly framed, and invites the meeting inter alia to pass Bk. eee 1.
resolutions which would be invalid if passed (n); for the —
meeting might take some other legal course, ¢.g., pass some
amended resolution which would be valid.
In order that a resolution come to at any meeting, whether Resolutions cf
of directors or of shareholders, may have any legal effect, it is poe
necessary that the meeting shall be duly convened; that a
proper number of persons shall be present (0), and there must
always be two at least (p); that the resolution should relate to
a matter upon which the meeting is competent to pass a reso-
lution ; and that the resolution should be duly passed.
In order that a meeting may be duly convened, it is necessary
that it be convened (1) by those who have a right to convene it,
(2) at a proper time, (3) at a proper place, and (4) by a proper
notice.
The persons entitled to convene a meeting have been Persons to
alluded to already; and it is only necessary to add that a are
meeting convened by the proper persons will not be incom-
petent to transact business simply because they may themselves
have been irregularly convened to consider whether a meeting
shall be called or not (q).
As regards time: where there is no express provision, a Time.
reasonable time must be given (7); and perhaps if the time
were unreasonably short and were made so purposely, the
Court might restrain the holding of the meeting. But if a
meeting is held, and no objection is taken to the shortness of
the notice convening it, the Court will not interfere (s). Where
the time for holding a meeting is prescribed, such time must be
observed; and there are instances in which resolutions of
meetings have been held invalid on the ground that the
meetings were not held at the proper times (t).
In calculating the time for holding a meeting, where an
(n) Isle of Wight Rail. Co. v. Ta-
hourdin, 25 Ch. D, 320.
(0) See Howbeach Coal Co. v.
Teague, 5 H. & N. 151, and other
cases, ante, pp. 157, 158.
(p) Sharp v. Dawes, 2 Q. B. D, 26.
(q) Browne v. La Trinidad, 37 Ch.
D. 1.
L.C.
(r) Browne v. La Trinidad, 37 Ch.
D. 1. As to a meeting of directors,
see Lx parte Smith, 39 Ch. D. 546.
(s) Browne v. La Trinidad, 37
Ch. D. 1.
(t) Railway Sleepers Supply Co.,
°29 Ch. D. 204. Compare Miller’s
Dale, &e., Lime Co., 31 Ch. D, 211,
#y
306
Bk. III. Chap. 1.
Sect. 2.
Place.
Notice of object
of meeting.
Every one
entitled to be
heard must have
an opportunity
of being heard.
MANAGEMENT OF COMPANIES.
interval of not less than a certain number of days is required
to elapse between one meeting and another, the rule is that
the prescribed number of days must be clear days, 1.¢., ex-
clusive of the days of the meetings (w).
As regards place: where no place is prescribed, it is con-
ceived that any reasonably convenient place of meeting may be
fixed. But the Court would probably interfere if a place were
purposely fixed at which it was known shareholders could not
attend.
A meeting is not duly convened unless every person entitled
to attend has notice not only of the time and place at which,
but also of the purposes for which it is to be held, so that he
may exercise his own judgment whether he will attend or
not; and there are numerous cases in which resolutions have
been held invalid on the ground that insufficient notice was
given of an intention to submit the matters to which they
relate to the meeting at which they were passed (x). But a
notice may be good in part and bad in part, and is not wholly
invalid because it extends to something which cannot be
done (y).
A person who attends a meeting cannot dispute the validity
of what is done on the ground that he had not due notice of
the time and place at which the meeting was about to be held;
and if all entitled to notice have it in fact, but not in the
precise form in which it ought to have been given them, the
proceedings of the meeting will not necessarily be invalid (z).
But still it is absolutely requisite for the protection of those
who are to be affected by the resolutions of others, that such
resolutions shall have no effect unless all entitled to a voice in
making them had an opportunity of expressing their views. In
a case where directors were empowered to meet once a week at
their office, without notice or summons, but on such day and
at such hour as they should from time to time agree upon, it
was held that a resolution come to by a quorum assembled
(u) Ib. (y) Cleve v. Financial Corporation,
(w) A leading case on this head 16 Eq. 363; Isle of Wight Rail. Co.
is Bridport Old Brewery Co.. 2 Ch. vv. Tahourdin, 25 Ch. D. 320.
191. See also Garden Ctully Co. v. (2) See British Sugar Refining Co.,
McLister, 1 App. Ca. 39. 3K. & J. 408.
MEETINGS OF SHAREHOLDERS. 307
without notice was invalid, inasmuch as no day or hour for the Bk. eta 1.
meeting of the directors had ever been fixed (a). a
The mode in which notice is to be given varies with almost Mode of giving
every company. Such statutory enactments as exist upon the aie
subject will be noticed hereafter. The only general rule which
can be laid down is, that notice must be given in the manner
prescribed by each company’s act, charter, deed of settlement,
orregulations. It seems that it is not necessary to give notice
of the holding of an adjourned meeting to the persons entitled
to attend it; it is apparently sufficient if they had notice of
the holding of the original meeting (v). But nothing can,
without notice, be transacted at an adjourned meeting except
the unfinished business of the first meeting (c).
There are two kinds of meetings, viz., ordinary and eaxtra- Ordinary and
- Z extraordinary
ordinary, or, as they are sometimes called, general and special. meetings.
Ordinary or general meetings are usually held at stated times,
and for the transaction of business generally. Extraordinary Nature of busi-
7 ‘ 3 4 ness should be
or special meetings are held as occasion may require, for the specified.
transaction of some particular business, which ought to be
specified in the notice convening the meeting. A resolution
passed at an extraordinary meeting, upon a matter for the
consideration of which it was not avowedly called, or which
was not specified in the notice convening the meeting, is alto-
gether inoperative (d) ; and although such resolution may have
been confirmed at a subsequent ordinary meeting, it will still
be invalid unless it might have been properly passed in the
first instance at an ordinary meeting, without previous notice
of any intention to enter upon the matter to which the reso-
lution relates (e): and if a meeting is convened to confirm
resolutions previously passed, the notice ought to state those
resolutions or their effect (f).
(a) Moore v. Hammond,6B.&C. Bank of Hindustan, 6 Eq. 91; Anglo-
456. Californian Gold Mining Co. v. Lewis,
(b) See Wills v. Murray, 4 Ex. 6H. & N. 174; Stearic Acid Co., 9
843, 862 ; Scadding v. Lorant,3 H. Jur. N. 8. 1066, V.-C. K.
L. C. 418. (e) Lawes’ case, 1 De G. M.& G.
(c) BR. v. Grimshaw, 10 Q. B. 747. 421.
(d) Bridport Old Brewery Co., 2 (f) Dean v. Bennett, 6 Ch. 489,
Ch. 191; Imp. Bank of China v. and 9 Ey. 625,
x2
308 MANAGEMENT OF COMPANIES.
Bk. i Ula: 1. One and the same meeting may be both ordinary and ex-
———— traordinary ; ordinary for the purpose of transacting the usual
ia business of the company, and extraordinary for the transaction
oe of some particular business of which special notice may have
been given (g). If an ordinary meeting is held and adjourned
the adjourned meeting continues to be an ordinary meeting,
although special notice is given that it is about to be held for
special business (h).
Bye-laws. The power of making bye-laws for the regulation of the
affairs of a company is not unfrequently reposed in its share-
holders: and it is not uncommonly required that all bye-laws
shall be sealed with the seal of the company. In such a case
nothing which is not so sealed can be regarded as a bye-
law (2) ; nor is an unsealed resolution passed at a meeting of
the shareholders of an incorporated company, equivalent to a
contract under the seal of such company (j). At the same
time it is clear that, as a general rule, the resolutions of meet-
ings of members of a body corporate do not require to be
sealed in order to be binding on its members, as between
themselves, and as members. Acts relating to the internal
affairs of a corporation, affecting members only, and affecting
them merely as members, do not in general require the com-
mon seal to render them valid (i).
Bye-laws not warranted by the authority which empowers
them to be made, are altogether illegal (1).
Resolution ofa Where there is no special provision to the contrary, the
seietton ota Tesolution come to by the majority of those present at a meet-
meeting. ing is the resolution of that meeting (m) ; and the chairman is
the person to decide what the result is and all incidental ques-
tions requiring instant decision ; but his decision is not neces-
(g) See Cuthill v. Kingdom, 1 Ex. Whitstable Co., 17 Ves. 315, 19 ib.
494; Graham v. Van Diemen’s Land 304, and 1 Mer. 107.
Co, 1H. & N. 541. (m) Horbury Bridge Coal, dc., Co.,
(h) Wills v. Murray, 4 Ex, 843, 11 Ch. D. 109, deciding that the
(2) Dunston v. Imperial Gas Co. yvegular method of voting is by show
3B& Ad, 125. of hands, and that an article giving
(J) Ibid., and see ante, p. 221. every member one vote for every
(k) Grant on Corp. 65. share only applies to cases where a
(1) See Calder, d&e., Nav. Oo. v. poll is demanded.
Pilling, 14 M. & W. 76; Adley v.
MEETINGS OF SHAREHOLDERS. 809
sarily final (n). It is not illegal to transfer or procure shares Bk. a 1.
before a meeting so as to multiply votes at it; nor can votes
so obtained be disregarded (0).
A meeting at which there is not present a sufficient number
of persons to transact business, cannot pass any valid resolu-
tion (p).
It is conceived that an agreement to vote in a particular Interested votes,
way, in consideration of some personal benefit, is illegal; for
a vote ought to be an impartial and honest exercise of judg-
ment(q). But asa matter of law as distinguished from con-
science a person may vote on a question in which he happens
to have a personal interest opposed to that of the company;
and where the question was whether proceedings should be
taken by the company to impeach the title of some of the
shareholders in it, those shareholders were held entitled to
vote in respect of the very shares the title to which was dis-
puted (r). So a director may vote as a shareholder on the
question whether a contract between the company and himself
shall be entered-into or be confirmed (s).
Absent members are not entitled to vote by proxy unless Proxies,
they are specially empowered so to do(t). The right of an
absent member to vote by proxy depends on the terms of
(n) Indian Zoedone Co., 26 Ch. D.
70.
(0) Pender v. Lushington, 6 Ch. D.
70; Stranton Iron and Steel Co., 16
Eg. 559; Cannon v. Trask, 20 Eq.
669 ; Moffatt v. Farquhar, 7 Ch. D.
591, and see North-West Transporta-
tion Co. v. Beatty, 12 App. Ca. 589,
noticed infra.
(p) Howbeach Coal Co. v. Teague,
5 H. & N. 151; Sharp v. Dawes, 2
Q. B. D. 26.
(q) See Elliott v. Richardson, L.
R. 5 C. P. 744, where the agreement
was held illegal as opposed to the
Companies act, 1862. See, further,
Moffatt v. Farquharson, 2 Bro. C. C.
338; Card v. Hope, 2 B. & Cr. 661.
Compare Bolton v. Madden, L. R. 9
Q. B. 55, where an agreement be-
tween two subscribers to a charity
to vote for each other’s nominees,
was held not to be illegal.
(r) Hast Pant Du Mining Co. v.
Merryweather, 2 Hem. & M. 254.
See, also, Meniter v. Hooper’s Tele-
graph Works, 9 Ch. 350. Compare
Atwool v. Merryweather, 5 Eq. 464,
note, and see 8 & 9 Vict. c. 16, §§ 85
and 86, and the Companies act, 1862,
Table A, No. 57, as to votes by
directors on matters in which they
are interested.
(s) North-West Transportation Co.
v. Beatty, 12 App. Ca, 589, where
the director had bought up shares to
secure a majority.
(t) See Grant on Corporations,
256, note (q) ; Com. Dig. Franchise,
F. 11.
310
MANAGEMENT OF COMPANIES.
Bk, III. Chap. 1. the company’s regulations, and these must be strictly complied
Sect. 2.
Husband and
wife voting.
with (u). A corporation entitled to. hold shares in another
company has the same right to vote by proxy as any other
member (z). A member who signs a form of proxy in blank,
and hands it over to another to be used in the ordinary way,
impliedly authorises that other to fill up the blank with his
own name (y).. It would: seem that a person who has himself
a right to attend a meeting cannot be considered to represent
another, for whom he holds a proxy, unless he shows some
intention to act for his principal as well as for himself (z).
Where voting by proxy is allowed, the appointment of the
proxy to vote at any one meeting must bear a penny stamp (a);
and the appointment must specify the day upon which the
meeting at which it is intended to be used is to be held; and
the proxy is available only at the meeting so specified, or an
adjournment thereof(b). If the appointment authorises the
proxy to vote at more than one meeting, the proxy paper will
require a ten shilling instead of a penny stamp (c). The ex-
pense of stamping proxy papers ought to be borne by those
who want them and not by the company, unless there is some
provision to that effect (d). Every person who makes or
executes, or votes or attempts to vote by means of a voting
paper not duly stamped incurs a penalty of 50/., and his vote
is absolutely void (e).
The right of a married woman or of her husband to vote in
respect of shares held by her has not been judicially con-
sidered. Speaking generally, however, and without reference
(u) Harben v. Phillips, 23 Ch. D.
14; Indian Zoedone Co., 26 Ch. D.
70.
(x) Indian Zoedone Co., 26 Ch. D.
70.
(y) Ex parte Duce, 13 Ch. D. 429;
Ex parte Lancaster, 5 Ch. D. 911.
(2) Ea parte Evans, 13 Ch. D. 424.
(a) 33 & 34 Vict. c. 97, § 3, and
Schedule ; 34 Vict. c. 4.
(>) 33 & 34 Vict. c. 97, § 102,
pl. 1. See, as to filling up a paper
signed in blank, Hx parte Lancaster,
5 Ch. D. 911.
(c) 33 & 34 Vict. c. 97, § 3, and
Schedule. As to stamps on proxies
under the older stamp laws, see 2.
v. Kell, 12 A. & E. 559 ; Monmouth-
shire Canal Co. v. Kendall, 4 B. &
Al. 453; Trinity House of Hull v.
Beadle, 13 Q. B. 175.
(d) Studdert v. Grosvenor, 33 Ch.
D. 528.
(e) 83 & 34 Vict. c. 97, § 102,
pl. 3.
MEETINGS OF SHAREHOLDERS.
311
to the regulations of any particular company, it would seem Bk. III. Chap. 1.
that if the shares belong to her as part of her separate estate,
her husband has no right to vote in respect of them, and her
vote is valid notwithstanding his disapproval thereof. But if
the shares do not form part of her separate estate, she alone
cannot in point of law be a member in respect of them, and
cannot therefore vote (f); nor is her husband entitled to vote
in respect of such shares until he has become a member of
the company in respect of them. Nor does it follow from the
fact that he is subject to liabilities in respect of his wife’s
shares, that he is entitled to the privilege of voting in respect
of them.
The right of a shareholder to demand a poll has not been
decided ; but the right would probably be held to exist unless
the contrary could be shown (g). A person holding a proxy
has no right to demand a poll on behalf of his principal (h).
The demand should be made immediately after the declaration
of the show of hands (2), and the poll may be taken at once
without adjourning the meeting (f).
Absentees cannot effectually urge their ignorance of what
took place at meetings which they might have attended had
they thought proper so to do: and they are bound by the
resolutions come to at a duly convened meeting, provided such
resolutions relate to matters upon which the meeting was
competent to decide (2). Moreover, shareholders who receive
reports of what takes place at meetings, and who do not object
to what is being done, will be considered as acquiescing therein
(f) See R. v. Harrald, L, R. 7 Q.
B. 361.
p. 157.
(i) R. v. Thomas, 11 Q. B. D. 282.
(g) See Grant on Corp. 203;
R. v. Wimbledon Local Board, 8 Q.
B. D. 459; Campbell v. Maund, 5
A. & E. 865. If no poll is taken
when rightfully demanded the elec-
tion is void; R. v. Cooper, L. R.5
Q. B. 457. As to demanding a poll
on a question of adjournment, see
Macdougall v. Gardiner, 1 Ch. D. 13.
(h) BR. v. Government Stock Invest-
ment Co, 3 Q. B. D. 442; Haven
Gold Mining Co., 20 Ch. D. 151, at
(k) Chillington Iron Co., 29 Ch.
D. 159; R.v. D’Oyly, 12 Ad. & E.
139. Some dicta to the contrary in
Horbury Bridge Coal, ce., Co., 11
Ch. D. 109, must be considered as
overruled. See also British Flax
Producers Co., W. N. 1889, 7.
(1) Phosphate of Lime Co. v. Green
L.R.7C. P. 43; Hvans:v. Small-
combe, L. R. 3 H, L. 249; Tur-
quand v. Marshall, 4 Ch. 376; Nor-
wich Yarn Co., 22 Beay. 165.
Sect. 2.
Poll.
Absentees.
312
Bk. III. Chap. 1.
Sect. 2.
Minutes of
mecstings,
Signing minutes.
MANAGEMENT OF COMPANIES.
if what is done might have been validly sanctioned by them if
present; but not if what is done is altogether illegal, and
beyond the power of even all the shareholders (m).
The limits of the power of a majority will be examined
hereafter.
Minutes of meetings, and the contents of books kept by the
officers of a company, are not, as against third persons, evi-
dence for the company, unless expressly made so by act of
Parliament (n). Partnership books are, as a rule, evidence
against every partner, because every partner is entitled not
only to see them, but, in conjunction with his co-partners, to
determine what shall be inserted and what not; but this is not
the case with shareholders of companies, and consequently
unless there is some statutory enactment or agreement to the
contrary, the books of a company are no more evidence against
ordinary members of the company than they are as against
strangers (n). The inconvenience resulting from this prin-
ciple is obviated in modern acts of Parliament by making
certain things, ¢.g., the registers of shareholders, and signed
minutes of meetings, primd facie evidence as well against
shareholders as against strangers.
Shareholders are not, as between themselves and their
directors, supposed to know all that is in the company’s
books (0).
With respect to minutes of meetings, it is usual for acts ot
Parliament to require that the minutes of every meeting shall
be entered in a book, and be signed by the chairman of the
meeting, and to declare that the minutes so entered and signed
shall be admissible in evidence in courts of justice. In prac-
tice, the minutes of a meeting are commonly made up and
entered by the secretary after the meeting is over, and the
(m) See Phenix Life Assur. Co’s Co, 5 B. & Ad. 866. Compare
case, 2 J. & H. 441; Irvine v. Union
Bank of Australia, 2 App. Ca. 366.
Compare Evans v. Smallcombe, L. RB.
3 H. L. 249; Spackman v. Evans,
ib. 171 ; Houldsworth v. Evans, ib.
263 ; Phosphate of Lime Co. v. Green,
L. R. 7 C. P. 43.
(n) Hill v, Manchester Waterworks
Alderson v. Clay, 1 Stark. 405, and
The Thetford case, 12 Vin. Ab. 90,
pl. 16; Magutre’s case, 3 De G. & S.
31. See, also, the next note.
(0) See Longworth’s case, 1 De G.
F. & J. pp. 27 and 32. See, too,
per Turner, L. J., in Stewart's case, 1
Ch. 587.
MEETINGS OF SHAREHOLDERS. 8138
chairman signs such minutes at a subsequent period (generally Bk. ae 1,
the next meeting). It has been frequently urged that a reso-
lution made at a meeting, the minutes of which were entered
and signed after the meeting was over, could not, by such
minutes, be proved to have been made. But this objection
has always been overruled, even where the minutes of each
meeting ought in strictness to have been signed at such meet-
ing(p). But where a company brought an action for calls, and
the evidence of the making of the calls consisted of minutes
which were signed after the commencement of the action, it
was held that such minutes were not admissible (q).
The maxim omnia presumuntur rite esse acta is applicable Omnia presum-
to the proceedings at meetings; and if minutes of such pro- aa eee
ceedings are not produced it will be presumed against the
company, and in favour of all persons dealing bond fide with
its directors, not only that every resolution proved to have
been made was duly passed, but also that all such resolutions
and steps were made and taken as were necessary to authorise
subsequent acts proved to have been done(r). But this pre-
sumption will not be made in favour of directors and against
the shareholders ; and a transaction with directors which is
invalid if not assented to by the shareholders must, if relied
on by the directors, be proved by them to have been brought
to the attention of the shareholders, and to have received their
sanction (s).
A resolution of a meeting is not an agreement, and does not Stamp.
require an agreement stamp (¢).
One of the most important rights of shareholders is to Inspection of
F ks, &c.
inspect the books and accounts of the company, and to have poy {¢. P9
(p) Miles v. Bough, 3 Q. B. 845 ;
Southampton Dock Co. v. Richards,
1 Man. & Gr. 448; West London
Rail. Co. v. Bernard, 3 Q. B. 873;
London and Brighton Rail. Co. v.
Fairclough, 2 Man. & Gr. 675;
Inglis v. Great Northern Rail. Co.,
1 McQueen, 112. See, also, Roney’s
case, 4 De G. J. & Sm. 426, which
shows that those who sign minutes
are treated as admitting their truth.
And compare Tothill’s case, 1 Ch. 85.
(q) Cornwall Great Consolidated
Mining Co. v. Bennett, 5 H. & N. 423.
(r) See Lane’s case, 1 De G. J. &
Sm. 504; Grady’s case, ib. 488;
Stanhope’s case, 1 Ch. 161; Knight's
case, 2 Ch. 321.
(s) See British Provident Assur.
Soc. v. Norton, 3 N. R, 147, V.-C. K.
(t) Mills v. British Provident As-
surance Society, 1 Fos, & Fin. 607.
314
Bk. III. Chap. 1.
Sect. 3.
Disputes between
shareholders.
Acts which are
ultra vires.
MANAGEMENT OF COMPANIES.
them examined and reported upon by competent persons.
This subject will be alluded to more in detail hereafter (u).
It may, however, be observed generally, that a right to in-
spect includes a right to copy if the first is practically useless
without the second (#); and a shareholder who has a right to
inspect need assign no reason for exercising such right, and
cannot be refused inspection on the ground that he desires it
in order to oppose the directors or other shareholders (y). At
the same time, the Court will not assist a shareholder in
obtaining inspection for an improper purpose; and the right
must be exercised at reasonable times and in a reasonable
manner (2).
SECTION III.—OF THE POWERS OF MAJORITIES.
In the event of a difference arising between shareholders, it
becomes necessary to consider whether there is any method of
determining which of them is to give way to the other. It is
not uncommonly supposed by the public, that the minority of
the shareholders, if they are unequally divided, must submit
to the majority. But this is by no means the case; for, as
will be seen presently, the majority cannot oblige the minority
except within certain limits.
As regards incorporated companies, one limit is set by the
doctrines of ultra vires which have been already explained (a).
That which the company cannot do, even with the consent of
all the shareholders, it obviously cannot do at the bidding of
any majority, however large; and any shareholder can obtain
the aid of the Court to prevent an act which is ultra vires,
even although resolved upon by all the other shareholders (b).
Every company incorporated by act of Parliament, by
charter, or by letters patent, or by registration, is governed
by a law defining its objects and limiting its powers, and such
(u) Infra, 0. 3, § 4. son, 37 Ch. D. 669.
(x) Mutter v. East. & Midland (2) See the cases last cited.
Rail. Co., 38 Ch. D. 92. (a) Ante, p. 162,
(y) Tb., and see Holland v. Dick- (b) See infra, p. 319 et seg.
POWERS OF MAJORITIES. 815
Bk. IIT. Chap. 1.
law cannot be abrogated by any agreement between the mem- cee
bers of the company however unanimous they may be(c). A
registered company cannot alter the nature of its business as
defined in its memorandum of association (d); nor can even
all the members of a chartered company do what they like
with its property, ¢.g., divide it amongst themselves without
accounting for its value to the company (¢); nor can even all
the members of a railway company apply the funds of a com-
pany to a purpose which is not authorised by the act of
Parliament by which the company is governed (/).
On the other hand, it is to be observed, that a corporation wait _ He
acts by a majority: the will of the majority is the will of the the casos of
corporation ; and whatever it is competent for the corporation i car
to do can be done by a majority of its members against the
will of the minority, unless there is some express provision to
the contrary (g). It follows from this, that the power of a
majority of the shareholders of a company incorporated by
charter or act of Parliament, is limited only by that charter or
act, unless the powers of the majority are specially restricted
in some other way (i).
But the doctrines of ultra vires have no application to acts Unanimous
resolved upon by all the members of an unincorporated and eee
unprivileged company. Such a company, although formed for
one purpose, may, if all the members consent, depart from
that purpose to any extent they all may please (2). There
may be great difficulty in obtaining the assent of all; and in
practice it is often impossible to do so. It is seldom, if ever,
practically possible to apply to companies the recognised rule
applicable to partnerships, viz., the rule that partners who
(c) See Ashbury Rail. Co. v. Riche,
L. R. 7 H. L. 653; Att-Gen. v.
Great East. Rail. Co., 5 App. Ca.
473.
(d) Ibid, and see infra.
(e) Society of Practical Knowledge
vy. Abbott, 2 Beav. 559.
(f) See Att.-Gen. v. Great Kast.
Rail. Co., ubi supra; and the cases
cited infra, p. 317 eé seq.
(g) See Grant on Corporations,
p. 68 et seg., Australian Aux. St.
Clipper Co. v. Mounsey, 4 K. & J.
733 ; Exeter Rail. Co. v. Buller, 5
Ra, Ca. 211. See also the statute
33 Hen. 8, c. 27.
(h) Even a special agreement re-
stricting powers expressly conferred
by statute may be invalid, see
Walker v. London Tramways Co., 12
Ch. D. 705.
(t) See Keene’s Executor’s cause, 8
De G. M. & G. 272.
316
MANAGEMENT OF COMPANIES.
Bk. III. Chap. 1. deliberately do not adhere to their partnership articles, are to
Sect. 3.
How disputes
must be settled.
1. Disputes on
matters arising
in ordinary
course of
business.
be treated as having agreed to vary the articles in those
respects in which the partners have not observed them (hk).
At the same time, if any members of a company, be they
shareholders or directors, choose to ignore the company’s
regulations, and not to observe the provisions contained in
them, those individuals cannot afterwards object to the validity
of a course of conduct adopted or acquiesced in by them on
the ground that it is not warranted by the regulations; but
their adoption or acquiescence in no way affects the rights
and obligations of the other shareholders, either inter se or as
between them and the acquiescing parties. On this ground,
the non-observance of prescribed formalities has over and over
again been held to be of no consequence as between acquiescing
shareholders, and yet to be fatal as between them and other
non-assenting shareholders (J).
Passing now to the consideration of what is to be done where
questions arise as to which all the shareholders are not agreed,
the first point to determine is, whether the act, charter, or
deed of settlement, or regulations by which the company is
governed, do or do not contain any express provision appli-
cable to the matter in question ; for if they do, such provision
ought to be obeyed (m). If they do not, then the nature of the
question at issue must be examined ; for there is an important
distinction between differences which relate to matters inci-
dental to carrying on the legitimate business of a company,
and differences which relate to matters with which it was never
intended that the company should concern itself.
With respect to the first class of differences, regard must be
had to the state of things actually existing; for, as a rule, if
the shareholders are equally
(k) Partn., p. 408, and as to the
difficulty of applying this rule to
companies, see Ex parte Sargent, 17
Eq. 273; Keene's Executors’ case, 3
De G. M. & G. 272.
(1) Compare, for example, Keene’s
Executors’ case, 3 De G. M. & G.
272, and Straffon’s Executors’ case,
1 De G M. & G. 576. See also
divided, those who forbid a
Busl’s case, 6 Ch. 246, and L. R. 6
H. L. 37.
(m) The general obligation to
observe the provisions of companies’
deeds of settlement will be found
well put in Lz parte Brown, 19
Beav. 97, and Lawes’s case, 1 De G.
M. & G. 421.
POWERS OF MAJORITIES. 817
change must have their way: in re communi potior est conditio Bk. ae 1,
prohibentis (n). If, however, in a case of this description,
unprovided for by previous agreement, the shareholders are ae in
unequally divided, the minority must give way to the majo- See
rity (0). This doctrine has been held to apply where the
majority wished to make a division of profits, without first
paying an outstanding debt (p); where the majority wished to
borrow money (q); where the majority resolved to assign all
the joint property to trustees, upon trust for sale and distri-
bution amongst the joint creditors (7); where the majority
resolved on leasing part of the property of the company for a
temporary purpose (s); where the majority of the subscribers
to an abortive company resolved that the subscriptions should
be returned (t); and where the majority approved and adopted
accounts fairly laid before them (w).
Moreover, the legitimate business of a company includes Matters in- _
whatever is fairly incidental to those things which it is formed ones
to do, and whatever may be necessary for carrying on its busi- or
ness in the way in which it is ordinarily carried on by other
people (x). Hence, where the directors of a fire insurance
company, the policies of which did not cover losses occasioned
by explosions of gunpowder, resolved to pay claims made in
consequence of losses so occasioned, and it was proved that
other companies generally did the same thing, although not
(n) But see as to the employment (r) Lord v. Governor and Co. of
of a ship, Abbott on Shipping, p.
58, ed, 12; andas to completing con-
tracts already entered into, Butchart
v. Dresser, 4 De G. M. & G. 545,
(0) See ante, p. 315, and Gregory
v. Patchett, 33 Beav. 595 ; Const v.
Harris, T. & R. 518; Robinson v.
Thompson, 1 Vern. 465.
(p) Stevens v. The South Devon
Rail. Co., 9 Ha, 326, and see Gregory
v. Patchett, 33 Beav. 595.
(q) See Bryon v. The Metropolitan
Saloon Omnibus Co.. 3 De G. & J.
123, affirming 8. C. 4 Jur. N.S.
680; Australian Auailiary Steam
Clipper Co. v. Mounsey, 4 K. & J.
733.
Copper Miners, 2 Ph. 740.
(s) Simpson v. Westminster Palace
Hotel Co, 2 De G. F. & J. 141.
See, also, Forrest v. Manchester and
Sheffield Rail. Co., 30 Beav. 40, and
on appeal, 4 De G. F. & J. 126.
(t) Kent v. Jackson, 14 Beay. 367,
and 2 De G. M. & G, 49.
(u) Kent v. Jackson, 2 De G.M. &
G. 49, and 14 Beav. 367 ; Stupart v.
Arrowsmith, 3 Sm. & G. 176. See
as to opening accounts already
settled, Morgan’s case, 1 Mac. & G.,
235.
(x) Att.-Gen. v. Great East. Rail.
Co., 5 App. Ca. 473, and the cases in
the next notes,
318
MANAGEMENT OF COMPANIES.
Bk, III. ees 1. bound to do so, it was held that such payments could not be
Sect
Changes in
wishes,
All members
entitled to be
heard,
Majorities at
meetings,
restrained (y). So a railway and ferry company may use its
ferryboats for excursion trips when not wanted for the ferry (z).
So directors of a trading company are justified in giving gra-
tuities to their servants when there had been a very good
year (a). So banking companies may grant pensions to the
families of deceased officers (aa).
In questions of the class now under consideration, the views
of the majority may vary from time to time, and effect must, it
is conceived, be given to them as they change (0).
A very important rule respecting the powers and votes of
majorities is, that a majority, to have any weight, must act
and be constituted with perfect good faith ; for every member
has a right to be consulted, to express his own views, and to
have those views considered by the other members. In the
language of Lord Eldon, ‘‘ that is the act of all which is the
act of the majority, provided all are consulted, and the
majority are acting bond fide, meeting not for the purpose of
negativing what any one may have to offer, but for the purpose
of negativing what, when they are met together, they may after
due consideration think proper to negative. For a majority
of partners to say, We do not care what one partner may
say; we, being the majority, will do what we please, is, I
apprehend, what a court of equity will not allow” (c).
Moreover, where powers are conferred on a majority present
at a meeting of not less than a certain number of persons,
unless such meeting be duly convened and the requisite
(y) Taunton v. Royal Insur. Co., 2
Hem. & M. 135. See on this case,
and those cited in note (s), Joint
Stock Discount Company v. Brown,
3 Eq. 139.
(2) Forrest v. Manchester and
Sheffield Rail. Co., 30 Beay. 40, and
4DeG.F. & J. 126; and see Ait.-
Gen. Great East. Rail. Co. 5 App.
Ca. .473, as to supplying rolling
stock.
(a) Hampson v. Price’s Patent
Candle Co. 24 W. R. 754. This
right ceases when the company has
ceased to carry on business, Hutton
v. West Cork Rail. Co., 23 Ch. D. 654.
(aa) Henderson v. Bank of Austral-
asia, 40 Ch. D. 170.
(b) See Exeter Rail. Co. v. Buller,
5 Ra. Ca, 211, and Att.-Gen. v.
Gould, 28 Beay. 485.
(c) Const v, Harris, Turn. & R.
525, and see ib. 518, and Blesset v.
Daniel, 10 Ha. 493; Great Western
Rail. Co. v. Rushout, 5 De G. & Sm.
310, and further as to agreements
precluding impartial yoting, ante, p.
309.
POWERS OF MAJORITIES. 819
number be present at the meeting the powers in question can- Bk. ny ae i,
not be exercised; and although it may be true that the
required number of persons was summoned, and that the
absentees could not have turned the scale, this will not render
valid the acts of the majority of those actually present, for that
is not such a majority as was originally contemplated (d).
Passing now to the second class of differences, viz., those ee
which relate to matters with which the company was never ing a change in
intended to concern itself, it is to be observed that what is to pure
ultra vires an incorporated company must be ultra vires the
majority of the members of an unincorporated company formed
for similar purposes and with similar powers, and it has been
decided over and over again that no majority, however large,
can lawfully engage the company in such matters against the
will of even one dissentient shareholder. Each member is ~ eae
entitled to say to the others, “‘I became a member in a con- change.
cern formed for a definite purpose, and upon terms which were
agreed upon by all of us, and you have no right, without my
consent, to engage me in any other concern, or to hold me to
any other terms, or to get rid of me, if I decline to assent to a
variation in the agreement by which you are bound to me and
Ito you.” Nor is it at all material that the new business is
extremely profitable (e). This principle is applicable to al] = companies
partnerships and companies, whether great or small, and is partnerships.
evidently one which requires only to be stated to be at once
assented to as being just. No cases upon this subject can be
referred to with greater advantage than Natusch v. Irving and
Const v. Harris, both of which were decided by Lord Eldon (f).
In Natusch v. Irving (g), a company was formed in the early Fire and Life
. ‘ I Com-
part of the year 1824 for granting fire and life assurances. apdaine
(d) See London and Southern
Counties Freehold Land Co., 31 Ch.
D. 223 ; Howbeach Coal Co. v. Teague,
ville, 1 Taunt. 241; Glassington v.
Thwaites, 1 Sim. & Stu. 131.
(g) Gow on Partnership, App.
5 H.& N. 151; Ex parte Morrison,
De G. 539. See, too, the cases
cited ante, p. 305, et seq.
(¢) Att.-Gen. v. Great Northern
Rail. Co., 1 Dr. & Sm. 154.
(f) See, too, Davies v. Hawkins,
3M. & S. 488; Fennings v. Gren-
398, ed. 3. The case is referred to
at length in Partn. 316. See, also
The Phenia Life Insur. Co. 2 J. &
H. 441. Compare Bath’s case, 8 Ch.
D. 334, where the original deed of
settlement authorised the addition
of other businesss.
320
Bk, III. Chap. 1.
Sect. 3.
into a Marine
Insurance
Company.
Natusch v,
Irving.
Const v. Harris.
Altering prin-
ciple on which
profits should
be dealt with.
Modern cases
illustrative of
these principles.
MANAGEMENT OF COMPANIES.
The plaintiff was one of the original subscribers. In the
summer of 1824, the act of 6 Geo. 1, prohibiting companies
from carrying on the business of marine insurance, was
repealed, and shortly afterwards advertisements appeared in
the newspapers, stating that the company would commence
the business of marine insurance. The plaintiff objected to
this extension of the business of the company and he instituted
a suit to restrain it and obtained an injunction.
In Const v. Harris (hk), the proprietors of Covent Garden
Theatre agreed that the profits should be exclusively appro-
priated to certain definite purposes. Afterwards, the pro-
prietors of seven out of eight shares, entered into an agreement
to apply the profits in a different manner, but they had not
consulted the owner of the other eighth share, and he disap-
proved of the alteration. It was held by Lord Eldon, that the
majority had no power to depart from the terms of the original
agreement; and upon a bill filed by the one dissentient
member for a specific performance of that agreement, a receiver
of the profits was appointed. In a long and elaborate judg-
ment, Lord Eldon distinctly recognised the principle, that
articles which had been agreed on to regulate the rights of the
members of a company, cannot be altered without the consent
of all the members (i).
In modern cases the same principle has been constantly
recognised and followed (k). Indeed it may be said never now
to be disputed; the contest always turning on the question,
whether the acts of the majority do or do not belong to the
class under consideration, rather than to the question whether,
if they do, the minority is or is not bound by them. With
reference to the former question, it has been held not com-
petent for a majority of shareholders in a company formed
for the purpose of making a railway between two places, to
make a railway between two other places (J); nor for the
(h) Turn. & R. 496. & G. 225; Davidson’s case, 4 K. & J.
(i) See Turn. & R. 517, 523. The 688 ; Smith v. Goldsworthy, 4 Q. B.
judgments in this and the preceding 430; Davies v. Hawkins, 3 M. & 8.
cases are well worthy of attentive 488; Auld v. Glasgow Working Men’s
perusal. Building Soe., 12 App. Ca. 197.
(k) See Ex parte Morgan, 1 Mac. (2) Bagshaw v. The Eastern Union
POWERS OF MAJORITIES.
821
majority of the members of a fire and life insurance company Bk. II. Chap. 1.
to convert the company into a marine insurance company (2) ;
nor for a majority of the members of a railway company to
engage it in the business of coal sellers (n); nor for a
majority of the members of any company to employ the pro-
perty or funds of the company otherwise than as contemplated
by themselves and the other members; ¢.g., by dividing the
capital amongst themselves (0), or even amongst all the share-
holders whether they approve or not (p); by making presents
to the directors (¢) ; by paying the costs of actions, &c., insti-
tuted by or against the directors as individuals, and not as
trustees or agents of the company (7); by paying dividends or
interest on shares or share warrants out of capital (s); by
applying the funds of the company in defraying the expenses
of an application to Parliament to alter the constitution or
objects of the company (t); or in the purchase of shares of
Rail. Co., 7 Ha. 114, and 2 Mac. &
G. 389 ; Simpson v. Denison, 10 Ha.
51.
(m) Natusch v. Irving, ante, p.
319; Phenia Life Insur. Co., 2 J.
& H. 441. In Rogers v. Oxford, &c.,
Ruil. Co, 2 De G. & J. 662, the
railway company had express power
to become a canal company also.
(n) Att.-Gen. v. Great Northern
Rail. Co.,1 Dr. & Sm. 154, Com-
pare Att.-Gen. v. Great Eastern Rail.
Co., 5 App. Ca. 473.
(0) Menier v. Hooper's Telegraph
Co., 9 Ch. 350; Griffith v. Paget, 5
Ch, D. 894.
(p) Holmes v. Newcastle,
Abattoir Co., 1 Ch. D. 682.
(qg) York and North Mid. Rail. v.
Hudson, 16 Beav. 485. See, too,
Rossmore v. Mowatt, 15 Jur. 238,
V.-C. K. B.
(r) See Studdert v. Grosvenor, 33
Ch. D. 528; Smith v. Duke of Man-
chester, 24 Ch. D. 611 ; Pickering v.
Stephenson, 14 Eq. 322; Kernaghan
v. Williams, 6 Eq. 228.
(s) Leeds Estate, dc., Co. v. Shepherd,
L.c.
ce.,
36 Ch. D. 787 ; Oxford Benefit Build-
ing Society, 35 Ch. D. 502; Denham
& Co., 25 Ch. D. 752; Flitcroft’s
case, 21 Ch. D. 519 ; National Funds
Assurance Co, 10 Ch. D. 118;
Guinness v. Land Corporation of Ire-
land, 22 Ch. D. 349; MacDoughall v.
Jersey Hotel Co.,2 Hem. & M. 528. If
directors have received from a share-
holder any part of the money due
upon his shares beyond the amount
actually called up, and have agreed
to pay interest on the money so
advanced, interest must be paid out
of capital if there are no profits out
of which to pay it. This is not a
reduction of capital but spending
capital in payment of a lawful debt.
Dale v. Martin, 11 L. R. Ir. 371;
affirming 9 L. R. Ir. 498.
(t) Lyde v. Eastern Bengal Rail.
Co., 36 Beav. 10; Munt v. The
Shrewsbury and Chester Ratl. Co., 13
Beay. 1; Sempson v. Denison, 10 Ha.
51; Vance v. The East Lancas. Rail.
Co., 3 K. & J. 50, and the cases there
cited.
#y
Sect. 3.
322
MANAGEMENT OF COMPANIES.
Bk. III. Chap.1. retiring shareholders (w); or in subscribing to a public insti-
Sect. 3.
Invalid bye-
laws.
Transfer of
business.
— tution as the Imperial Institute (v); or in stamping, and
paying for, the return of proxy papers of any kind, or in print-
ing and sending out proxy papers in a form calculated to
influence the votes of the shareholders (a).
Upon the same principle bye-laws which are not warranted
by the terms of the instrument which confers the power of
making them, are altogether invalid (y); and a majority
cannot, unless empowered so to do by the company’s act,
charter, deed of settlement, or regulations, or by some statute,
forfeit shares (z) or reduce the capital of the company (a), or
issue preference shares (b).
A company incorporated by charter or special act of Parlia-
ment cannot delegate its powers, and cannot therefore transfer
its business even fora time to another company (c); nor can the
majority of the shareholders of any company bind the minority
by an agreement to transfer its property and business, unless
such power is authorised by the original constitution of the
company (d), or by statute (e).
(u) Trevor v. Whitworth, 12 App.
Ca. 409; Hope v. International Fi-
nancial Soc., 4 Ch. D. 327 ; Hodgkin-
son v. National Live Stock Insur. Co.,
26 Beav. 473, and 4 De G. & J.
422; Gregory v. Patchett, 33 Beav.
595.
(v) Tomkinson v. South East. Rail.
Co., 35 Ch. D. 675.
(x) Studdert v. Grosvenor, 33 Ch.
D. 528.
(y) Calder, dc., Nav. Co. v. Pilling,
14 M. & W. 76; Adley v. Whit-
stuple Co., 17 Ves. 315 ; 19 ib. 304 ;
1 Mer. 107.
(2) Barton’s case, 4 Drew. 535, and
4DeG. & J. 46.
(a) Smith v. Goldsworthy, 4 Q. B.
430 ; Hope v. International Financial
Soc., 4 Ch. D. 327,
(b) Hutton v, Scarborough Cliff Co.,
2 Dr. & Sm. 514 and 521; and on
appeal, 6 N. R. 10; Ashbury v.
Nor is it competent for the
Watson, 30 Ch. D. 376; and dis-
tinguish Harrison v. Mexican Ral.
Co., 19 Eq. 358 ; and South Durham
Brewery Co., 31 Ch. D. 261, where
an increase of capital by an issue of
preference shares was authorised by
articles drawn up at the same time
as the memorandum of association.
Although these were limited com-
panies, the principles on which they
were decided appear to apply to all
companies.
(c) Hattersley v. Shelburne, 10 W.
R. 881, and 31 L. J. Ch. 873; Charl-
ton v. Newcastle and Carlisle Rail.
Co, 5 Jur. N. 8. 1096; Winch v.
Birkenhead, ke., Rail. Co., 5 De G. &
8.562; Bemun v. Rufford, 1 Sim. N,
S. 550 ; Salomons v. Laing, 12 Beav.
377. Compare Clay v. Rufford, 5
De G. & 8. 768,
(d) See Ernest v. Nicholls, 6 H.
L. C. 401; Era Assur. Co, 2 J.
(¢) See note (e) next page.
POWERS OF MAJORITIES.
323
majority of one company to purchase the assets and liabilities Bk. II. Chap. 1.
of another without similar powers (/).
Whence it follows
that two companies cannot amalgamate with each other, unless
such a transaction is authorised by the constitutions of both
companies, or unless all the shareholders in both consent to
the amalgamation (q).
And where there is power to amalga-
mate, that power must be strictly pursued, or at least there
must be no substantial departure from it (h).
The right of a majority of shareholders to apply to the Right of ma-
Legislature or the Crown for an act of Parliament or charter
for the purpose of changing the constitution of the company,
has occasioned much discussion and no little difference of
opinion.
The right of every person to apply to Parliament or to
the crown on any subject he pleases is founded upon principles
of constitutional law, which are paramount to all others ; and Ward ». Society
although there is an instance in which a minority of a chartered
society obtained an injunction, restraining the majority from
surrendering the existing charter with a view to procure a new
one materially differing from it (i), the authority of this case is
questionable.
of one dissentient shareholder, grant an injunction restraining
the application of the funds of an incorporated company in
defraying the expenses of obtaining an act of Parliament
altering the constitution of that company (k); but upon con-
stitutional principles the Court declines to go further, and will
not restrain shareholders in a company from applying at their
own expense for an act which, if passed, will affect the whole
& H. 400, and 1H. & M. 672. See
ante, pp. 250, 258, and, further, as to
amalgamating, Ex parte Bagshaw, 4
Eq. 341; Stace and Worth’s case,
4 Ch. 682; Gilbert v. Cooper, 10
Jur. 580, V.-C. E., and Shrewsbury
and Birmingham Rail. Co. v. Stour
Valley Rail. Co.,2 De G. M. & G.
866; European Society Arbitration
Acts, 8 Ch. D. 679.
(e) By § 27 of the Stannaries act,
1887 (50 & 51 Vict. c. 43), cost-book
mining companies governed by that
act have power to amalgamate with
companies working adjoining mines.
(f) See last note but one.
(g) See notes (c) and (d).
(h) Clay v. Rufford,5 De G. & Sm.
768.
(1) Ward v. Society of Attornies, 1
Coll, 370.
(k) Munt v. The Shrewsbury and
Chester Rail. Co., 18 Beay. 1; Simp-
son v. Denison, 10 Ha. 51; Vance
v. Hast Lane. Rail. Co., 3K. & J.
50; and the cases there cited.
y2
ect, 3.
Amalgamation.
jority to apply
for power to
alter nature
of company.
of Attornies.
The Court will, however, even at the instance Such applica-
tions may be
made, but not
at the expense
of the company.
324
MANAGEMENT OF COMPANIES.
Bk, III. Chap. 1. company and change its constitution ; those shareholders who
Sect. 4.
Recapitulation.
Statutory enact-
ments affecting
the constitution
of companies.
object to the application must oppose it in Parliament (J).
Recapitulating the results now arrived at, it appears—
1. That within the limits set by the original constitution of
a company, the voice of a majority must prevail.
2. That it is not competent for any number of shareholders,
less than all, to pass beyond those limits.
3. That it is competent for all to do so, unless they are
bound together not only by agreement amongst themselves,
but by some charter, letters patent, or act of Parliament,
which is inconsistent with what they all desire to do.
SECTION IV.—OF THE CONSTITUTION AND MANAGEMENT OF PAR-
TICULAR COMPANIES.
Having made these general observations on directors and
shareholders, it is proposed to examine the various statutory
provisions now in force relating to their powers and duties in
particular companies.
There are no statutory provisions which affect the consti-
tution of the managing bodies, or the powers of the share-
holders of companies governed by the Banking act of 7 Geo. 4,
c. 46; or by the Letters Patent act of 7 Wm. 4 & 1 Vict. ¢. 73.
But the enactments affecting the management of the affairs of
cost-book mining companies, of companies governed by the
Companies’ clauses consolidation act, 8 & 9 Vict. c. 16, and of
companies governed by the Companies act, 1862, are numerous
and important, and require special notice.
(1) See the last cited cases, and
Ware v. The Grand Junction Water-
works Co., 2 R. & M. 470; and as to
injunctions restraining applications
to Parliament, Steele v. The North
Metropolitan Rail. Co., 2 Ch. 237 ;
Telford v. Metropolitan Board of
Works, 138 Eq. 574; The Lancashire
and Carlisle Rail. Co. v. The North-
Western Ratl. Co., 2K. & J. 293;
Heathcote v. The North Staffordshire
Rail. Co., 2 Mac. & G. 100. See,
also, Bill v. Sierra Nevada, &c., Co.,
1DeG. F. & J. 177, in which an
injunction to restrain an application
to a foreign government was also
refused.
COST-BOOK MINING COMPANIES. 325
Bk. III. Chap. 1.
Sect. 4.
1. Cost-book mining companies governed by the Stannaries
acts, 1869 and 1887 (i).
The affairs of a cost-book mining company are conducted by Duties of
an agent called a purser, and by the acts above mentioned the pons
following duties are imposed upon him :—
1. To enter proper accounts in the cost-book of the company
every four months (7).
2. To call a meeting of the shareholders every sixteen weeks
for the transaction of ordinary business, and to submit to the
meeting his accounts (0).
3. To make out and send to the registration office at Truro
the periodical returns required to be sent by him (p).
A copy of the company’s rules and regulations is to be filed Company's rules
at the office of the registrar of the vice-warden’s court, and to Ener
be open to the inspection of all applicants at reasonable
times (q). These rules and regulations may within certain
limits be altered or added to by the company by special resolu-
tions passed in accordance with the terms of the act. The
company has no power to make rules or regulations incon-
sistent with the act, nor to abrogate any special rules or
regulations for the management of the company existing at the
time when the act was passed (24 June, 1869) ; nor to make
any special rule enabling a company then existing to borrow
money (7).
(m) The act of 1869, 32 & 33 Vict.
c. 19, does not extend to companies
registered under the Companies acts
unless such companies are expressly
mentioned or necessarily implied, §
3, while the act of 1887, 50 & 51
Vict. c. 48, does apply to such com-
panies (§ 2, interpretation of the
word “company” ). Moreover, while
the act of 1869 applies to all mines
in the Stannaries, § 3, the act of
1887 applies only to metalliferous
mines and tin streaming works in
that district, § 3.
(n) 32 & 33 Vict. c 19, § 9, and
50 & 51 Vict. c. 43, § 28. Compare
the two sections, and notice that by
the latter act a penalty is imposed
for any omission or false entry, §§
23 & 24. See, as to mine club funds,
§ 13.
(0) 50 & 51 Vict. c. 48, § 25. A
penalty is imposed for any breach of
duty. The accounts are to be printed
and a copy sent to each shareholder,
ib., § 26.
(p) Ib. § 32.
(q) 32 & 33 Vict. c 19, § 9, and
18 & 19 Vict. c. 32, § 22. Mest
Devon Great Consols Mine, 27 Ch.
D. 106.
(r) 32 & 33 Vict, ¢. 19, § 7,
826
Bk, III. Chap. 1,
Sect. 4.
Meetings and
votes.
Shares.
Forfeiture of
shares.
Relinquishment
of shares.
Transfer of
shares.
Sale and amal-
gamation.
MANAGEMENT OF COMPANIES.
There must be an ordinary meeting of the company once
every sixteen weeks (s). Resolutions at a meeting are
passed by the votes of a majority in value of the share-
holders present in person or represented by proxy (t). A
meeting with special notice has power to make calls and audit
the accounts (w).
The company has power by a resolution passed at a meeting
with special notice (x), to forfeit (y) shares for the non-payment
of calls, after notice requiring payment has been given by the
company (z). Shares when forfeited become the property of
the company and may be disposed of as it thinks fit.
Shareholders may relinquish their shares by notice in
writing delivered to the purser, and the shares thereupon
become the property of the company (a). But by the Stannaries
act, 1887 (b), the relinquishment to be valid must be made at
least six weeks before a resolution is passed, or an order made,
for winding up the company.
Forfeited and relinquished shares may be sold by the com-
pany, and may be bought by the shareholders (c). A statutory
declaration by the purser, that the requirements of the act,
necessary to constitute a valid forfeiture or relinquishment,
have been complied with, and his receipt for the purchase
money, confer a good title on the purchaser (d),
The company need not recognize the transfer of a share
until all calls are paid (e). Nor need it recognize a fraudulent
transfer (f), nor the transfer (g) nor relinquishment (hk) of a
fractional part of a share. —
The company has also power to sell its machinery with or
(s) 50 & 51 Viet. ¢. 43, § 25.
(t) 82 & 33-Vict. c. 19, § 4; for
the basis on which relinquished
shares are now to be valued, see ib.,
meaning of special resolution, see
ib. § 6.
(u) Th. § 10,
(«) For what constitutes such a
meeting, see ib. § 5.
(y) Ib. §§ 16 & 17, and see Rule
v. Jewell, 18 Ch. D. 660.
(z) For the service of notices by
the company, see ib. § 8.
(a) Ib. §§ 21 & 22.
(b) 50 & 51 Vict, c, 43, § 22. For
§ 21, and see also Prosper United
Mining Co, '7 Ch. 236, and Frank
Mills Mining Co., 23 Ch. D. 52.
(c) 82 & 38 Vict. c. 19, §§ 18
& 21,
(d) Th. §§ 19 & 23,
(e) Ib. § 14.
(f) Ib. § 35, and see Chynoweth’s
ease, 15 Ch. D. 13.
(g) Tb. § 15.
(h) Tb. § 22.
UNDER THE COMPANIES CLAUSES CONSOLIDATION ACT. 827
without its interest in the leases of its mines (i), and to amal- Bk. ee 1.
gamate with a company working an adjoining mine (4). Ss
2. Companies governed by 8 & 9 Viet. c. 16.
First, as to the managing body.
- The Companies’ clauses consolidation act contains several 1. Directors
important provisions relating to the appointment, rotation, Samet
powers, and proceedings of directors of the companies to § &? Viet
which the act applies (J). The special act of such a company
is supposed to fix the number of its directors, and this number
cannot be varied except within such limits as may be thereby
allowed (m). A certain number of the directors are required
to retire from office in rotation every year, so that all the
directors may be changed every three years; the persons to
retire are to be determined by the directors by ballot if they
do not otherwise agree; but the persons to take their place
are to be elected by the shareholders (nr). The directors may
be removed by the shareholders at a general meeting (0).
Occasional vacancies are to be supplied by the directors them-
selves (p). In order that a person may be eligible as a
director he must be a shareholder, and hold as many shares as
may be required by the company’s special act (q). Moreover,
it is expressly declared that no person holding an office or
place of trust or profit under the company, or interested in
any contract with the company, is capable of being a director (r);
and that if any director accepts or holds any other office or
place of trust or profit under the company, or is directly or
indirectly concerned in any contract with the company, or
(4) Ib. § 24. and cases there cited.
(k) 50 & 51 Vict. c. 43, § 27. — (n) 8 & 9 Viet. c. 16, §§ 88, 83, 84,
Notice that the majority necessary (0) § 91. Isle of Wight Ratl. Co.
to pass the special resolution in these v. Tahourdin, 25 Ch. D. 320.
two cases is different. (p) Tb. § 89.
(1) See 8 & 9 Vict. c. 16, §§ 81 to (q) Ib. § 85. See Portal vy.
100. Emmens, 1 C. P. D, 221 and 664 ;
(m) Ib. §§ 81 & 82. See on the Kincaid’s case, 11 Eq. 192 ; Forbes’s
construction of such acts, Portal vy. case, 19 Eq. 333.
Emmens, 1 C. P. D, 201 and 664, (r) Th. § 85,
328
Bk. TIT. Chap. 1.
Sect. 4.
Contracts be-
tween directors
and company,
Foster v. Oxford
Railway Com-
pany.
Nature of
disqualifying
contract,
MANAGEMENT OF COMPANIES.
participates in the profits of any work to be done for it, or
ceases to be the holder of the prescribed number of shares,
then his office shall become vacant, and he shall cease from
voting or acting as a director (s). But an exception is made
as regards a director whose only interest in a contract with
the company arises from his having shares in another company
with which such contract is made (t).
These provisions do not, like the similar clauses of the re-
pealed act of 7 & 8 Vict. c. 110 (w), render void a contract
made between a director and the company, unless such con-
tract is confirmed by the shareholders; and it was held in
Foster v. The Oxford Railway Company (x), that under the
act 8 & 9 Vict. c. 16, such a contract was not void. But it
must not be forgotten that, although the act does not ex-
pressly invalidate contracts of this description, there is a well-
established equitable principle which precludes any person
whose duty it is to take care of others, from binding them by
any bargain entered into on their behalf with himself, unless
all the circumstances relating to such bargain are fully and
clearly explained to them (y).
With respect to the nature of the contracts which disqualify
a person interested in them from being a director, it has been
held, that they must be contracts made with the company in
the prosecution of its undertaking; and that there is nothing
to prevent a banker of a company from being one of its
directors (z).
(s) 8 & 9 Vict. c. 16, § 86.
(t) Ib. § 87.
(vu) See 7 & 8 Vict. ¢. 110, § 29.
The following decisions upon that
section may be usefully referred to.
Ernest v. Nicholls, 6 H. L. C. 401;
Curtets v. Anchor Insur. Co., 2 H.
& N. 537; Poole v. National, dc,
Assur. Society, ib. 687; He parte
Stears, Johns. 480; Stears v. South
Essex Gas Co, 9 C. B. N. S. 180.
See as to the purchase of shares by
directors, Hodgkinson y. Nut. Live
Stock Insur. Co., 26 Beav. 473, and
4 De G. & J. 422; Lane’s case, 1
De G, J. & 8, 504 ; and as to loans,
Teversham v. Cameron’s, d&c., Rail.
Co., 3 De G. & S. 296; Murray's
Executors’ case, 5 De G. M. & G.
746 ; Baker’s case, 1 Dr. & Sm. 55 ;
Bluck v. Mallalue, 27 Beav. 398;
British Prov. Ass. Society v. Norton,
3 N. R.147; Paul and Beresford’s
case, 33 Beav. 204,
(z) 13 C. B. 200. But query this
case, see Aberdeen Rail. Co. v. Blaikie,
1 McQu. 461; Flanagan v. G. W.
Rail. Co., 7 Eq. 116, in which such
contracts were held invalid.
(y) See infra, Ch. 2, § 2, duties of
directors.
(%) Sheffield and Manchester Rail,
UNDER THE COMPANIES CLAUSES CONSOLIDATION ACT. 829
To return to the act. The directors have the management Bk. ee 1.
of the affairs of the company, with the exception of such as a.
are required to be transacted by a general meeting (@). directors,
They are subject to the control of a general meeting specially
convened for the purpose, but no resolution of any such
meeting renders invalid what may have been done before the
resolution passed (b). The directors are required to hold
meetings at such times as they shall appoint, and they are
empowered to adjourn such meetings as they may think
proper (c). Any two directors may require a meeting of direc-
tors to be called (c). One-third of the whole number of
directors constitutes a quorum, unless some other quorum is
prescribed by the company’s special act (c). All questions
at any meeting are determined by a majority of votes of the
directors present, and, in case of an equality of votes, the
chairman has a casting vote (c). A chairman is required to be
elected, and the elected chairman continues in office for a
year (d@). A deputy-chairman may be elected, if the directors
think fit, and vacancies in the office of chairman and deputy-
chairman are to be filled up (e). In case of the absence at any
meeting of the chairman and deputy-chairman, the directors
present are to choose one of their number to be a chairman
for that meeting (/).
The directors are authorised to delegate their powers to one Delegation of
or more committees (g). Members of committees must act in?”
concert and not delegate their powers to one of their number (h).
The mode in which contracts are to be made on behalf of Contracts by
the company has been already explained (2). nee
The directors are required to cause to be entered in proper Duty to keep
books, notes or minutes of all appointments and contracts made Peden
by them, and of the orders and proceedings of all meetings of
Co. v. Woodcock, 7 M. & W. 574. (d) Tb. § 93.
The cases referred to above, in note (e) Ibid.
(u), may be usefully consulted on (f) Ib. § 94.
this head. See also Lewis v. Carr, (g) Ib. §§ 95 & 96. See D'Arcy
1 Ex. D. 484. v. Tamar Rail. Co., L. R. 2 Ex. 158,
(a) 8 & 9 Vict. c, 16, § 90. See, where a bond was sealed without
as to this, § 91, and infra, p. 332. authority.
(6) Ib. § 90. (h) Cook v. Ward, 2 CG. P. D. 255.
(c) Ib. § 92. See infra, note (y). (+) Ib. § 97; see ante, p. 226,
330
MANAGEMENT OF COMPANIES,
Bk, IIT, wa 1.the company, and of the directors and their committees (j).
Sect. 4.
Acts of de facto
directors valid.
Indemnity of
directors.
Duty to take
security from
subordinate
officers,
2. Shareholders
in companies
governed by
8 & 9 Vict.
vc. 16.
All entries are to be signed by the chairman of the meeting at
which they are made, and entries so signed are receivable in
evidence without any preliminary proof (hk).
The proceedings of de facto directors are not invalid, although,
it may afterwards be discovered that there was some defect in
their appointment, or that they were disqualified (J).
The directors are not personally liable for what they may
lawfully do on behalf of the company, and they are entitled to
be indemnified by the company against all costs, charges, and
expenses properly incurred by them in the exercise of the
powers entrusted to them (m).
The directors are required to take security from every
person entrusted with the custody or control of the monies of
the company (n); and they are empowered to demand from
every officer employed by the company an account of all
monies received by him on behalf of the company and the
delivery up of all receipts and vouchers, and payment of the
balance which may appear to be owing from him on such
account (0). A summary remedy is provided in case such a
demand is not complied with (p), and also against any officer
believed to be about to abscond without accounting (q).
Secondly, as to the shareholders.
Ordinary general meetings of the shareholders are to be held
twice a year, viz., in February and August, unless the company’s
act otherwise directs (7). Extraordinary general meetings may
at any time be convened by the directors (s); but provision is
also made for convening such meetings at the instance of the
(j) 8 & 9 Vict. c. 16, § 98. Coventry, 8 De G. M. & G. 835.
(k) Ib, See as to this, Miles v. Decree on appeal, clause 6, as to
Bough, 3 Q. B. 845, and other cases the effect of not observing such
noticed ante, p. 312, clauses.
(2) Ib. § 99. Fora discussion as (0) Tb. § 110.
to the effect of such a clause, see (p) Tb. §§ 111 & 112.
Newhaven Local Board v. Newhaven (~ Ib. § 113.
School Board, 30 Ch. D. 350. (r) Ib. § 66.
(m) Tb. § 100. (s) Ib. § 68.
(mn) Ib § 109. See Hvans v.
UNDER THE COMPANIES CLAUSES CONSOLIDATION ACT. 331
shareholders (¢). In order to constitute a meeting, there must Bk. ae 1.
be present, either personally or by proxy, the quorum prescribed
by the special act; and where no quorum is prescribed, then
shareholders, holding in the aggregate not less than one-
twentieth of the capital of the company, and being in number
not less than one for every 5001. of such required proportion
of capital, unless such number would be more than twenty, in
which case twenty shareholders, holding not less than one-
twentieth of the capital of the company, shall be the quorum (u).
Every meeting is to be presided over by a chairman, viz., by
the chairman of directors, or in his absence, by the deputy-
chairman, or in the absence of both, by a director chosen by
the meeting, or in the absence of all the directors, by a share-
holder similarly chosen (x).
Fourteen days’ public notice, at least, of all meetings are to Notices of
be given by advertisement (y); and every notice of an extra- as
ordinary meeting is to specify the purpose for which the
meeting is called (s); and if any matters, except such as are
authorised by the legislature to be done at an ordinary meeting,
are to be transacted at such a meeting, the notice convening
that meeting must state what those matters are (a). The
shareholders present at any meeting are to proceed with the
business to transact which the meeting shall have been con-
vened, and with no other business ; and no business is to be
transacted at an adjourned meeting except that left unfinished
at the first meeting (0).
No shareholder is entitled to vote, unless all the calls upon Votes of share-
his shares have been paid (c); but with this qualification, and 2
except where the company’s special act otherwise provides,
every shareholder is entitled to one vote for every share he
holds up to ten, and to one additional vote for every additional
five shares up to one hundred, and to an additional vote for
every ten shares beyond the first hundred (d). Voting by
(t) 8&9 Vict. c. 16, § 70. (2) Thid.
(uw) Ib. § 72. For some purposes (a) Th. §§ 67, 71, 138.
a less quorum is sufficient, see the (b) Ib. § 74, and see §§ 67 & 69,
§ 72. (c) Tb. § 75.
(x) Ib. § 73. (d) Ibid.
(y) Ib. § 71, and see § 138.
332
Bk, ITI. Chap. 1.
Sect. 4.
Election of
officers,
Other powers of
shareholders,
Sealing register.
MANAGEMENT OF COMPANIES.
proxy is allowed, subject to certain regulations, easily com-
plied with (e); and every proposition is determined by a
majority of votes, the chairman having the casting vote in
case of an equality(f). Where a share is registered in the
names of more persons than one, he whose name stands first
on the register is to be treated as the shareholder for all
purposes of voting (g). Lunatic shareholders are entitled to
vote by their committees, and infant shareholders by their
guardians (kh). In case of a dispute as to whether any reso-
lution has been passed by the required majority, a poll may be
demanded; but if no poll is demanded the decision of the
chairman is final (7).
The shareholders elect the directors (k); but occasional
vacancies occurring among them may be filled up by the con-
tinuing directors (1). The shareholders also appoint the audi-
tors, and determine the remuneration of the directors, auditors,
treasurer, and secretary, the amount of money to be borrowed
on mortgage, and the extent to which the company’s capital
may be augmented (m). Dividends, moreover, can only be de-
clared at a general meeting of the shareholders (n). The share-
holders can also, at a meeting specially convened for the pur-
pose, make regulations for the conduct of the directors (0); or
remove them(p). The power of making bye-laws may be
exercised by the directors, subject to the control of the share-
holders (q).
The company’s register of shareholders is to be authenticated
(ec) 8 & 9 Vict. c. 16, §§ 76 & 77,
and 51 & 52 Vict. c. 48. See ante,
p. 309.
(f) 8&9 Vict. c. 16, § 76.
(g) Ib. § 78.
(h) Ib. § 79.
(7) Tb. § 80.
(k) Ib. §§ 83 &91. As to removal,
see ante, p. 327.
(2) Ib. § 89.
(m) Ib. § 91. See, too, as to
auditors, §§ 101 & 104, and as to
borrowing money, § 38, et seg. A
company must pay its secretary for
his services, although his remune-
ration may not have been fixed at
a general meeting, Bill v. Darenth,
dc., Rail. Co., 1 H. & N. 305.
(n) 8 & 9 Vict. c. 16, § 91.
(0) Ib. § 90.
(p) $91. Isle of Wight Rail. Co.
v. Tahourdin, 25 Ch. D. 320.
(q) Ib. §§ 90 & 124. The bye-
laws must be under seal. A justice
of the peace who is a shareholder
cannot convict for a breach of a
bye-law, R. v. Hammond 3.N, R.
140,
UNDER THE COMPANIES AcT, 1862. 833
by the seal of the company at the ordinary general meetings of Bk. ee ae 1,
shareholders (r). —
Shares cannot be forfeited for non-payment of calls without Forfeiture of
the sanction of a general meeting of shareholders (s). ae
The shareholders have a right to inspect and take copies Right to inspect
of (j— books, &c.
The shareholders’ address-book (w).
The register of mortgages and bonds (z).
The register of consolidated stock (y).
. The register of debenture stock (2).
. The company’s books of account (a).
oe po
. The company’s special act (b).
They have also a right to have copies of, or of any part of
the shareholders’ address-book, and the company’s books of
account, and special act (c).
Copies of the company’s special act may always be seen by
any person interested (d).
8. Companies governed by the Companies act, 1862.
The constitution of a company formed under the act of Constitution of
1862 is determined by its memorandum of association and its S™Pany formed
articles, to copies of which the members are entitled (e). Both
the memorandum and the articles bind the members as if they
had signed and sealed them, and had covenanted to observe
their conditions, subject to the provisions of the act(f). The
memorandum of association defines the nature and objects of
the company, and cannot be altered in these respects, although
(r) 8 & 9 Vict. c. 16, § 9. (2) 26 & 27 Vict. c. 118, § 28.
(s) Ib. §§ 31 & 82. See wmfra, Mutter v. Eastern Midlands Rail. Oo.,
book iii. c. 6, as to forfeiture of 38 Ch. D, 92.
shares. (a) 8 & 9 Vict. c& 16, §§ 117 &
(t) See as to this, Mutter v. Eastern 119.
Midlands Ratl. Co., 38 Ch. D. 92, (b) Ib. § 161.
noticed ante, p. 314. (c) Ib. §§ 10, 119, 161.
(uw) Ib. § 10. (d) Ib. § 161. Printed copies can
(x) Ib. § 45. be bought of the Queen’s printers,
(y) Ib. § 63. Holland v. Dickson, (c) 25 & 26 Vict. c. 89, § 19.
37 Ch. D. 669. (f) Ib. §§ 11 & 16.
334
Bk. III. Chap. 1.
Sect. 4.
Constitution of
existing com-
panies registered
under the act.
MANAGEMENT OF COMPANIES.
it may in some others (g). The articles contain regulations
for the management of the company’s affairs, and may be
altered from time to time by a special resolution of the mem-
bers (hk), notwithstanding any article to the contrary (i). But
neither the articles themselves nor the power of altering them
authorises any alteration of the constitution of the company, as
defined by the memorandum of association (k); ¢.g., the issue
of preference shares (1), the payment of dividends out of
capital(m) ; the purchase of its own shares (n); the issue of
shares at a discount (0); or the reduction of capital otherwise
than as allowed by the Companies acts, 1867, 1877, and 1880,
which will be referred to hereafter (p).
The constitution of an existing company, registered but not
formed under the act of 1862, is determined by the act of Par-
liament, letters patent, deed of settlement, or other instrument
creating or regulating the company. This constitution, so far
as it is fixed by act of Parliament or letters patent, is only alter-
able by the legislature or the Crown, as the case may be (q);
(g) Ib. § 12. See, also, as to the
liability of the directors, 30 & 31
Vict, c. 131, § 8; as to reducing
capital, ib. § 9, et seq., amended by
40 & 41 Vict. c. 26; as to sub-
dividing shares, ib. § 21; as to
declaring that a portion of the
capital shall not be called up
except in the event of a winding-
up, 42 & 43 Vict. c. 76, § 5; as to
returning profits in reduction of
paid-up capital, 43 Vict. c. 19, §§
3-6. See, also, 28 & 29 Vict. o. 78,
§ 3, amended by 33 & 34 Vict. ¢. 20,
which enables certain companies to
restrict their objects in order to
avail themselves of the privileges
of issuing transferable mortgage
debentures under that act.
(h) § 50. Sheffield Nickel Co. v.
Unwin, 2 Q. B. D. 214.
(t) Walker v. London Tramways
Co., 12 Ch. D. 705.
(k) Ashbury Rail. Carriage Co. v.
Riche, L. R. 7 H. L. 653; Ashbury
v. [Vateon, 80 Ch. D, 376, 28 Ch. D.
56, and ante, p. 164.
(l) Hutton v. Scarborough Hotel
Co., 2 Dr. & Sm. 521; Ashbury v.
Watson, 30 Ch. D. 376; and dis-
tinguish Harrison v. Mexican Rail.
Co., 19 Eq. 358; South Durham
Brewery Co., 31 Ch. D. 261, ante,
p. 322, note (b). See infra, c. 3, § 1.
(m) Guinness v. Land Corporation
of Ireland, 23 Ch. D. 349.
(n) Trevor v. Whitworth, 12 App.
Ca. 409, disapproving of the reason-
ing of the Court of Appeal in
Dronfield Silkstone Coal Co., 17 Ch.
D. 76; Taylor v. Pilsen, &e., Light
Co., 27 Ch. D, 270, must be con-
sidered as overruled on this point.
(0) Almada yv. Tirito Co., 38 Ch.
D. 415 ; New Chile Gold Mining 0o.,
ib. 475 ; Addlestone Linoleum Co, 37
Ch. D. 191. Plaskynaston Tube Co.,
23 Ch. D. 548, and Ince Hall Rolling
Mills Co., ib. 545 note, are overruled.
(p) Hope v. International Finan-
cial Soc., 4 Ch. D. 327.
(yg) 25 & 26 Vict. c, 89, § 196, cl.
UNDER THE COMPANIES AcT, 1862. 885
nor can the members change the constitution of the company Bk. Te 1.
in any of those matters which, had it been formed under the
act of 1862, would have been unalterable by its members (7).
But those regulations which are not contained in any act of
Parliament or letters patent, and which, if the company had
been formed under the act of 1862, might have been altered by
its members, may be altered by a special resolution of the
members of an existing company, after its registration under
the act (s).
A company registered: under the act as an unlimited com- Power to change
pany can now be converted into a limited company under the oe
provisions of the Companies act, 1879 (t).
Very little is to be found in the act relating to the powers of Management
directors, or to the internal management of a company’s affairs. Se mae
These matters are for the most part left to be provided for by
each company as it may deem proper, and are accordingly dealt
with in Table A.
The act of 1862, however, requires that a general meeting Provisions of
of members shall be held once a year at least (u), and the **
amendment act requires that every company formed under the
act of 1862, after the 1st of September, 1867, shall hold a
general meeting within four months after its memorandum of
association is registered (7). Moreover, the act of 1862 enables
the members, by a special resolution, the meaning of which is
defined (x), 1. to alter the constitution and regulations of the
company to the extent already pointed out; 2. to appoint
inspectors to examine into the affairs of the company (y) ;
and 38. to have the company wound up (z). The act, further,
renders the keeping of proper minutes compulsory, and enacts
that, until the contrary is proved, meetings and proceedings,
of which minutes shall be properly made, shall be considered
3&4, See, also, 30 & 31 Vict.c. Gibson v. Barton, L. R. 10 Q. B.
181, $4 329.
(r) § 196, cl. 6. (v) 30 & 81 Vict. c. 131, § 39,
(s) § 196, and see § 176, as to (x) 25 & 26 Vict. c. 89, § 51.
companies governed by Table B. of (y) § 60.
the act of 1856. (2) §§ 79 & 129. The members
(t) 42 & 43 Vict. c. 76,§§ 4&5. of unregistered companies have not
(u) 25 & 26 Vict. c. 89, § 49. this power, see § 199.
336 MANAGEMENT OF COMPANIES.
Bk. cae le 1. as duly convened and transacted, and that all appointments of
-— directors, managers or liquidators, shall be deemed valid, and
that all their acts shall be valid, notwithstanding any defect
that may afterwards be discovered in their appointments or
qualifications (a).
Examination of, | For the greater protection of the members of companies the
company’s affairs
by inspectors, act contains some very important provisions, enabling not
only the members (), but also, on their application, the Board
of Trade to appoint inspectors to examine into and report
upon the affairs of all companies registered under the act (c).
A copy of the report of the inspectors, sealed with the seal of
the company, is also made admissible in any legal proceeding
as evidence of their opinion on any matter contained in their
report (d).
Provisions of Passing now to the regulations in Table A., the following
Table A. s : ; ‘
rules will be found respecting the managing bodies and the
members of companies to which that Table applies.
First, as regards the managing body.
Directors. The business of the company is to be managed by the
Table A, directors, and, in case of any vacancy in their body, by those
who continue in office (Table A., Nos. 55 and 56). The
powers of the directors are, however, subject not only to the
provisions of the act, but also to the company’s regula-
tions (ib.), which, as before observed, may be altered by
special resolution. What is done by de facto directors is valid,
notwithstanding the subsequent discovery of a defect in their
appointment or of their disqualification (No. 71, and § 67 of
the act) (e).
The directors are the proper persons to make calls (No. 4),
forfeit shares (Nos. 17 and 22), and appoint the first auditors
(a) 25 & 26 Vict. c. 89,§ 67. See Coal Co. v. Teague, 5 H. & N. 151,
ante, p. 312, where the defect in the appointment
(b) § 60. of directors was held not to be cured
(c) §§ 56-59. by a clause of this nature. Compare
(d) § 61. Murray v. Bush, L. R. 6 H. L. 37,
(e) See ante, p. 300, Newhaven which turned on a similar clause in
Local Board v. Newhaven School 7 & 8 Vict. ¢. 110, § 30,
Board, 30 Ch. D. 350; and Howbeach
UNDER THE COMPANIES ACT, 1862. 3387
(No. 84). But the directors cannot, without the sanction of Bk. oe
the members, convert shares into stock (No. 28), increase the ————-——
capital by issuing new shares (No. 26), or declare dividends
(No. 72).
Until directors are appointed the subscribers of the memo- Appointment
randum of association are the directors (Table A., No. 53), ae
and are the persons to determine the number and names of
the first directors (No. 52). This number may afterwards be
varied by the members (No. 63). At the first ordinary meet-
ing of the members, after the registration of the company,
the whole, and in every subsequent year one-third, of the
directors, must retire (No. 58). In case of any dispute as to
who shall retire in the first two years after the first, the per-
sons to retire must be determined by ballot (No. 59); but
afterwards those who have been longest in office must retire
(No. 59). .
Fraud by the
seller.
SALES NOT ON STOCK EXCHANGE.
for indemnity which would obviously remove the vendor's
objections.
It is conceived that an unpaid vendor of a share in a com-
pany has the same right of stopping the delivery to an in-
solvent purchaser that a seller of ordinary goods has in similar
cases.
A person who fraudulently sells shares in a company which
he knows has no existence, is criminally responsible (¢). But
the rule caveat emptor renders it lawful for a person holding
shares in an insolvent company to sell them to any one willing
to buy them; and in the absence of misrepresentation by
the seller, the buyer is apparently without remedy against
him (2).
A person who has been induced to purchase shares by fraud
on the part of the seller, can, at his option, either keep the
shares and sue for the damage he has sustained by the fraud,
or repudiate the contract, and recover the money paid under
it. But he cannot adopt the latter alternative unless he can,
when the action is brought, restore the shares in the same
state in which he took them, and place the seller in the same
position in which he stood before the sale (x). The purchaser
can also maintain an action to rescind the contract, and to
compel the vendor to indemnify him. And the fact that the
plaintiff sold some of the shares before he knew of the fraud,
will not disentitle him to relief, if the contract is severable,
and this it has been held to be, where all the shares bought
are shares in the same company (y). Nor will the forfeiture
of the shares after the commencement of the action affect
his rights (z). Unless, however, the company is implicated
in the fraud, the purchaser, if he has become a. share-
(t) See Maccallum v. Turton, 2 Y. taking shares on the faith of frau-
& J. 183. dulent statements, see Clarke vy.
(u) See Remfry v. Butler, E. B. & Dickson, 6 C. B. N.S. 453 ; Bedford
E. 887; Stray v. Russell, 1 E.& FE. v. Bagshaw, 4 H. & N. 538; David-
888, and ante, p. 493. son v. Tulloch, 3 Macqueen, 783 ;
(«) Clarke v. Dickson, E.B. & E. Tirycross v. Grant, 2 C. P. D. 469.
148; and see Maturin v. Tredinnick, (y) Maturin v. Tredinnick, 2 N.
cited in the next note. As to R. 514, and 4 ib. 15,
actions for damages sustained by (x) Ibid.
SALES BY AUCTION. 497
holder, cannot, it is conceived, prevent calls being made Bk. eae 4.
upon him (a). ee
If a person is induced to sell shares by the fraud of the Frand on seller.
purchaser, the vendor has similar rights to those which a pur-
chaser has in the converse case already considered. But ee
where the purchaser is innocent of the fraud, and a persou’s chaser.
shares have been fraudulently sold and transferred by others,
his rights against the purchaser will depend upon whether the
latter has acquired the legal ownership or the right to call for
the legal ownership, bond fide, for value, and without notice of
the fraud. If he has, his title cannot be impeached (b) ; but
if he has not, the shares may be recovered from him, unless
the claimant has lost his right to relief by his own negligence,
lapse of time, or some other special circumstance (c).
Shares are not unfrequently sold by auction. If an auc- Sales of shares
tioneer sells shares, without disclosing the persons on whose ne
behalf he sells, he will be personally responsible for the due
completion of the sale, and will be liable to the purchaser in
damages for the non-transfer of the shares to him (d). More-
over, if in such a case the auctioneer, when called upon to
transfer the shares refers the purchaser to the owners, it
becomes unnecessary for the purchaser to tender a deed of
transfer to the auctioneer before suing him, for by such a
reference the auctioneer discharges the purchaser from ten-
dering any deed of transfer to him(e). If shares are sold
subject to a condition that if they are not paid for by a certain
time, the seller shall be at liberty to resell them, and shall be
entitled to recover from the purchaser any loss sustained by
the resale, and the shares are sold and resold under this con-
dition, the first purchaser can be sued on the special contract
entered into by him (f).
(a) See ante, booki. c. 3, and infra, (c) See Tayler v. Great Indian
book iv. c. 1, § 10, under the head Rail. Co.,4 De G. & J. 559, ante,
Contributories. loxam v. Metropo- pp. 473, and other cases of forged
litan Cab Oo.,4.N. R. 51, V.-C. W., — transfers cited ante, p. 483 et seq.
where an injunction was granted is, (d) Franklyn v. Lamond, 4 C. B.
it is conceived, not opposed to this, 637.
as the plaintiff was not a share- (e) Ib.
holder. (f) Lamond v. Davall, 9 Q. B.
(b) See ante, pp. 476 et seq. 1030.
L.c. # kK
498
Bk. IIT. Chap. 4.
Sect. 6.
Actions by pur-
chaser against
seller.
Actions by seller
against pur-
chaser.
Transfers in
blank.
Damages re-
coverable when
contract for sale
is broken.
SALES NOT ON STOCK EXCHANGE.
In an action by a purchaser of shares against a seller, for
not transferring the shares bought, the purchaser must prove
—l, that he was ready and willing to pay for the shares (9),
and 2, that he tendered to the seller for his execution a
proper instrument of transfer (h). The necessity for such
tender, however, only exists upon the supposition that some
formal document is required to render the transfer of the shares
complete, and upon the further supposition that the seller has
not discharged the purchaser from making the tender (2).
Again, a seller suing a purchaser for not accepting shares
must prove readiness and willingness on his, the seller’s part,
to transfer those shares to the purchaser (k). The circum-
stances that a call is due upon shares agreed to be sold, and
that they are not transferable so long as the call remains
unpaid, do not disprove readiness and willingness on the part
of the seller to transfer, if he was in fact ready and able to pay
the call in question (2).
The effect of transfers in blank has been already con-
sidered (m). The decisions at law on this subject must now
be taken with the qualifications rendered necessary by the
decisions in equity.
In an action by the seller of shares against the purchaser
for not accepting them, the damages are measured by the
difference between the contract price and the market price at
the time of the purchaser’s breach of contract (mn); and it is
for the jury to determine when this time was(o). So, in an
action by the purchaser of shares against the seller for not
delivering them, the damages are measured by the difference
(9) Lawrence v. Knowles, 5 Bing. W. 849. As to the duty to procure
N.C. 399, In Tempest v. Kilner, 2 a transfer, see ante, p. 491, and infra,
C. B. 300, the averment of readiness _p. 506.
and willingness was traversed too (1) Shaw v. Rowley, 16 M. & W.
largely. 810.
(h) Stephens v. De Medina, 4 Q. (m) Ante, p. 471 et seq.
B. 422; Bowlby v. Bell, 3 C. B. (n) Shaw v. Holland, 15 M. & W.
284 ; Green v. Murray, 6 Jur. 728, 136; Stewart v. Cauty, 8 M. & W.
Q. B. 160 ; Pott v. Flather, 5 Ra. Ca. 85.
(t) Franklyn v. Lamond, 4 C. B. (0) Ibid., and see Barned v.
637. Hamilton, 2 Ra, Ca. 624.
(kt) Hunnwic v. Goldner, 11 M. &
SPECIFIC PERFORMANCE. 499
between the contract price and the market price at the time Bk. etre 4.
when they ought to have been delivered(p). Where, however,
an action is brought for not re-delivering shares lent and
agreed to be returned ona given day, the damages are mea-
sured by the market price of the shares at the time of the
trial (7); and the same rule is adopted in estimating damages
in actions against companies for not delivering shares at the
time they ought (7).
An action will lie for specific performance of a contract Specific perform-
for the purchase and sale of shares (s) if it is capable of being oe vos
performed (t): and the purchaser will be compelled to pay the
price, although it may have been expressed to be paid in the
deed of transfer, if, in fact, it was not thus paid (w); and will
be compelled to accept a transfer of the shares he has bought,
and to indemnify the seller from all liabilities accruing subse-
quently to the sale (a); and the seller will be compelled to
account for any monies he may have received from an improper
subsequent sale to another person (y). The Court has, how-
ever, refused to compel a purchaser of scrip to accept shares,
and indemnify the seller from calls upon them(z); and to
compel an allottee of shares to accept them, and to execute
the company’s deed in respect of them (a); and to compel the
(p) Tempest v. Kilner, 3 C. B.
253.
(q) Owen v. Routh, 14 C. B. 327.
If the shares have been returned,
the damages must be limited to the
loss caused by their detention.
Williams v. Archer, 5 C. B. 318.
(r) Cockerell v. Van Diemen’s Land
Co., 18 C. B. 454, and 1C. B. N.S.
732,
(s) Ante, p. 493.
(t) See, as to this, Bermingham v.
Sheridan, 33 Beav. 660, and com-
pare Poole v. Middleton, 29 Beav.
646; and see ante, p. 493, from
which it appears, that although re-
gistration in the purchaser’s name
may be impossible, he can be com-
pelled in equity to indemnify the
vendor.
(u) Wilson v. Keating, 27 Beav.
12],and 4 De G. & J.588. The case
seems, at first sight, to have been a
hard one upon the defendant ; but
the deed stated that he had paid the
money, and this he knew was not
the fact. He could not, therefore,
be treated as having been misled by
the plaintiff or by the contents of
the deed.
(x) Wynne v. Price, 3 De G. & S.
310, and other cases cited, ante,
pp. 492, 493. As to the right of a
mortgagee of shares to an indemnity
from his mortgagor, see Phene vy,
Gillan, 5 Ha. 1.
(y) Beckitt v. Bilbrough, 8 Ha.
188.
() Jackson v. Cocker, 4 Beav. 59.
Compare this with the last case.
(a) Sheffield, de, Gas Co. v. Hur-
rison, 17 Beay. 294,
KK 2
500 SALES ON STOCK EXCHANGE.
Bk. ud oe 4. promoters of a company to deliver shares to a subscriber to
-— — the company ()). Neither will the Court interfere to compel
the completion of a gratuitous and intended transfer (c).
In Povle v. Middleton (d), a purchaser of shares obtained a
decree against the seller for the specific performance of the
contract of sale, although the directors refused to allow the
defendant to transfer his shares. The contract was valid
without their consent; and they could not prevent the defen-
dant from completing it, nor object to that mode of transfer
Relief where
directors refuse
to allow a
transfer.
which they were in the habit of allowing in other cases.
How far disputes between the vendor and purchaser of shares
may be determined by means of the summary jurisdiction con-
ferred by § 85 of the Companies act, 1862, has been often dis-
cussed, but is not yet satisfactorily settled. The jurisdiction
Jurisdiction
under § 35 of
the Companies
act, 1862,
apparently exists, but it is discretionary only, and the decisions
seem to show that the Court will be slow to exercise the juris-
diction except where the legal title of the applicant is clear (¢).
2. Sales on the Stock Exchange.
Nales of shares
on the Stock
xchange.
Having now alluded to contracts for the sale of shares other-
wise than on the Stock Exchange, it is proposed to notice the
effect of entering into such contracts through members of that
body. In practice scrip and shares are usually bought and
sold through jobbers and brokers (f); anda person employing
Brokers and
jobbers.
(b) Columbine v. Uhichester, 2 Ph.
27. In this case, however, the pro-
moters did not appear to have any
shaves which they could allot.
(c) See Milroy v. Lord, 4 De G.
F.& J. 264.
(d) 29 Beay. 646.
(e) See Ward and Henrys case, 2
Ch. 431; Musyrure and Hart's cuse,
5 Ey. 193; Ber parte Sargent, 17 Eq.
273; Ex parte Shaw, 2 Q. B. D. 463,
aud sce Fry, Sp. Per, p. 488,
2nd ed.
(f) Brokers buy and sell for prin-
cipals, jobbers for themselves ; but
as between all members of the Stuck
Exchange brokers are always re-
garded as principals ; and for the
purposes of the text there is no ma-
terial distinction between brokers
and jobbers. That their liabilities
on these contracts are alike, see
Lord Blackburn’s judgment in
Maated v. Paine, No, 2, L. R. 6 Ex.
132. See, as to brokers, Partn., p.
97, and Baring v. Corrie, 2 B. &
A. 137, In this case it is said
brokers have no business to con-
tract as principals ; but this has no
application to sharebrokers, as is
evident from the cases alluded to in
the text.
SALES ON STOCK EXCHANGE, 501
a broker to buy or sell is, in the absence of evidence to the Bk. otal 4,
contrary, presumed to authorise him to buy or sell according
to the rules and usages prevailing in the market where the
commodity is to be bought or sold (g); and persons employing
members of the Stock Exchange as their brokers are bound by
the rules and usages which govern that body (h) ; provided they
are not unreasonable, or on some other ground illegal, ¢.y.,
contrary to 30 Vict. c. 29(?). What these rules and usages are
is a question of fact to be proved by the person who relies on
them: and in considering the cases it is important to bear in
mind that the decisions are made only with reference to the
custom as proved or admitted in the particular case under con-
sideration, and do not conclude the question as to what the
custom really is.
Besides the printed rules of the Stock Exchange there are
certain established practices observed by its members, and
which are as binding upon them as the printed rules them-
selves. Both the rules and unwritten practices are altered
from time to time, but a contract must be interpreted according
tothe custom as it existed at the date of the contract (k).
The rules and practices of the Stock Exchange respecting Course of a_
the sale and purchase of shares will be found stated in Mazted See one
v. Paine (1), Bowring v. Shepherd (m), Grissell v. Bristowe (n),
Coles v. Bristowe (0), Rennie v. Morris (p), Merry v. Nickalls (q),
and Thacker v. Hardy (r); and from those cases it appears that
in the ordinary course of events a sale of shares on the Stock
Exchange is essentially a transaction of the following descrip-
tion :—
(g) See Fleet v. Murton, L. R. 7
Q. B. 126 ; Robinson v. Mollett, L. R.
7 H. L. 802, reversing L. R. 5 C. P.
646, and L. R.7 C. P. 84, and the
cases there referred to.
(h) Stray v. Russell, 1 E. & E,
888; Biederman v. Stone, L. R. 2
C. P. 504; Grissell v. Bristowe, L.
R. 4 C. P. 365; Coles v. Bristowe, 4
Ch. 3; Bowring v. Shepherd, L. R. 6
Q. B. 309; Duncan v. Hill, L. R. 6
Ex. 255, reversed in part, L. R. 8
Ex. 242.
(2) Ante, p. 489.
(k) Per Lord Blackburn, Maated
y. Paine, 2nd action, L. R. 6 Ex.
132, 160.
(1) L. R. 4 Ex. 203, and 6 Ex, 132.
(m) L. R. 6 Q. B. 309.
(n) L. R. 4 C. P. 36, and 3 C, P,
112.
(0) 4 Ch, 3, and 6 Eq. 149.
(p) 18 Eq. 203, overruled by
Merry v. Nickulls.
(q) 7 Ch. 733, and L. R.7 H. L,
530. See, also, Ha parte Grant, 13
Ch. D. 667.
(r) 4Q. B. D. 685,
502
Bk, III. Chap. 4.
Sect. 6.
SALES ON STOCK EXCHANGE.
1. There is a contract between the selling and buying
broker or jobber, to the effect that on a given day, called the
account day, the shares shall be deliverable and the price
payable.
2. That on the day before the account day (called the name
day) the buying broker or jobber gives ov passes to the selling
broker a ticket containing the name of the person to whom the
shares are to be transferred, and the price which that person
has agreed to pay for them.
3. That the name so passed can be objected to within a
limited time (10 days); and if objected to on reasonable
grounds, must be replaced by another name; the committee
of the Stock Exchange deciding, in case of dispute, whether
another name is to be given or not.
4. That the above-mentioned ticket is prepared by the
broker of the ultimate purchaser, and is passed (between 12
and 2 o’clock on the name day) by such broker to his imme-
diate vendor, and by him to his vendor, and so on, until it
reaches the broker of the original seller. The ticket is in-
dorsed by each member of the Stock Exchange, with his own
name, as it passes through his hands.
5. That the original seller executes a transfer (prepared by
his broker) to the ultimate purchaser; the consideration for
such transfer being usually stated to be the price agreed to be
paid by such purchaser (s).
6. That the selling broker looks for payment of the price at
which he sold to the broker or jobber who bought of him; but
usually takes from the broker of the ultimate purchaser the
money he has agreed to pay, and then settles for the difference,
if any, with the broker or jobber with whom he, the selling
broker, originally contracted.
From this statement it is apparent that important and diffi-
cult questions of law are likely to arise, and, in order to solve
them, it is proposed to consider the position—
(s) The confusion introduced by 188, which, however, was put right
this circumstance led to a variance in the 2nd suit, 6 Eq. 505, and 4
between the pleadings and the evi- Ch. 200,
dence in Hawkins v. Maltby, 3 Ch,
VENDOR AND PURCHASING BROKER. 503
1. Of the vendor and of the broker or jobber who agrees to Bk. ee 4.
buy from him.
2. Of the vendor and the ultimate purchaser.
8. Of the vendor and the undisclosed and intermediate
purchasers.
4. Of the vendor and purchaser as regards their respective
brokers.
1. As to the position of the vendor and of the broker or jobber who agrees to buy
from hin.
There is a clear contract between these parties which each Contract between
can enforce against the other. This has never been doubted ; ue
but the real nature of the contract has given rise to much ar jobber.
controversy. From the most recent decisions, however, it
seems that the true contract is to the effect that the vendor
will transfer to the buyer or to his nominee, and that the
broker or jobber will either accept the shares and pay for
them and indemnify the seller against all liability in respect
of them, or find some other person to do so; and that person
must be a person sui juris who has himself agreed to take
the shares, and to whom no reasonable objection can be
taken (t).
Accordingly where the name of an infant was passed, and Instances of
the transfer was made to him, the purchasing jobber was held reneerne
liable to the vendor, although being ignorant of the infancy
he had made no objection to the transferee within the time
fixed by the rules of the Stock Exchange (wu). So, where a
jobber passed the name of a person whose broker had exceeded
his authority, by extending the time for completing the sale,
and that person declined to accept a transfer, it was held that
the jobber had not relieved himself from liability in respect of
his contract (z). So, also, where the name passed was that of
a foreigner resident at Smyrna, it was held, in substance, that
(t) See Maated v. Paine, No. 2, L. 530, and 7 Ch. 733 ; overruling
L. R. 6 Ex. 132, and the cases cited Rennie v. Morris, 13 Eq. 203.
in the next few notes. («) Maxted v. Paine, 1st action, L,
(u) Merry v. Nickalls,L. R. 7H. RB. 4 Ex. 81,
504
Bk, III. Chap. 4.
Sect. 6.
Waiver of
objection to
nominee.
Grissell v,
Bristowe.
Coles .
Bristowe.
Maxted v, Paine,
No. 2.
SALES ON STOCK EXCHANGE.
the vendor might reasonably object to it; and having done so,
that the jobber remained liable (y).
But if the person whose name is given is sui juris, and is
one to whom the vendor may reasonably object, and he allows
the time for objecting to pass, and executes a transfer to that
person, the purchasing broker or jobber is discharged from all
further liability, unless, as sometimes happens, he has ex-
pressly undertaken some further obligation, e.g., to guarantee
registration of the transfer.
In Grissell v. Bristowe (z), and Coles y. Bristowe (a), the
seller had executed a transfer to the person whose name was
given as the ultimate purchaser, and he paid for the shares
and kept the transfers, but did not execute them, and did not
procure them to be registered in his name. ‘The seller conse-
quently remained liable to the company for calls, and he
sought to compel the jobber who first bought the shares to
indemnify him. But it was held both by the Court of Ex-
chequer Chamber and by the Court of Appeal in Chancery
that the jobber had duly discharged his obligations, and had
ceased to be liable. In these cases it did not appear that the
transferee could have been reasonably objected to; but the
decisions showed the true position of purchasing jobbers, and
paved the way to those which follow.
In Maxted v. Paine, No. 2 (b), the name passed was one
which could have been reasonably objected to, and was the
name of a nominee of the true purchaser, who was paid by
him for accepting the transfer. It was, nevertheless, held,
that there being no fraud on the part of the defendant (the
first purchasing jobber), he had discharged his obligation, by
procuring the acceptance of a transfer by a person who could
not himself repudiate it, and to whom the vendor had not
objected in due time. This case shows conclusively that as
between the vendor and purchasing jobber, and where they
(y) Allen v. Graves, L. R.5 Q.B. 625.
478. (b) L. R. 6 Ex. 182, and 4 Ex.
(#) L.R. 4 C. P. 36, reversing 8. 203. See as to the judgment of
C.3C. P. 112. Lord Blackburn, in this case, Merry
(a) 4 Ch. 3, reversing 8. C.6 Eq. v. Nickalls, 7 Ch. 733.
149; Loring v. Davis, 32 Ch. D,
VENDOR AND ULTIMATE PURCHASER. 505
both act bond fide, it is the duty of the vendor to make inquiry Bk. ae 4,
respecting his proposed transferee.
If, as sometimes happens, the purchasing broker or jobber Registration
has expressly guaranteed the registration of the shares, he is sana te
liable to indemnify the seller against the consequences of their
non-registration in the name of the transferee (c); but he is
not liable for the solvency of the transferee.
2. As to the position of the vendor and the ultimate purchaser.
When the ticket containing the name of the ultimate pur- Contract between
chaser issued by his brokers is delivered to the vendor, and a ae
he has executed a transfer of his shares, and that transfer has
been accepted by the purchaser, and he has paid the price, it
is plain that the vendor has become a trustee for the pur-
chaser, and that the purchaser is bound to indemnify the
vendor against all liability in respect of the shares (d). This
has been decided even where the purchaser has not executed
the transfer (d) ; and where the registration of the transfer can-
not take place by reason of the stoppage of the company (e).
The most recent decision on this point is Loring v. Davis (f),
where the original contract was void under Leeman’s act, 30
Vict. c. 29, and the transfer had not been executed by the
purchaser ; but he had authorised his agents to accept the
shares, and they had done so.
Even before the Judicature acts, where the vendor and ulti-
mate purchaser had been thus brought into direct communica-
tion with each other, the vendor could sue the purchaser at
Loring ¥.
Davis.
(c) Cruse v. Paine, 6 Eq, 641, and Hodgkinson v. Kelly, 6 Eq. 496;
4 Ch, 441. Holmes v. Symons, 13 Eq. 66. Com-
(d) Paine v. Hutchinson, 3 Eq. pare Bermingham v. Sheridan, 33
257, and 3 Ch. 388; Hodgkinson Beav. 660, which cannot now be
v. Kelly, 6 Eq. 496; Hawkins v. relied upon. See, on it, 3 Ch,
Maltby, 6 Eq. 505, and 4 Ch. 200; 393.
Shepherd v. Gillespie, 5 Eq. 293, and (f) 32 Ch. D. 625. The autho-
3 Ch. 764; Sheppard v. Murphy, Ir. _ rity to accept the shares was revoked
Rep. 2 Eq. 544, and 16 W. R. 948; by one letter but conferred by an-
Wynne v. Price, 3 De G. & Sm. 310. other sent with it.
(e) Evans v. Wood, 5 Ey. 9;
506
Bk, III. Chap. 4.
Sect. 6.
Privity of
contract,
Duty to procure
transfer.
Stray v. Russell.
SALES ON STOCK EXCHANGE.
law for such indemnity (g): for then, at all events, there was
clearly a contract between them (h).
The precise moment when the contract in these cases is
first created, has given rise to some difference of opinion,
but the better opinion seems to be that a contract between
the vendor and the ultimate purchaser exists, as soon as the
ticket containing the purchaser’s name has been handed, by
his authority, to the vendor, and he has accepted the name,
and indicated that acceptance to the purchaser (i). This
opinion is based upon the ground that the ticket is drawn up
and issued by the agent of the purchaser, who is authorised to
use the machinery of the Stock Exchange, and to transmit the
ticket to any person to whom the operation of that machinery
may bring it. When that person is ascertained, and the ticket
is handed to him, an offer is made by the purchaser to buy
of the vendor, upon the terms specified on the ticket: and
if the vendor accepts that offer, and informs the purchaser that
he has done so, it is difficult to see that anything further is
required to make a contract between the parties. This point,
however, has ceased to be of the same importance as before
the Judicature acts: for now, if the relation of trustee and
cestut que trust is shown to exist, it becomes unnecessary to
consider whether there was a contract between the plaintiff
and the defendant or not.
It was settled in Stray v. Russell (k), that in sales on the
Stock Exchange, it is not the duty of the seller of shares to
(g) Kellock v. Enthoven, L. R. 9
Q. B. 241; Bowring v. Shepherd, L.
R. 6 Q. B. 309 ; Davis v. Haycock,
L. R. 4 Ex. 373; Walker v. Bartlett,
18 C. B. 845, reversing S. C. ib.
446; Humble v. Langston, 7 M. &
W. 517. The action should be for
not indemnifying the seller. See
Sayles v. Blane, 14 Q. B. 205, and
6 Ra. Ca. 79, and the cases above.
(h) See, as to this, Hawkins v.
Maltby, 3 Ch. 188, where the con-
tract was held to be misstated.
This, however, was put right in
the 2nd suit, 6 Eq. 505, and 4 Ch.
200.
(7) See acc. per Christian, L. J.,
Sheppard v. Murphy, 16 W. BR, 948,
956 ; per Brett, J., in Bowring v.
Shepherd, L. R. 6 Q. B. 309, 328;
per Kelly, C. B., in Davis v. Hay-
cock, L. R. 4 Ex. 378, 384-386. See,
also, per Lord Blackburn, in Maated
v. Paine, 2nd action, L. R. 6 Ex.
132, 166. See, contra, Mr. Justice
Lush’s judgment in the same case.
See, also, Fry, Sp. Per., 628, 2nd ed.
(k) 1 E. & E. 888. As to sales
not on the Stock Exchange, see p.
491 et seq.
VENDOR AND ULTIMATE PURCHASER. 507
procure their transfer to the purchaser; and that a person Bk. ee 4.
who buys shares through a broker may be compelled to pay ——————-
for them, although the company may decline to accept him as
a shareholder; and he has endeavoured to repudiate the
shares. The facts of this case were as follows:—Some shares
in the Royal British Bank were sold by the defendant to the
plaintiff through brokers, who were members of the Stock
Exchange. Soon after the sale the bank stopped payment,
and the directors refused to allow any transfers of shares.
The plaintiff, the purchaser, repudiated the purchase, and
directed his broker not to pay the purchase-money. The
broker, however, did pay it, as he was bound to do by the
rules of the Stock Exchange. By the same rules it was in-
cumbent on the purchaser, and not on the seller, to obtain the
consent of the directors.to the transfer. The plaintiff took
no steps to procure such consent, and refused to repay his
broker the money he had paid for the shares. This, how-
ever, the plaintiff was ultimately compelled to do by an action
at law (1), and he then brought an action to recover their price
from the seller. It was held that the action could not be sus-
tained: 1. Because there had not been a total failure of con-
sideration, inasmuch as the plaintiff had got the transfers and
the certificates ; 2. Because, by the rules of the Stock Ex-
change, it was not the duty of the seller to procure the con-
sent of the directors to the transfers; and 8. Because the
plaintiff was not himself ready and willing to perform the
contract on his part.
It follows that if the buyer has paid the seller or his broker London Founders’
. : : Association v.
on the receipt of a proper transfer (which is the usual prac- Clarke.
tice), and the company declines to accept the buyer, he cannot
recover from the seller the amount paid for the shares, the
vendor himself being in no default (m).
A reasonable time for the transfer of shares bought and sold Time for com-
Cer : 3 3 pleting transfers.
is implied in the contract for sale; and where the sale is made
through brokers, the rules of the Stock Exchange fixing the
time within which shares sold are to be delivered are admis-
()) See Taylor v. Stray, 2 C. B. N. (m) London Founders’ Association
8. 175, 197. v. Clarke, 20 Q. B. D. 576,
508
Bk. III. Chap. 4.
Sect. 6.
Same broker
acting for hoth
parties,
\
Unilisclosed
principals.
Intermediate
purchasers.
SALES ON STOCK EXCHANGE,
‘ sible in evidence upon the question what is reasonable time,
although the buying and selling brokers are not proved to be
members of the Exchange (n). As to the delivery of certi-
ficates, see ante, p. 490.
A curious and instructive case arose in Ireland in which the
same broker acted for both buyer and seller without their
knowing it. He was instructed to sell shares in a company by
some of his customers, and he was instructed to buy shares in
the same company for others of his customers. He sent
bought and sold notes to them respectively, and in his books
he debited the buyers with the price and credited the sellers
with the same amount. Some of the buyers sent him cheques
for the money they had to pay. Others of the buyers had
money in his hands. No money reached the sellers, and they
knew nothing of what was being done about the payment of
the purchase-money. The broker became bankrupt. The
buyers sued the sellers for the shares: a decree was made
in their favour, by the Court of first instance, but this was
reversed on appeal, on the ground that the parties did not
know that the same broker was acting for them, and that
the vendors had not been paid, and that until they were, the
purchasers were not entitled to the shares (0).
3. As to the position of the vendor and the undisclosed and intermediate
purchasers.
If the first purchaser is a broker buying for a principal, the
liabilities of such principal are the same as the liabilities of a
purchasing broker or jobber (p). These have been already
examined.
But in the course of a sale on the Stock Exchange, the only
persons who are brought into contact with the vendor are the
first and ultimate purchasers. With the intermediate pur-
(n) Stewart v. Cauty,8 M.& W. plaintiff and the defendant were
160. See, also, Field v. Lelean, 6 mining sharebrokers.
H. & N. 617, where evidence of a (0) M’Devitt v. Connolly, 15 L. R.,
custom among mining sharebrokers Iz. 500, reversing S. C., 13 ib, 207.
to pay on delivery was held admis- (p) See Lord Blackburn’s judg-
sible upon the question of reason- ment in Muaxted v. Paine, No. 2, L.
able time. In this case both the R. 6 Ex, 132,
VENDOR AND INTERMEDIATE PURCHASERS. 509
chasers he has ordinarily nothing to do, and unless under ex- Bh Lars hay
ceptional circumstances, he has no rights against them (q). 7
A vendor, for example, has ordinarily no remedy against an
intermediate purchaser who passes the nume of some one else
as the ultimate purchaser and transferee (1).
But an intermediate jobber may enter into a contract with
the vendor through his broker, and in such a case the inter-
mediate jobber will be liable to the vendor for any breach of
such contract (s).
Moreover, if the ultimate purchaser is a mere nominee of Cestui que trust
and trustee for an intermediate purchaser, or for any one else, Shenae
and the transfer to the ultimate purchaser is never registered,
but the vendor continues the legal owner of the shares, and
incurs liability in consequence, he is entitled to be indemnified
against that loss by the person in whom the beneficial interest
of the shares is really vested (t). This liability arises not out
of any contract between the legal and beneficial owners ; but
from the relation of trustee and cestui que trust which exists
between them ; and from the principle that the interposition
of intermediate trustees does not affect the rights of the legal
and true equitable owner. Upon this principle it was held in
Brown v. Black (u), that a vendor of shares who had trans- Brown v. Black.
ferred them to an infant, but whom he did not know to be
such, was entitled to be indemnified by the real purchasers
who had used the infant’s name, although the infant had been
registered in respect of the shares for two years. His infancy
was discovered on the winding-up of the company; and, the
transfer to him being invalid, the transferor became a contri-
butory in his place, and then successfully claimed: indemnity
from the real owners of the shares (x).
(q) See, however, Lord Black-
burn’s judgment in Muzted v.
Paine, L. R. 6 Ex. 167-8.
(r) Torrington v. Lowe, L. R. 4
Cc. P. 26. Compare Castellan v.
Hobson, 10 Eq. 47.
(s) Asin Allen v. Graves, L, R. 5
Q. B. 478, where there was a special
arrangement between the plaintiti’s
broker and the defendant, an inter-
mediate jobber.
(t) Castellan v. Hobson, 10 Ey. 47 ;
and see ante, p. 506.
(u) 8 Ch. 939, and 15 Eq. 363.
(x) Compare Maynard v. Eaton,
9 Ch. 414, a similar case, but where
a compromise effected between the
plaintiff and the infant was held
fatal to the plaintiffs claim. See,
also, Heritage v. Paine, 2 Ch. D. 594,
510 SALES ON STOCK EXCHANGE.
Bk. III. Chap. 4. For convenience of reference, the following analysis of the
Sect. 6. a nie é 2
principal decisions, referred to in the preceding pages upon the
rights of vendors, is appended :—
I, Vendor against jobber.
1. Successful actions and suits.
(a) Actions at law.
Maxted v. Paine, No. 1, L. R. 4 Ex. 81.
Allen v. Graves, L. BR. 5 Q. B. 478.
In both of these the transferee was objected to,
(b) Suits in equity.
Merry v. Nickalls, L. R. 7 H. L. 530; 7 Ch. 733.
Heritage v. Paine, 2 Ch. D. 594.
Transferee an infant.
Cruse v. Paine, 6 Eq. 641, and 4 Ch, 441.
Registration guaranteed.
2. Unsuccessful actions and suits.
(a) Actions at law.
Grissell v. Bristowe, L. R. 4 C. P. 36, reversing L. R. 3
Cc. P. 112.
Maxted v. Paine, No. 2, L. R. 6 Ex. 132, and L. R. 4
Ex. 208.
In both of these the transferee had accepted the
transfer.
(b) Suits in equity.
Coles v. Bristowe, 4 Ch. 3, reversing 6 Eq. 149.
Trausferee had accepted the transfer.
Rennie v. Morris, 18 Eq. 203. :
Transferee an infant; overruled by Merry v.
Nickalls, 7 Ch. 733; and L. R. 7 H. L, 5380.
II. Vendor against ultimate purchaser.
1. Successful actions and suits,
(a) Actions at law.
Bowring v. Shepherd, L. R. 6 Q. B. 309.
Davis v. Haycock, L. R. 4 Ex. 373.
Walker v. Bartlett, 18 C. B. 845.
Humble v. Langston, 7 M. & W. 517.
Kellock v. Enthoven, L. R. 8 Q. B. 458, and 9 Q. B. 241.
Where the purchaser had himself transferred the
shares.
(b) Suits in equity.
Wynne vy. Price, 3 De G. & Sm. 310.
Paine v. Hutchinson, 3 Eq. 257, and 3 Ch. 388.
Shepherd v. Gillespie, 5 Eq. 293, and 3 Ch. 764.
Sheppard v. Murphy, Ir. Rep. 2 Eq. 544, and 16 W. R.
948.
Hawkins v. Maltby, 6 Eq. 505, and 4 Ch. 200.
Holmes vy. Symons, 13 Eq. 66.
VENDOR AND PURCHASER AND THEIR BROKERS. 511
Loring v. Davis, 32 Ch. D, 625. Bk. ILI. Chap. 4.
In none of these cases was the transfer executed ___ Beet. 6.
by the transferee.
Evans v. Wood, 5 Eq. 9.
Hodgkinson v. Kelly, 6 Eq. 496.
In both of which the company had stopped.
2. Unsuccessful suits.
Hawkins v. Maltby, 3 Ch. 188, reversing 8. C. 4 Eq. 572.
The case on appeal turned on the pleadings.
Bermingham vy. Sheridan, 33 Beay. 660.
Not now to be relied upon. See ante, p. 505,
note (e).
III. Vendor against cestwi que trust of transferee.
(a) Successful suits.
Castellan v. Hobson, 10 Eq. 47.
Brown v. Black, 15 Eq. 363, and 8 Ch. 939.
Transfer to an infant.
(6) Unsuccessful suit.
Maynard v. Eaton, 9 Ch. 414.
Compromise with transferee held to be a defence.
IV. Purchaser against vendor.
M Devitt v. Connolly, 15 L. R., Ir. 500, ante, p. 508.
4. As to the position of the real vendor and purchaser as regards their
respective brokers,
The duty of a broker employed to sell is to sell according to selling
his instructions if he can do so, and if he cannot, not to sell at
all. His duty is performed when he has entered into a binding
contract for sale, and has given the name of the buyer to his
employer (y). If the selling broker receives the price, it is
his duty to hand it over to his principal; but it is no part of a
selling broker’s legal duty to his employer to procure payment
of the price, nor to procure the execution by the purchaser of
the transfer, nor to procure the registration thereof(z). Nor
has it yet been decided that it is part of his duty to inquire
into the solvency of the transferee (a). As between the vendor
and his own broker, the sale is effected by the contract to sell,
although the vendor may refuse to carry it out (D).
(y) A broker who by disregarding (2) See Clark’s Law of Joint Stock
the requirements of 30 Vict. c. 29, Companies (Scotch), 145.
fails to effect a binding contract, is (a) See, on this subject, Lord
liable to his employer for negligence, Blackburn’s judgment in Maated vy.
see Neilson v. James, 9 Q. B. D. Paine, No. 2, L. R. 6 Ex. 132,
546, ante, p. 489. (6) Ross v. Moses, 1 C. B, 227,
512
Bk. TT. Chap. 4.
Sect. 6.
Duty of buying
broker.
Broker buying
what he was not
directed to buy.
Revocation of
broker’s autho-
rity.
Right of broker
to indemnity,
SALES ON STOCK EXCHANGE.
Again, the duty of a broker employed to buy is to buy
according to his instructions if he can; and if he cannot, not
to buy at all. He has no implied authority to enlarge the
time for completing the purchase when that time has once been
fixed ; in other words, he has no implied authority to continue
the account (c). If he exceeds his authority he exposes him-
self to liability to persons who rely on his having authority to
buy, and are damnified by its absence (d).
A broker instructed to buy shares of a particular kind, fulfils
his instructions if he buys what are commonly bought and sold
as such shares in the share market. Thus, where a broker
was instructed to buy ‘‘ Kentish Coast Railway Scrip,” and he
bought what was known as such, and was paid for it, it was
held, that he was not liable to refund the money he had re-
ceived, although it tuned out that what he had bought was
scrip issued without due authority, and was in fact utterly
worthless (¢). Upon the same principle, if a broker is told to
buy shares and he buys scrip; if nothing but scrip has found
its way into the market, and if such scrip has been usually
bought and sold as shares, and if there is nothing to show that
the broker was to wait until shares were issued, he will be held
to have pursued his authority (/).
Until the broker has acted upon his authority to buy, it may
be revoked; and if any money has been given him in order to
enable him to pay for them, it may be demanded back (g). But
this cannot be done after he has entered into a contract for
purchase, and become personally responsible for the due per-
formance of that contract (h).
On the other hand, a person who employs a broker to buy or
sell is bound to indemnify him against any losses which he may
incur by reason of his having contracted in his own behalf,
and of being afterwards, without any default of his own, unable
(c) See Maxted v. Paine, No. 1, Saunders, 4 Bing. 5.
L. R. 4 Ex, 81. (g) Fletcher v. Marshall, 15 M. &
(d) Ku parte Panmure, 24 Ch. D. W. 755.
367. See ante, p. 494. (h) McEwen v. Woods, 11 Q. B.
(e) Lamert v. Heath, 15 M.& W. 13. See, also, Read v. Anderson, 18
486. Q. B. D. 779, affirming 10 Q. B. D.
(f) Mitchell v. Newhall, 15 M.& 100.
W. 308. Compare Kempson v.
VENDOR AND PURCHASER AND THEIR BROKERS. 518
duly to complete his contract (¢).
serve to illustrate this doctrine.
1. Where a broker is employed to sell.
In Sutton vy. Tatham(k), a person ordered a broker to sell Eee
for him 250 shares. The broker entered into a contract for gutton v,
their sale, and was afterwards informed that a mistake had Tatham.
been made, and that fifty only were intended to be sold. The
broker not being enabled to deliver the shares which he had
agreed to sell, was compelled to make good to the purchaser
the difference between the price agreed upon and the price at
which the purchaser had procured shares elsewhere. It was
held, that the broker was entitled to recover this difference
from his employer.
In Bayliffe v. Butterworth (, the defendant instructed the pete on
plaintiff, a broker, to sell shares for him, which the plaintiff
accordingly did. When the time came for the delivery of the
shares to the purchaser, the defendant made default, and did
not furnish them. The plaintiff having been compelled by the
rules of the Stock Exchange to pay the difference between the
price agreed to be paid by the purchaser and that actually
paid by him for other shares, was held entitled to recover such
difference from the defendant.
2. Where a broker is employed to buy.
In Bayley v. Wilkins (m), the defendant requested the plain- oe
tiff, a broker, to buy shares for him, which the plaintiff accord- Baste ty
ingly did. At the time of their purchase, a call had been made, Wilkins.
but such call had not become payable. The plaintiff paid the
amount of the call to the selling broker in pursuance of the
rules of the Stock Exchange, and was held entitled to recover
the money so paid from the defendant.
In Taylor v. Stray (n), the defendant instructed the plaintiff, Taylor v. Stray.
The following cases will Bk. a “ 4,
(t) See, in addition to the cases
cited, infra, Young v. Cole, 3 Bing.
N. C. 724; Child v. Morley, 8 T. R.
610; Bowlby v. Bell, 3 C. B. 284;
Simpson v. Rand, 1 Ex. 688. As to
indemnifying one’s broker against
the costs of an action brought
against him, see Brown v. Hall, 7
C. B. N.S. 503.
L.C.
(k) 10 A. & E, 27.
(2) 1 Ex. 425. Compare this with
Bowlby v. Bell, 3 C. B. 284.
(m) 7 C. B. 886, See, as to the
evidence to be adduced by a broker
who seeks to recover a call paid by
him, McEwen v. Woods, 2 Car. &
K. 330, and 11 Q. B. 13.
(n) 2 C. B, N.S. 175. See, too,
FL 1
514
Bk. IIL. Chap, 4,
Sect. 6.
Pollock v.
Stables.
Lacey v. Hill.
Broker not
entitled to
indemnity for
his own default.
Duncan v, Hill,
SALES ON STOCK EXCHANGE.
a broker, to buy some Royal British Bank shares for hin.
The defendant accordingly bought the shares, which were to
be paid for on a future day. Before that day arrived, the bank
stopped payment, and the defendant refused to take or pay for
the shares. The plaintiff thereupon paid for them in com-
pliance with the rules of the Stock Exchange; and he was held
entitled to recover the money so paid from the defendant.
In Pollock vy. Stables (0), the plaintiff, in pursuance of the
defendant’s instructions, bought shares for him which the
defendant neglected to take up. The broker who sold them,
consequently re-sold them, and thereby a loss was sustained.
The plaintiff, who was also a broker, made good this loss, as
he was compellable to do by the rules of the Stock Exchange,
and he was held entitled to recover the amount he had paid
from the defendant.
In Lacey v. Hill(p), brokers bought stock for a customer,
who suddenly died insolvent; they having paid for the stock
were held entitled to re-sell it and to prove against his estate
for the loss they sustained.
But a broker is not entitled to indemnity from his employer
in respect of loss arising from his own default. Thus in
Duncan y. Hill (q), the plaintiffs, who were brokers on the
Stock Exchange, were instructed by the defendant to buy
shares for a certain account, and afterwards to continue it.
This was done; but before the final settling-day arrived the
brokers were declared defaulters, and according to the rules
of the Stock Exchange all their transactions were peremptorily
closed. The brokers were held entitled to be repaid moneys
paid by them in order to keep open the account at the de-
fendant’s request, but not those further sums which had
become payable by reason of their own insolvency (r).
Stray v. Russell, 1 E. & E. 888;
Chapman v. Shepherd, L. R. 2 C. P.
228; Biederman v. Stone, ib. 504,
The last two cases show that the
broker’s right is not affected by
§ 153 of the Companies act, 1862.
See, further, as to the right of pur-
chasing brokers to indemnity from
their employers, Mollett vy. Robinson,
L. R.7 H. L. 802; 7 C. P. 84, and
5 C. P. 646.
(o) 12 Q. B. 765.
(p) Lacey v. Hill, Scrimgeour’s
claim, 8 Ch. 921. See ib., Crowley’s
claim, 18 Eq. 182.
(q) L. R. 8 Ex, 242, reversing S.
C. 6 Ex. 255,
(r) Compare Hartas v. Ribbons, 22
VENDOR AND PURCHASER AND THEIR BROKERS. 515
Again, a broker who contracts to buy unnumbered shares in Bk. te ae 4.
a joint-stock bank, contrary to 89 Vict. c. 29, has no claim-— --—. —
against his employer if he refuses to accept the shares, unless
indeed he authorised a purchase contrary to the act (s).
The cases above referred to establish as a general doctrine Rules of Stock
that what a broker, employed in buying and selling shares for fon en ,
another person, is compelled by the rules of the Stock Ex- "se of brokers.
change to pay, in consequence of the non-performance by his
employer of the contract entered into on his behalf, is recover-
able from him by the broker. The principle of the decisions
in question does not however extend further than this, viz.,
that brokers are impliedly authorised by those who employ
them, to do what is usual and customary amongst brokers in
matters such as those they are employed about. The cases
which have been noticed do not show that persons who employ
members of the Stock Exchange are affected by the rules of
the Exchange without reference to the question of what is cus-
tomary amongst its members; and in truth, to non-members,
such rules are only important so far as they evidence usage.
This is shown by the case of Westropp v. Solomon (t). There, After-made
the defendant employed the plaintiff, a broker, to sell ten scrip en ;
certificates, which the plaintiff did. It afterwards appeared Solowon.
that these certificates were forgeries, although neither the
plaintiff nor the defendant had any suspicion that such was the
case. The committee of the Stock Exchange made a rule to
the effect that the purchasers of the spurious scrip should have
a right to demand from the sellers not only repayment of the
purchase-money, but also payment of an additional fixed sum.
In compliance with this rule, the plaintiff repaid to the pur-
chaser the money received from him, and also the additional
sum fixed by the rule; but it was held, that the plaintiff was
only entitled to recover from the defendant the money which
the purchaser himself could have recovered at law; namely
the amount paid by him with interest; and it was held, that
Q. B. D. 254, where the principal Mx parte Panmure, 24 Ch. D. 367.
ratified the closing of the account ; (s) Ante, p. 489.
and Lacey v. Hill, Crowley’s claim, 18 (t) 8 C. B. 345. See, also, Sweet-
Eq. 182, where the brokers became ing v. Pearce, 7 C, B. N.S. 449, and
defaulters solely by-reason of the pre- 9 ib, 534.
vious default of their principal ; see
a
e
bo
516 SALES ON STOCK EXCHANGE.
Bk, ee 4. the rule, having been made after the sale, formed no part of
that usage of brokers by which the defendant was bound.
Brokers’ charges. | Accounts sent in by sharebrokers to their employers may be
shown not to have included charges which ought to have been
included ; and this is true even where the persons to whom
such accounts are sent have dealt with other people upon the
faith of the accounts being full and correct (1).
Illegal purchases A broker employed to buy or sell shares in an illegal com-
sa ue pany, or in a company which by law is not in a position to
issue shares, cannot recover from his employer either any
commission on the purchase or sale, or any money expended
for him on account of such shares ().
(u) Dails v. Lloyd, 12 Q. B. 581. 1 Camp. 547; and Bousfield v. Wil-
(a) Josephs v. Pebrer, 3 B.?& C. son, 16 M. & W. 185, both of which
639 ; Ex parte Neilson, 3 De G.M. have been noticed already. See
& G, 556. See, further, as to illegal ante, p. 140.
sales through brokers, Buck v. Buck,
SURRENDER OF SHARES. 517
CHAPTER V.
OF THE SURRENDER OF SHARES,
1. General Observations.
Tue right of a shareholder to retire from a company of which Bk. III. Chap. 5.
he is a member, by surrendering his shares to the company, Retirement by
depends upon the acts of Parliament, charter, or regulations or ope
customs which govern the company in question. Where there
is nothing enabling a shareholder to retire by surrendering his
shares, the ordinary partnership rule applies, and no surrender
can be made except with the consent of all the shareholders (a).
If such a method of withdrawing from the company is autho-
rised by its constitution, a surrender by a shareholder of his
shares will of course be valid, if all the formalities which may
be necessary are duly complied with ; and where the power to
surrender exists, the due observance of all necessary formalities
will be presumed in favour of a shareholder who has in fact
bond fide retired from the company, and whose shares have
been cancelled or otherwise disposed of by the company (b).
The right of a shareholder to retire by surrendering his Power of ma-
shares, is not one of those matters as to which a majority of Nae ah
reference to the
relinquishment
implied authority to represent the company. Both principle of shares.
members binds a minority, or as to which directors have any
and authority are clearly opposed to any such doctrine (c).
(a) See volume on Partnership,
pp. 573 et seg. Retirement by trans-
fer is quite another matter, and has
been already referred to.
(b) See Lane's case, 1 De G. J. &
Sm. 504; Kipling v. Todd, and
Kipling v. Allan, 3 C. P. D. 350.
The retirement must be complete,
see Barry v. Navan and King’s
County Rail. Co., 4 L, R. Ir. 68.
(c) The Plate Glass, &e., Co. v.
Sunley, 8 EK. & B. 47, is not incon-
sistent with this nor with the cases
referred to in the text ; in that case
the demurrer admitted that the com-
pany had accepted the surrender of
the shares then in question. See as
to special resolutions under the
Companies act, 1862, infra, p. 526.
518
SURRENDER OF SHARES.
Bk. III, Chap. 5. Nor if directors have power to accept a surrender of shares
Morgan’s case.
Stanhope’s case.
can they delegate this power to a manager (d). At the same
time if shares have been surrendered with the knowledge of
all the shareholders under circumstances fully disclosed to them
all, and such surrender has not been questioned for a consider-
able period, the company will be precluded from afterwards
disputing the validity of the surrender (¢). The following are
leading authorities upon this subject :—
Morgan’s case(f). The company’s deed authorised the
directors to buy up, out of certain specified funds of the com-
pany, any shares which might be offered for sale. An extra-
ordinary general meeting resolved that if any shareholder should
be desirous of withdrawing from the company, the directors
should be at liberty to purchase his shares upon certain speci-
fied terms. A shareholder acted upon this resolution, com-
plied with the terms, and sold his shares to the company. But
it was held that the resolution was not binding on the company ;
and that the shareholder in question was properly made a
contributory, although nearly five years had elapsed since his
withdrawal.
Stanhope’s case (g). The directors had power generally to
act as might appear to them best for the interest of the com-
pany. A dispute arose amongst them, and one of them re-
tired, and his shares were surrendered and cancelled. It was
held that his retirement was unauthorised, and he was put on
(d) Cartmell’s case, 9 Ch. 691.
(e) As in Brotherhood’s case, 31
Beav. 365, and 4 De G. F. & J.
566; noticed infra, pp. 519 and
522, and Hunt’s case, 32 Beav.
387. Implied notice to the
directors of the company through
the books of the company is not
enough, Hallmark’s case, 9 Ch. D.
829 ; Denham & Co., 25 Ch. D. 752 ;
Cartmell’s case, 9 Ch. 691, where the
directors had power to accept sur-
renders. See, as to estoppel by con-
duct, ante, p. 47 et seq.
(f) 1 De G. & S. 750, and 1 Mae.
& G. 225. Richmond’s Executors’
case, 3 De G, & Sm, 96, and Lawes’
case, 1 De G. M. & G. 421, were
similar ‘decisions with respect to
other shareholders in the same com-
pany. Compare Kent v. Jackson,
14 Beav. 367, and 2 De G. M. & G.
49,
(g) 3 De G. & S. 198. See, too,
Esparto Trading Co., 12 Ch. D. 191 ;
Daniell’s case, 22 Beav. 43, affirmed
3 Jur. N. 5. 803; Walter’s case, 3
De G, & 8. 244; Holt’s case, 1 Sim.
N.S. 389 ; and compare Cockburn’s
case, 4 De G. & 8. 177, and Bush's
case, 3 ib. 267; and observe the
larger powers of the directors in
the first, and the adoption of their
acts in the last, of these two cascs,
SURRENDER OF SHARES, 519
the list of contributories ten years after his shares had been Bk. IIL Chap. 5.
cancelled.
Munt’s case (h). The directors of a company, disagreeing as Munt’s case.
to the mode of managing its affairs, and being divided into two
parties, it was resolved that one of the two parties should
retire, and that the other should take the management of the
company and relieve the first from their liabilities. The
directors composing one of the two parties did accordingly
retire, and relinquish their shares in favour of the company ;
but it was held that their retirement was altogether unautho-
rised and invalid, and that they were contributories on the
winding up of the company.
The principles laid down in these cases were very much con- ce
attle Insurance
sidered in the course of winding up the Agricultwrist Cattle Company.
Insurance Company. The company was formed in 1845. In
1848 it had got into difficulties, and several shareholders
wished to retire. This they could not do consistently with the
company’s deed of settlement. An arrangement, however,
was made in November, 1848, under resolutions passed at a
meeting of shareholders specially convened for the purpose, to
the effect that a call of 41. per share should be made, and that
those shareholders who wished to retire should, on a particular
day, pay part only of the call, and that their shares should be
forfeited for non-payment of the rest. Under this arrangement
many persons retired at once; many, however, remained, and
of those some retired afterwards under various arrangements
made between themselves and the directors. In 1861 the
company was ordered to be wound up, and in the course of
such winding up it was held—1. That having regard to the ae
publicity and bona fides of the arrangement come to in a ee
November, 1848, and to the time which had since elapsed, the ¢ase.
validity of the retirement of those shareholders who withdrew
in pursuance of that arrangement could not be disputed, and
that those persons therefore were not liable to be placed on the
list of contributories (i). 2. That those persons who retired ee
(h) 22 Beav. 55. See, too, Ben- (t) Evans v. Smallcombe, L. R. 3
nett’s case, 18 Beav. 339,and 5 De 4H. L. 249; Brotherhood’s case, 31
G. M. & G. 284; Richmond’s case, Beav. 365, affirmed 4 De G, F, & J,
and Puinter’s case, 4 K. & J. 305, 566,
520
Bk. III. Chap. 5.
Houldsworth’s
case,
Directors have
no power to buy
out shareholders.
Retirement of
shareholders
compared with
refusal to accept
shares.
SURRENDER OF SHARES.
afterwards by arrangement with the directors, but without the
knowledge of the other shareholders, were to be treated as
shareholders still, and were liable to be placed on the list,
although twelve years had elapsed since their retirement and .
the winding-up order (k).
Moreover, where persons have only agreed to take shares,
and have not become actual shareholders, the directors have no
implied power to release them from their agreement (1). Never-
theless, an express power to accept a surrender of shares, or to
rescind and abandon contracts, has been held to apply to con-
tracts to take shares and to authorise a release of a person from
his agreement to become a member (im).
The foregoing decisions sufficiently establish the doctrine
that in the absence of a special authority enabling them so to
do, directors have no power to bind the company by buying
each other out; nor by buying out shareholders; nor by
accepting the surrender or relinquishment of shares to the
company (n). Moreover, if the directors of a company mis-
apply its funds by buying up shares in the company, they are
compellable to make good to the company the money so
expended, with interest (0).
It is necessary, however, to distinguish the retirement of a
shareholder from the refusal of a person to be a shareholder in
(k) Spackman v. Evans, L. R. 3
H. L. 171; Houldsworth v. Evans,
ib. 263 ; Stanhope’s case, 1 Ch. 161 ;
Stewart’s case, ib. 511. See, on these
cases, the note infra, pp. 522 and
523.
(1) Hall’s case, 5 Ch. 707 ; Adams’
case, 13 Hq. 474.
(m) Snell's case, 5 Ch, 22 ; Thomas’
cause, 13 Eq. 437 ; and compare Kip-
ling v. Todd, 3 C. P. D. 350, infra,
525, where the Court presumed a
surrender of shares which directors
had under a special act.
(n) See, further, Trevor v. Whit-
worth, 12 App. Ca. 409, and the
criticisms therein on Dronfield Silk-
stone Coal Co., 17 Ch. D. 76 ; London
and Provincial Coal Co., 5 Ch. D.
525 ; Phosphate of Lime Co. v. Green,
L. R. 7 C. P. 48; Harris v. North
Devon Rail. Co., 20 Beav. 384;
Walkers case, 2 Jur. N. S. 1216,
L. J.; Playfair v. Birmingham,
Bristol, dc, Co. 1 Ra. Ca, 640;
Hodgkinson v. National Live Stock
Insur. Co., 26 Beav. 473, and 4 De
G.& J.422 ; Burt v. British Nation
Life Assur, Assoc., 4 De G. & J.
158; Paul and Beresford’s case, 10
Jur. N. 8. 692, M. R.
(0) Hvans v. Coventry, 8 De G.
M. & G. 835. See decree, par. 4,
varying pars. 5 and 6 of the decree
in the court below. See ante, p.
371.
SURRENDER OF SHARES. 521
a concern which he never agreed to join(p); and it has very Bk. IIL Chap. 5.
properly been held that the principle of the above decisions
does not apply to the case of a person who, having taken shares
in a company formed for given objects, relinquishes such shares
and retires from the company, upon a change being made in
those objects without his consent(q). So, if it is doubtful AC
whether a person ever was a shareholder or not, an agreement shareholder.
releasing him from all liability, if any, may be validly made, so
as to bind the company (7); and an allotment of shares made
pursuant to an invalid resolution may be properly cancelled at
all events before the shares are registered in the name of the
allottee (s). But a general power to compromise does not
authorise an agreement to allow a shareholder to retire when
there is no dispute as to his membership, and where there is
no power to buy or accept a surrender of shares (t).
It is further necessary to distinguish the retirement of a Surrender of
shareholder by relinquishing his shares to the company, from al
his retirement by transferring his shares to some or one of the ‘it ® "ansfer
directors of the company upon their own individual account. ‘itectors.
For whilst, in the absence of special authority, it is not com-
petent for directors to accept on behalf of a company the
surrender of shares held in the company, it is as competent for
the directors of a company, as for anybody else, to accept shares
in the company from such shareholders as may be willing to
transfer them in the ordinary way. Consequently, an agree-
ment between the directors and some of the shareholders of a
company to the effect that the latter shall relinquish their
shares and transfer them to the directors, is not ultra vires, or
(p) See Pim’s case,3 De G. & 8.
11, and 1 Mac. & G. 291; Henessy’s
case, 2 Mac. & G. 201, and 3 De G.
& 8.191, as to placing shares in a
person’s name without authority.
See ante, p. 19 et seg.
(q) Meyer’s case, 16 Beav. 383.
(r) Bath’s case, 8 Ch. D. 334;
Lord Belhaven’s case,38 De G. J. & Sm.
41; Dizon’s case, L. R. 5 H. L. 606,
reversing 5 Ch. 79. See Wright's
case, 7 Ch. 55, reversing S. C. 12
Eq. 331; Fox's case, 5 Eq. 118.
(s) Barnett’s case, 18 Eq. 507.
(t) See L. R. 3 H. L. 188, 231;
Adams’ case, 13 Eq. 474; Phosphate
of Lime Co. v. Green, L. R.7 U.P.
43; Dicon’s case, 5 Ch. 79, was
decided on the principle that there
can be no compromise where there
is no dispute; and although the
House of Lords reversed the de-
cision, see L. R. 5 H. L. 606, the
principle is unquestionable. Comp.
Wright's case, 7 Ch. 55.
52
9
as
SURRENDER OF SHARES.
Bk. IIL. Chap. 5. in any way illegal, if the agreement is with the directors as in-
dividuals, and not with them as representing the company (u).
Upon the same principle, if a shareholder transfers his shares
to a director or to an ordinary individual, without notice
that the director is acting on behalf of the company, the trans-
feror does effectually retire from the company; although had
he known that he was in fact surrendering his shares to the
company, the surrender would have been invalid (z).
Moreover, directors who individually agree to accept a sur-
render of shares and to indemnify the surrenderor against calls,
are personally bound by their agreement, whether it is, as
regards the company, ultra vires or not (y).
NOTE ON SMALLCOMBE’S CASE, SPACKMAN’S CASE, AND HOULDS-
WORTH’S CASE, REFERRED TO ABOVE, P. 519,
Smallcombe retired in strict accordance with the arrangement come to
in 1848.
Houldsworth retired pursuant to the same arrangement, with this excep-
tion, that he did not retire within the time fixed thereby, but shortly
afterwards ; the time having been extended by the directors.
Spackman retired pursuant to another agreement altogether, come to
between him and the directors for compromising litigation between him
and the company.
The House of Lords held,—
1. That the arrangement of 1848 was one by which a majority of share-
holders could not bind a minority.
2. That, nevertheless, the minority might be precluded from disputing it.
3. That all the shareholders must be treated as having had notice of it,
and that as they had allowed it to be carried out, and had not disputed its
validity for many years, they were all precluded from disputing it.
4. That consequently Smallcombe was not a contributory (2).
5. That the agreement with Houldsworth differed in an essential parti-
cular from the arrangement of 1848, and was one which the directors had
no power to enter into.
6. That all the shareholders could not be treated as having had sufficient
notice of the agreement with him to preclude them from disputing it, even
after the lapse of many years.
(u) Haddon v. Ayers, 1 E.& E. 8. 777; Ee parte Bagge, 13 Beav.
118. See, too, Jessopp’s case,2 De 162; Nicols’ case, 3 De G. & J. 387.
G. & J. 638. In Cartmell’s case, 9 (y) Barker v. Allan, 5 H. & N. 61.
Ch. 691, the directors never assented (2) Brotherhood’s case, 31 Beav.
to the transfer made to them. 365, affirmed 4 De G. F, & J. 566,
(x) See Hollwey’s case,1 De G.& — was like Smaileomle’s,
IN PARTICULAR COMPANIES.
528
7. That consequently Houldsworth or, he being dead, his executors were Bk. III. Chap. 5.
contributories.
8. That the agreement with Spackman was one which the directors had
no power to make.
9. That all the shareholders could not be treated as having had sufficient
notice of it to preclude them from disputing it, even after the lapse of
many years.
10. That he therefore was also a contributory (a).
The Lords were by no means unanimous in their decision, and Lord St.
Leonards, in a judgment which the writer ventures to think ought to have
prevailed with the House, gave his opinion, that in all three cases the com-
pany ought to be held precluded from disputing transactions so long passed
as those in question, and all of which were perfectly bond fide. The same
view was taken by Lord Romilly when the cases were before him (see 1
Ch. 163). As the decisions stand, however, they are extremely difficult to
reconcile on satisfactory grounds; for the notice which the shareholders
had in Houldsworth’s and Spackman’s cases was little if at all less full than
the notice they had in Smallcombe’s case. Some general principles of value,
however, can be extracted from these three cases. They show—-
1, That a company will be precluded from disputing the validity of
transactions sanctioned by a general meeting, but not binding on absentees,
if such transactions are bond fide, and such as all the shareholders, if suc
juris, could sanction, and if it can be inferred that all the shareholders
were informed of them, and if no steps have been taken for a considerable
time to impeach them.
2. That information on the part of all the shareholders, sufficient for the
purpose in question, must be inferred from notices sent to them all, in the
usual way, telling them what has been done; but not from reports, &c.,
not distinctly giving them this information.
3. That powers of compromise and powers of forfeiture must be bond fide
exercised for the purposes for which they are conferred, and that attempts
to make them available for other purposes will not succeed.
This view of their joint effect is supported by Phosphate of Lime Co. v.
Green, L. R.'7 C. P. 48, where the Court of Common Pleas held that a
company had ratified a purchase of shares which the directors had no
power to make.
2. Surrender in particular companies.
It is necessary now to advert to the right to retire by
surrender of shares in the various classes of companies which
exist in this country.
The rules of building societies invariably provide for the Building
withdrawal of their unadvanced members, and the terms on
(4) Stanhope’s case, 1 Ch. 161, was like Spackman’s,
524
Bk. III. Chap. 5.
Auld v. Glasgow
Build. Soc.
Cost-book com-
panies,
Usual terms of
retirement.
SURRENDER OF SHARES.
which they can retire depend entirely on the rules (d) ; these
rules cannot be altered to the prejudice of any member without
his consent. Thus, where the rules enabled unadvanced
members to withdraw the sum at their credit in the society’s
books, it was held that so long as the society was not in liqui-
dation, any unadvanced member was entitled to withdraw the
amount at his credit in the books, although the assets of the
company had become depreciated, and a majority of the
members had passed a resolution to the effect that 7s. 6d. per
pound should be deducted from the amounts at the credit of
the members, and be carried to a suspense account (c).
The right of a shareholder in a cost-book mining company
to retire from the company upon the relinquishment of his
shares, and payment of what may be due from him to the
company, is established by custom, and is therefore imported
into the contract by which the members of such companies are
mutually bound (d); and where it was proved to be the practice
of a cost-book company to allow shareholders to retire upon
any terms agreed upon at general meetings, it was held that a
shareholder who had been allowed at a general meeting to
surrender his shares without paying the arrears of calls upon
them, had ceased to be ashareholder (ec). The surrender must
be by notice in writing to the purser (f), and must be delivered
at least six weeks before a resolution is passed or an order
made to wind up the company (9).
The usual terms on which a member is entitled to retire
from a cost-book company are, that if the company is insolvent,
the retiring member pays his share of the deficiency, as if the
company were being wound up, but if the company is solvent he
is entitled to receive his share of the surplus left, on deducting
the liabilities from the value of the assets. In ascertaining
(b) See Tosh v. North British
Build. Soc.,11 App. Ca. 489 ; Walton
v. Edge, 10 ib. 33; Brownlie v. Rus-
4De G. M. & G, 285, and 1 Sm. &G.
26; Bodmin United Mines, 23 Beav.
370 ; Birch’s case,2 De G. & J. 10;
sell, 8 ib. 235 ; Sheffield and S. York.
Perm. Build. Soc,, 22 Q. B. D, 470.
(c) Auld v. Glasgow, de., Build,
Soc., 12 App. Ca. 197.
(d) See, as to this, infra, and Eu
parte Palmer, 7 Ch, 286 ; Fenn’s case,
Lofthouse’s case, ib. 69; Northey v.
Johnson, 19 L. T. 104.
(e) Bodmin United Mines, 23 Beav.
370.
(f) 32 & 33 Vict. c. 19, §§ 21-23.
(g) 50 & 51 Vict. c. 43, § 22
IN PARTICULAR COMPANIES. 525
these amounts, the solvency or insolvency of the remaining Bk- HI Chap. 5.
shareholders had formerly to be taken into account, and the
assets valued on the footing of the company being a going
concern (hk). Now, the valuation of the assets is to be made
upon the basis that the continuing shareholders had also
relinquished their shares (i). The terms of retirement may be
varied by agreement, which may be implied from the course of
practice in the company, but such an agreement is not nearly
so readily implied in the case of large companies as in the case
of ordinary partnerships (h).
The Companies clauses consolidation act, 1845, contains no Companies
provision authorising the surrender of shares. But by the une
Companies clauses act, 1863 (J) (which applies to all com-
panies which have a special act of Parliament incorporating
that act), it is enacted (§ 9) that “the company may from time
to time accept, on such terms as they think fit, surrenders of
any shares which have not been fully paid up;” and (§ 10)
that ‘the company shall not pay or refund to any shareholder
any sum of money for or in respect of the cancellation or sur-
render of any share.”
In Kipling v. Todd and Kipling v. Allan(m), Todd and Kipling v. Todd
Allan were nominated in a company’s special act as directors,
and their qualification was the possession of 50 shares each.
Todd resigned his directorship, and never acted as director,
Allan did for a short time, and then resigned. Neither of
them ever had any shares allotted to them, nor ever had any
registered in his name. Moreover, all the company’s shares
were allotted to other people. Under these circumstances, a
surrender by Todd and Allan of their shares, and an issue of
them by the company to other persons were presumed; and
Todd and Allan were held not liable to creditors of the com-
pany whose debts had accrued after their resignations.
Neither the Companies act, 1862, nor the regulations in Companies aet,
Table A. to that act, authorise the retirement of a member by ae
(h) Frank Mills Mining Co., 23 Ch. D. 52.
Ch. D. 52, and cases in note (d). (2) 26 & 27 Vict. c. 118,
(t) 50 & 51 Vict. c. 43, § 21. See (m) 3 C. P. D. 350. Compare
the section. Portal v. Emmens, 1 C. P. D, 201 &
(k) Frank Mills Mining Co, 28 664,
526
Bk, III. Chap. 5.
Company buying
its own shares.
Trevor v.
Whitworth.
SURRENDER OF SHARES.
surrendering his shares to the company; and the effect of a
surrender of shares, unless it be in exchange for others, is to
diminish the capital of the company. Nevertheless, it has
been held that the holder of unpaid-up shares in a company
registered with limited liability, can surrender his shares with-
out first paying them up in full if the articles as originally
framed or as altered by special resolution (n) authorise such a
surrender (0). The power to surrender has been regarded as
open to no more objection on the ground that it reduces the
capital than a power to forfeit (p), the legality of which is un-
questioned. (See Table A. and the next chapter.) A power to
forfeit, however, is only operative where a shareholder cannot
or will not pay up his calls, and is far less open to abuse in
order to reduce capital than a power to surrender.
The right of a member of these companies to retire by sur-
rendering his shares, has been recently very much discussed,
and some doubt on the subject has been expressed (q); but
the decisions above referred to have not been overruled, and
the power when properly conferred and exercised, may there-
fore be treated as intra vires.
It is, however, now settled that a company governed by the
Companies act, 1862, cannot lawfully apply its funds in buying
up its own shares, even if empowered go to do by its original
articles (r), or by special resolution(s), or even by its memoran-
dum ofassociation. This last point hasnot beenactually decided,
but is practically determined by the decision of the House of
Lords in Trevor v. Whitworth, and the judgment of Lord
(n) Teasdale’s case, 9 Ch. 54, where,
however, the effect of all the resolu-
tions taken together was to increase
the unpaid-up capital. See as to
this case, Trevor v. Whitworth, and
Hope v. International Financial Soc.,
cited infra.
(0) Ibid. ; Marshall v. Glamorgan
Iron Co., 7 Eq. 129; and see
Wright’s case, 12 Eq. 386, note;
Snell’s case, 5 Ch. 22.
(p) Dronfield Silkstone Coal Co.,
17 Ch. D. 76, which, however, was
disapproved, and practically over-
ruled by the House of Lords in
Trevor v. Whitworth, infra.
(q) See the next two notes.
(r) Trevor v. Whitworth, 12 App.
Ca. 409. Dronfield Silkstone Coal
Co., 17 Ch. D. 76, contra, must be
considered as overruled.
(s) Hope v. International Finan-
cial Society, 4 Ch. D. 327, which
compare with Teasdale’s case, ante,
note (7).
IN PARTICULAR COMPANIES. 527
Macnaghten is clear upon the point (¢). The consequences of Bk. IIL. Chap. 5,
this are very serious to persons selling their shares in such
companies to the companies themselves, or surrendering their
shares to the companies for value paid by the companies. The
transaction being wltra vires, it will follow that any money paid
by the company for the shares can be recovered back; that
the directors paying it and the shareholders receiving it, will be
liable for it, and that the surrender itself will be invalid unless
indeed the transaction can be upheld in part, and set aside in
part, which may be possible in some cases, but practically in
very few.
(t) See Trevor v. Whitworth, 12 App. Ca. 409, pp. 432 et seq.
528
Bk. II]. Chap. 6.
Right of com-
pany to forfeit
shares,
FORFEITURE OF SHARES.
CHAPTER VI.
OF THE FORFEITURE OF SHARES.
Companies have no power to forfeit the shares of their
members, or of subscribers who have not yet become members,
unless such power is specially conferred upon them (a). A
clause in a company’s articles enabling the directors to forfeit
the shares of any member who shall take any legal proceedings
against the company is invalid (b).
The right to forfeit shares is frequently arrogated in cases
where a shareholder will not pay to the company what is due
to it from him in respect of his shares: and it is not uncom-
monly assumed that a right to forfeit in such a case is pos-
sessed as a matter of course by directors. But this opinion is
erroneous ; for, as already stated, a right to forfeit exists only
when specially conferred ; and even a majority of shareholders
cannot confer it unless empowered so to do by the company’s
act, charter, deed of settlement, or regulations (c). But if
there is power to forfeit for non-payment of calls, that power
may be extended to non-payment of additional capital which
may be authorised to be raised (d).
(a) Hart v. Clarke, 6 De G. M. v. Keane, 11 Ch. D. 353 ; Labouchere
& G. 232, and 6 H. L. C. 633; Nor-
man v. Mitchell, 5 De G. M. & G.
648 ; Barton’s case, 4 Drew. 535,
and 4 De G. & J. 46. As to com-
panies partly English and partly
foreign, see Sudlow v. Dutch Rhenish
Rail. Co., 21 Beav. 43. As to the
right of corporations to disenfran-
chise and expel members for reason-
able cause, see Osgood v. Nelson, L.
R. 5 H. L. 636; Grant on Cor-
porations, 262-269. As to expul-
sion from a club, see Hopkinson v.
Marquis of Exeter, 5 Eq. 68; Fisher
vy. Earl of Wharneliffe, 13 Ch. D.
346 ; Dawkins v. Antrobus, 17 Ch.
D 615; and from a trade associa-
tion, Strick v. Swansea Tin Plate Co.,
36 Ch. D. 558 ; Rigby v. Connol, 14
Ch. D, 482.
(b) Hope v. International Finan-
cial Society, 4 Ch. D. 327.
(c) Barton’s case, 4 Drew. 535,
affirmed on appeal, 4 De G. & J. 46.
As to the Companies act, 1862, see
infra.
(d) See Kelk’s case, 9 Eq. 107.
IN COMPANIES GOVERNED By 8 & 9 vicr. c. 16. 529
By the Stannaries act, 1869, shares in cost-book mining Bk. III. Chap. 6.
companies can be forfeited for non-payment of calls (a). prises a
. . © shares In cost-
The only other general legislative enactment now in force (2), book companies.
which expressly confers on companies the power of forfeiting Statutes autho-
. : ea rising forfeiture
the shares of their members, is the Companies’ clauses con- of shaves.
solidation act. The Companies act of 1862 does not itself
contain any provisions on this subject, but the Table A. to
that act does, as will be seen presently (c).
As to companies governed by the Companies’ clauses consolida- peitciits of
tion act, it is provided by 8 & 9 Vict. c. 16, §§ 29-35, that if panies governed
any shareholder fail to pay any call payable by him, the directors, Pe oe Bae
at any time after the expiration of two months from the day
appointed for the payment of a call, may declare the share in
respect of which such call was payable forfeited, whether the
call has been sued for or not. But before declaring any share
forfeited, the directors must give notice of their intention to
do so, twenty-one days at least before making a declaration of
forfeiture. After a share has been declared forfeited, it may
be sold for payment of the calls in arrear; but before it is so
sold, the declaration of its forfeiture must be confirmed, and
its sale must be ordered at a general meeting held not sooner
than two months after the day on which notice of intention to
forfeit was given. If the money arising from the sale of a
forfeited share is more than sufficient to pay the arrears of
calls with interest, and the expenses of sale, the surplus is
to be paid to the defaulting shareholder ; and if before a share
is sold he pays what is due upon it and also the expenses, if
any, incurred for the purpose of selling it, then he is entitled
(a) 32 & 33 Vict. c. 19,§ 16. See,
before this act, Hart v. Clarke, 5 De
G. M. & G. 232, and 6 H. L. C.
633.
(b) The 7 & 8 Vict. c, 113, § 37,
provided for forfeiture, but the 7 &
8 Vict. c. 110, did not. Companies
governed by this last act usually
possessed the right of forfeiting
shares under their deed of settle-
ment. A clause in the deed that
the shares of subscribers who would
not execute it might be forfeited,
L.C.
was valid; Stewart v. Anglo-Cali-
fornian Co. 18 Q. B. 736; Beres-
ford’s case, 2 Mac. & G. 197, and 3
De G. & 8. 175; Baily’s case, 15
Jur. 29; but if there was no such
clause, no forfeiture could be
effected ; Barton’s case, 4 Drew. 535,
and on appeal, 4 De G. & J. 46.
(c) The acts of 1856-58 also left
the subject of forfeiture to be dealt
with by the regulations of each
company.
MM
530
Bk. III. Chap. 6.
Forfeiting and
suing for calls.
Cancellation of
forfeited shares.
Companies
governed by the
act of 1862.
FORFEITURE OF SHARES.
to have the share restored to him. The act in question
expressly declares that shares may be forfeited for non-pay-
ment of calls, whether those calls have been sued for or not.
The right to forfeit and the right to sue may consequently
both be exercised together: the remedies are cumulative, not
alternative (d).
If the company has a special act also incorporating the
Companies’ clauses act, 1863, the shares when forfeited may
be cancelled if they cannot be sold (¢). But this can only be
done by a general meeting, held at least two months after
notice of the forfeiture (/), and the shares may be redeemed
by payment of what is due in respect of them before they have
been cancelled (yg). Even such cancellation, however, does
not release the shareholder from his liability to pay what may
be due from him at the time of cancellation (h); although if he
is afterwards sued in respect of what is so due, he must be
credited with the value of his shares at that time (i). How-
ever, by the consent in writing of the shareholder and the
sanction of a general meeting, shares which have been for-
feited or on which money is due may be cancelled, so as to
release the holder from all liabilities (k); but no money must
be paid by the company for the cancellation of any share (I).
New shares may be issued in lieu of cancelled shares (m).
As to companies governed by the Companies act, 1862, it is
provided by Table A., that shares may be forfeited for non-
payment of calls (No. 17); and even if power to forfeit is not
given by the original articles, it may be given by special reso-
lution under § 50 of the act (n). But a power to forfeit the
shares of a person if he sues the company or the directors is
brutwm fulmen (0). In order legally to forfeit a share, under
(d) Great Northern Rail. Uo. v. (g) Ib. § 7.
Kennedy, 4 Ex. 417; Inglis v. Great (h) Ib. § 6.
Northern Rail. Co., 1 Macq. 112. (2) Ib, § 7.
In Edinburgh, Leith, &c., Rail. Co. (k) Tb. § 8.
v. Hebblewhite, 6 M. & W. 707; (1) Ib. § 10.
Giles v. Hutt, 3 Ex. 18; London and (m) Tb. § 11.
Brighton Rail. Co. v. Fairclough, 2 (n) See Teasdale’s case, 9 Ch. 54,
Man. & Gr. 674, there was only an and Kelk’s case, and Pahlen’s case, 9
option to sue or to forfeit. Eq. 107.
(e) 26 & 27 Vict. c. 118, § 4. (0) See Hope v. International Ft-
(f) Tbid. nancial Society, 4 Ch. D. 327.
PROVISIONS OF TABLE A. 581
the regulations of this table, it is necessary, first to serve the Bk. III Chap. 6.
defaulting member, personally or by post (see Nos. 95—97),
with a notice (No. 17); and secondly, to pass a resolution of
the directors forfeiting his shares (No. 19).
The notice must
1. Require the defaulting member to pay the call in arrear,
with interest and any expenses that may have accrued by
reason of its non-payment (No. 17) (p);
2. Name a further day on or before which the unpaid calls
with the interest and expenses are to be paid (No. 18) ;
3. State the place where the payment is to be made, such
place being either the company’s registered office or some
other place at which the calls are usually made payable, e.¢.,
at the company’s bankers (No. 18) ;
4. State that, in the event of non-payment at or before the
time and at the place appointed, the shares in respect of which
the call was made will be liable to be forfeited (No. 18).
If the requisitions of this notice are not complied with, the
shares in respect of which it was given, may be forfeited, by a
resolution of the directors, at any time before payment of what
is due in respect of such shares (No. 19).
Any member whose shares have been forfeited is liable to
pay all calls due upon them at the time of their forfeiture
(No. 21).
Forfeited shares are the property of the company, and may Forfeited shares.
be disposed of as the members at a general meeting think fit
(No. 20).
In order to enable such shares to be reissued, and to protect
a purchaser from the risk of haying his title defeated by some
irregularity in the forfeiture, it is provided that a statutory
declaration in writing that the call in respect of a share was
made and notice thereof given, and that default in payment of
the call was made, and that the forfeiture of the share was
made by a resolution of the directors to that effect, shall be
sufficient evidence of the facts therein stated as against all
persons entitled to such share ; and such declaration, and the
(p) Interest can only be claimed call, Johnson v. Lyttle’s Iron Agency,
from the time when the call ought 5 Ch. D. 687,
to be paid not from the date of the
MM 2
582
FORFEITURE OF SHARKS.
Bk. III. Chap. 6. receipt of the company for the price of such share, shall con-
Exercise of the
right to forfeit.
Forfeiture to
enable a share-
holder to retire.
stitute a good title thereto (No. 22).
A right to forfeit shares must, in order to be effectually
exercised, be pursued with the greatest exactness (q) ; it must
be exercised by the proper parties, z.c., by directors properly
appointed (7), and by the requisite number of them (s), and in
the proper manner and for proper cause. The right must be
exercised bond fide for the purpose for which it was conferred.
The power to forfeit is a trust, the execution of which will be
narrowly scanned by the court (t). It cannot, for example,
be exercised surreptitiously, for the purpose of expelling a
shareholder (t) ; nor by connivance, for the purpose of assisting
him in getting rid of shares and retiring from the company, in
fraud of the other shareholders. A court will not sanction or
recognise as valid a forfeiture made mald fide for any such
purpose.
The invalidity of a forfeiture made for the purpose of
enabling a shareholder to retire when he is not entitled so to
do, is well shown by the decision in Richmond’s case, and
Painter’s case (uw). There a director of a company proposed
that he and his co-directors should take a number of shares
as trustees for the company, and he signed the deed for 2000
shares, and he was registered as the owner thereof. None of
the other directors, however,
(q) See, as to the insufficiency of
notices, &c., Johnson v. Lyttle’s Iron
Agency, 5 Ch. D. 687; Watson v.
Eales, 23 Beav. 294; Van Diemen’s
Land Co. v. Cockerell, 1 C. B. N.S.
732, affirming Cockerell v. Van Die-
mews Land Co.,18 C. B, 454 ; Hdin-
burgh, Leith, de., Rail. Co. v. Hebble-
white, 6 M. & W. 707; London and
Brighton Rail. Co. v. Fairclough, 2
Man. & Gr. 674. Compare Graham v.
Vun Diemen’s Land Co.,1 H.& N.541.
(r) Garden Gilly, ke. ,Co.v. M‘Lister,
1 App. Ca. 39, where the appoint-
ment of the directors was invalid,
(s) Bottomley’s case, 16 Ch. D. 681,
where the number of directors was
insufficient. Compare Lyster’s case,
followed his example. About
4 Ey. 233, infra, note (a).
(t) Blisset v. Daniel, 10 Ha. 483 ;
Harris v. North Devon Rail. Co., 20
Beav. 384 ; Stubbs v. Lister, 1 Y. &
C. C. C. 81. See, also, Stewart's
case, 1 Ch. 511; and Sweny v. Smith,
7 Ey. 324, where the plaintiff had
sent a cheque for his calls.
(u) 4 K. & J. 305. See, also,
Lsparto Trading Co., 12 Ch. D. 191;
Halls case, 5 Ch. 707 ; Gower’s case,
6 Eq. 77; Spackman v. Evans, L. R.
3H. L. 171; Stanhope’s case, 1 Ch.
161; Phosphate of Lime Co. v. Green,
L.R.7 C. P. 43; Harris v. North
Devon Rail. Co., 20 Beav. 384 ;
Preston v. Grand Collier Dock Co., 11
Sim. 327.
WHAT AMOUNTS 'f0 A FORFEITURE. 533
two years afterwards he ceased to be a director; and a year Bk. HI. Chap. 6.
after that, finding the company to be the reverse of prosperous,
he desired to have his 2000 shares cancelled. To enable the
directors to cancel them, he suggested that a call should be
made on his shares, and that they should be forfeited under
the powers contained in the company’s deed. This suggestion
was acted on; a call was made, and his shares were forfeited
for non-payment thereof. But it was held, that the directors
had no power to release a shareholder from his obligations by
enabling him to retire at the expense of the company; that the
shares had not been bond fide forfeited for the benefit of the
company, and that the forfeiture was therefore invalid.
Clauses in deeds of settlement, &c., which declare that on i See
non-payment of calls, &c., shares shall become absolutely for-
feited, do not enable shareholders to get rid of their shares
by refusing to pay their calls.
the benefit of the company, and there is no forfeiture until a
forfeiture is declared (x).
Such clauses are inserted for
Moreover, a declared intention to forfeit not carried into
effect (y), or not duly confirmed, is no forfeiture at all (z).
Still, if there is power to forfeit, and a declared intention to
forfeit, and the shares intended to be forfeited are treated by
the company and the shareholder as forfeited, the company
will be precluded from afterwards insisting that no forfeiture
ever took place (a).
where the forfeiture is altogether wltra vires ; and there are
cases in which, after the lapse of many years, persons whose
shares had been forfeited in order to enable them to retire,
were nevertheless held to be contributories ()).
The effect of the forfeiture of a share depends entirely upon Effect of for-
whether the forfeiture is valid or not. If it is valid, the share- “"""”
This doctrine, however, cannot apply
(z) See Moore v. Rawlins, 6 C. B.
N.S. 289.
(a) Ex parte Woollaston, 4 De G.
& J. 437; Knights case, 2 Ch. 321,
(y) Biggs case, 1 Ey. 309.
(2) See Birmingham, Bristol, cc.,
Rail. Co. v. Locke, 1 Q. B. 256;
Edinburgh, Leith, dc., Rail. Co. v.
Hebblewhite, 6 M. & W. 707 ; London
and Brighton Rail. Co, v. Fairclough,
2 Man. & Gr, 674,
where a resolution to forfeit was
presumed ; Lyster’s case, 4 Eq. 233,
where the forfeiture was by two
directors out of six. See, under the
head Contributories, in bk. iv., c. 1,
§ 10, B. (38).
(b) See ante, p. 519,
584
FORFEITURE OF SHARES.
Bk. III. Chap. 6. holder ceases, by the forfeiture of his shares, to be a member
Relief in such
cases.
of the company; and although he may be liable to be sued
for the calls (c) for the non-payment of which his shares have
been forfeited, he is not liable to subsequent calls nor to be
made a contributory as a present member on the winding-up
of the company (d). But if a forfeiture is invalid, and if the
company is not estopped from showing the invalidity (e), then
the shareholder does not cease to be a member of the com-
pany, and he still remains liable to calls (f), and to be made
a contributory on the winding-up of the company(g). Whether
the invalidity of a declaration of forfeiture affords a defence to
an action by the injured shareholder against the company for
damages occasioned by its wrongful act, is a question on which
decisions conflict (kh). But if a member has been in fact
wrongfully expelled, and been damnified, it is not easy to see
why an action should not lie. Be this, however, as it may,
the invalidity of a forfeiture affords no reason why the court
should not interfere to protect or restore a shareholder to that
position from which he is in fact excluded. In Hart v.
Clarke (i), a shareholder in a cost-book mining company, whose
shares had been improperly forfeited, was, after the lapse of a
considerable length of time, restored to his rights as a share-
holder ; in Norman v. Mitchell (k), and in Watson v. Eales (1),
(c) Interest on such calls was held
not recoverable in Stocken’s case, 5
Eq. 6, and 3 Ch. 412.
(d) See infra, under the head
Contributories, in book iv., c. 1, § 10.
He may be a contributory as a past
member, Bridger’s case, 4 Ch. 266 ;
Creyke’s case, 5 Ch. 638.
(e) See ante, p. 48 et seq.
(f) See Birmingham, Bristol, &c.,
Rail. Co. v. Locke, 1 Q. B. 256;
Edinburgh, Leith, &c., Rail. Co. v.
Hebblewhite,6 M. & W. 707 ; London
and Brighton Rail. Co. v. Fairclough,
2 Man. & Gr. 674.
(g) Barton’s case, 4 Drew. 535,
and 4 De G. & J. 46; Richmond’s
case, and Painter's case, 4 K. & J.
305, and the cases cited, ante, p. 532,
note (u),
(hk) See Catchpole v. Ambergate
Ruil. Co.,1 E. & B. 111, and com-
pare the cases in the next note. If
a company has no power to forfeit,
a forfeiture cannot be imputed to it,
and the action for damages ought to
be against its directors, if it can be
sustained at all.
(1) 6 De G. M. & G. 232, and 6
H. L. C. 633. See, also, Sweny v.
Smith, 7 Eq. 324, where the share-
holder had tendered his call ; Garden
Gully, &e., Co. v. M’Lister, 1 App.
Ca. 39; where the defence failed,
and Wood v. Wood, L. R. 9 Ex. 190,
where it succeeded. The former
case does not appear to have been
noticed.
(k) 5 De G. M. & G. 648,
(2) 23 Beay. 294,
RELIEF AGAINST FORFEITURE. 585
an injunction was granted to restrain the carrying into effect Bk. III. Chap. 6.
of declarations of forfeiture recently made; and in Stubbs y. Sts "
Lister (m), a forfeiture of shares was set aside on the ground
that the directors who were bound to credit the shareholder
with the utmost value of the shares, had credited him with a
value set upon them by themselves, and which value was less
than the current market price of shares in the company at the
time the forfeiture was declared. In this case the shares were
a security for money owing by their owner to the company, and
were forfeited for non-payment of that money.
It may further be observed, that although a court will not
relieve a person whose shares have been duly forfeited (1), it
will interfere to prevent a forfeiture pending a dispute between
a company and a shareholder upon payment by him into court
of what may be due from him in respect of the shares intended
to be forfeited (0), and will take care that the shareholder has
credit for whatever the shares may or, if properly sold, might
have fetched (/p).
The effect of acquiescence in a forfeiture, and of delay in
seeking relief, will be examined hereafter. See Chap. IX.,
§ 3 (q).
(m) 1Y.&C. 0. C. 81. (p) See Stubbs v, Lister, 1 Y. &
(n) Sparks v. Liverpool Water- C.C.C. 81.
works Co., 13 Ves. 428. (q) The most recent decision on
(0) See Naylor v. South Devon this point is Rule v. Jewell, 18 Ch.
Rail. Co., 1 De G. & 8. 32. D. 660.
536
Bk. III. Chap. 7.
Sect. 1.
Executors of
shareholders.
Liability to
calls, &c.
THE EFFECT OF THE DEATH OF A SHAREHOLDER
CHAPTER VII.
OF THE EFFECT OF THE DEATH OF A SHAREHOLDER.
TH consequences of the death of a member of a company
will be most conveniently pointed out in the course of an
examination of the position of the company, and of the exe-
cutors of the deceased member—
1. As between themselves ;
2. As regards the creditors of the company ; and
3. As regards the separate creditors and legatees of the
deceased,
SECTION I.—CONSEQUENCES AS REGARDS THE COMPANY AND
THE EXECUTORS OF THE DECEASED.
The position of the executors or administrators of a deceased
shareholder relatively to the company is as follows :—
1. They are entitled, as against the company, to the shares of
the deceased, and to be paid by the company whatever is
payable by it in respect of such shares at the time of his death ;
and also whatever becomes payable in respect of those shares
whilst they form part of his estate.
2. The assets of the deceased are liable to make good what-
ever is at the time of his decease payable by him to the
company; and also whatever afterwards becomes payable by his
representatives by virtue of the contract into which he entered.
Consequently, if a person becomes a shareholder in a company
and then dies, and afterwards, and whilst his shares are part of
his estate, a call is made by the company on its shareholders,
AS BETWEEN THE COMPANY AND THE SHAREHOLDER’S EXECUTORS. 587
his assets will be liable to the payment of such call (a). More- Bk. ee 7.
over a call, made by a company in pursuance of its act, ———
charter, or deed of settlement, constitutes a specialty debt (b) ;
and all calls made under the winding-up provisions of the
Companies act, 1862, are also specialty debts (¢). But
specialty debts are no longer entitled to priority of payment
over simple contract debts (d); and even before the law was
altered in this respect, executors who paid the simple contract
debts of their testator before a call was made, were allowed
those payments as against the company seeking to make them
liable for a devastavit (e); and no part of the testator’s assets
could, as against his simple contract creditors, be set apart for
the payment of calls which had not been made (/).
8. It follows from the foregoing observations that, when a Liability to be
: ‘ made contribu-
company is being wound up, the executors of a deceased share- tories.
holder are liable to be made contributories as executors in
respect of his shares so long as they remain untransferred.
From this again it follows, that the executors of a deceased
shareholder are entitled to petition for an order to wind up the
company, although they may not be themselves shareholders
therein. This subject will be alluded to hereafter (g).
4. In most companies, executors have, as between them- Necessity for
selves and the company in which their testator was a share- °°" '
become share-
holder, a right to become shareholders in his stead (h). But if holders.
(a) See, in equity, Fyler v. Fyler,
2 Ra. Ca. 813; Blakeley’s case, 13
Beay. 133, and 3 Mac. & G. 726 ;
Heward v. Wheatley, 3 De G. M. &
G. 628, and at law, Wills v. Murray,
4 Ex. 843. Compare Weald of Kent
Canal Co. v. Robinson, 5 Taunt.
801.
(b) Cork and Bandon Rail. Co. v.
Goode, 13 C. B. 826. In Morris v.
Sadher, Ir. L. R. 6 Eq. 580, a
covenant by a deceased shareholder
with an officer of the company to
pay what should be demanded of
him, was held not to create a
specialty debt in respect of moneys
due from his estate, but not de-
manded in his lifetime. Calls made
under a Colonial act are simple con-
tract debts only, see Welland Rail.
Co. v. Blake, 6 H. & N. 415,
(c) The Companies act, 1862, § 16.
It was not so under the older
winding - up acts, see Robinson's
Executors’ cause, 6 De G. M. & G.
572.
(d) 32 & 33 Vict. c. 46.
(e) Henderson v. Gilchrist, 17 Jur.
570.
(f) Wentworth v. Chevell, 3 Jur.
N.S. 805. As to the legatees and
next of kin, see infra, p. 540 et seq.
(gy) See infra, bk. iv. c. 1, § 3.
(h) A clause in the articles of
association giving the company
power to decline to register a trang-
538
Bk. IIT. Chap. 7.
Sect. 1.
Shares held by
several persons
jointly,
THE EFFECT OF THE DEATH OF A SHAREHOLDER
an executor does become a shareholder, his liability, as well to
the company as to its creditors, is a personal liability ; and such
liability is in no way qualified or limited by the circumstance
that as between himself and those who are beneficially entitled
to the testator’s assets, the executor is not the owner of the
shares standing in his name (7). Executors, therefore, should
not become shareholders if they can avoid doing so; and
generally it will be found that they can transfer their tes-
tator’s shares without first becoming shareholders themselves ;
and where this is the case, an assent by them to become share-
holders will not be presumed, even if their names have been
put on the company’s register (k). Whether, however, executors
can or cannot dispose of their testator’s shares without them-
selves becoming shareholders, and the manner in which it is to
be done, depend, in each case, upon the constitution of the
company in which the shares are held.
By the Companies act, 1862, provision is expressly made for
transfers by executors, although they may not themselves be
members (I). ,
The transfer by executors of shares in companies, governed
by the Companies’ clauses consolidation act, is also specially
provided for (m); but by this act the executors must apparently
be themselves registered as shareholders before they can
transfer (2).
When a share ina company is held by several persons jointly
and one of them dies, the legal title to that share devolves on
the survivors, whatever may be the case as to the equitable
title (0).
fer does not apply as between a
testator and his executor. See
Bentham Mills Spinning Co., 11
Ch. D. 900 ; compare Ex parte Har-
rison, 26 Ch. D. 522, and 28 Ch. D.
363.
(i) See Duff’s Executor’s case, 32
Ch. D. 301 ; Spence’s case, 17 Beav.
203 ; Fenwick’s case. 1 De G. & S.
557; Armstrong v. Burnet, 20 Beay.
424,
(hr) See Buchaws case, 4 App. Ca.
549, 583, where the executors were
If the holders are partners, and the share is partner-
on the register,
(l) 25 & 26 Vict. c. 89, § 24, and
see Table A., Nos, 12—16. The
Table B. to the Companies act,
1856, contained similar provisions.
(m) 8 & 9 Vict. c. 16, §§ 18, 19,
20.
(n) Compare §§ 3, 14, 18.
(0) See acc. Hill’s case, 20 Eq.
595, where the survivor alone was
put on the list of contributories.
Qu. whether the executors can be
put on as past members,
AS REGARDS THE CREDITORS OF THE COMPANY. 589
ship property, the equitable interest of the deceased will not BK ET Chap. i
survive; but if the holders are not partners, the question of ——-~—-—~ -
survivorship or non-survivorship will depend upon those prin-
ciples which would be applicable under similar circumstances
to other property; and the fact that the regulations of the
company contain a clause to the effect that no benefit of sur-
vivorship shall take place amongst the shareholders will be of
little, if any, consequence. For example: shares purchased
by A., in the names of himself and B., primd facie belong in
equity to A.; but if A. dies before B., the legal interest in them
devolves on B.; and if the evidence rebuts the presumption
which primd facie exists in A.’s favour, B. will be entitled to
the shares both at law and in equity, although the company’s
deed may contain such a clause as that just mentioned (p).
If, however, B. is only a trustee for A., and A. dies, and then
B. dies, and the company is wound up, B.’s executor will be
liable to be put upon the list of contributories, and he will be
entitled to indemnity out of A.’s estate, and to sue for such
indemnity before being actually settled on the list (q).
SECTION II.—CONSEQUENCES OF DEATH AS REGARDS THE CREDITORS
OF THE COMPANY.
With respect to the right of a creditor of a company to Liability of
proceed against the executors of a deceased shareholder, a ‘site of de-
distinction must be taken between unincorporated and incor- holder.
porated companies ; for whilst the assets of a deceased share-
holder in an unincorporated company are primd facie liable in
equity (although not at law) to the debts of the company con-
tracted before his decease (r), the assets of a deceased member
of a body corporate are, primd facie, not liable to the payment
of the debts thereof either at law or in equity. But as regards
both classes of companies, the position of executors in fact
(p) Garrick v. Taylor, 4 De G. F. (q) Hobbs v. Wayet, 36 Ch. D.
& J. 159, affirming S.C. 29 Beay. 256.
79, (r) See Partn., 594 et seq,
540
Bk. III. Chap. 7.
Sect. 3.
Legacies of
shares in com-
panies,
THE EFFECT OF THE DEATH OF A SHAREHOLDER
depends less on general principles than on particular statutes,
the provisions of which must therefore not be overlooked.
Thus, although banking companies governed by 7 Geo. 4, c. 46,
are not corporate bodies, and although creditors of such com-
panies are, it seems, entitled to obtain payment of their debts
out of the assets of a deceased shareholder, still the creditors’
rights are so far modified by the acts in question, that, whether
they are creditors by specialty or by simple contract, the lapse
of three years after the death of a shareholder bars their
claims against his executors (s); and even within that period
the executors are only liable to pay such debts as the surviving:
shareholders are unable to discharge (t). Several cases are
also to be found in which executors, not being themselves
shareholders, have been held not liable to creditors (wu). Similar
observations apply to actions for calls.
The liability of executors to be proceeded against by sci. fa.
or its modern substitute has been already noticed (Book II.,
c. 7, § 8): their liabilities as contributories will be referred to
hereafter in Book IV., c. 1, § 10.
SECTION IIJ].—AS REGARDS THE SEPARATE CREDITORS AND LEGATEES
OF THE DECEASED.
Shares in companies are property for all purposes of ad-
ministration. They are assets for the payment of debts; they
can be disposed of by will; and if not disposed of they must
be dealt with like other personal estate, and be distributed
amongst the statutory next-of-kin of their deceased owner.
(s) See Barker v. Buttress, 7 Beav.
134.
the deceased’s name was kept on
the register of shareholders ; Poole
(t) Heward v. Wheatley, Ex parte
Wilson, 5 De G. & 8. 552. Com-
pare [te Walton’s Estute, 23 Beavy.
480.
(u) Ness v. Armstrong, 4 Ex. 21,
where the executors had received
dividends ; Powis v. Butler, 3 C. B.
N, S. 645, and 4 ib, 469, where
v. Knott, 7 W. R. 527, where the
deceased had died before the creditor
had obtained judgment against the
company. The doubt expressed in
Ricketts v. Bowhay, 3 C. B, 889,
is removed by the decision in Ness
v. Armstrong, 4 Ex. 21; and the
case of Ness v, Bertram, 4 Ex. 191,
AS REGARDS HIS SEPARATE CREDITORS AND LEGATEES. 541
They are legal and not equitable assets (.c); they pass under a Bk. ae oy .
bequest of personal estate (y) ; and if the certificates are kept-.-— —-—~
at a bank the shares will pass under a bequest of property at
that bank (z).
Shares, however, will not ordinarily pass under a bequest of
moneys, bonds, or securities (a). But under special circum-
stances they will pass even under a bequest of money, as in
Knight v. Knight (b), where share certificates were in an en-
velope indorsed ‘‘ to be considered as money and given to A.B.”
A bequest of shares will ordinarily pass stock (c), but not
debentures (d).
Where a person entitled to various kinds of shares in a com-
pany bequeaths some of them without saying which in par-
ticular, the legatee can select which he pleases (¢).
A legacy of shares in a company is not necessarily adeemed Ademption.
by the conversion of such shares into stock (f), or into
annuities (g); nor by the amalgamation of that company with
another (h). But a bequest of shares in an unincorporated
banking company governed by 7 Geo. 4, c. 46, was held to fail
by reason of the subsequent registration of the company
with limited lability, and with an altered capital differently
divided (i).
A legatee of shares may, of course, decline to accept them,
and he may do so although he accepts other property under the
same will (k); unless there is only one gift, in which case he
must accept or decline the whole (J).
turned entirely on a point of plead- (f) Oakes v. Oakes, 9 Ha. 666.
ing.
(x) Cook v. Gregson, 3 Drew. 547.
(y) Cudman vy. Cadman, 13 Eq,
470, canal shares.
(2) Desinge v. Beare, 37 Ch. D.
481.
(a) Hudleston v. Gouldsbury, 10
Beav. 547; Ogle v. Knipe, 8 Eq.
434 ; Collins v. Collins, 12 Hq. 455.
(b) 2 Giff. 616.
(c) Morrice v. Aylmer, 10 Ch, 148,
and L. R.7 H.L. 717; Trinder v.
Trinder, 1 Eq. 695.
(d) Dillon v. Arkins, 17 L. R. Tr.
636.
(e) Millard v. Batley, 1 Eq. 378.
See on this case the cases in note
(c); and compare Re Gibson, 2 Eq.
669 ; Re Lane, 14 Ch. D. 856, a case
of debentures,
(g) Bronsdon v. Winter, 1 Amb.
57; Partridge v. Partridge, 9 Mod.
269 ; Cas. t. Tal. 226.
(h) See Phillips v. Turner, 17
Beav. 194,
(t) Dresser v. Gray, 36 Ch. D, 205,
N.B. The head-note misdescribes
the company.
(k) Long v. Kent, 6 N. R. 354.
(1) See Guthrie v. Walrond, 22
Ch. D, 573, and the cases there
cited,
542 THE EFFECT OF THE DEATH OF A SHAREHOLDER
Bk, a ray 7. Where a share in a company is bequeathed to a person ab-
_----—--— golutely, the executors should transfer it to the legatee as soon
Absolute is : Bdge ie :
legacies. as possible, in order that the liability of the testator’s estate in
respect of it may be put an end to (m). If the legatee is not
sui juris, and the share cannot be transferred into his name,
the position of the executors becomes embarrassing. If, how-
ever, they do nothing with the share, but simply take the
dividends as executors, they will not render themselves per-
sonally liable to creditors (vn); nor will they be liable to be
made contributories, otherwise than in then representative
capacity (0). But it may happen that, unless the executors
transfer the shares into the names of themselves or some other
persons, the shares will become forfeitable ; and in that case
(the legatee of the share being still supposed to be not sui juris)
the executors should, for their own protection, apply for the
direction of the Court.
Legacies for Where shares are bequeathed to one person for life with
life. é
remainder to another, they ought nevertheless to be sold
unless it is clearly the testator’s intention that they shall be
retained in specie (p). If they are intended to be enjored in
specie, the position of the executors again becomes embarrass-
ing: for if they transfer the shares into the name of the tenant
for life, there is nothing to prevent him from selling them for
his own use; and in case of a sale of the shares by him, the
remainderman would naturally seek to make the executors
responsible for their loss. If, on the other hand, the executors
procure the shares to be transferred into their own names as
trustees for the legatees, a personal liability in respect of the
shares will be incurred by the executors, and that liability will
not be limited by the amount of the assets of the testator.
Unless, therefore, the executors can retain the shares without
transferring them, they should, for their own safety, apply for
the direction of the Court.
(m) See Keene’s Huecutors’ case, 3 (p) See Blann v. Bell, 2 De G.
De G. M. & G. 272. M. & G. 775; Thornton vy. Ellis,
(n) Ness v. Armstrong, 4 Ex. 21. 15 Beav. 193; Crowe v. Crisford,
(0) This subject will be adverted 17 ib. 507; Wightwick v. Lord, 6
to hereafter when treating of Con- H. L. C. 217.
tributories, Vk, iv., «. 1, § 10.
AS REGARDS HIS SEPARATE CREDITORS AND LEGATEES. 543
Where shares are bequeathed to one person for life, with Bk. ae 7.
remainder to another, and are transferred into the name of the ——-- -~---
tenant for life, they will, on his death, be transferable into the ears:
name of the remainderman without further payment of probate
duty (q). Such shares, in fact, form no part of the tenant for
life’s estate, and are covered by the duty payable in respect of
the estate of the original testator.
Where shares are bequeathed, not specifically, to one person Income before
for life, and after his death to another, the money yielded by ae
them before sale will not necessarily belong to the tenant for
life; for, according to the case of Dimes v. Scott (7), the tenant Dimes v. Scott.
for life is only entitled to the income which would have been
obtained if the shares had been sold and the produce invested
in consols, at the end of a year from the testator’s death : the
income thus ascertained being, however, paid from the date of
the death. This rule applies where the testator’s residuary
estate consists of shares when he dies. But it has been held
that the rule does not apply where the executors themselves
make an unauthorised investment; and that in such a case the
tenant for life is entitled to the income actually yielded by the
investment, and the remainderman is not entitled to more than
a restoration of the original capital (s).
When the legacy is specific, the rule in Dimes v. Scott does
not apply, the legatee taking whatever the shares may yield(t).
So where the shares, although not specifically bequeathed, are
directed by the will not to be sold for a certain time, what
they yield during that time will belong to the tenant for
life (w).
It appears to be now settled, that when shares are specifi- payment of
cally bequeathed, and the will contains no special directions to
the contrary, all calls made upon the shares in the testator’s
lifetime must be borne by his general personal estate ; whilst
all those made after his death must be borne by the legatee
(q) Hennell v. Strong, 25 L. J. Ch. (t) Infra.
407. (u) See Green v. Britten, 1 De G.
(r) 4 Russ. 195, and see Fearns v. J. & Sm. 649. Where the sale is
Young, 9 Ves. 549. postponed by the Court for the
(s) See Stroud v. Gwyer, 28 Beav. benefit of infants, see Lambert v.
130. Rendle, 3 N. R. 247.
544
THE EFFECT OF THE DEATH OF A SHAREHOLDER
Bk. ae es 7. taking the shares (x). There are, indeed, cases which show that
Indemnity fund
to meet calls.
Rights to
profits, &c.
calls made after the testator’s death are payable out of his
general estate, and not by the specific legatee (y); but these
cases are not to be relied upon, except where the payment of
the calls would have been a condition precedent to the comple-
tion of the testator’s own title to the shares if he himself had
lived (z), and the calls are made before the specific legatee is,
by the terms of the will, to have the shares (a).
Where shares are specifically bequeathed, and calls upon
them are payable out of a testator’s residuary estate, a fund
ought to be set apart for the imdemnity of the specific lega-
tee (b) ; but, where the assets of the deceased are insufficient
for the payment of his debts, no fund to meet future calls
ought to be set apart to the prejudice of even simple contract
creditors (c).
A legatee of shares on which the company has a general lien,
is not liable to contribute with the devisee of land mortgaged
to the company by the testator towards the payment off of the
mortgage debt (d).
A specific legatee of a share in a company is entitled to all
ordinary dividends declared after the testator’s death (¢); un-
less although declared after his death they were earned and
ought to have been declared before (/).
(c) See Re Bow, 1 Hem. & M.
552, and Day v. Day, 1 Dr. & Sm.
261, where all the previous cases
are reviewed. See also, Bevan v.
Waterhouse, 3 Ch. D. 752, as to a
direction to pay calls out of income
and not out of capital.
(y) Blount v. Hipkins, 7 Sim. 51 ;
Clive v. Clive, Kay, 600 ; Jacques v.
Chambers, 4 Ra, Ca. 499, correcting
S. C., 2 Coll. 435 ; Wright v. War-
ren, 4 De G. & BS. 367.
(z) As to this qualification, see
Armstrony v. Burnet, 20 Beav. 424 ;
Addams v. Ferick, 26 ib. 384; and
Day v. Day, ubi supra.
(a) Re Box, 1 Hem. & M. 522,
where the testator’s residuary estate,
including the shares, was bequeathed
to A. for life, and after his death
But dividends de-
the shares were specifically be-
queathed to B., and the calls were
made in A.’s lifetime.
(6) Jacques v. Chambers, 4 Ra. Ca.
499.
(c) Wentworth v. Chevell, 3 Jur.
N.S. 805. See, too, Read v. Blunt,
5 Sim. 567, and compare Atkinson
v. Grey, 1 Sm. & G, 577. See ante,
p. 537.
(d) See Dunlop v. Dunlop, 21 Ch.
D. 583, noticed ante, p. 457.
(e) Jacques v. Chambers, 2 Coll.
435 ; Wright v. Warren, 4 De G. &
S. 367; Browne v. Collins, 12 Eq.
586 ; Ibbotson v. Elam, 1 Eq. 188.
(f) Browne v. Collins, 12 Ey.
586. But see Ibbotson v. Elam, 1
Eq. 188.
AS REGARDS HIS SEPARATE CREDITORS AND LEGATEES.
clared before a testator’s death(q), or declared afterwards when Bk. ee
they were earned and ought to have been declared before (h),
primd facie form part of his general estate, and do not pass to
the specific legatee of the share: and the same rule applies to
dividends declared before his death, but the actual payment of
which is postponed until afterwards (i). Losses must not be
thrown on capital so as to benefit a tenant for life at the
expense of the remainderman (/).
545
1ap. 7.
3.
Few questions have given rise to more difficulty and diversity Bonuses, &c,
of opinion than the proper mode of treating bonuses and other
extraordinary payments made in respect of shares held for life.
At one time it was considered that all payments in respect of
accumulations of profits were to be treated as between tenant
for life and remaindermen as capital and not as income; and
it was not by any means clear that the mode in which the com-
pany treated them afforded the true solution of the difficulty (/).
This subject, however, has been at last thoroughly discussed
in the House of Lords in Bouch v. Sproule (m), where all the pouch v. Sproule
previous authorities were reviewed. The principles there laid
down are as follows, viz. :—
1. If a company has no power to increase its capital, but
accumulates profits, uses them as capital, and afterwards
divides them amongst the shareholders, the amount payable
in respect of shares held for life must be treated as capital (n).
(g) See the next two notes.
(h) Browne v. Collins, 12 Eq. 586,
(1) De Gendre v. Kent, 4 Eq. 283 ;
Lock v. Venables, 27 Beav. 598 ;
Wright v. Tuckett, 1 J. & H. 266.
Compare Clive v. Clive, Kay, 600,
which turned on the special word-
ing of the company’s deed of settle-
ment.
(k) See Upton v. Brown, 26 Ch.
D. 588 ; Gow v. Forster, ib. 672.
(2) Compare I. Hopkins’ trust, 18
Eq. 696 ; Plumbe v. Neild, 6 Jur. N.
S. 529 ; Price v. Anderson, 15 Sim.
473 ; Preston v. Melville, 16 ib. 163 ;
and Barclay v. Wainwright, 14 Ves.
66, in which the payments were
held to be income, with TI. Straker
L.C.
v. IVilson, 6 Ch. 503; Barton’s
trust, 5 Eq. 238; Ward v. Combe,
7 Sim. 634 ; Witts v. Steere, 13 Ves.
363 ; Paris v. Paris, 10 Ves. 185;
and Brander v. Brunder, 4 Ves. 800,
in which the payments were held to
be capital. See, also, Cuming v.
Boswell, 2 Jur. N. S. 1005, where
the House of Lords held, that upon
the true construction of a Scotch
deed, bonuses belonged to an infant’s
estate, and not to the person who,
on his death under 21, became en-
titled to the stocks which yielded
them.
(m) 12 App. Ca. 385, reversing
8. C. 29 Ch. D. 635,
(x) Irving v. Houstoun, 4 Paton
By N
546
Lk. III. Chap. 7.
Sect. 3.
Maclaren v.
Stainton.
Loss of income
by tenant for
life,
Apportionment
of interest and
dividends,
THE EFFECT OF THE DEATIL OF A SHAREHOLDER,
2. Ifa company can lawfully increase its capital, and it does
so by capitalising and distributing its accumulated profits, then
what is distributed in respect of shares held for life must be
treated as capital, whether what is distributed is cash or new
shares (0).
3. If a company having power to treat accumulated profits
as an increase of capital, or otherwise, divides accumulated
profits amongst its shareholders as profits (or without capital-
ising them or treating them as capital) what is distributed
in respect of shares held for life will belong to the tenant for
life as income (p/p).
It had been previously decided that if a company having
power to increase its capital chooses not to divide its
profits as income, but to capitalise them, the sum payable
to a-legatee of shares for life must be treated by him as
capital (q).
On the other hand, if, as in Maclaren v. Stainton (r) a bonus
arising from money paid to a company under a compromise
with one of its own shareholders is divided as income, the sum
payable will belong to a specific legatee of shares and not to
the residuary legatee, and to a legatee of shares for life and
not to the remainderman.
Where part of the profits accruing during the life of the
tenant for life are capitalised by the company, he has no right
to have the loss of income, which he thereby sustains, made
good by the remainderman (s).
Interest on a debt accrues de die in diem, and is apportion-
able at common law; and profits and dividends, including
bonuses (t), are now apportionable under the act 33 & 84 Vict.
ce. 85, which applies to all cases arising between a tenant for
life and remainderman after the act came into operation,
Sc. App. 521, a former decision of (q) Barton’s trust, 5 Eq. 238. See,
the House of Lords, and one which also, Straker v. Wilson, 6 Ch. 503.
has often been felt to create a diffi- (r) 3 De G. F, & J. 202, reversing
culty. 27 Beay. 460.
(0) This was the point decided in (s) See Stroud v. Gwyer, 28 Beav.
Bouch v. Sproule. 130.
(y) This point did not arise in (t) Carr v. Griffiths, 12 Ch. D.
Bouck. v. Sproule, but is warranted 655.
by it.
AS REGARDS HIS SEPARATE CREDITORS AND LEGATELS. BAT
although the will under which the parties claim came into Bk. Ae 7.
operation before that time (w). If, therefore, a testator be- - —-—
queaths debentures to one person for life, and afterwards to
another, and dies shortly before the current interest on the
debentures is payable, so much only of that interest as accrued
after the death of the testator will belong to the tenant for
life (x). And it is apprehended that now if there is a specific
bequest of shares in a company, and the testator dies a few
days before a dividend upon them is declared, there will be a
similar apportionment of the dividend (y).
Other circumstances being the same, the price of shares in
dividend-paying companies naturally rises as a dividend day
approaches ; in fact, the price includes a proportionate part of
the accruing dividend ; nevertheless, as between a tenant for
life and a remainderman the price realised by a sale of shares
is all treated as corpus, without reference to the time when a
sale is made (z); and it is conceived that the statute 88 & 34
Vict. c. 85, has not altered the law in this respect.
Where shares are bequeathed to executors upon trust for Liability of
sale as soon as conveniently may be after the testator’s death, ne”
they should sell them within a year after his death: and in a ** -
case where they were kept unsold for many years and the
company was ultimately wound up, the estate of a deceased
executor who survived the testator only thirteen months was
held liable for the loss sustained by not having sold them
within the year (a). Where, however, the executors honestly
(u) Lawrence v. Lawrence, 26 Ch.
D, 795,
(a) See Rogers’ Trusts, 1 Dr. & Sm.
338.
(y) Carr v. Griffiths, ubi sup.; Pol-
lock v. Pollock, 18 Eq. 329, correcting
Whitehead v. Whitehead, 16 Eq. 528.
In Jones v. Ogle, 14 Eq. 419, affirmed
on appeal, 8 Ch. 192, there was no
apportionment, but there not only
the shares but the dividends on
them were specifically bequeathed.
Compare Re Clarke, 18 Ch. D. 160.
See, before the act, Maawell’s Trusts,
1 Hem. & M. 610; Butes v. Mac-
kinley, 31 Beav. 280; Clive v. Clive,
Kay, 600; Hartley v. Allen, 4 Jur.
N.S. 500.
(2) Scholefield v. Redfern, 2 Dr.
& Sm. 182. See, also, Freman v.
Whitbread, 1 Eq. 266.
(a) Grayburn v. Clarkson, 3 Ch.
605 ; Sculthorpe v. Tipper, 13 Eq.
232. See, also, The Heirs Hiddingh
v. De Villiers Denyssen, 12 App. Ca.
624, an appeal from the Cape, where
executors who had delayed the con-
version of shares were held liable
for their value ascertained at a rea-
sonable time after the death of the
testator, which in that case was fixed
at six months,
NN 2
548
THE EFFECT OF THE DEATH OF A SHAREHOLDER.
Bk. III. Chap. 7. in the exercise of their own judgment postpone the sale for a
Sect. 3.
short time longer than a year, they will not be compelled to
make good loss arising from the postponement (b); and if a
testator gives his executors an absolute discretion to postpone
the sale and conversion they will not, in the absence of mala
fides, be held liable for any loss sustained by non-conversion,
even of shares in an unlimited company (c).
(b) Marsden v. Kent, 5 Ch. D. 598. (c) Re Norrington, 13 Ch. D. 654,
BANKRUPTCY OF A SHAREHOLDER. 549
CHAPTER VIII
OF THE EFFECT OF THE BANKRUPTCY OF A SHAREHOLDER.
THE law of bankruptcy so far as it relates to partners will Bk. III. Chap. 8.
be found in the volume on partnership. So much of it as
relates to shareholders and is peculiar to them is alone referred
to in the present treatise.
Every shareholder who is sui juris, whether a trader or not, Married
is liable to become bankrupt (a). A married woman holding ate
shares for her separate use can however only become bankrupt
if she carries on a trade separately from her husband, and she
is only subject to the bankrupt laws in respect of her separate
estate (b). Whether holding shares in a trading company is
carrying on trade within the meaning of the Married Woman’s
Property act, 1882 (c), has not yet been decided. But merely
holding shares in an incorporated company can hardly be
carrying on a trade (d). Whether holding shares in an unin-
corporated company can amount to ‘‘ carrying on trade sepa-
rately from her husband” is more doubtful; but unless a
married woman not only holds shares in a company, but also
takes an active part in carrying on its business separately from
her husband, she cannot, it is conceived, be made bankrupt
under the clause in question. The older authorities, to the
effect that persons holding shares in trading companies were
themselves traders within the meaning of the old Bankruptcy
acts (e), have little bearing on this question.
Any company empowered to sue and be sued by a public
(a) See as to infants and lunatics, ried on by the corporation not by
Partn., p. 624, note (7). the members of it.
(b) 45 & 46 Vict. c. 75, § 1, el. 5. (e) Smith v. Cannan, 2 E. & B.
Ex parte Coulson, 20 Q. B. D. 249. 35, and the cases there referred to.
(c) Ib. See as to mining companics, Ex
(d) In this case the trade is car- parte Schomberg, 10 Ch. 172.
550
BANKRUPTCY OF A SHAREHOLDER.
Bk. III Chap. 8. officer (f ) or a corporation (g), ¢.g. a registered company (h),
Shares vest in
trustee,
may be the petitioning creditor; and a company being wound
up under the Companies act, 1862, can obtain an adjudication
against one of its own shareholders in respect of calls (i).
An incorporated company can act in bankruptcy by any of
its officers authorised so to do under its corporate seal (k);
and an unincorporated company having no public officer can
act by any of its members authorised so to act (1).
It is presumed that a company empowered to sue and be
sued by a public officer can act by him although there is no
general enactment or rule expressly to this effect (m).
The petitioning creditor’s debt must amount to 501., pay-
able immediately or at some certain future time (nm). A call
made under the winding-up provisions of the Companies act,
1862, is expressly declared to be a debt accruing when the
call is made (0).
The doctrine that on the bankruptcy of one member of a
firm the whole firm is dissolved is not applicable to companies
with transferable shares (/).
Upon the bankruptcy of a shareholder all his property,
including his shares, vests first in the official receiver, and
afterwards when a trustee is appointed in the trustee (q) ; but
subject to disclaimer, as will be seen presently. Shares held
by the bankrupt as trustee do not pass to his trustee in bank-
(f) Bank. rules, 1886, 1. 258. As
to the mode of describing him, see
Ex parte Torkington, 9 Ch. 298.
(g) 46 & 47 Vict. c. 52, § 168,
“ Person.” Ex parte Collins, De Gex,
881; Ex parte Sneyds, 1 Moll. 261.
(h) Re Calthrop, 3 Ch, 252.
(1) See 25 & 26 Vict. c. 89, §§ 75,
95; Ex parte Winterbottom, 18 Q.
B. D. 446; Eu parte Hall, Mon. &
Ch. 365; Eu parte Calthrop, 3 Ch.
252. Under the former acts the official
manager could not be a petitioner ;
Williams v. Harding, L. R. 1 H. 1.9.
(k) Tb., § 148.
(J) See ib. and Bank. rules, 1886,
r, 258. The section uses the word
fie, and the statement in the text
is supposed to be the meaning.
(m) See § 148 and rule 258; Re
Caldecott, 2 M. D. & D. 368, affirm-
ing Ex parte Davidson, 1 M. D. & D.
648.
(n) 46 & 47 Vict. c. 52, § 6.
(0) See Comp. Act, 1862, § 75;
Lx parte Canwell, 4 De G. J.
& S. 539. See as to calls made
under the Winding-up acts, 1848-49,
Williams v. Harding, L. R. 1 H.
L. 9.
(p) See Eu parte Broadbent, 1
Mont. & A. 638; Bentley v. Bates,
4 Y. & C. Ex. 190, as to mining
partnerships.
(q) 46 & 47 Vict. o. 52, §§ 43, 44,
54. See as to the old Jaw and the
vesting of onerous property, Cope-
land y. Stephens, 1 B. & A. 593.
551
“EFFECT OF BANKRUPTCY.
ruptcy (r); and shares which are in the order and disposition Bk. HL Chap. 8.
of the bankrupt, but in which other persons have an interest
by way of mortgage or otherwise do not now pass to his trustee
under the reputed ownership clause (s) ; the trustee, in short,
is only entitled to the interest of the bankrupt in the shares,
and if they are subject to a lien either in favour of the com-
pany (¢), or of any third party (uv), the trustee’s right to the
shares is subject to the same lien.
It must not, however, be supposed that the effect of vesting ace a
a bankrupt’s property, including his shares, in his trustee, is
to make the trustee a shareholder, i.¢c. a member of the company
in which the shares are held (x). In order to become a share-
holder the trustee must do whatever may be necessary by the
regulations of the company to render himself a member thereof.
The vesting of the bankrupt’s property in the trustee entitles
the trustee, but does not oblige him, to become a member.
His right to become a member can be exercised even after
the lapse of a considerable time, if nothing has been done
either by him or the company depriving him of such right (y).
Speaking generally a trustee of a bankrupt shareholder may
take one or other of the following courses, viz. :—
1. He may cause the shares to be transferred into his own Registration in
name (or do whatever else is necessary) and thereby become” pa anes
himself a member of the company in respect of them. The re-
gulations of the company may possibly not entitle him to take
this course; but this is rarely if ever the case. A clause
empowering directors to decline to register a transfer to a
account.
(r) Ib., s. 44 (1), and see Pinkett
v. Wright, 2 Ha. 120 ; Joy v. Camp-
bell, 1 Sc. & Lef. 328.
(s) Ib., § 44 (8); Colonial Bank v.
Whinney, 11 App. Ca. 426, revers-
ing 8. C., 80 Ch. D. 261. The older
authorities collected in former edi-
tions are omitted as no longer useful.
(t) See Child v. Hudson’s Bay Co.,
2 P. W. 207; Ex parte Cooper, 2
M.D. & D.1. See, too, Pinkett v.
Wright, 2 Ha, 120, where, however,
it was held that a banking company
had no lien on the shares of a
customer who had overdrawn his
See, too, Melioruccht v.
Royal Ex. Co., 1 Eq. Ca, Ab. 9.
(uw) See Ez parte Dobson, 2 M. D.
& D. 685 ; Ex parte Moss,3 De G.
& §. 599.
(x) See South Staffordshire Rail.
Co. v. Burnside, 5 Ex. 129, and the
next note.
(y) Graham v. Van Diemews Land
Co. 11 Ex. 101, where five years
had elapsed. Compare Lon. and’
Provincial Tel. Co., 9 Eq. 653; Law-
rence v. Knowles, 5 Bing. N.C. 399,
where the right was lost. As to
disclaimer, see infra,
552
BANKRUPTCY OF A SHAREHOLDER.
Bk. III. Chap. 8. person disapproved by them or indebted to the company does
Sale by the
trustee,
Shares left in
name of bank-
rupt.
not apply to a trustee claiming the shares under the Bank-
ruptcy act (z). But the trustee has no right to be registered
as owner if the bankrupt has executed a transfer to another
person who has such right (a); and even the consent of such
person will not entitle the trustee to be registered so long as
the transfer already executed remains in force (b).
If the trustee elects to take the shares and to be registered
in respect of them he becomes himself a shareholder to all
intents and purposes; and it is very seldom therefore that he
takes this course.
2. The trustee may, without himself becoming a shareholder,
sell or dispose of the bankrupt’s shares. A provision to this
effect is usually inserted in a company’s regulations (c) ; but
whether there is or is not such a clause in them, the Bank-
ruptcy act, 1883, authorises the trustee to take this course (d).
So long as the shares are retained in the bankrupt’s name
unsold the trustee incurs no personal liability to the company
in respect of them. On the other hand, not being himself a
shareholder, notices of meetings, of calls, and of forfeiture of
shares, will not be sent to him but to the bankrupt. Conse-
quently, if a call is made and not paid, and the company has
power to forfeit. shares for the non-payment of calls, the
trustee’s title may be defeated by a forfeiture of which he has
not received notice (¢). So he may lose his right to them by a
transfer to a bond fide purchaser for value without notice.
This was decided in a case where the assignee did nothing for
five years. In the meantime the bankrupt died; his widow
and executrix became registered in respect of his shares, and
she afterwards sold them and the purchaser was registered.
The assignee then claimed them, but the V.-C. James held
that the purchaser had acquired a good legal title to them (f).
(2) Bentham Mills Spinning Co.,
11 Ch. D. 900.
(d) 46 & 47 Vict. c. 52, § 50 (cl. 3).
(e) Graham v. Van Diemen’s Land
(a) Ex parte Harrison, 28 Ch. Diy.
363.
(b) Ibid.
(c) The Companies act, 1862, Table
A., contains such a provision ; see
art. 14,
Co, 1 H. & N. 541.
(f) See London and Provincial
Tel. Co., 9 Eq. 653. The purchaser
had at any rate the better title in
equity to be registered, and being
registered, the assignee could not
DISCLAIMER BY TRUSTEE. 558
3. The trustee may disclaim the shares. The provision in Bk. III. Chap. 8.
the Bankruptcy act, 1883, relating to the disclaimer of onerous Disclaimer.
property differs in many important respects from those con- eae act, 1883,
tained in former acts of bankruptcy, and decisions on them
must not be relied upon as applicable to the law as it now
stands (g).
The following is the substance of the present enactment
relating to the disclaimer of shares :—
1. The trustee may disclaim them by writing signed by him
at any time within three months after the first appointment of
a trustee; or within two months after he first became aware of
their existence (I) ; ‘
2. He may disclaim them, although he may have tried to sell
them, or has taken possession of them, or exercised any act of
ownership in relation to them (i) ;
3. The disclaimer determines as from its date the rights,
interests, and liabilities of the bankrupt and of his property in
respect of the shares (k) ;
4. It also discharges the trustee from all personal liability
in respect of them as from the date when they vested in
him (J) ;
5. But except so far as necessary for the purpose of re-
leasing the bankrupt and the trustee, the disclaimer does not
affect the rights or liabilities of any other person (m):
6. The trustee cannot disclaim if an application in writing
has been made to him by any person interested in the shares
requiring him to decide whether he will disclaim or not, and
he has for twenty-eight days (or such extended time as may be
allowed by the court) declined or neglected to give notice
whether he disclaims or not (n) ;
7. The court may make an order vesting the shares in any
disturb him by having the register
rectified, which was what he sought.
(g) See for. the present law 46 &
47 Vict. c. 52, § 55. The section
was much discussed with reference
to cases in Ex parte the Clothworkers’
Co., 21 Q. B. D. 475. The older
cases are Ex parte Budden, 12 Ch.
D. 288; Ex parte Walton, 17 ib.
746 ; Levi v. Ayers, 3 App. Ca 842 ;
Mill v. E. & W. In. Docks Co., 9
App. Ca. 448.
(h) § 53, cl. 1. See Wilson v.
Wallani, 5 Ex. D. 155, as to signa-
ture by an agent.
(i) Ibid.
(k) § 55, el. 2.
(2) Ib.
(m) Tb.
(n) Ib., el. 4,
554
BANKRUPTCY OF A SHAREHOLDER.
Bk. IIL. Chap. 8. person or trustee for any person entilled to them or to com-
Proof of debts.
Proof by unin-
corporated com-
panies,
pensation for any liability in respect of the shares not dis-
charged by the act (0) ;
8. Any person injured by the disclaimer is deemed to be a
creditor of the bankrupt to the extent of the injury, and may
prove the same accordingly against the bankrupt estate (p).
The short effect of a disclaimer of shares appears, therefore,
to be as follows :—1, the bankrupt and the trustee are dis-
charged from all future liability in respect of them; 2, they
have no further right or interest in them; 8, the company can
apparently apply for an order vesting the shares in itself or
some trustee for itself (q) ; 4, the company can prove against
the bankrupt’s estate for any damage it may sustain by the
disclaimer. If the shares are subject to any mortgage or equi-
table charge the bankrupt and his trustee will be released from
all liability in respect of the shares; but the mortgage or
charge will not be affected; and the person entitled thereto
will apparently be entitled to an order vesting the shares in
himself free from redemption. Whether the company can
compel him to take the shares or allow the company to have
them, and in the latter case to take them free from the mort-
gage or charge, are questions not yet settled by decision (r).
Under the Bankruptcy act, 1883, § 87, every conceivable
debt or money demand, liquidated or unliquidated, present or
future, vested or contingent, can be proved with two excep-
tions, viz., (1) demands for unliquidated damages arising other-
wise than by reason of a contract, promise, or breach of trust ;
and (2) demands which in the opinion of the court are incapable
of being fairly estimated (s).
A transferor of shares to a bankrupt can now prove in re-
spect of his right of indemnity (¢) by his transferee, although
the transfer may not have been perfected.
An ordinary partnership cannot prove against the separate
(0) § 55, cl. 6, much abridged.
(p) Ib., cl. 7. See He parte Davis,
3 Ch. D, 463.
(q) This will not be clear until it
is decided. See Ex parte The Cloth-
workers Co., 21 Q. B. D. 475.
(r) See the case last referred to,
and observe that § 55 contains special
provisions applicable to leases but
not to shares.
(s) See as to these, Hardy v.
Fothergill, 13 App. Ca. 351.
(t) Holmes v. Symons, 13 Eq. 66,
shows that this formerly was not so.
PROOF FOR CALLS. 555
estate of one of its members, except under special circum- Bk. II. Chap. 8.
stances; for to allow such a proof would be inconsistent with
the general principle that a person cannot prove against his
own estate in competition with his own creditors (uw). The
application of this principle to unincorporated companies seek-
ing to prove against a bankrupt shareholder in competition
with his other creditors has given rise to some difficulty. ‘The
question, however, now seldom arises. It is now settled that
the rule does not apply to proofs by banking companies em-
powered to sue by public officers by the act 7 Geo. 4, c. 46 (x);
nor to proofs by liquidators of unincorporated companies being
wound up (y). The difficulty cannot arise in the case of
incorporated companies; but it may arise where the proving
company is merely a large partnership not empowered to sue
by a public officer, and not being wound up. No case has
been met with in which proof by a cost-book mining company
has been discussed; but the purser can sue a member for
calls, and as to them would probably be considered a public
officer (2).
Calls on shares made before adjudication are, and always Proof for calls.
have been, provable like other debts; and it is immaterial
whether such calls are made by directors whilst a company is
carrying on business, or by liquidators when a company is being
wound up (a). But with respect to calls made after adjudica- Old law.
ticn, the authorities were not a little embarrassing. Calls
made by directors after adjudication were not provable under
the Bankruptcy act of 1849, it being wholly uncertain at the
time of adjudication whether they would ever be made or not;
they were consequently neither debts payable presently or at a
future time, nor were they debts payable on a contingency
within the meaning of that act (b). Neither did the Bankruptcy -
act of 1861 make such calls provable (c). The same reasons
(u) See Partn. 737 et seq. (0) South Staffordshire Rail. Co. v.
(2) Re Caldecott, 2M. D. & D. Burnside, 5 Ex. 129 ; Wylam’s Steam
368, affirming Ex parte Davidson, 1 fuel Co. v. Street, 10 ib. 849 ; Re
ib, 648. J. H., Ir. Rep. 3 Eq. 245. See, also,
(y) Ex parte Ball, 10 Ch, 48, General Discount Co. v. Stokes, 17 C.
(z) As to the purser, see ante, B. N.S. 765,
pp. 265, 427. (c) See 24 & 25 Vict. c, 184, §§
(w) As in Ex parte Brown,3 DeG. 150 et seq.
& Sm. 590.
556
BANKRUPTCY OF A SHAREHOLDER.
Bk, III. Chap. 8. were as applicable to calls made under the Winding-up acts as
Companies act,
1&62, § 75.
Present law.
to other calls; but the decisions respecting such calls were not
uniform (d).
The difficulties arising from the conflict of these decisions
were intended to be removed by § 75 of the Companies act,
1862. But this section itself gave rise to further difficulties ;
and it was ultimately decided, 1, that the liability of a contri-
butory to calls made in a winding-up under that act commenced
when he became a member (e); 2, that if the winding-up pre-
ceded his bankruptcy, all future calls might be proved against
his estate (f); 8, but where he was adjudicated bankrupt
before the winding-up, calls made in the winding-up could not
be proved at all (g); and consequently in this case the bank-
rupt remained liable for all cails made while he continued a
shareholder.
The Bankruptcy act, 1868, abolished these unnecessary
distinctions (h); and the present Bankruptcy act, 1883, is
similar to it. Under this act, when a shareholder becomes
bankrupt, all calls in arrear are provable as debts, and his
liability to future calls may be estimated and proved as well
when the company is being wound up as when it is not (i). If
the shares are neither disclaimed nor sold by the trustee, but
are allowed to remain in the name of the bankrupt, and he
obtains his discharge, it seems that he will nevertheless be
freed from calls in respect of them, as his liability to them was
capable of proof (k).
(d) See, on the one hand, General
Discount Co. v. Stokes, 17 C. BLN.
S. 765, and on the other, Parbury’s
case, 3 De G. F. & J. 80, and Eu
parte Nicholas, 2 De G. M. & G.
271. See, also, Chapple’s case, 5 De
G. & Sm. 400; Greenshaeld’s case,
ib. 599.
(c) Ex parte Canwell, 4 De G. J. &
S. 539. See, also, Williams v. Hard-
ing, L. R.1 H. L. 9.
(f) Ex parte Pickering, 4 Ch, 58 ;
Mitchell’s case, 5 Ch. 400; M‘#wen’s
case, 6 Ch. 582; where the bank-
rupt was a past member ; Lz parte
Marshall, 7 Ch. 324; Financial Cor-
poration v. Lawrence, L. R. 4 C. P.
731, and the cases in the next note,
Holmes v. Symons, 13 Eq. 66, is not
opposed to these.
(9) Martin’s Patent Anchor Co. v.
Morton, L. R. 3 Q. B. 306 ; Hastie’s
case, 7 Eq. 3, and 4 Ch. 274; Ez
_ parte King, 3 Ch. 10. It was left
doubtful whether in this case they
could be proved if made before the
bankrupt’s estate was distributed, or
if the assignee took the shares. See
L. J. Giffard’s judgment, 4 Ch. 278.
(h) See §§ 23, 24, 31.
(i) See §§ 37, 55,
(k) Mercantile Mutual Marine Ins.
SET-OFF. 557
A company entitled to a lien on a bankrupt’s shares for Bk. HI. Chap. 8.
calls is a secured creditor, and cannot therefore prove without
giving up its lien (J).
The ordinary rules as to set-off and mutual credit apply to Set-olf.
bankrupt shareholders. As regards companies which are being
wound up, the Companies act, 1862, provides in effect that
debts due to a contributory from a limited company which is
being wound up cannot be set off by him against calls made
upon him (m). But it has nevertheless been decided that if
the liquidator proves for a call against the estate of a bankrupt
contribu‘ory to whom the company is indebted, the mutual
credit clause applies, and a set-off must be allowed (x).
The combined effect of the sections of the Bankruptcy act, Summary.
1883, relating to the vesting and disposition of property (§§ 48,
44, 50, 54), disclaimer (§ 55), and the proof of debts (§ 87),
seems to be as follows :—
1. That the legal right to a bankrupt’s shares vests in his
trustee ;
2. That the shares do not vest in the trustee so as to make
him a shareholder in place of the bankrupt ;
3. That the trustee can, without the concurrence of the
bankrupt, sell and transfer or otherwise dispose of his shares
for the benefit of his estate ;
4, That this right can only be exercised by the trustee, sub-
ject to the same conditions as regards consents, payment of
calls in arrear, and the like, as the bankrupt himself would
have had to comply with if he had been the transferor ;
5. That if the shares cannot be disposed of beneficially for
the estate, they may be disclaimed by the trustee, and so be
got rid of altogether ;
6. That inasmuch as under § 87 all calls due and to become -
due can be proved, the bankrupt when discharged will be free
‘from liability in respect of the shares, whatever the trustee
may do with them ;
Ass., 25 Ch. D. 415. Compare Fur- (m) 25 & 26 Vict. c. 89, §§ 101
doonjee’s case, 3 Ch. D. 264, which & 38, cl. 7. See infra, bk. iv., ¢.
arose under an Indian insolvency 1, § 11 (5).
act. (n) Re Duckworth, 2 Ch. 578;
(l) See Re Jennings, 1 Ir, Ch. Caralli and Haggard’ s claim, 4 Ch,
236 & 654. 174; Hx parte Strang, 5 Ch. 492,
558 BANKRUPTCY OF A SHAREHOLDER.
Bk, III. Chap.8. 7, That practically even calls in arrear will not be proved if
the company has a lien on the shares, and they are worth more
than the amount due in respect of them: for the company will
then retain the shares and realise them if not redeemed ;
8. That practically calls not in arrear will not be proved if
the shares are transferred by the trustee ; for the company will
look to the transferee for all future calls (0) ;
9. That future calls will be proved if the trustee disclaims
or does nothing; the amount of injury sustained by the dis-
claimer being estimated under § 55 at the amount of the debt
which but for the disclaimer would be provable under § 87 (p).
The liability of trustees in bankruptcy to be made contri-
butories will be considered hereafter (see Book IV. c. 1, § 10).
(0) But it is apprehended that not intended.
future calls can be proved in this (p) The calls can be proved if the
case. If they cannot the bankrupt trustee does nothing. See Ew parte
may still be liable in some casesas Dawis, 3 Ch. D, 463.
a past member, which evidently is
ACTIONS BETWEEN COMPANIES AND THEIR MEMBERS.
CHAPTER IX.
OF ACTIONS BETWEEN COMPANIES AND THEIR MEMBERS, AND
BETWEEN THE MEMBERS THEMSELVES.
General Observations.
The mutual rights and obligations of shareholders and Bk. III. Chap. 9.
directors having been examined, it is proposed in the next
place to consider the means by which those rights and obli-
gations can be enforced.
In the volume on Partnership, it was pointed out that an
unincorporated firm or company could not at common law sue
one of its members, nor could he sue it (a), and that this in-
convenience could not be avoided by an agreement amongst the
members that some officer, ¢.g., the secretary or treasurer of the
company, should sue and be sued on its behalf (b). The con-
sequences of these doctrines were very serious to unincorporated
companies of many members. Companies which were neither Putting a credi-
public officers, frequently found it extremely difficult to compel
the payment of money due to them from such shareholders by
any direct proceeding against them. This difficulty often led
to the crooked expedient of “‘ putting a creditor on a share-
holder ;”’ that is to say, of compelling a shareholder to pay
what he owed to the company by inducing some creditor of the
company to single him out and sue him for the company’s debt
(a) Partn. 456 et seq. the case of a cost-bdok mining com-
(b) See Evans v. Hooper, 1 Q.B. pany. By 32 & 33 Vict. c.19, § 13,
D. 45; Corner v. Maawell-Irwin, Ir, calls may now be sued for by the
Rep. 10 C. L. 354; Gray v. Pearson, purser. As to bills payable to the
-L, R. 5 C. P. 568, the case of a _ holder of an office for the time being,
mutual marine insurance society; see 45 & 46 Vict. c. 61 3§ 7, cL 2
Hybart v. Parker, 4 C. B. N. 5. 209,
i : tor on a share-
incorporated nor empowered to sue their own shareholders by jolder.
560 ACTIONS BETWEEN COMPANIES AND THEIR MEMBERS.
Bk. III. Chap. 9. at the costs ofthe company. This expedient was usually found
to answer the purpose, inasmuch as the shareholder could only
resist the creditor’s action by pleading the non-joinder of the
other shareholders in abatement; and this it was almost always
impossible to do with effect. Rather therefore than allow the
creditor to obtain judgment, the unfortunate shareholder made
terms with the directors. It is obvious that the grossest
oppression might be exercised in this manner, and whatever
might be said in defence of putting a creditor on an obstinate
shareholder who would not pay, and could not be otherwise
made to pay, what he justly owed to the company, nothing
could possibly be said in its favour in any other case. Fortu-
nately, courts of equity would always interfere in such cases,
and both restrain proceedings by the creditor and compel those
who “ put him on,” to deal fairly with the person sued. What-
ever the rights of the creditor might have been, if he had been
suing bond fide (c), he was not regarded in cases of the present
description as having any greater rights than those whose tool
he was (d). If the shareholder sued was entitled to have the
accounts of the company taken, and to have its assets applied
in payment of its debts, the court would make a decree ac-
cordingly (e), if the necessary parties were before the court (/).
But a court of equity would only interfere to protect the share-
holder on the terms of his doing what was just towards the
company; and would, if there was reason to believe that he
ought to pay what the company sought to make him pay,
require him to pay that sum into court (4).
The mere fact, moreover, that a shareholder in a company is
being sued by a creditor at the instance of the company, is not
Interference
of a court of
equity in such
a case.
(c) If he was so suing, the court 162.
would not interfere, Green v. Nixon,
23 Beay. 530; Beck v. Dean, 3 Jur.
N.S. 14.
(d) See Taylor v. Hughes, 2 Jo.
& Lat. 24; Shortridge v. Bosanquet,
16 Beay. 84, and Bargate v. Short-
ridge, 5 H. L. C. 297; Horn v.
Kilkenny, &c., Rail. Co. 1 K.& J.
399. Sze, also, Woodhamsv. Anglo-
Australian Co, 2 De G. J. & Sm.
(e) Fernihough v. Leader, 4 Ra. Ca.
373, and Lewis v. Billing, ib. 414.
(f) See Sibley v. Minton, 27 L. J.
Ch, 53.
(g) See Cutts v. Riddell, 1 DeG. &
S. 226; Sibley v. Minton, 27 L. J.
Ch, 53. This last was the case of a
cost-book mining company, a share-
holder in which would not pay his
calls.
ACTIONS BETWEEN COMPANIES AND THEIR MEMBERS. 561
sufficient to induce a court to make an order for winding up Bk. III. Chap. 9.
the company (i).
The inconveniences arising from the state of the law above Eftect of incor-
alluded to, were effectually removed by incorporating the com- P™*#™
pany; for a member of a body corporate might always sue or
be sued by it just as if he were not a member; and whether
the body corporate was a company having gain for its object or
not, is and always was immaterial with reference to its capacity
of suing and being sued.
The institution of a public officer to sue and be sued on Effect of enr-
P 5 bling company
behalf of the members of an unincorporated company, 1s not to sue and be
necessarily so efficacious for the purposes now under discus- aye Sone
sion as the incorporation of the company. For the public
officer may be so constituted as to represent the members as
individuals, and only to represent them all, and not all less
some or one of them. If in such a case he sues one of the
members of the company which he represents, he in fact either
represents the member sued as well as all the other members,
or nobody at all, and in either case his action will be im-
proper (i). In most modern acts of Parliament, however, care
has been taken to avoid this objection, and to render the
public officer the representative of the company as distinct
from the individuals composing it; and where this is done,
legal proceedings between the public officer and those individuals
or any of them, are theoretically as unobjectionable as are legal
proceedings between incorporated companies and their share-
holders. The tendency in modern times, moreover, is to regard
companies empowered to sue and be sued more in the light of
corporate bodies than formerly, and to treat public officers as
the representatives of collective wholes rather than as the
representatives of members individually (f).
The general effect of the Judicature acts, so far as they Effect of the
. . . Judicature
relate to legal proceedings by companies, has been already in- acts,
(2) See infra, book iv. ch.1,§4, 473; Hughes v. Thorpe, 5 M. & W.
and Ex parte Wyld, 1 Mac. & G.1; 656; Seddon v. Connell, 10 Sim. 58.
Ex parte Lawton, 1 K. & J. 204; See, too, per Lord Eldon in Van
Ea parte Watson, 3 De G. & 8. 253; — Sandau v. Moore, 1 Russ, 460 and
Lz parte Wise, 1 Drew. 465. 472.
(t) See Hichens v. Congreve, 4 Russ, (k) See infra, p. 564.
562 ; MacMahon v. Upton, 2 Sim.
L.c. Foo
562
Bk, TIE. Chap. 9.
Sect. 1.
Actions by and
against the
company.
Actions by or
against some
on behalf of
others.
Actions between
incorporated
companies and
their members.
ACTIONS BETWEEN COMPANIES AND THEIR MEMBERS.
vestigated (Bk. ii., c. 7); and it was then seen that an unin-
corporated company can now sue and be sued in its mercantile
name; and that where parties are numerous and have a
common interest, some of them may sue and be sued on behalf
of all in respect thereof. Further, there is now the same facility
in arranging parties to actions in all divisions of the High Court
as there was formerly in arranging parties to suits in equity ;
and the fact that an account has to be taken in order to ascertain
what is due from one party to another is no longer any reason
why an action by one against another should fail ; at most, such
a circumstance may render it expedient to transfer the action
from one division of the High Court to the other at some stage
of the action.
It has not yet been decided whether an action in the name
of an unincorporated company can be maintained by or against
one of its own members; but the writer sees no difficulty in
principle in supporting such an action; the company being
regarded for the purposes of the action as one collective
whole (J). This, however, is comparatively an unimportant
matter; for if an action in that form cannot be maintained, it
is plain that one or more members can sue the others whenever
there are legal or equitable rights to be enforced or adjusted.
With respect to actions by or against some members of com-
panies on behalf of themselves and others, it must be borne in
mind that suits in this form have long been familiar in courts
of equity, and certain rules respecting them have been settled
which are not interfered with by the Judicature acts. The
rules will be fully investigated presently.
SECTION I.—OF THE PARTIES TO SUE AND BE SUED.
1. Actions by and against incorporated companies.
An incorporated company can only sue and be sued in its
corporate name ; and this rule applies as much to actions by
and against its own members as to actions by and against
(2) Such actions are common in Scotland.
ACTIONS BY AND AGAINST INCORPORATED COMPANILS,
other persons.
joint-stock company can support an action against one of its —~—— ---
own shareholders for damages for a libel on the company pub-
lished by him (m). A shareholder of an incorporated company
may be a creditor of or debtor to the company, just as if he
were not a member of it. It follows from this, that he may
not only sue it, but having obtained judgment against it, he
may execute that judgment against his co-shareholders, if they
are liable to be proceeded against in that way by ordinary
creditors. Moreover, acourt will not interfere at the instance
of the shareholders proceeded against, and stay execution
against them, either on the ground that the plaintiff is himself
a member of the company, and bound therefore to contribute
to his own payment, or upon the ground that the rights of the
parties cannot be ascertained without taking the accounts of
the company. In the case supposed the plaintiff is a creditor
of the company, and not the less so for being a shareholder in
it; and to deprive him of his rights as a creditor would be to
defeat one of the objects for which the company, as such, has
any existence (n). But one shareholder will not be allowed to
buy up and put in force against a co-shareholder a debt of the
company, if the object of the execution creditor is to obtain by
means of that debt payment of other monies to which he is
not justly entitled (0).
An action to recover property of a company, or to make its
directors answerable for the misapplication of its funds, ought
to be brought in the name of the company ( p), and the directors
cannot require all the persons liable to indemnify them to be
made parties (q).
The cases in which some of the members of an incorporated
company can sue or be sued on behalf of themselves and others
will be considered presently (pp-570- and 572).
(m) Metropolitan Saloon Omnibus
Co. v. Hawkins, 4H. & N. 87.
(n) See Rheany v. Smith, 2 Ph.
726; Hardinge v. Webster, 1 Dr. &
Sm. 101.
(0) Woodhams v. Anglo-Austra-
lian, &e., Co., 2 De G. J. & Sm. 162.
(p) Gray v. Lewis, 8 Ch. 1035 ;
Duckett v. Gover, 6 Ch. D. 82;
Russell v. Wakefield Waterworks Co.,
20 Eq. 474,
(Q Wye Valley Rail. Co. y. Hawes,
16 Ch. D. 489.
002
563
Accordingly it has been held that a registered Bk. i Nea 9.
ect. 1.
564
Bk. III. Chap. 9.
Sect. 1.
Representation
of parties by
public officers.
Action for calls.
ACTIONS BETWEEN COMPANIES AND THEIR MEMBERS,
2. Of actions by and against public officers.
Upon the ground that the public officer of a company only
represents all the shareholders, and not any one or more of
them as against the others (r), it was twice held by Lord Eldon,
that a suit for the dissolution of a company empowered to sue
and be sued by its secretary, was defective for want of parties,
although the suit was instituted by one shareholder on behalf
of himself and others, against the secretary and the directors
of the company (s). In tracing the history of joint-stock: com-
panies in the celebrated case of Van Sandau v. Moore, Lord
Eldon prominently alluded to the inability of a public officer to
represent the company in suits between its members (¢), and
this doctrine was carried out to its full extent by the late Vice-
Chancellor Shadwell (u), who held (x), that neither the act of 7
Geo. 4, c. 46, nor the subsequent act of 1 & 2 Viet. c. 96,
empowered the public officer to represent all the members of
the company except one, in a suit between him and them as
members. But notwithstanding these authorities an action
may be instituted by the public officer of a company against
some of its members, if the question in dispute is one between
the company as a collective whole, on the one side, and those
individual members on the other; and it has accordingly been
held that, under the Joint-stock banking act, 7 Geo. 4, c. 46,
it is competent for a public officer of a company governed by
that act, to sue the directors of the company for the purpose of
making them account for breaches of trust and mismanage-
ment; and in such an action none of the shareholders need be
parties, although the company has ceased to carry on business,
except for the purpose of winding up its affairs (y). The public
officer is the proper person to sue a shareholder for calls made
payable to him by the company (2).
(r) See ante, pp. 266 and 561. 58; Abraham v. Hannay, 13 Sim.
(s) Davis v. Fisk, cited in You. 581.
425; and Van Sandaw v. Moore, 1 (2) In Seddon vy. Connell, 10 Sim.
Russ. 441. 58.
(t) See 1 Russ. 460 and 472, and (y) Harrison v. Brown, 5 De G. &
Hichens v. Congreve, 4 Russ. 562. Sm. 728.
(u) In MacMahon v. Upton, 2 (2) See as to banking companies
Sim. 473 ; Seddon v. Connell, 10Sim. governed by 7 Geo. 4, c. 46; Chap-
ACTIONS BY ONE MEMBER ON BEHALF OF HIMSELF AND OTHERS.
The Stannaries act, 1869, expressly authorises the purser of Bk. IIL Chap. 9.
a cost-book mining company to sue a shareholder for calls, -
although the act does not authorise such a company to sue and purser,
be sued generally by its purser (a).
3. Of actions by one member on behalf of himself and others.
Actions by one member of a class of persons on behalf of
himself and all others of that class, have long been familiar in
courts of equity (0).
Actions in this form are permissible when
their object is to obtain relief to which the whole class is
entitled, and when the members of the class are so numerous
that they cannot all be made parties by name (c).
Thus, for the purpose of rescinding an agreement illegally Actions to
entered into by the directors of an incorporated company, OY tors from im-
for the purpose of restraining them from doing that which is
illegal, an action may be instituted by one shareholder on
behalf of himself and all the others, except the defendants,
against those directors (d).
Again in Apperley v. Page (e), it was held that a suit could Apperley «.
be sustained by some shareholders of a provisionally registered **8*
railway company on behalf of themselves and all the other
shareholders except the defendants, against the directors, for
man v. Milvain, 5 Ex. 61, removing
the doubt expressed in Hughes v.
Thorpe, 5 M. & W. 656. See, too,
Ex parte Hall, 3 Deac. 405. As to
other companies, see Lawrence v.
Wynn, 5 M. & W, 355 ; Skinner v.
Lambert, 4 Man. & Gr. 477; Wills
v. Sutherland, 4 Ex. 211, affirmed
in error, 5 Ex. 715, in each of which
an action for calls by a public officer
was successful. See, too, Smith v.
Goldsworthy, 4 Q. B. 430; Reddish v.
Pinnock, 10 Ex. 213.
(a) 32 & 33 Vict. c. 19, § 13.
(b) See Walworth v. Holt, 4 M. &
Cr. 619.
(c) Twenty used to be the mini-
mum. See Harrison v. Stewardson,
2 Ha. 530. But see Fripp v. Chard
Rail. Co., 11 Ha. 258. See now
Ord. xvi., r. 9.
(d) Gray v. Chaplin, 2 Sim. & Stu,
267, reversed on appeal, on the
ground of delay and acquiescence,
2 Russ. 126,
(e) 1 Ph. 779. See, also, Butt v.
Monteaus, 1 K. & J. 98; Sheppard
v. Oxenford, ib. 491; Cramer v.
Bird, 6 Eq. 143 ; Wilson v. Stanhope,
2 Coll, 629; Harvey v. Collett, 15
Sim. 332 ; Cooper v. Webb. ib. 454 ;
Clements v. Bowes, 17 Sim. 167, and
1 Drew. 684 ; Richardson v. Hastings,
7 Beav. 323; Sibson v. Edgeworth,
2 De G.& 8S. 73. Compare Wil-
liams v. Salmond, 2 K. & J, 463.
566
ACTIONS BETWEEN COMPANIES AND THEIR MEMBERS.
Bk. a. Chap. 9. the purpose of having the assets of the company realised and
ect. 1.
Actions by one
shareholder on
his own behalf.
applied in payment of its debts, and for the distribution of the
surplus amongst the shareholders.
This form of action, moreover, is constantly adopted where
numerous partners seek to make their managers account for
secret benefits and advantages obtained by them in breach of
the good faith owing to those whose affairs they conduct (f) ;
or to rescind contracts into which the partnership has been
induced to enter by false and fraudulent representations (9).
So in the case of mutual insurance societies and friendly
societies one member may sue the trustees or committee and
one of each class of members as representing all the other
members, where the object of the action is to obtain payment
of what is due to the plaintiff (h).
Moreover where it is permissible, on the principles above
explained, for one person to sue on behalf of himself and
others, he ought so to sue or his action will be defective for
want of parties. But there are exceptions to this; forit seems
settled that any one shareholder can maintain an action
against a company to restrain the company from doing an act
that is illegal or wltra vires (i); and if a plaintiff sues alone
when he ought to sue on behalf of himself and others, an
amendment would probably be allowed.
Where the plaintiff does not seek redress in respect of any
injury or injustice to himself and others, i.e. where he seeks
redress in respect of some injury or injustice to himself, he not
only can sue in his own name alone but he ought so to sue.
For example a shareholder may sue on his own behalf only to
restrain the improper rejection of his vote (k), his wrongful
(f) Chancey v. May, Prec.in Ch. M. 429.
592; Hichens v. Congreve, 4 Russ.
562; Taylor v. Salmon, 4 M. & Cr.
134; Beck v. Kantorowicz, 3K. & J.
237.
(g) See Small v. Attwood, You.
407, and infra, p. 568.
(h) See Pare v. Clegg, 29 Beav.
589 ; Bromley v. Williams, 32 ib.
177 ; Harvey v, Beckwith, 2 Hem. &
(1) See Hoole v. Great Western
Rail. Co., 3 Ch. 262, Russell v.
Wakefield Waterworks Co., 20 Eq.
474 at p. 481. Simpson v. West-
minster Palace Hotel Co.,8 H. L. C.
712.
(k) Pender v. Lushington, 6 Ch.
D. 70; Moffatt v. Farquhar, 7 Ch.
D, 591,
ACTIONS BY ONE MEMBER ON BEHALF OF HIMSELF AND OTHERS. 567
exclusion from acting as director (J), or a refusal to allow him Bk. ae che 9.
to inspect the company’s register (1). -
In order that an action may be sustainable by one or more Identity of
persons on behalf of themselves and others, it is essential that ae
the interests of the plaintiffs on the record, and of those
others whom they assume to represent, should be, in a judicial
point of view, identical, and be proved to be so by the
plaintiffs (n). Consequently a shareholder in a company who
has sold his shares, and has no longer any interest in the
company, cannot sustain an action on behalf of himself and
the other shareholders for an account of the dealings and
transactions of the company or of its directors, and to have its
assets applied in discharge of its liabilities. For, whether he
is or is not still under liabilities from which he is entitled to
be freed, he has no right, having sold all his interest in the
company, to assume to represent those with whom he has no
longer anything to do (0). Upon the same principle it has
been said that a shareholder who is a mere trustee, having no
beneficial interest in the company, is not a proper person to
sue on behalf of himself and other shareholders (p).
Neither can an action by one shareholder on behalf of him- Plaintiff a
self and others be maintained by a person who does not Se
honestly represent the interests of his co-shareholder, but
who is the nominee of a rival company (gq). A bill by such a
(2) Pulbrook v. Richmond Consoh-
dated Mining Co. 9 Ch. D. 610;
Thomas v. Hobler,4 De G. F. & J.
199 ; which shows that if the plain-
Munster v. Cammell Co., 21 Ch.
D. 183 ; and see Harben v. Phillops,
23 Ch. D. 14; Browne v. La
Trinidad, 87 Ch. D. 1.
(m) Mutter v. Eastern and Mid-
lands Rail. Co., 38 Ch. D. 92;
Holland v. Dickson, 37 Ch. D. 669.
(n) See the cases as to calls, infra,
p. 578, and Ward v. Sittingbourne and
Sheerness Rail. Co., 9 Ch. 488 ; Clay
y. Rufford, 8 Ha. 281; Wiliams v.
Salmond, 2 K. & J. 463; Sibson v.
Edgworth, 2 De G. & S. 73; in
which case the defendant pleaded
that the interests of the plaintiff
and those he assumed to represent,
were not identical. See, also,
tiff makes an alternative case, neither
alternative must be opposed to the
interests of those whom he assumes
to represent.
(0) Doyle v. Muntz, 5 Ha. 509.
(p) Thid. sed queere.
(q) Forrest vy. Manchester, &c., Rail.
Co, 4 De G. FL & J. 126. See,
also, Hare v. London and North
Western Rail. Co, 1 J. & H. 252,
and Thomas v. Hobler, 4 De G. F. &
J.199. The rule does not apply to
a nominee of a rival company, who
does not assume to represent others,
Mutter v. Eastern and Midland Rail,
Co., 38 Ch, D, 92,
568 ACTIONS BETWEEN COMPANIES AND THEIR MEMBERS.
Bk. rd Sher. 9. plaintiff has even been taken off the file (r).
But the mere
circumstance that the plaintiff has bought a share recently
to enable himself to bring an action, does not warrant the
Court in dismissing it (s).
Joint right of
x It was at one time considered that a suit by one person on
action.
behalf of himself and others was not sustainable unless the
injury of which he complained was such as to give him and
them a right to sue jointly ; and that where persons having no
previous connection with each other had been induced to sub-
Actions for
scribe to a loan or for shares in a company by fraud, a suit by
recovery of
subscriptions one of them on behalf of himself and others to obtain a return
ea se of their subscriptions could not be sustained (¢). But later
cases have gone further and allowed such actions on the
ground that the subscribers to a company have such a com-
munity of interest in the funds subscribed as to entitle them
all to sue for their return (w). Practically this point is not
now of much importance, owing to the modern rule as to mis-
joinder of plaintiffs («).
An action by one or more persons on behalf of themselves
and others, may be instituted without the consent of such
others (y) ; and even against their consent if the object of the
action is to prevent or obtain redress in respect of an illegal
act (z). But an action by one or more on behalf, &c., is the
action of those who are named on the record as plaintiffs, and
whatever is a defence as against them is a defence to the
action, whatever might have been the case if other persons had
been plaintiffs on the record (a).
Further observa
tions on actions
by some on
behalf,
(r) Robson v. Dodds, 8 Eq. 301. it. See, also, Moseley v. Cressey’s Co.,
(s) Bloxam v. Metropolitan Rail.
Co., 3 Ch. 337; Seaton v. Grant, 2
Ch. 459. See further, on this
subject, Orr v. Glasgow, de., Rail.
Co., 3 McQu. 799 ; Rogers v. Oxford,
dc., Rail. Co., 2 De G. & J. 662.
(t) Jones v. Garcia del Rio, Turn.
& Russ. 297; Croskey v. Bank of
Wales, 4 Giff. 314. See, also,
Hallows v. Fernie, 3 Ch, 467.
(u) See Beeching v. Lloyd, 3 Drew.
227, which, although prior to Croskey
y. Bank of Wales, was not cited in
1 Eq. 405, a suit for the return of
deposits.
(x) See infra, next page.
(y) Burt v. British Nation Assur.
Co, 5 Jur. N. §. 555, affirmed on
appeal, 4 De G. & J. 158 ; Williums
vy. Salmond, 2 K. & J. 463.
(2) White v. Carmarthen Rail. Co.,
1 Hem. & M. 786. See, also,
Blozam v. Metropolitan Rail. Co.,
3 Ch. 337. Compare Lund v. Blan-
shard, 4 Ha. 299,
(a) Burt v. British Nation Insur.
569
ACTIONS BY ONE MEMBER ON BEHALF OF HIMSELF AND OTHERS.
Formerly, if a bill was filed by some on behalf of themselves Bk. ee hese 9.
and others, and it turned out that any of the persons thus in-
cluded as plaintiffs had no right to sue, or had interests con-
flicting with that of the plaintiffs on the record, the bill was
dismissed (b) ; but now the Court has power to grant relief and
to modify its decree according to the special circumstance ot
the case, and for that purpose to direct amendments, and to
treat any one or more of the plaintiffs as if he or they was or
were a defendant or defendants to the action, and the remain-
ing plaintiff or plaintiffs was or were the only plaintiff or
plaintiffs on the record (-), Accordingly, if an action is
brought by one shareholder on behalf of himself and others,
Misjoinder of
plaintiffs,
and it appears that the interest of some of the persons thus
represented is different from that of the plaintiff, the action
may nevertheless be sustained (d).
When an action is brought by some shareholders on behalf Frame of action
of themselves and others, it should appear in the statement of edare
claim (1), that the plaintiffs are shareholders (e); and (2), that
they are suing on behalf of themselves and others. If this
last does not appear, the action will be treated as that of the
ostensible plaintiffs alone (f).
Where an action is instituted by one member of a company
on behalf of himself and others for the protection of the funds
of the company and the action is successful, the plaintiffs are
only entitled to their costs as between party and party,
although in one sense the funds out of which those costs are
to be paid belong to the plaintiffs themselves (9).
Costs.
Co., ubi supra, where the plaintiff
was held barred by his own ac-
quiescence in the matters com-
plained of. See, too, Scarth v.
Chadwick, 14 Jur. 300, where the
defendants got rid of the suit by
paying the plaintiff all that he was
entitled to.
(b) In Spittal v. Smith, Taml. 45 ;
the bill was dismissed as to some of
the plaintiffs only.
(c) See Ord. xvi. r. 11.
(d) Watson v. Cave, 17 Ch. D. 19;
Hallows v. Fernie, 3 Ch. 467 ; Jones
v. Rose, 4 Ha. 52. See, too, Clements
v. Bowes, 1 Drew. 684; Sturge v.
The Eastern Union Rail. Co., 7 De
G. M. & G, 180, 181.
(e) Banks v. Parker, 16 Sim. 176 ;
Walburn v. Ingilby, 1 M. & K. 61.
(f) Baldwin v. Lawrence, 2 Sim. &
Stu. 18; Cooper v. Powis, 3 De G. &
S. 688.
(9) Morgan v. Great Eastern Rail.
Co.,1 Hem. & M, 560,
570
Bk. III. Chap. 9.
Sect. 1.
Appeal.
Where company
is incorporated.
e
ACTIONS BETWEEN COMPANIES AND THEIR MEMBERS.
Accounts taken in an action by one shareholder on behalf
of himself and others bind all of them (h).
No member of a class which purports to be represented by
the plaintiff can appeal against an order made in the plaintiff's
favour; his proper course if dissatisfied with the order is to
make an application to the Court below to be added as a
defendant to the action and then to apply to get rid of the
order or to obtain the conduct of the action (i). If the deci-
sion of the Court of first instance is against the plaintiff, it
would seem that any member of the class represented by
him may obtain leave to appeal on an ex parte application to
the Court of Appeal (hk).
Where a company is incorporated, and its directors or some
shareholders have done or are doing that which other share-
holders desire to bring an action to redress or prevent, the
following rules are to be observed :—
1. If the matter complained of is one which gives a right of
action to the company as a collective whole, the company ought
to sue in its corporate name, and an action by one member on
behalf of himself and others is improper (/): but leave may be
given to add the company as a co-plaintiff (m).
2. Again, if the complaint relates to some matter of internal
management as to which a majority is competent to decide,
the action should be brought by the majority in the name of
the company (7).
3. But if those who have the management of the affairs of
the company will not bring an action in its name when the
shareholders require it, having a right so to do, or if directors
or shareholders have done or are about to do that which is
wrong, even if sanctioned by a majority, then an action by
some of the members on behalf of themselves and others, or in
the latter case by a member suing alone (0), may be sustained,
(h) See Singleton v. Selwyn, 9 Jur.
N.S. 1149.
(1) Watson v. Cave (No. 1),17 Ch.
D. 19, and see Wilson v. Church, 9
Ch. D. 552.
(k) Markham v. Markham, 16 Ch.
D. 1.
(1) Gruy v. Lewis, 8 Ch. 1085 ;
Russell v. Wakefield Waterworks Co.,
20 Eq. 474.
(m) Duckett v. Gover, 6 Ch. D. 82.
(x) MacDougall v. Gardiner, 1 Ch.
D. 13; Mozley v. Alston, 1 Ph. 790 ;
Foss v. Harbottle, 2 Ha. 461.
(0) Stimpson v. Westininster Palace
FAfotel Co., 8 H. L, C, 712 3 Russell v,
571
ACTIONS BY ONE MEMBER ON BEHALF OF HIMSELF AND OTHERS,
for otherwise the dissentients would be without redress (py). Bk. ee 9.
And a clause in the articles of association imposing any penalty
on a shareholder for bringing such an action against the com-
pany is void (q). In suits thus constituted, courts of equity
have compelled directors to account for monies improperly
applied (r) ; have declared resolutions fraudulent and void (s) ;
have restrained the carrying out of agreements under the seal
of the company (t); restrained the application of the funds
of a company to unauthorised purposes (wu), e.g., defraying
the expense of applications to Parliament (v); restrained a
company from purchasing its own shares (y); restrained the
construction of part of a railway instead of the whole of it (z) ;
restrained the improper declaration of dividends (a) ; set aside
an improper forfeiture of shares (b) ; restrained the transfer of
the business of one company to another company (c) ; set aside
agreements for such transfer (d); set aside fraudulent pur-
Wakefield Waterworks Co., 20 Eq.
474 at p. 481; Hoole v. Great Western
Railway Co., 3 Ch. 262.
(p) See the last three notes, Mason
vy. Harris, 11 Ch. D. 97, and the
cases infra.
(q) Hope v. International Financial
Society, 4 Ch. D. 327.
(r) Bryson v. Warwick Canal Co.,
4DeGM.&G.71l.
(s) Preston v. Grand Collier Dock
Co., 11 Sinn. 327,
(t) Maunsell v. Midland Great
Western (Ireland) Rail. Co., 1 Hem.
& M. 130.
(u) Guinness v. Land Corporation
of Ireland, 22 Ch. D. 349 ; Smith v.
Duke of Manchester, 24 Ch. D. 611 ;
Tomkinson v. South Eastern Rail. Co.,
35 Ch. D. 675 ; Studdert v. Grosvenor,
33 Ch. D. 528; Colman v. Eastern
Counties Rail. Co., 10 Beav. 1;
Salomons v. Laing, 12 Beav. 339 and
377 ; Munt v. Shrewsbury and Chester
Rail. Co., 13 Beav. 1; Bagshaw v.
Eastern Union Rail. Co.,'7 Ha. 114,
and 2 Mac. & G. 389; Simpson v.
Denison, 10 Ha. 51; Vance v. East
Lancas, Rail, Co., 3 K. & J. 50,
(x) Seethe last two cases, and Lyde
y. East. Bengal Rail. Co., 36 Beav. 10.
(y) Hope v. International Financial
Society, 4 Ch. D. 327.
(2) Cohen v. Wilkinson, 12 Beav.
125, and 1 Mac. & G. 481 ; Hodgson
v. Powis, 12 Beav. 392 and 529, and
1DeG.M. &G. 6.
(a) Bloxam v. Metropolitan Rail.
Co. 3 Ch. 337; Hoole v. Great
Western Rail. Co., ib. 262 ; Dumvile
v. Birkenhead, dc., Ratl. Co., 12
Beay. 444; Curlisle v. South-Eastern
Rail. Co.,1 Mac. & G. 689; Henry
v. Great Northern Rail. Co., 4 K. &
J.1,and 1 De G. & J. 606. As to
actions to restrain the payment of
dividends actually declared, see
infra, p. 574,
(6) Sweny v. Smith, '7 Eq. 324.
(c) Beman v. Rufford, 1 Sim. N.
8. 550; Charlton v. Newcastle and
Carlisle Rail. Vo., 5 Jur. N.S. 1096 ;
Hare v. London and N.-W. Rail.
Co., 1 J. & Tf. 252, which shows that
the company which has agreed to
take the business ought to bea party.
(d) Clinch v. Financial Corp., 5
Eq. 450, and 4 Ch. 117,
572
Bk. IIT. Chap. 9.
Sect. 1.
Company and
directors proper
parties in such
cases.
Actions by some
on behalf to con-
trol a majority.
ACTIONS BETWEEN COMPANIES AND THEIR MEMBERS.
chases (¢), restrained loans to directors (f) ; restrained a divi-
sion of assets amongst a majority of members to the exclusion
of the rest (9).
An action by one member on behalf of himself and others
may even be maintainable, where an action with like objects
would fail if instituted by the company in its corporate capa-
city; ¢.g., where the complaint is of fraud imputable to the
company as a body, but not imputable to the members indi-
vidually (h).
In such cases as the foregoing, the company, as such, is a
proper party, because it is the company, as such, which is
sought to be affected by the judgment of the Court (i); and the
directors individually are proper parties, because they are the
persons to be affected in the first instance, and some judgment
against them personally is also usually necessary. If, however,
a judgment against the company is all that is required, there is
no necessity to make the directors parties individually (i).
The cases above referred to show that it is competent for
one shareholder to institute an action on behalf of himself and
co-shareholders, for the purpose of obtaining relief in respect
of illegal acts done or contemplated by directors ; moreover,
an action in this form is sustainable to prevent or set aside a
transaction which is a fraud by a majority on a minority (J);
but courts will not interfere in actions so constituted, if the
relief sought is in respect of acts the legality or illegality of
which depends on the voice of a majority of the shareholders,
who are not themselves chargeable with fraud (m). If such
last-mentioned acts are sanctioned by the majority, the Court
(e) Atwool vy. Merryweather, 5 Eq.
464, note.
(f) Bluck v. Mallalue, 27 Beav.
398.
(9) Menier v. Hooper’s Telegraph
Co., 9 Ch. 350.
(h) See the observations of Lord
Cottenham in Vigers v. Pike, 8 Cl. &
Fin. 647, 648.
(7) See Bagshaw v. The Eastern
Union Rail. Co., '7 Ha. 114.
(k) Winch v. Birkenhead, cc.,
Rail. Co, 5 De G, & Sm, 562, an
action to restrain a company from in
effect transferring its business.
(1) Atwool v. Merryweather, 5 Eq.
464 note; Menter v. Hooper's Tele-
graph Co.,9 Ch.350 : Masonv. Harris,
Ch. D. 97.
(m) See the next section, and
Russell v. Wakefield Waterworks Co.,
20 Eq. 474; Browne v. The Mon-
mouthshire Rail. and Canal Co., 13
Beav. 32 ; Stevens v. The South Devon
Rail. Co., 9 Ha. 313,
ACTIONS BY ONE MEMBER ON BEHALF OF HIMSELF AND OTHERS.
573
cannot interfere at all, and if they are not so sanctioned, the Bk. ee 9.
majority should themselves apply to the Court, and institute
proceedings in the name of the company (v). Ifit is thought bn a
necessary to bring an action before the views of the majority
are known, or if the majority are too indifferent to take any
proceedings to enforce obedience to their own resolutions, the
proper course to be taken by those who determine to appeal to
the Court is to take upon themselves the responsibility of
bringing an action in the name of the company. Such an
action will not be stayed unless it appears that the majority
disapprove it (0); if, however, the majority disapprove the
action they should apply to the Court to strike out the name
of the company as plaintiffs (p).
Moreover, if there are conflicting interests, care must be Conflicting
taken to have each separate interest substantially represented are
by some person who is a party to the action (q). Therefore, Actions to
where there is a dispute about a call which some shareholders ven
have paid and others have not, those who have not paid cannot
sustain an action on behalf of themselves and those who have
paid, against the directors, trustees, and secretary of the com-
pany, for a general account of the partnership debts and
assets, and to have the property of the concern applied in
discharge of its liabilities. To an action with such objects,
some at least of the class of shareholders who have paid the
call ought to be made parties(r). Again, with respect to
(xn) MacDougall v. Gardiner, 1 Ch.
D. 13; Mozley v. Alston, 1 Ph. 790.
(0) The Exeter and Crediton Rail.
Co, v. Buller, 5 Ra, Ca. 211, where
the bill was filed in the name of the
to amend and make the company
defendants.
(q) Cramer v. Bird, 6 Eq. 143;
Hoole v. Great Western Rail. Oo.,
2 Ch. 262 ; Fraser v. Cooper, Hall &
company, although the defendants
had possession of the seal. See, also,
East Pant Du, dc. Mining Co. v.
Merryweather, 2 Hem. & M. 254;
Atwool v. Merryweather, 5 Eq. 464
note ; Pender v. Lushington, 6 Ch.
D. 70 ; Harben v. Phillips, 23 ib. 14 ;
Imperial Hydropathic Hotel Co. v.
Hampson, ib. 1.
(p) Silber Light Co. v. Silber, 12
Ch. D. 717, where leave was given
Co., 21 Ch. D. 718 (an action by a
bondholder on behalf of himself and
other bondholders).
(r) See Richardson v. Larpent, 2
Y. & C. C. C.507 ; Lovell v. Andrew,
15 Sm. 581; Sharpe v. Day, 1 Ph.
771; Lund v. Blanshard, 4 Ha. 9.
If the plaintiff does not know who
they are, see Hodgkinson v. National
Liwe Stock Insurance Co., 26 Beav.
473, and De G, & J. 422,
574
ACTIONS BETWEEN COMPANIES AND THEIR MEMBERS.
Bk. III. Chap. 9. actions to restrain the improper payment of a dividend, it is
Sect. 2.
Actions to
restrain pay-
ment of divi-
dends,
Internal ma-
nagement of
companies,
to be remembered that the declaration of a dividend confers on
each shareholder a legal title to his share of it; and, conse-
quently, even although the dividend may have been improperly
declared, payment of it will not be restrained in an action
by one shareholder against the company and its directors
only. On these grounds, in Carlisle v. South-Eastern Railway
Company, an injunction to restrain the payment of a dividend
already declared was refused, although an injunction to restrain
the future declaration of dividends, except out of profits, was
granted (s).
SECTION Il.—OF THE RULE THAT THE COURT WILL NOT INTERFERE
IN MATTERS OF INTERNAL REGULATION.
Where an application is made to a Court to assist one or
more shareholders against others or against the managing
body, the first matter to be considered is, whether the rights
which the complainants seek to enforce do or do not depend
on the views which may be taken by the majority of the share-
holders (f). The Court will interfere to prevent the violation
of rights which do not depend on the views of other share-
holders (wz) ; but, as a general rule, the Court will not interfere
between members of companies for the purpose of enforcing
alleged rights arising out of matters which are properly the
subject of internal regulation. It will not interfere to control
a majority, unless it sees that the majority has been or is
doing, or is about to do, that which it is illegal even for a
majority to do; and it follows from this, that the Court will
not interfere in matters properly the subject of internal
management until all reasonable attempts have been made to
take the sense of the general body of members on the matters
(s) Carlisle v. South Eastern Rail. to represent others in the same
Co, 1 Mac. & G. 689. See, also, interest.
Fawcett v. Laurie, 1 Dr. & Sm. 192, (t) As to the powers of majorities,
Compare Hoole v. Great Western see ante, bk. iii. ch. 1, § 4.
Rail. Co., 3 Ch. 252, where one of (w) See infra, p. 579, &c., and the
the defendants was held sufficiently instances on p. 571.
MATTERS OF INTERNAL REGULATION. 575
in question ; nor even then unless it is called upon to interfere Bk. ee oe 9.
to give effect to the will of the majority against a factious
minority.
The leading decisions on this subject are Curlen v. Drury,
Foss y. Harbottle, and Mozley vy. Alston, which will serve to
illustrate the application of the principle in question, as well
to unincorporated as to incorporated companies.
In Carlen v. Drury (x), a large number of persons were ne
partners in a concern called The Bankside Brewery, and six of able directors.
them on behalf of themselves and co-partners, filed a bill Oa v%
against the managers and others, alleging circumstances of
gross mismanagement and neglect on the part of the managers,
and praying for an account, a dissolution, and a receiver. It
appeared that by the company’s deed of settlement, the
managers might be removed at any general meeting; that
general meetings were to be held at Lady-day and Michaelmas,
or within a month after, at such place as the managers should
appoint; that a committee of twelve persons should be annually
elected for auditing accounts, and advising the managers; that
if the managers should misbehave themselves, this committee,
or any seven of them, should have the power of calling a
special general meeting of shareholders to report thereon; and
that no dissolution should be made without the consent of a
majority of three-fourths of the shareholders at a general
meeting. A motion for an injunction and a receiver was
refused with costs, the Court not being satisfied that the
means of redress provided by the parties themselves in the
articles were not effectual, and being of opinion that the plain-
tiffs had a remedy in their own hands to which they had not
resorted. From the judgment of Lord Eldon, it appears that
the Court would, if necessary, have compelled the managers to
call meetings; that in a case of delinquency clearly made out
the Court would have acted without hesitation ; but that there
must have been a positive necessity for the interference of the
Court arising from the refusal or neglect of the committee to
act; and that the Court would not interfere before the parties
(z) 1 V. & B. 154, See, also, mont v. Meredith, 3 V. & B, 180;
Waters v. Taylor, 15 Ves.10 ; Ellison Miles v. Thomas, 9 Sim. 606.
y. Bignold, 2 Jac. & W. 503 ; Beau-
576
Bk. IIL. Chap. 9.
Sect. 2.
Alleged fraud
and misconduct.
Foss v. Har-
bottle.
Directors impro-
perly appointed.
Mozley v.
Alston.
ACTIONS BETWEEN COMPANIES AND THEIR MEMBERS.
had tried that jurisdiction which the articles had themselves
provided.
In Foss v. Harbottle (y), two members of an incorporated
company, called The Victoria Park Company, filed a bill
against the directors and others, charging them with a variety
of fraudulent and illegal acts, whereby the property of the
company was misapplied, aliened, and wasted, and praying that
the defendants might make good to the company the losses
sustained by the acts complained of, and that a receiver might
be appointed to apply the property of the company in dis-
charge of its liabilities, and to secure the surplus. The
general result of the act incorporating the company was (in
the opinion of the Court) to make the directors the governing
body, subject to the superior control of the proprietors, who,
when assembled in general meeting, had power to originate
proceedings for any purpose within the scope of the company’s
powers, as well as to control the directors in any acts which
they might have originated. The Court was of opinion that
the acts of the defendants complained of were of such a nature
as to be capable of confirmation by a majority of the members
of the company ; that it did not appear that any attempt had
been made to bring those acts before a general meeting of the
shareholders ; and that under those circumstances, the Court
could not interfere at the suit of a minority, whatever it might
have been induced to do if proper means had been resorted to
and found ineffectual to set the general body of shareholders
in motion.
In Mozley vy. Alston (z), a bill was filed by two shareholders
of a railway company against the company and its directors,
alleging that the latter had been illegally appointed ; that they
had possession of the seal of the corporation ; and that they
were about to use it for various improper purposes. The bill
prayed that the directors who were defendants might be
restrained from acting as directors, and be ordered to place
(y) 2 Ha. 461, Compare Atwool (z) 1 Ph. 790. Compare Atwool v.
v. Merryweather, 5 Eq. 464n., which Merryweather, 5 Eq. 464, note, where
was also a case of fraud, but a ma- the votes of the defendant turned
jority of the shareholders excluding _ the scale, and the suit succeeded.
the defendants supported the bill.
MATTERS OF INTERNAL REGULATION. 577
the seal, and the books and documents of the company, under Bk. earl 9.
the control of its lawful directors. It appeared from the
statements of the bill that a majority of the shareholders
agreed with the plaintiffs in their view of the illegality of the
defendants’ appointment, and the Court held that, if that were
so, there was nothing to prevent the company from filing a
bill in its corporate character to remedy the alleged evils; and
that as the plaintiffs showed no reason to justify them alone in
applying to the Court for redress, they were not entitled to its
assistance.
These cases have been followed by a variety of others (a). ng fhe ik
One of the most characteristic of this class is perhaps Bailey way Company.
vy. The Birkenhead, Lancashire, and Cheshire Junction Railway
Company (b), where a bill was filed by one of a set of share-
holders in an amalgamated company, alleging that an unfair
and unnecessary call had been made upon that set, and seeking
to restrain proceedings to enforce payment of the call. Lord
Langdale thought that the case could only be considered as an
attempt to induce the Court to interfere in the internal manage-
ment of the affairs of a company, and to take upon itself to
determine a question which might and ought to be determined
by the shareholders themselves at general meetings.
So, in the Scotch case of Orr v. Glasgow, c., Railway Orr v. Glasgow
: 5 ‘ 3 P Railway Com-
Company (c), a suit was instituted against a railway company pany.
and its directors, seeking redress on the ground that the
directors were also directors of a rival company, and were
acting in the interests of that company to the prejudice of the
shareholders in the first company. The specific relief sought
was, that certain calls might be set aside, and that monies
already paid, for calls previously made, might be returned ;
(a) See, in addition to those
mentioned in the text, Edwards v.
The Shrewsbury and Birmingham
Rail. Co, 2 De G. & Sm. 537;
Yetts v. The Norfolk Rail. Co., 3 ib.
293 ; Kent v. Jackson, 14 Beav. 367,
and 2 De G. M. & G. 49; Inder-
wick v. Snell, 2 Mac. & G. 216; and
the cases dealing with disputes be-
tween members of a club, See
LC.
Fisher vy. Keane, 11 Ch. D, 353 ;
Labouchere v. Wharncliffe, 13 ib. 346 ;
Dawkins v, Antrobus, 17 ib. 615.
(b) 12 Beav. 433.
(c) 8 MacQu. 799. Compare
Hodgkinson v. National Live Stock
Insurance Co., 26 Beay. 473, and 4
De G. & J. 422, where, ‘however,
relief was sought in respect of other
matters than the call.
#*p p
578
ACTIONS BETWEEN COMPANIES AND THEIR MEMBERS.
Bk. III. Chap. 9. hut the suit was dismissed, on the ground that although the
Sect. 2.
MacDougall v.
Gardiner.
Course to be
taken by
minority,
acts of the directors were beyond their powers, it was com-
petent to the shareholders to ratify and adopt those acts, and
the suit was not instituted for the protection of the majority
of shareholders.
Again, in MacDougall v. Gardiner (d), the Court was asked
to restrain directors from carrying out certain arrangements
without submitting them to the shareholders and to compel
the directors to call a meeting. The shareholders had them-
selves power to call a meeting, and it did not appear that a
majority of the shareholders could not control the directors
without the assistance of the Court, which was therefore
refused.
Other instances will be referred to hereafter when treating
of injunctions.
In such cases as these, those who complain of the managing
body should, before appealing to the Court, endeavour to bring
their grievances before their fellow shareholders, and ascertain
The Court will not
prevent the holding of a meeting simply because the notice
convening it may invite it to exceed its powers(f). If the
majority disapprove the conduct complained of, they can sue
in the name of the company, and so obtain redress (q) ; or if
the defendants prevent that course by turning the scale of votes,
an action by one shareholder on behalf of himself and others
may be supported (h). If, however, the majority, acting bond
Jide, agree with and sanction the course adopted or proposed
what the views of the majority are (e),
(d) 10 Ch. 606, and 1 Ch, D. 13. v. Harbottle, and Mozley v. Alston,
The decision of V.-C. Malins, in 20
Eq. 383, was reversed, and the pre-
vious decisions of the same judge in
Featherstone v. Cooke, 16 Eq. 298, and
Trade Auaxiliary Co. v. Vickers, ib.,
can hardly be relied upon.
(e) See the foregoing cases.
(f) Isle of Wight Rail. Co. v. Ta-
hourdin, 25 Ch. D. 320. Compare
Jackson v. Munster Bank, 13 L. R. Ir.
118.
(g) See the observations in Joss
and MacDougall v. Gardiner, 1 Ch.D.
13, above referred to. As to using
the name of the company at the risk
of a stay of proceedings, see ante,
p. 573.
(h) See Atwool v. Merryweather, 5
Eq. 464, where a bill by one share-
holder on behalf of himself and
others, was ultimately successful ;
although a bill by the company had
been taken off the file.-
MATTERS OF INTERNAL REGULATION. 579
ae Chap. 9.
to be adopted by the managing body, and if that course is not Bk. oe
illegal if approved by the majority, the Court clearly cannot
interfere. But if that course will be a fraud on the minority,
or illegal, although sanctioned by the majority of shareholders,
then, even if it is approved by all of them except one, the
Court will interfere at the suit of that single dissentient share-
holder, and protect him and his interests: and in such a case
it is not essential that he should appeal to the other share-
holders before applying to the Court (i).
As an illustration of the proposition that the majority cannot Majority not
be interfered with if they are not doing what it is illegal for fires wtb
them to do, reference may be made to the case of Lord v. T’he eo =
Governor and Company of Copper Miners in England (k), where Lord v. Copper
a shareholder in an incorporated mining company filed a bill ee i
to restrain the governing body from vesting the property of
the company in trustees for the benefit of its creditors. Lord
Cottenham (reversing the decision of V.-C. Knight Bruce)
allowed a demurrer to the bill, on the ground that it was
competent for a majority of shareholders to sanction such a
proceeding, and that it appeared that in fact they had sanc-
tioned it.
The important principle that one out of any number of ieee
shareholders is entitled to the protection of the court against is illegal.
the illegal acts of the others (1), although he stands alone, was
emphatically declared and strictly carried out by Lord Eldon in
Natusch v. Irving (m) and Const v. Harris (n), which were cases
of unincorporated companies; but precisely the same principle
applies to all companies, whether incorporated by act of Parlia-
ment, charter, letters patent, or registration.
(t) See Gregory v. Patchett, 33 Jackson, 14 Beav. 367, and 2 De G.
Beay. 595 ; Atwool v. Merryweather,
5 Eq. 464; Mason v. Harris, 11 Ch.
D. 97; Tomkinson v. South Eastern
Rail. Co., 35 Ch. D. 675. The con-
trary receives some countenance
from, but is not really warranted by,
Edwards v. Shrewsbury, &c., Rail.
Co, 2De G. & S. 537.
(k) 2 Ph. 740. See, too, Gregory
v. Patchett, 38 Beav. 595 ; Kent v.
M.& G. 49; The Exeter and Cre-
diton Rail. Co. v. Buller, 5 Rail. Ca.
219 ; Inderwick v. Snell, 2 Mac. &
G. 216, where directors complained
that they had been wrongfully re-
moved.
(2) a. ¢., illegal, although sanc-
tioned by a majority.
(m) Gow. on Partn. App. 398.
(n) T. and R, 518, 519.
rPP2
580 ACTIONS BETWEEN COMPANIES AND THEIR MEMBERS.
Bk. IIT. Chap.9. Thus, in Adley v. The Whitstable Company (0), Lord Eldon
Sect. 2. : :
ac. restored a member of a company incorporated by act of Parlia-
Whitstable : ment, to rights from which he had been unlawfully excluded
ConiTnEy, under colour of a bye-law of the company.
In Preston v. The Grand Collier Dock Company (p), the Vice-
Chancellor of England overruled a demurrer to a bill, the
object of which was to set aside an arrangement on the ground
of fraud, and to compel certain shareholders to pay calls,
although it had been in effect unanimously resolved at a special
general meeting of the company that no calls should be made
upon them. So in Beman v. Rufford (q), the Court, at the suit
of a small minority of shareholders in a railway company,
restrained what in effect would have been a transfer of the busi-
ness of that company to another company, although the great
majority of shareholders in the former were desirous that such
transfer should be made. So the Court has interfered to prevent
an improper payment of dividends (7); and to prevent a pay-
ment of dividends in shares (s); and to protect the preference
shareholders in a company against the directors and other
shareholders, who intended to make an illegal apportionment
of dividends (t). Upon the same principle, the Court has over
and over again interfered, at the instance of a minority of
shareholders, to prevent an application of the funds of com-
panies to purposes foreign to those to attain which alone such
Preston v. Grand
Collier Dock
Company.
Beman v,
liufford.
companies were formed (1).
If a company incorporated for a special purpose is exceeding
its powers to the detriment of the public, an action by the
Attorney-General will lie; as an illustration of this, reference
may be made to Attorney-General v. Great Northern Railway
Action by
Attorney-
General.
(0) 17 Ves. 315, and 19 ib. 304,
and 1 Mex. 107, where a decree for
an account of profits was made.
(p) 11 Sim. 327,
(g) 1 Sim. N. S. 550. See, too,
Winch v. The Birkenhead, &c., Rail.
Co., 5 De G. & 8m. 562 ; Salomons
v. Laing, 12 Beav. 377; Clinch v.
Financial Corporation, 5 Eq. 450,
and 4 Ch, 117.
(r) Blocam v. Metropolitan Rail.
Co., 3 Ch. 337,
(s) Hoole v. Greet Western Rail.
Co., 3 Ch. 262,
(t) Henry v. Great Northern Rail.
Co, 4 K.& J. 1, and 1 De G. & J.
606. See, too, Carlisle v. The South-
Eastern Rail. Co., 1 Mac. & G. 689,
and on the rights of preference
shareholders, ante, p. 435.
(uw) See infra, under the head In-
junction, where the cases will be
found collected ; and ante, p. 571.
MATTERS OF INTERNAL REGULATION. 581
Company (x), where a railway company was restrained from Bk. haa 9.
ech. 2.
carrying on extensive dealings in coals.
Where a fraud on a company is complained of by a minority Frauds sanc-
only of its shareholders, considerable difficulty arises; for a anand .
transaction which is a fraud on the company may be repudiated
or adopted by it at its option. Hence, if a majority of the
shareholders not implicated in the fraud, bond jide, elect to
ratify the transaction which they might, if they chose, repudiate,
it seems that the Court will not interfere at the instance of the
minority (y); but if the fraud is a fraud by the majority upon
the minority the Court will protect such minority (2).
After the foregoing remarks, it scarcely requires to be men- Factious
tioned that the Court will interfere to control a factious minority ene
which impedes the execution of the lawful resolutions of the
Nor can JJosley v. Alston (b) be considered as Mozley v.
majority (a).
J y ( ) Alston,
inconsistent with this proposition ; for, although in that case
the Court certainly did refuse to interfere, it was not called
upon to do so ina suit properly framed; and it is tolerably
clear from the judgment, that if the majority had chosen to
institute a suit in the name of the corporation, the Court would
have acted very differently (c).
(z) 1 Dr. & Sm. 154. See, also, See, too, Fraser v. Whalley, 2 Hem.
Att.-Gen. v. Ely, Haddenham and
Sutton Rail. Co.,4 Ch. 194; Att.-
Gen. v. Great Eastern Rail. Co., 11
Ch. D. 449, and 5 App. Ca. 473 ;
Att.-Gen. v. Shrewsbury (Kingsland)
Bridge Co., 21 Ch. D, 752.
(y) See Foss v. Harbottle and
Mouley v. Alston, ubi supra, and per
Wood, V.-C., in Clinch v. Financial
Corp., 5 Eq. 482.
(2) See Atwool v. Merryweather, 5
Eq. 464 n.; and the cases of ille-
gality referred to above.
(a) See The Exeter and Crediton
Rail. Co. v. Buller, 5 Rail. Ca. 211,
in which the Court did so interfere.
& M. 10.
(6) 1 Ph, 790, and ante, p. 576.
(c) See, also, MucDougall v. Gar-
diner, 1 Ch. D. 13. In Miles v.
Thomas, 9 Sim. 606, V.-C. Shadwell
declined to restrain the sailing of a
ship, although it would seem that
the majority of the shareholders of
the company to which the ship be-
longed, were opposed to her sailing
on the voyage on which she was
about to be sent. The report of
this case is, however, obscure, not
only as to the facts, but also as to
the reasons for the judgment.
582
Bk. III. Chap. 9.
Sect. 3.
Laches a bar to
relief,
Setting aside
agreements.
Gray v. Chaplin.
ACTIONS BETWEEN COMPANIES AND THEIR MEMBERS,
SECTION IJL—OF THE RULE THAT THE COURT WILL NOT INTERFERE
AT. THE INSTANCE OF PERSONS WHO HAVE BEEN GUILTY OF
LACHES,
A plaintiff who seeks equitable, as distinguished from legal
relief, will fail to obtain redress if he has delayed his appli-
cation so long as to render it unjust to interfere on his behalf.
His delay naturally induces others to suppose that he is con-
tent, and to act on that supposition; and if he has allowed
them to engage in transactions and expose themselves to risks,
in the belief that they will alone be the losers in the event of
disaster, he will not be able to obtain any share of their gains
in the event of success. :
The application of these principles to shareholders, is well
illustrated by those cases in which partners and share-
holders, whose shares have been forfeited, have. been refused
relief on the ground of delay (d). The following cases further
illustrate the application of the principles under other circum-
stances. 3
In Gray v. Chaplin (e), the directors of a canal company
made an agreement for letting tolls for ninety-nine years, which
agreement was both ultra vires and detrimental to the interests
of the public. After the agreement had been acted upon for
forty-seven years without any complaint being made, a bill was
filed by two sharehoJders on behalf of themselves and the other
shareholders to set aside the agreement and for an account. A
ereat majority of the shareholders disavowed the suit, but the
Vice-Chancellor held that this was immaterial(f), and he
made an order for a receiver. Upon appeal, however, from
this order, Lord Eldon held, that the plaintiffs could not avail
themselves of the interest which the public might have in the
matters complained of; and that, whatever relief might be
obtained by the Attorney-General on behalf of the public (9),
the plaintiffs were precluded by their own laches and acqui-
(d) See Partn. 468—475, where Hall,1 De G. & J. 173, where it was
the cases are collected. Compare not. Ante, pp. 534 and 535.
Clegg v. Edmondson, 8 1). G. M. 787 ; (e) 2 Russ. 126.
Rule v. Jewell, 18 Ch. D. 660, where (f) See 2 Sim. & Stu. 267,and 2
laches was a bar, with Hart v. Clarke, Buss. 132, note.
6 Ho. Lo. Ca. 633 ; and Clements v. (g) See ante, p. 580.
EFFECT OF LACHES. 583
escence from disturbing the possession of the lessee of the tolls, sae atta 9.
at all events before the hearing of the cause and in the absence ——————
of the Attorney-General to represent the public. The order
for the receiver was accordingly discharged. What became of
the suit afterwards does not appear, but Lord Eldon’s judg-
ment left the plaintiffs small hopes of obtaining a decree.
In Graham v. The Birkenhead, dc., Railway Company (h), & Compelling
suit was instituted by a shareholder in a company to restrain ee eae =
the completion of part only of the company’s works. There Graham ». Bir-
had been several suits for the same purpose instituted by other oe
shareholders, but for reasons to which it is not material to
advert, those suits were never effectually prosecuted. It had
been known for a considerable time that it was not intended
by the directors to complete the company’s works as originally
contemplated, and that in fact there were not sufficient funds
for that purpose. It was also well known that the directors
had for some time been completing part of the works. It was
held that those who disapproved of the application of the com-
pany’s funds to that limited extent, ought to have taken pro-
ceedings to stop it at once; and that having regard to tha
laches of the plaintiff he was not entitled to relief.
In Stupart v. Arrowsmith (i), a suit was instituted by a Making good
shareholder in a company against its directors and others for ee
the purpose of compelling them to restore funds of the com- stupart z.
pany alleged to have been illegally applied in buying up “7°™s™t®.
shares (k), and for a general account. It appeared, however,
that the alleged illegal purchase of shares had not taken place,
that the directors had laid accounts before the shareholders
showing the amount of the company’s receipts and expendi-
ture, and the balance to be divided ; that these accounts had
been adopted at a general meeting, and that payments had
been made to some of the shareholders upon the footing of
these accounts. The suit was not instituted until three years
after the adoption of the accounts, at the meeting referred to,
(h) 2 Mac. & G. 146,and 12 Beav. Patchett, 33 Beav. 595 ; Scott v. Izon,
460. 34 Beay. 434.
(i) 3 Sm. & G. 176. See, too, (k) See, as to this, Hvans v.
Kent v. Jackson, 14 Beay. 367, and Coventry, 8 De G. M. & G, 835, and
2 De G. M. & G, 49; Gregory v. other cases, ante, p. 371 et seq.
584
ACTIONS BETWEEN COMPANIES AND THEIR MEMBERS,
Bk. IIL. Shep: 9 and it was held that, under these circumstances, and no fraud
Sect.
Burt v. British
Nation.
Application of
Joreguing prin-
ciples in winding
up companies,
Brotherhood’s
case.
Smal!combe’s
case.
having been proved, the plaintiff was not entitled to the inter-
ference of the Court.
In Burt v. British Nation Assurance Association (1) a suit by
a director complaining of various improper acts done before he
became a director, was dismissed on-the ground that for two
years he had had the means of knowing what had been done,
and had sanctioned what he afterwards sought to impeach.
It has even been held that a person who acquires a share
from a former shareholder is precluded from complaining of
what his predecessor could not complain of himself (m). But
this is very questionable (n).
Again, a person who seeks to rescind an agreement for frand
must bring his action within a reasonable time after he has
discovered the fraud (0); and this rule applies to actions by
companies to rescind contracts into which they have entered (p).
With respect to companies, by far the most important de-
cisions upon the subject of laches and acquiescence are those
in which the foregoing principles were held to be applicable to
questions arising in winding up companies ; for it is now settled
that if a person has retired from a company pursuant to an in-
valid agreement, which all the shareholders must be considered
as having known, and which they have long suffered to remain
unimpeached, such person cannot afterwards be placed on the
list of contributories (q).
() 4De G.& J. 158. See, also,
Peck v. Gurney, 13 Eq. 79 ; Hunter
y. Stewart, 4 De G. F. & J. 168.
(m) Efooks v. South-Western Rail.
Co., 1 Sm. & G.142 ; Peek v. Gurney,
13 Eq. 79.
(n) See per Fry, L. J., in Ashbury
v. Watson, 30 Ch. D. at pp. 379 and
386.
(0) Clough v. Lon. and N.-W.
Rail. Co., L. R. 7 Ex. 26 ; Sharpley
v. Louth and East Coast Rail. Co., 2
Ch. D. 663. See ante, pp. 73, 85.
(p) Erlanger v. New Sombrero
Phosphate Co.,3 App. Ca. 1218, ante,
354, where a delay of 10 months was
held not fatal. Compare the judg-
ments of Lords Cairnsand Blackburn
on this point.
(q) Brotherhood’s case, 31 Beav.
365, affirmed on appeal, 4 De G. F.
& J. 566, and confirmed by Evans
v. Smallcombe, L. R. 3 H. L. 249.
See, as to these cases, ante, p. 519
et seg. See, also, Hunt’s case, 32
Beav. 387; Gregory v. Patchett, 33
ib, 595.
SPECIFIC PERFORMANCE.
SECTION IV.—OF PARTICULAR ACTIONS.
1. Actions for specific performance.
Shareholders and companies seldom sue each other for
specific performance, except to enforce contracts to take shares
and to obtain indemnity against liabilities.
An agreement to form a company is one the specific per-
formance of which can hardly ever be decreed. Such an agree-
ment may be perfectly valid and binding, but this is not
sufficient to entitle one of the parties to it to a decree for spe-
cific performance by the other; for this purpose the agreement
must not only be valid, but must also be one which a Court
can compel performance of in all essential points; if this is
practically impossible, an action for damages, and not for
specific performance, is the proper remedy. In Stocker vy.
Wedderburn (r), the plaintiff had obtained a patent, and it was
agreed between him and the defendants that a company should
be formed by them for the purpose of working the patent; that
the plaintiff should assign the patent to the company, give
his whole services to it for two years, do his best to improve
his invention, and give the company the full benefit of all
improvements. Owing to a doubt respecting the validity
of the patent, the defendant refused to abide by the agree-
ment, and thereupon the plaintiff filed a bill for specific per-
formance, praying, amongst other things, that the defendants
might be decreed to take such steps as might be necessary for
the registration and incorporation of the company. To this
bill the defendants demurred, and the demurrer was allowed
with costs, on the ground that the agreement was one and
entire, and that if a decree were made in the plaintiff’s favour,
the Court could neither compel him to perform his part nor
restore the defendants to their original position in case he did
not.
585
Bk, III. Chap. 9.
Sect. 4.
Specific perform-
ance of agree-
ments to form
company.
Stocker v.
WedderLurn
Where two companies, having power to amalgamate, have Specific perform-
entered into a binding agreement so to do, specific performance
ance of agrec-
ment to amal-
of the agreement will be decreed, if its terms are such that a smate.
(r) 3K. & J.393. See, too, Max- 495, where, however, there was
well v. Port Tennant Co., 24 Beay. fraud.
586 ACTIONS BETWEEN COMPANIES AND THEIR MEMBERS.
Bk. oe 9. decree for specific performance can practically be enforced.
In the Anglo-Australian Assurance Company v. British Provi-
dent Insurance Society(s), an agreement by the defendant
company to take the assets and liabilities of the plaintiff com-
pany, and to indemnify it against its liabilities, was specifically
enforced.
Specific perform- The question whether a court will decree the specific per-
ance of agree- ‘
ments to take formance of an agreement to allot and accept shares in a com-
Slates pany, has given rise to some difference of opinion. An
ordinary contract for the sale of shares is one which the Court
will decree to be specifically performed (t); and it is immaterial
whether the vendor has or has not other shares which he does
not sell, or, in other words, whether he and the purchaser will
or will not become co-shareholders. But a contract for the
sale of shares by one individual to another, is distinguishable
in many respects from a contract for the allotment and accept-
ance of shares in a company, and Lord Romilly refused to
decree specific performance of a contract of this kind, on the
ground that the decree would be ineffectual, as the shares might
be transferred immediately after the contract was performed (wu).
On principle, however, this view cannot be supported, and more
recent decisions show that specific performance of such agree-
ments will be enforced (x). It is true that the applicant for
shares might sell and transfer his shares as soon as the decree
was made, but the decree would nevertheless not be inoperative.
If the applicant were the plaintiff, he could not be got rid of;
whilst if he were the defendant, he could only retire from the
company by transferring his shares to somebody else. ‘The
reason therefore which induces the Court to decline to decree
specific performance of an agreement for an ordinary partnership
at will, is scarcely applicable to such an agreement as that now
under consideration. Moreover, nothing is more common than
(s) 3 Giff. 521, and on appeal,4 case there were circumstances to
De G. F. & J. 341. show that specific performance was
(t) Ante, p. 499. impossible.
(u) Sheffield Gas, de., Co. v. Har- (x) Odessa Tramways Co. v. Men-
rison, 17 Beav. 294; Bluck v. Mal- del, 8 Ch. D. 235. See, also, the
lalue, 27 Beav. 398 ; Columbine v. cases below, where specific perform-
Chichester, 2 Ph. 27. In this last ance was refused on other grounds.
SPECIFIC PERFORMANCE.
for the promoters of a company to agree to sell property to the
company in consideration of a certain number of paid-up shares,
and it is certainly difficult to see why such a contract, if valid and
binding on both parties, should not be enforced ; indeed, there
is authority for specific performance in such a case (y). Again,
persons who have agreed to take shares in a company, are every
day made contributories for the purpose of winding up; and
they are so upon the ground that, although they are not actually
shareholders, they have entered into an agreement to take
shares which is binding upon them. Many of these cases are
only intelligible upon the assumption that a contract for the
allotment and acceptance of shares is one which a court ought
to enforce.
In order, however, that specific performance of an agreement
to take or deliver shares in a company may be decreed, it is
necessary that the agreement should be concluded and bind-
ing (z), and be untainted by fraud (a), or unfairness (b), and be
capable of being performed by the defendant (c), and not
involve any breach of trust (d), or performance by either party
of obligations the performance of which a court cannot practi-
cally enforce (e).
On this head, reference may be made to the instructive case
of the Odessa Tramways Co. v. Mendel (f), where specific
performance of an agreement to take shares was decreed,
although the defendant alleged that the agreement was part of
a scheme between himself and the directors to do that which
was really ultra vires or a fraud on the shareholders. The
scheme alleged was held to be separable, and the defendant
(y) See Fyfe v. Swabey, 16 Jur. 49,
M. R.
(c) Ferguson v. Wilson, 2 Ch. 77;
Columbine v. Chichester, 2 Ph. 27.
(2) Which it was not in Oriental
Steam Nav. Co. v. Briggs, 4 De G. F.
& J. 191.
(a) Which was not the case in
New Brunswick and Canada Rail.
Co. v. Muggeridge, 4 Drew.-686, and
1 Drew. & Sm. 363; or in Mazwell
y. Port Tennant Co., 24 Beav. 495.
(b) As to agreements between co-
directors, see Flanagan v. Great
Western Rail. Co., 7 Eq. 116.
As to the impossibility of obtaining
registration of transfers, ante, pp.
500, 507.
(d) Fry on Spec. Perf. p. 177, ed.
2, and see Flanagan v. Great Western
Rail. Co., 7 Eq. 116.
(e) Flanagan v. Great Western
Rail. Co., 7 Eq. 1163; Stocker v.
Wedderburn, 3 K. & J. 393, ante,
p. 585.
(f) 8 Ch. D. 235.
587
Bk. pa Peet 9.
t. 4.
Defences to
suits for specific
performance
of agreement
to take shares.
Odessa Tram-
ways Co. v.
Mendel.
588
Bk. III. Chap. 9.
Sect. 4.
Agreements
with promoters
and directors,
Incomplete
gratuitous
transfers.
Contracts for
indemnity.
ACTIONS BETWEEN COMPANIES AND THEIR MEMBERS.
was not allowed to avail himself of his own fraud as a reason
for not taking the shares he had agreed to take and pay for.
As regards impossibility of performance, it is to be observed
that an agreement by A. that B. shall do something, can only
be decreed to be specifically performed if the agreement,
although in form by A., is in truth an agreement by B. him-
self, or if B. is bound to do that which it has been agreed he
shall do. If B.is not bound, by the agreement or otherwise,
to do what A. has agreed he B. shall do, no decree for specific
performance can be made against either A. or B.(g). These
observations apply to agreements made by promoters and
others, to be performed by a company ; if the company is not
bound by the agreement, a decree cannot be made either against
the company or against the individuals who entered into the
agreement (h). If directors agree to allot shares, and the
ageement is in point of law the agreement of the company, the
directors individually can neither be compelled to perform it
nor to compensate the plaintiff for its non-performance (i).
Although a court will decree specific performance of an
agreement to sell shares, it will not interfere to compel the
completion of a gratuitous and intended, but unperfected
transaction. Thus, if a person voluntarily settles shares on
others, but does not transfer them, or actually constitute him-
self a trustee of them, the persons intended to be benefited by
the settlement do not acquire any equitable title to the shares
enforceable against the settlor or his representatives (k).
The right of sellers of shares to be indemnified against calls
and other liabilities has already been considered (Book III,
c. 4, § 6), as has also the right of directors and others to be
indemnified against liabilities incurred by them in conducting
the affairs of their companies (Book III., c. 2, § 8). Those
rights are enforced by action, which may or may not assume
the form of an action for specific performance. It is unne-
cessary, however, further to allude to this subject (J).
(g) Damages can be obtained, see 806, L. J.; and 4 De Gr F. & J. 264.
Foster v. Wheeler, 38 Ch. D. 130. See, also, Nanney v. Morgan, 37 Ch.
(h) Ellis v. Colman, 25 Beav. 662. JD. 346.
(2) Ferguson v. Wilson, 2 Ch. 77. (2) See, as to specific performance
(k) Milroy v. Lord, 8 Jur, N. 8. of contracts to indemnify, Ranelagh
RESCISSION FOR FRAUD. 589
As a general rule, only those persons who are, by themselves 3k. ae 9.
or their agents, parties to an agreement (or who represent ieee
them), can enforce it. Anagreement between A. and B. cannot oe
be enforced by C., although it may be for his benefit (m). But re +
if the agreement creates a trust for C., he can enforce the trust,
and so obtain the benefit of the agreement (n). The applica-
tion of these principles to cases in which attempts have been
made to enforce against companies contracts entered into before
their formation, has been already alluded to (Bk. II., c. 1, § 2,
and c. 2, § 3). Another illustration is afforded by Bell v. Bell ».
Mexborough (0), where an unsuccessful attempt was made by a aes
subscriber to an abortive railway company to compel two
members of the provisional committee to perform an agreement
to take shares and pay for them. The plaintiff was no party
to this agreement, and he could not enforce it. His remedy, if
any, was for misrepresentation, inducing him to take shares.
2. Rescission of contract and return of deposits.
The circumstances under which agreements to take shares
can be rescinded and deposits paid on them be recovered, have
been already examined (see Bk. I., c. 1, § 8, and c. 8).
With reference to actions to rescind contracts to take shares
on the ground of misrepresentation, it is necessary to distin-
guish companies which are being wound up from companies
which are not in that position.
After the winding-up of a company has commenced, it is too 1. Companies
late for a shareholder to repudiate his shares on the ground of Ee eet
fraud ; even although that fraud may in point of law be impu-
table to the company, and may have been discovered since the
winding-up commenced. This was decided in Oakes v. Tur-
v. Hayes, 1 Vernon, 190; Lloyd v. Ch. D. 125.
Dimmack, 7 Ch. D. 398 ; Hughes- (n) Asin Page v. Cox, 10 Ha. 163;
Hallett v. Indian Mammoth Gold Murray v. Flavell, 25 Ch. D. 89,
Mining Co., 22 Ch. D. 561; Hobbs See, too, Gregory v. Williams, 3
v. Wayet, 36 Ch. D. 256. Fry Spec. Mer. 582; Dale v. Hamilton, 2 Ph.
Perf., Part VI, Chap. 10. 266.
(m) Colyear v. Mulgrave, 2 Keen, (0) 5 Ra. Ca, 149, and 10 Jur.
81; Empress Engineering Co. 16 893, and 12 ib. 64, on appeal.
590
Bk, III. Chap. 9.
Sect. 4.
2. Companies
not being wound
up.
Fraud must te
clearly proved,
Conybeare v.
New Brunswick,
&c., Company.
ACTIONS BETWEEN COMPANIES AND THEIR MEMBERS.
quand (p), and is settled law, and is based upon the ground
that such fraud affords no answer to the claims of the creditors
of the company.
But where the company is not being wound up, the right of
a person who has been induced by the fraud or misrepre-
sentation of the company to take shares in it, to repudiate those
shares and to be relieved from them is indisputable ; provided,
1, the fraud or misrepresentation of which he complains is
proved, and is sufficiently material; and 2, he has not deprived
himself of his right of repudiation by his own laches, or by
conduct inconsistent with such right (q).
The difficulty in practice is to prove the facts necessary to
obtain relief. Ifthere has been no positive misrepresentation
and no concealment, making what is stated untrue (7), the cir-
cumstance that the plaintiff was in fact misled by what he was
told and by documents furnished to him will not entitle him to
be relieved from his contract. This is well illustrated by
Conybeare v. New Brunswick and Canada Railway Com-
pany (s). The material facts of this difficult case were shortly
as follows:—The company was formed for the purpose of
purchasing and carrying on a railway belonging to the St.
Andrew’s and Quebec Railway Company, and of purchasing all
the lands and property of that company, and all the rights of
the holders of a certain class of shares (called A. shares) in it.
The plaintiff applied for shares in the new company, and was
informed by its secretary that the A. shares were entitled to a
preferential dividend of 61. per cent., and that the holder of
every A. share was entitled to four acres of land. The secre-
tary also stated that the new company had acquired some
thousands of acres of land from the Colonial Government, and
that all claims against the company were regularly liquidated
(p) L. R. 2 H. L, 325; Kent v. proving the fraud relied upon, Rob-
Freehold Land Co. 3 Ch. 493, re-
versing 8. C. 4 Hy. 588.
(q) Ante, pp. 73 and 85.
(r) Ante, p. 70.
(s) 9 H. L. C. 711, reversing
8. C, 1 De GF. & J. 578, and
affirming the decision of V.-C.
Stuart in 6 Jur. N. S. 164. See,
also, as to the necessity of clearly
son vy. Earl of Devon, ante, p. 78 ;
Kennedy v. Panama, c&c., Mail Co.,
L. R. 2 Q. B. 580; Smith v. Chad-
wick, 9 App. Ca. 187, and 20 Ch. D.
70, which, however, was not an
action for rescission; and as to
giving particulars of fraud, McCreight
vy. Stevens, 1 Hurls. & Colt. 454,
RESCISSION FOR FRAUD.
every six weeks; and he gave the plaintiff reports from the
directors, in which these and other matters, tending to show
the prosperity of the company, were stated. The plaintiff was
shown, and he examined the statutes of the Colonial Legis-
lature, by which the lands were granted; and he took copies of
all those statutes, except one, away with him. That one sta-
tute which had been produced to the plaintiff, but which was
not amongst those he took away, showed that the title of the
company to the lands depended on the completion of the rail-
way by a certain time. The effect of the statute was correctly
stated in the company’s articles of association. The plaintiff
took shares in the company on the faith of those documents
and statements; but having afterwards discovered that the
company was greatly in debt, that its affairs were far from
prosperous, and its title to the lands was not absolute but
liable to forfeiture, insisted on rescinding his contract.
The Vice-Chancellor Stuart and the House of Lords were
of opinion that no positive misrepresentation had been made,
that no wilful concealment had been practised with reference to
the title to the land, and that the plaintiff had not been
induced to take the shares upon the faith of that title being
indefeasible, and his bill was dismissed by the Lords with
costs (t).
Upon the subject of the right to rescind a severable con-
tract in part where it cannot be rescinded in toto the case of
Maturin v. Tredinnick (u) is very important.
There the plaintiff had been induced by the fraud of the
defendant to purchase from him several shares in several
mining companies. Before the plaintiff had discovered the
fraud he sold some of the shares in one of the companies.
(t) The Lords Justices held that
the plaintiff was entitled to relief
upon the grounds that the title of
the company to the land had been
represented to him as indefeasible,
that he had been put off inquiry
by the statements so made to him,
and that even if the acquisition of
land was not the main inducement
of the plaintiff in taking shares, it
formed a material ingredient in the
purchase.
(u) 2 New Rep. 514, and 4 ib. 15,
In this case the V.-C. is reported to
have said that a sale of some shares
in one of the companies would have
afforded a defence to the suit. as to
the shares in the other companies,
But quere how this is consistent
with the relief actually given. See,
further, Curtis’s case, 6 Eq. 455,
591
Bk. III. Chap. 9.
Sect. 4.
Rescission of
severable con-
tracts.
Maturin »,
Tredinnick,
592
ACTIONS BETWEEN COMPANIES AND THEIR MEMBERS.
Bk. III. Chap. 9. He afterwards filed a bill to rescind the contract as to all the
Sect. 4.
Director selling
his own shares
as unallotted
shares.
Fraud by seller
of shares,
— remaining shares.
Pending the suit one of the companies in
which some of these shares were held, was ordered to be
wound up; and the shares in one of the other companies were
forfeited for non-payment of calls, but the defendant had full
notice of the intended forfeiture. The Vice-Chancellor Wood
held, (1,) that the sale of some of the shares before the bill
was filed did not disentitle the plaintiff to rescind the con-
tract as to the other shares; and, (2,) that neither the sub-
sequent order to wind up one of the companies,, nor the
subsequent forfeiture of shares, afforded any defence to the
suit.
Ifa director of a company is applied to for unallotted shares,
and he transfers to the applicant shares already allotted to
himself, the transferee can repudiate the transfer, and recover
back what he may have paid for the shares ().
When a person has been induced by the fraud of some par-
ticular shareholder to purchase shares of him, the right of
the person defrauded is to rescind the contract of sale, and
to throw the shares back on the person from whom he took
them, and to be indemnified by him against all losses sus-
tained in consequence of having taken the shares (y). This
is apparently the limit of the right of the person defrauded
in such a case (z). If the shares have been actually trans-
ferred to him, he is not entitled to have the transfer treated as
null and void as between himself and the company ; nor to
restrain the company from making calls upon him whilst
He may be entitled to compel his
vendor to accept a re-transfer of the shares, but even this right
must, it is conceived, depend upon whether the company is
he is a shareholder (a).
(%) Blake v. Mowatt, 21 Beav, 603.
(y) See Stainbank v. Fernley, 9
Sim. 556, and Seddon v. Connell, 10
Sim. 58 & 79, and Maturin v. Tredin-
nick, 2 New Rep. 514, and 4 ib. 15
ante, p. 591.
(z) An action for damages will lie,
see ante, p. 588, note (g), but this is
not so complete a remedy.
(a) Bloxam v. Metropolitan Cab
Co. 4 New Rep. 51, is not op-
posed to this. For although the
company was restrained from suing
the plaintiff for calls, the plaintiff
had not acquired any title to the
shares, they having been transferred
to him by a person who had himself
no title. The transfer was therefore
wholly void.
RESCISSION FOR FRAUD. 593
being wound up or not, and upon the power of the directors to Bk. hea 9.
refuse to register transfers. SS
Actions for rescission of contract and for the return of
deposits, can also be maintained under other circumstances
besides fraud and misrepresentation as has been already pointed
out (Bk. I., c. 1, §§ 2, 8).
Actions for the rescission of contracts with promoters have
also been considered (Bk. III., c. 2, § 1).
The persons to be made parties to actions for rescission of Parties to
contract must include the parties to the contract, but since the ca ke.
Judicature acts, other persons against whom the plaintiff may
be entitled to relief may be joined.
A person who has been induced by the fraud of the defen- Shares purchased
dant to purchase shares from him, is entitled to bring an action rea annie
for a return of the purchase-money, and for an indemnity, and
the only necessary party to such an action is the person who
sold the shares (b).
Where persons have been induced by fraud to subscribe to a Bubble com-
bubble company, each one may institute an action on his own pe
behalf against those who have fraudulently obtained his money,
for a return thereof; and in such a case, it is not necessary
that the other persons defrauded should be parties to the action,
or be represented therein (c). Anaction by one of such persons
on behalf of himself and others can, however, also be main-
tained in these cases (d). A member of a chartered company
cannot, so long as the charter is not revoked, maintain an
action to rescind his agreement to take shares on the ground
that the charter was obtained by fraud and that the company
was formed by fraud (e).
(b) See Stainbank v. Fernley, 9
Sim. 556; Mare v. Malachy, 1M. &
Cr. 559; Turner v. Hill, Turner vy.
Tyacke, Turner v. Borlase, 11 Sim.
1, 16, 17.
(c) Colt v. Woollaston, 2 P. W.
154; Green v. Barrett, 1 Sim. 45 ;
Blain v. Agar, 2 Sim. 289 ; Cridland
v, De Mauley, 1 De G. & 5, 459.
(d) Crosskey v. Bank of Wales, 4
Giff. 314; Cooper v. Webb, 15 Sim.
L.Cc.
454; Wilson v. Stanhope, 2 Coll.
629 ; Apperley v. Page, 1 Ph. 779;
Clements v. Bowes, 17 Sim. 167, and
1 Drew. 684, where demurrers to
such bills were overruled. Sve, too,
Sheppard v. Oxenford, 1 K. & J. 491,
and Butt v. Monteauz,1 K. & J.
98. Compare Hallows v. Fernie, 3
Ch. 467, and 3 Eq. 520.
(e) Machride vy. Lindsay, 9 Ha.
574.
*QQ
594
Bk. III. Chap. 9.
Sect. 4.
Opening
accounts.
Discovery.
ACTIONS BETWEEN COMPANIES AND, THEIR MEMBERS.
8. Of account and discovery.
The subject of account and discovery so far as it relates to
partnerships and unincorporated companies will be found fully
discussed in the author’s work on Partnership (/).
Actions for an account may be maintained in order to have
the assets of abortive companies properly applied (g); and in
order to compel promoters and directors to make good moneys
which on principles before explained are moneys of the com-
pany (hk). But after a company is ordered to be wound up
those questions which were formerly settled in a suit for a dis-
solution and account are now disposed of under the winding-up
order, as will be seen hereafter in Book IV.
As regards opening settled accounts it has been decided
that when accounts have been laid before shareholders at a
proper meeting, and have been accepted and adopted by them
as correct, those accounts cannot be afterwards impeached,
except on the ground of fraud or mistake, which must be
proved by those who allege it (i). Moreover, an account may
be a settled account although it may not have been audited as
required by the rules of the company(k). In connection with
this subject the power of a majority of shareholders to bind a
minority must be borne in mind ; for a minority cannot impeach
an account which relates to matters as to which the majority
can bind the minority (1), and which the majority have assented
to with adequate knowledge of the facts.
With respect to discovery the only points to which attention
need be called in a treatise like the present are these, viz. :
1. The Court may order interrogatories to be delivered to
any member or officer of any company, whether incorporated
or not (m).
(f) Partn., 492 et seq.
(g) Wallworth v. Holt, 4 M. & Cr.
619 ; Sheppard v. Oxenford, 1 K. &
J. 491, and ante, § 1 (8).
(h) Ante, Bk. IIL, ¢. 2.
(t) See Holgate v. Shutt, 27 Ch.
D.111, and 28 ib. 111; Holmes’ case,
2D.G.M. &G.113; Kent v. Jackson,
ib. 49; Lx parte Bignold, 22 Beav.
An ordinary member however will not be required
143; Stupart v. Arrowsmith, 3 Sm.
& G. 176. Compare Portsmouth
Banking Co., 2 Eq. 167, as to re-
ports without accounts.
(&) Holgate v. Shutt, 28 Ch. D.
111.
(1) Ante, Bk. IIL, ¢ 1, § 3. .
(m) RB. 8. C., Ord. XXXI, s. 5.
ACCOUNT AND DISCOVERY. 595
to answer interrogatories under this rule unless they relate to Bk eae 9.
matters which he knows more about than the officers of the ~ —--——
company (7).
2. Officers of the company cannot avoid discovery simply by
saying they do not know. They must inquire of those officers
or servants of the company who do know (0) ; and must either
consult the books and documents of the company which con-
tain the information sought or produce them for inspection by
the person seeking discovery (), unless such books, &c., are
privileged from production. Directors cannot defeat the
Court by forbidding their officer to examine the books (gq).
8. An order for an affidavit of documents may be made oe
under R. 8. C., Ord. XXXI., r. 12, against an officer of a
company (r).
Books and papers which are in the pussession of a com- Directors deny-
pany are, for purposes of discovery, in the possession or power 8 Possession.
of the directors, and they cannot avoid giving a list of the
documents of the company by saying that they, the directors,
have none (s).
When an order is made against a company for the inspec- Inspection of
tion of its books, and the directors will not allow them to be ics anal
produced, an order for their production will be made against
the directors personally (¢).
The right of the members of a company to inspect and take
copies of its accounts and other books and documents, apart
from legal proceedings, has been already alluded to, see
Bk. IIL, ¢. 8, § 4 (u).
(n) Berkeley v. Standard Discount 128, and 1 Ph. 222.
Co., 13 Ch. D. 97. (7) Cooke v. Oceanic Steam Co.,
(0) Taylor v. Rundell, 11 Sim. W. N. (1875) 220.
391, and Cr. & Ph. 104; Southwark (s) Clinch v. Financial Corporation,
Water Co. v. Quick,3Q. B.D.321,per 2 Eq. 271.
Cotton, L. J. ; Bolckow, Vaughan & (t) Lacharmev. Quartz Rock Mining
Co. v. Fisher, 10 ib. 161. Com- (Co, 1 Hurls. & Colt. 134. As to
pare Rasbotham v. Shropshire Union the form of an order for production
Canal Co., 24 Ch. D. 110. by a corporation, see Ranger v. Great
(p) See Drake v. Symes, Johns. Western Rail Co., 4 De G. & J. 74.
647, (uw) See also infra, under the heads
(q) Seddon v. Connell,1 ¥.&C.C. (4) Injunction, and (6) Mandamus.
QaQq2
596
Bk. III. Chap. 9.
Sect. 4.
Injunctions
against com-
panies and
their directors,
Injunctions
granted,
ACTIONS BETWEEN COMPANIES AND THEIR MEMBERS.
4. Of injunctions.
With respect to injunctions against companies and their
directors, little remains to be added to what was said when
considering the principles by which Courts are guided in
interfering in matters of internal management (x), and in
controlling majorities (y). In order, however, to facilitate
reference, it will be convenient to collect those cases in which
an injunction has been granted or refused, although they may
have been noticed in previous pages.
In relying upon the authorities here collected, it is to be
borne in mind that the circumstances under which the Court
will grant an injunction have been somewhat extended by the
Judicature act, 1873, § 25 (8), but not much (z). It must also
be recollected that before the trial of a cause, the Court will not
restrain the exercise of a clear legal right, unless the Court is
satisfied that it will be compelled to do so at the trial (a) ; nor
will it interfere, if it is not in the possession of all the material
facts, and convinced that an immediate injunction is impera-
tively required (0).
I.—An injunction has been granted to restrain—
1, The improper insertion or continuance of a person’s name on a com-
pany’s prospectus (c) or on the register of shareholders (d) ;
2. The registry of an improper transfer of shares (e) ;
3. The making of calls for illegal purposes (f ) ;
(«) Ante, p. 574 et seq.
(y) Ante, p. 314 et seq.
(2) See North London Rail. Co. v.
Great Northern Rail. Co., 11 Q. B. D.
30.
(a) Playfair v. Birmingham, c&c.,
Rail. Co., 1 Ra. Ca. 640.
(b) Fielden v. Lancashire,
Rail. Co., 2 De G. & S. 531.
(c) Routh v. Webster, 10 Beay. 561.
(d) Taylor v. Hughes, 2 Jo. & Lat.
24; Shortridge v. Bosanquet, 16
Beav. 84. Compare Bullock v. Chap-
man, 2 De G. & 8. 211. This is
é&e.,
now usually done by an application
to rectify the register, as to which
see ante, p. 57 et seg. and 121 et seq.
(e) Fyfe v. Swaby, 16 Jur. 49.
(f) See as to this, Preston v.
Grand Collier Dock Co., 11 Sim. 327,
and Hodgkinson v. National Live
Stock Insur. Co., 26 Beav. 473, and
4 De G. & J. 422, both of which,
however, were decided on demurrer.
See further on this subject, Orr v.
Glasgow Rail. Co., 3 MacQu. 799,
and the other cases cited infra, under
the next head, Nos. 2 to 6.
INJUNCTIONS. 597
4. The making of calls on a shareholder induced to become such by Bk. IT. Chap. 9.
fraud (9) ; Sect. 4.
5. The illegal issue of shares (h); ¢g., preference shares issued pursuant qyjunctions
to a special resolution (2) ; granted,
6. The illegal forfeiture of shares (k) ;
7. The unfair use by a company of a creditor’s name in an action against
a shareholder (1) ;
8. The illegal suspension of a shareholder from his rights (m) ; eg., the
improper rejection of his vote (n) ;
9. The illegal payment of dividends not actually declared (0), ¢.g., pay-
ment of dividends out of capital or borrowed money (7) ;
10. The payment of dividends in shares (q) ;
11. The making of loans to directors (r) ;
12. The departure by a company from the objects to attain which it was
formed ; viz., to restrain
A fire and life insurance company from engaging in marine insu-
rances (s) ;
A railway company from dealing extensively in the purchase and sale
of coals (t) ;
A railway company from guaranteeing the payment of dividends by a
steam packet company (u) ;
From taking an unauthorised number of shares in another railway
company (2) ;
(g) Smith v. Reese River Co.,2 Eq.
264, and L. R.4 H. L. 64; Bloxcam
y. Metrop. Cab Uo., 4 N. R. 51.
(h) Fraser v. Whalley, 2 Hem. &
M. 10. See infra, under second
head, No. 8.
(t) Hutton v. Scarboro’ Chiff Co.,
2 Dr. & Sm. 514 and 521.
(k) Johnson v. Lyttle’s Iron Agency,
5 Ch. D. 687; Watson v. Hales, 23
Beav. 294; Norman v. Mitchell, 5
De G. M. & G. 648; Naylor v. South
Devon Rail. Co.,1 De G. & Sm. 32.
(2) Taylor v. Hughes, 2 Jo. &
Lat. 24, and other cases cited ante,
p. 560.
(m) Adley v. Whitstable Co., 17
Ves. 315; 19 ib. 304; 1 Mer. 107.
(n) Pender v. Lushington, 6 Ch.
D. 70, and see Moffatt v. Farquhar,
7 Ch. D. 591.
(0) Fawcett v. Laurie, 1 Dr. &
Sm. 192; Carlisle v. South Eastern
Rail. Co.,1 Mac. & G. 689 ; Henry
v. Great Northern Rail. Co.,4 K.&
J.1,and 1 De G.& J. 606, and other
cases cited ante, p. 429 et seq.
(p) Dent v. London Tramways Co.,
16 Ch. D. 344; Davison v. Gillies,
ib. 347 n. ; Guinness v. Land Corpora-
tion of Ireland, 22 Ch. D. 349. Com-
pare under 2nd head, No. 14;
Bloxzam v. Metrop. Rail. Co., 3 Ch.
337 ; McDougall v. Jersey Hotel Co.,
2 Hem. & M. 528.
(q) Hoole v. Great Western Rail.
Co., 3 Ch. 262.
(r) Bluck v. Maldlalue, 27 Beav.
398.
(s) Natusch v. Irving, Part. 316 et
seg., and Gow on Partnership, App.
398, ed. 3.
(t) A.-G. v. Great Northern Rail,
Co., 1 Dr. & Sm. 154.
(u) Colman v. Eastern Counties
Rail. Co,, 10 Beav. 1.
(x) Salomons v. Laing, 12 Beav.
377.
598
Bk. III. Chap. 9.
Sect. 4.
Injunctions
granted,
ACTIONS BETWEEN COMPANIES AND THEIR MEMBERS.
From making a different railway from that which it was incorporated
to make (y) ;
Cr part only of such railway (2) ;
Ox one only out of several railways which it had been formed to
make (a) ;
13, The transfer, by one company, of its business to another company (b),
otherwise than under § 161 of the Companies Act, 1862 (c);
14, The amalgamation of two companies having similar objects (d) ;
15. A company and its directors from applying to Parliament at the
expense of the company, for power to do what it was not formed to
do (e) ;
16. A chartered company from surrendering its charter (f) ;
17. The publication of the contents of books and documents inspected
under an order (4) ;
18. The payment out of the funds of a company of money borrowed by
its promoters, to enable them to comply with the standing orders of the
House of Lords (A) ;
19. Proceeding to arbitration under an wiltra vires agreement (7) ;
20. Prosecuting a suit instituted by a stranger, but alleged to be for the
benefit of the company (f) ;
21. Prosecuting proceedings for a libel on the directors (1) ;
(y) Bagshaw v. Eastern Union
Rail. Co., 7 Ha. 114, and 2 Mac. &
G. 389 ; Simpson v. Denison, 10 Ha.
51.
(2) Cohen v. Wilkinson, 12 Beay.
125, and 1 Mac. & G. 481 ; Logan
v. Courtown, 13 Beav. 22.
(a) Hodgson v. Powis, 12 Beay.
392 and 529, and 1 De GM. &
G. 6.
(6) Chariton v. Newcastle and
Carlisle Rail. Co., 5 Jur. N.S. 1096 ;
Beman v. Rufford, 1 Sim. N.S.
550; IPinch v. Birkenhead, ce.,
Rail. Co., 5 De G. & S. 562. See,
too, Salomons v. Laing, 12 Beav.
377; Hattersley v. Shelburne, 10
W. R. 801, where it was intended
to obtain an act to legalise the
transfer.
(c) See, as to this, Southall v.
British Mutual Life Ass. Soc.,11 Eq.
65, and 6 Ch. 614.
(d) Kearns v. Leaf,1 Hem. & M.
681; Gilbert v. Cooper, 10 Jur. 580.
See, also, the last note but one.
(e) Lyde v, Last Bengal Rail. Co.
36 Beav. 10; Munt v. Shrewsbury
and Chester Rail. Co., 13 Beav. 1;
Simpson v. Denison, 10 Ha. 51;
Great Western Rail Co. v. Rushout,
5 De G. & Sm. 290; Vance v. East
Lane. Rail. Co., 3 K. & J. 50. See,
also, A.-G. v. Norwich, 16 Sim, 225,
and compare Bateman v. Mayor of
Ashton-under-Lyne, 3 H. & N, 323.
(f) Ward v. Society of Attornies,
1 Coll. 370, as to which, see ante,
p. 323,
(g) See Walliams v. Prince of
Vales Co., 23 Beav. 338.
(h) Spackman v. Lattimore, 3 Giff.
16.
(1) Maunsell v. Midland Great
Western Rail. Co., 1 Hem. & M. 130,
aud compare North London Rail. Co.
v. Great Northern Rail. Co., 11 Q. B.
D. 30. See also 31 Ch. D., p. 368.
(k) Kernaghan v. Williams, 6 Eq.
228.
(1) Pickering v. Stephenson, 14 Eq.
822, and compare Studdert v.
Grosvenor, 33 Ch. D, 528.
599
INJUNCTIONS.
Bk. III. Chap. 9.
22. The purchase by a company of its own shares (m) ;
Sect. 4.
23. Improper application of company’s funds, viz. :—
Subscription to the Imperial Institute (n) ;
Stamping proxy forms and paying return postage stamp on them (0) ;
Printing proxy forms in a way calculated to influence the votes of
shareholders (0) ;
Paying costs of a winding-up petition presented by the directors, Iut
opposed by a number of shareholders and a minority of directors (p) ;
Giving gratuities to servants and remunerating directors for past ser-
vices when company has ceased to carry on business (q) ;
24, Illegally preventing a person from acting as a director (s) ;
25. To prevent directors from laying resolutions favourable to themselves
on a question in which their interests are in conflict with those of the
shareholders before a méeting which has been convened by them by a mis-
leading circular, and one which contains statements calculated to obtain
proxies in their favour without giving the shareholders sutlicient informa-
tion to enable them to form a proper opinion as to the proper persons to
whom to entrust their votes (¢) ;
26, Illegally preventing a debenture or stock holder from inspecting the
company’s books (1).
Injunctions
granted,
Il.—An injunction has been refused to restrain— Injunctions
. refused,
1. A company from commencing business on a smaller scale than con-
templated by the prospectus, or before its nominal capital had been sub-
scribed (2) ;
2. The making of calls by a company commencing business with less
capital than that originally contemplated (y) ;
3. The making of necessary calls by directors who had been guilty of
improper conduct (2) ;
(m) Hope v. International Finan-
cial Soc, 4 Ch. D. 327. See also
Trevor v. Whitworth, 12 App. Ca.
409.
(n) Tomkinson v. South Hastern
Rail. Co., 35 Ch. D. 675,
(0) Studdert v. Grosvenor, 33 Ch.
D. 528.
(p) Smith v. Duke of Manchester,
24 Ch. D. 611.
(q) Hutton v.1Vest Cork Rail. Co.,
23 Ch. D. 654, and compare Hamp-
son v. Price’s Patent Candle Co., 24
W.R. 754; Taunton v. Royal Insur-
ance Co.,2 H. & M. 135. Henderson
v. Bank of Australasia, 40 Ch. D. 170.
(s) Pulbrook v. Richmond Consolt-
dated Mining Co., 9 Ch. D. 610;
Munster v. Cammell Co., 21 Ch. D.
183, And see Harben v. Phillips, 23
Ch. D. 14, and Bainbridge v. Smith,
W. N. 1889, p. 72.
(t) Jackson v. Munster Bank, 13
L. R. Ir. 118. Compare Isle of
Wight Rail. Co. v. Tahourdin, 25 Ch.
D. 320.
(wu) Holland v. Dickson, 37 Ch. D.
669; Mutter v. Eastern and Mid-
lands Rail. Co., 38 Ch. D. 92.
(x) McDougall v. Jersey Hotel Co.,
2 Hem. & M. 528,
(y) Norman v. Mitchell, 19 Beav.
278, and 5 De G. M. & G. 648.
(2) Logan v. Courtown, 13 Beav. 22.
600
Bk. III. Chap. 9.
Sect. 4.
Injunctions
refused,
ACTIONS BETWEEN
COMPANIES AND THEIR MEMBERS.
4, The making of calls on some only of the members of an amalgamated
society (a) ;
5. The making of calls on all the members of two amalgamated com-
panies, to pay the debts of one of such companies (6) ;
6. Actions for calls on improperly relinquished or forfeited shares (c) ;
7. The borrowing of money by a limited company (d) ;
8. The issuing of preference shares (e) ;
9. The application of the money raised by the issue of preference shares
to a purpose different from that for which it was raised (f) ;
10, The return of deposits to subscribers (4) ;
11. The payment of dividends actually declared (h) ;
12. The payment of dividends before payment of debts (2) ;
13. The payment of dividends before the completion of the company’s
works (k) ;
13a. The payment of dividends without making good lost capital (J) ;
14. The continuance in office of directors appointed in the place of others
removed for alleged misconduct (m) ;
15. The management of a company’s affairs by directors whose conduct
was complained of ; no sufficient attempt having been made to control them
before applying to the Court (x) ;
16. Directors improperly appointed, from acting (0) ;
17. Directors from putting their own names on negotiable instruments
relating to the affairs of the company (7) ;
(a) Batley v. Birkenhead, d&c., Rail.
Co., 12 Beav. 433. Compare Preston
v. Grand Collicr Dock Co.,11 Sim.
327, and see No. 15, enfra.
(b) Cooper v. Shropshire Union
Rail. Co., 6 Ra. Ca. 136; 8. C., 13
Jur. 443,
(c) Harris vy. North Devon Rail. Co.,
20 Beav. 384 ; Playfair v. Birming-
ham, &c., Raa. Co., 1 Ra, Ca. 640.
(d) Bryon v. Metropolitan Saloon
Omnibus Co., 4 Jur. N. 8. 680, and
on appeal, 3 De G. & J. 123. See
No. 15.
(e) Edwards v. Shrewsbury, cc.,
Ratl. Co..2 De G. & Sm. 537. See
under first head, No. 5.
(f) Yetts v. Norfolk Rati. Co., 3
De G. & Sm. 293. See No. 15,
anfra.
(g) Kent v. Jackson, 14 Beav. 367,
and 2 De G. M. & G. 49.
(h) Fancett v. Laurie, 1 Dr. & Sm.
192; the suit, however, was de-
fective for want of parties. See
ante, p. 574 note (s).
(2) Stevens v. South Devon Rail.
Co., 9 Ha. 326. See No. 15.
(k) Browne v. Monmouthshire, &e.,
Rail. Co., 13 Beay. 32. See No. 15.
(1) Lee v. Neufchatel, dc, Co,
W. N. (1889) 31. Compare supra,
under first head, No. 9.
(m) Inderwick v. Snell, 2 Mac. &
G. 216.
(nr) McDougall v. Gardiner, 1 Ch.
D. 13, and 10 Ch. 606; Carlen v.
Drury, 1 V. & B. 154; Waters v.
Taylor, 15 Ves. 10; Foss v. Harbottle,
2 Ha. 461; Mozley v. Alston, 1 Ph.
790. And see Harben v. Phillips,
23 Ch. D, 14. This principle was
acted on in the cases cited under
Nos. 4,5, 7, 8, 9, 12, 13.
(0) Hattersley v. Shelburne, 10 W.
R. 881. And see Imperial Hydro-
pathic Hotel Co. v. Hampson, 23 Ch.
D. 1.
(p) Blick v. Mallalue, 27 Beav.
398.
INJUNCTIONS. 601
Bk. III. Chap. 9.
18. The sailing of a ship on a voyage disapproved of (q) ; a
ect. 4,
19. The assignment of a company’s property to trustees, upon trust to
sell and pay the company’s debts (7) ; Injunctions
20. The total abandonment by a railway company of its works, it not refused.
having funds to complete them (s) ;
21. The application to Parliament, otherwise than at the expense of the
company, for power to enable the company to do what it was never in-
tended it should do (t), though the application is in the name and under
the seal of the company (1) ;
22, The sealing of an agreement to make such an application (2) ;
23. A company from applying to a foreign legislature for increased
powers (y) ;
24, An application to Parliament to legalise an agreement for the transfer
of the business of one company to another (2) ;
25. A railway company empowered to purchase a canal, from exercising
the powers of a canal company (a) ;
26. A railway company having steam ferry-boats from using them for
other than ferry purposes when not wanted for those purposes (8) ;
27. A railway company from carrying out a traflic agreement entered
into with another company (¢) ;
28, An hotel company from temporarily letting part of its hotel for other
than hotel purposes (d) ;
29, A fire insurance company from paying for losses usually paid for but
not covered by its policies (e) ;
30. The discharge of a servant whose engagement was provided for in the
company’s articles of association (f ) ;
31. The non-registry of a transfer of shares (9) ;
32, The voluntary winding up of a company with a view to a transfer of
its business under § 161 of the Companies act, 1862 (h) ;
(q) Miles v. Thomas, 9 Sim. 606.
(r) Lord v. Governor and Co. of
Copper Miners, 2 Ph. 740.
(s) Logan v. Courtown, 13 Beay. 22.
(t) Ware v. Grand June. Water-
works Co., 2 R. & M. 470.
(u) Ex parte Hartridge, 5 Ch.
671; Great Western Rail. Co. v.
Rushout, 5 De G. & Sm. 290.
Compare Maunsell v. Midland Great
West. Rail. Co., 1 Hem. & M. 130.
() Winch v. Birkenhead Raul. Co.,
5 De G. & Sm. 580.
(y) Bill v. Sierra Nevada Mining
Co.,1 De G. F. & J. 177.
(2) Hattersley v. Earl of Shelburne,
10 W. R. 881.
(a) Rogers v. Oxford, éc., Rail. Co.,
2De G. & J. 662.
(6) Forrest v. Manchester, cc.,
Rail. Co., 30 Beav. 40, affirmed on
appeal, 4 De G. F. & J. 126, but on
a different ground.
(c) Hare v. London and North-
Western Rail. Co., 2 J. & H. 80.
(d) Simpson v. Westminster Palace
Hotel Co.,2 De G. F.& J. 141, and
8H. L. C. 712.
(e) Taunton v. Royal Insur. Co., 2
Hem. & M. 135.
(f) Mair v. Himalaya Tea Co.,
1 Eq. 411.
(9) Taft v. Harrison, 10 Ha. 489.
(h) Southall v. British Mutual
Life Ass. Soc. 11 Eq. 65, and 6 Ch.
614,
602
Bk. III. Chap. 9.
Sect. 4.
Injunctions
refused.
Receivers,
ACTIONS BETWEEN COMPANIES AND THEIR MEMBERS.
33. The reduction of capital (7) ;
34. A general meeting called by shareholders under § 70 of the Com-
panies clauses act, 1845 (J) ;
35. Giving effect to resolutions of a meeting convened by an irregular
meeting of directors (i) ;
36. At the instance of a simple contract creditor to restrain the company
from dealing with its assets as it pleases (2).
37. From paying a pension to the family of a deceased officer of the
company (m).
5. Receivers.
The object of obtaining a receiver is to protect property
and to insure its due application in accordance with the rights
of the persons interested in it. A receiver is not the same as
a manager appointed to carry on a business ; but when neces-
sary the same person will be appointed receiver and manager.
The Judicature act, 1873, § 25 (8), authorises the appoint-
ment of a receiver whenever the Court is of opinion that it is
just or convenient to appoint one (n); but this general enact-
ment is construed somewhat restrictively and with reference
to the principles on which the Court of Chancery acted before
the Judicature acts came into operation (0).
Receivers of a company’s property are seldom appointed
unless there are conflicting claims to be adjusted, eg., dis-
putes between secured and unsecured creditors, between de-
benture holders and judgment creditors, between various classes
of shareholders, &¢. When a company is being wound up the
liquidator is a receiver of its assets for the benefit of its
shareholders and creditors ; but this does not prevent persons
having claims upon the assets in priority to the liquidator
(*) Bannatyne v. Direct Spanish
Telegraph Co., 34 Ch. D. 287. An
injunction would have been granted
in this case had the proposed reduc-
tion of capital interfered with the
tights of preference shareholders.
Compare Taylor v, Pilsen Light Co.,
27 Ch. D. 268.
(j) Isle of Wight Rail. Co. v.
Tahourdin, 25 Ch. D. 320.
(k) Browne v. La Trinidad, 37 Ch.
D. 1.
(2) Mills v. Northern Railway of
Buenos Ayres Co., 5 Ch. 621,
(m) Henderson v. Bank of Austral-
asia, 40 Ch. D. 170. Compare cases
cited ante, p. 599, note (q).
(n) Just or convenient is con-
strued just and convenient. See
North London Rail. Co. v. Great
Northern Rail. Co., 11 Q. B. D. 30.
(0) Ibid. For the effect of the
appointment of a receiver on the
nature of a debenture holder’s secu-
rity, see ante, p. 197. For receivers
appointed at the instance of judgment
creditors of a railway company, see
ante, pp. 278, 279.
RECEIVERS. MANDAMUS.
from obtaining a receiver of them so as to protect their pre-
ferential rights. The liquidator, however, is usually appointed
the receiver in such cases (/p).
A veceiver is an officer of the Court, and any interference
with him or with the property under his protection is punish-
able as a contempt of Court. A person who desires to obtain
such property must apply to the Court for an order for its
delivery to him or for permission to take it (q).
A manager of a business is never appointed by the Court
unless temporarily and with a view to a sale or winding up of
the business (7).
6. Of mandamus.
The Common law procedure act, 1854(s), authorises the
issuing of a mandamus in an action to enforce the fulfilment
of any duty in the fulfilment of which the person applying for
the writ is personally interested ; and the Judicature act, 1878,
§ 25 (8), has still further enlarged the power of the Court to
grant a mandamus (ft). An action for mandamus can be
brought in the Chancery Division of the High Court (wu). It
has been held that the writ ought not to issue for the purpose
of compelling the specific performance of an ordinary agree-
ment (xz), but it has been allowed to go to compel a chartered
company to register as a shareholder, a person entitled to be
so registered by the provisions of the company’s deed of
settlement (y): and in a recent action for mandamus a clerk
has been ordered to deliver up papers (2).
It has been recently decided that where an action for
mandamus will lie, the prerogative writ will not be allowed to
issue (a). It will, therefore, be seldom necessary or proper to
apply for a prerogative writ to settle disputes between com-
panies and their members.
(p) See Perry v. Oriental Hotel (u) Paris Skating Rink Co.,6 Ch.
Co., 5 Ch. 420. D. 731.
(q) Russell v. East Anglian Rail. («) Benson v. Paull, 6 E. & B. 273.
Co., 3 Mc. & G. 104. (y) Norris v. Irish Land Co., 8 E.
(r) Partn. 545 et seqg.; Roberts v. & B. 512.
Eberhardt, Kay, 148. (2) Newington Local Board vy.
(s) 17 & 18 Vict. c. 125, § 68, Eldridge, 12 Ch. D. 349,
repealed by 46 & 47 Vict. c. 49. (a) R. v. Lambourn Valley Rail.
(t) See R. 8. C. Ord. LIT. Co., 22 Q. B. D. 463.
603
Bk. III. Chap. 9.
Sect. 4.
Actions for
mandamus.
Prerogative
writ.
604
Bk. III. Chap. 9.
Sect. 4.
ACTIONS BETWEEN COMPANIES AND THEIR MEMBERS.
A prerogative writ has, however, been allowed to compel—
The production of a company’s register to a creditor (b) ;
The entry on the register of the probate of the will of a
deceased shareholder (c) ;
The registry or transfer of shares (cl) ;
The production to a shareholder, for a proper purpose and
at a proper time, of such books as he has a right to inspect (e) ;
The admission of persons to offices to which they have been
elected (7);
The election of directors and officers required to be ap-
pointed (4) ;
The appointment of a public officer by a company empowered
to sue and be sued by one (h);
The payment by such a company of a debt for which judg-
ment has been obtained against its officer (i) ;
The making of a call for the payment of a creditor having
no other remedy (7).
On the other hand, a mandamus has been refused to compel
a company to pay a shareholder dividends wrongfully withheld
from him (k); to compel a company to register a transfer of its
stock (J); to compel it to produce its books to the share-
(b) RB. v. Derbyshire, d&e., Rail.
Co., 3 E. & B. 784.
(c) R. v. Worcester Canal Co., 1
M. & R. 529.
(d) See R. v. Londonderry, &c.,
Rail. Co, 13 Q. B. 998; R. v.
Wing, 17 ib. 645; 2. v. General
Cemetery o., 6 E. & B. 415, and see
ante, p. 61, and infra, note 1.
(e) BR. v. Saddlers’ Co., 10 W. R.
87. See, also, R. v. Wilts, dc.,
Canal Co., 3 A. & E. 477, and &. v.
Mariquita, &c., Mining Co, 1 E. &
E. 289. In the two last cases, how-
ever, the writ was refused. See as
to inspection and taking copies,
Mutter v. Easternand Midlands Rail.
Co., 38 Ch. D. 92, and the cases
there cited. Holland v. Dickson, 37
ib. 669, shows that an injunction will
be granted, and that a mandamus is
not necessary.
(f) Anon.,2 Str. 696; Da Costa
v. Russia Co., ib. 783; Com. Dig.
Mand. B. 2.
(g) See per Tindal, C.J., in Thames
Haven Dock Co. v. Rose, 4 Man. &
Gr. 559.
(kh) See per Parke, B., in Steward
v. Greaves, 10 M. & W. 721.
(i) Corpe v. Glyn, 3 B. & Ad.
801; R. v. St. Katherine Dock Co.,4
B. & Ad. 360.
(j) See R. v. Victoria Park Co., 1
Q. B. 288, where the mandamus was
refused, the creditor being in a posi-
tion to isaue execution against the
company, though not to get satis-
faction by so doing.
(k) R.v. Whitstable Co., 7 East, 353.
(l) R. v. Bank of England, 2
Doug. 524; R. v. London Ass. Co.,
5 B. & A, 899. R. v. Lambourn
Valley Rail. Co., 22 Q. B. D. 463 ;
R. v. Shropshire, &c. Canal Co., L. R.
8 Q. B. 420, ante, note d.
605
MANDAMUS.
holders for the purpose of enabling them to consider whether Bk. 1. Chap. 9
a dividend shall or shall not be declared and paid (m) ; to ———————
compel it to make calls for the payment of a debt (7).
The Queen’s Bench Division alone has power to grant the Discretion of
prerogative writ (0); and the Cow has a wide discretion in ee
granting or refusing it. No prerogative writ of mandamus is
allowed to go except to enforce some public duty(p); nor
unless the applicant has been denied the right he seeks to
enforce (q) ; nor unless he applies for the writ within a reason-
able time after such denial (r) ; nor unless the Court is satisfied
that its interference is sought for a proper purpose (s); nor
unless the applicant having a legal right has no other adequate
legal remedy (t).
It has been held that, although a corporation may be com-
pelled by mandamus to affix its seal to a document (u), it Mandamus to
cannot be thus compelled to remove its seal from a docu- os
ment (xr). But it is submitted that the difference between
doing and undoing, is, in such a case as that alluded to, a
difference in words rather than in substance. Registers of
shareholders may be rectified both by inserting names wrong-
fully omitted and by striking out names wrongfully inserted,
as has been seen already (y).
7. Other Miscellaneous Actions.
Promoters of companies cannot maintain actions against
each other for remuneration for their services unless there is
(m) R. v. Bank of England, 2 B. &
A. 620.
(n) R. v. Victoria Park Co., 1 Q.
B. 288.
(0) See Glossop v. Keston Local
Board, 12 Ch. D. p. 115, and R,
v. Lambourn Valley Rail. Co., 22
Q. B. D. p. 469. As to the mode of
application for such awrit, see Crown
Office Rules, 1886, rr. 60 et seq.
(p) See the cases in notes & to n,
and Shortt on Mandamus.
(q) RB. v. Wilts, ke. Canal Co., 3
A. & E. 477.
(r) BR. vy. Cockermouth Inclosure
Commissioners, 1 B. & Ad. 378,
(s) BR. v. Wilts, dc., Canal Co., 3 A.
& E. 477; BR. v. Liverpool, Manches-
ter, kc., Rarl. Co., 21 L. J. Q. B. 284.
(t) See R. v. Chester, 1 T. R. 396;
R. vy. Stafford, 3 ib. 646; R. v.
Victoria Park Co., 1 Q. B. 288; R.
v. Registrar of Joint Stock Companies,
21 Q. B. D.131. RB. v. Lambourn
Valley Rail. Co., 22 Q. B. D. 463.
(u) RB. v. Windham, Cowp. 377;
R. v. Cambridge, 3 Burr. 1647; R,
vy. York, 4 T. R. 699,
(2) Ex parte Nash, 15 Q. B. 92.
(y) Ante, p. 61.
606
Bk. III. Chap. 9. some express contract for their payment (2).
Sect. 4.
Company re-
quired to pay
expenses of
formation.
Contribution
between them.
Actions for
deposits agreed
to be paid.
ACTIONS BETWEEN COMPANIES AND THEIR MEMBERS.
But a person
who is retained by the promoters to assist them, is entitled to
be paid by them for his services, although he may afterwards
himself subscribe for shares in the company (a).
Where a company is required by act of Parliament to apply
its first funds in defraying the expenses of its formation, an
action lies against it by those who have expended their money,
time, and trouble, in forming the company, and who have no
other paymasters. But a clause in a company’s deed of settle-
ment or articles of association to the like effect, does not
necessarily have the same operation (0).
Although the promoters of companies are not impliedly
liable to each other for services rendered, nor for money ex-
pended by any of them in the prosecution of their common
design ; still, if they render themselves jointly liable to a third
party, and, by virtue of that liability, some only of them are
compelled to pay what ought, as between themselves and the
others, to be paid by all, an action of contribution lies, at the
suit of those who have been so compelled to pay, against the
others; and even before the Judicature acts it was no objec-
tion to such an action that there were unsettled accounts
which required to be taken, before what was due from each to
the other could be properly ascertained (c).
If a person has agreed to take shares in a proposed com-
pany, and to pay a deposit in respect of such shares, an action
will lie for the recovery of the deposit he has agreed to pay (d).
The persons to bring such action are those with whom the
(z) See Holmes v. Higgins, 1 B. &
C. 74; Wilson v. Curzon, 15 M. &
Batard v. Hawes, 2 E. & B. 287;
Edger v. Knapp,'7 Jur, 583, C. P.
W. 532; Milburn v. Codd, 7 B. & C.
419.
(a) Lucas v. Beach, 1 Man. & Gr.
417. See, too, Caldicott v. Griffiths, 8
Ex. 898; and Barnett v. Lambert,
15 M. & W. 489. Compare Gorgier
v. Morris,7 C. B. N. 8. 588, where
the company was never formed, and
the agreement was to pay the
plaintiff in shares.
(b) See ante, pp. 146, et seq.
(c) Boulter v. Peplow, 9 0. B. 493 ;
It may be observed here, that where
the promoters of a company retain
a solicitor, they are all liable to be
sued by him for payment of his bill,
and that a delivery by him of his
bill, duly signed, to any one of those
liable, is a sufficient delivery to all,
Mant v. Smith, 4H. & N. 324; and
that any one of them is entitled to
tax his bill, Re Stephen, 2 Ph. 562.
(d) See, for instance, Duke v. Dive,
1 Ex, 36; Duke v. Forbes, ib, 356,
MISCELLANEOUS ACTIONS. 607
agreement sued upon was made. If, therefore, the agreement Bk. nae 9.
was with the members of the provisional committee, those
members, and not the managing section of them, are the
proper parties to sue (c).
Actions by subscribers for the return of their deposits have
been already considered (f).
With respect to ordinary actions between companies and Actions between
their shareholders, it is unnecessary to add to what has been ree apes eed
said in previous chapters. The following subjects have, in
fact, been already considered, viz.:—
1. Actions between the promoters of companies and by and
against persons who have subscribed for shares (g).
2. Applications by shareholders to have a company’s register
rectified (h).
8. Actions by shareholders whose shares have been illegally
forfeited (i).
4, Actions between the buyers and sellers of shares, and
between them and the brokers employed by them (A).
5. Actions for contribution and indemnity (2).
6. Actions for calls (m).
7. Actions for dividends (n).
(e) Woolmer v. Toby, 10 Q. B. (t) Ante, p. 534.
691. (k) Ante, p. 487 et seg.
(f) Ante, p. 29 et seg., and § 1 (3) (1) Ante, p. 378 et seq.
of the present chapter. (m) Ante, p. 427.
(g) Ante, p. 29. (n) Ante, p. 437.
(h) Ante, p. 61, 121.
BOOK IV.
OF THE DISSOLUTION AND WINDING-UP OF COMPANIES
FQ Q*
608
Bk. IV.
Introductory.
Effect of transfer
of shares when
company is not
incorporated.
THE WINDING-UP OF COMPANIES.
BOOK IV.
OF THE DISSOLUTION AND WINDING-UP OF COMPANIES,
Introductory.
Tue reasons for which an ordinary partnership is held to be
dissolved by the death, lunacy, or bankruptcy of any one of its
members, or by a transfer of his interest, or by his determina-
tion to retire, have no application to companies the shares in
which are transferable, and the management of the concerns of
which is entrusted by all the shareholders to directors. Nor
is there any authority to the effect that companies with trans-
ferable shares are or can be dissolved by, or on the happening
of, those events which are sufficient to dissolve, or induce
the Court to dissolve, an ordinary partnership. The death,
bankruptcy, or retirement of a shareholder dissolves his con-
nection with the company (a), but does not dissolve the bond
by which the remaining shareholders are held to each
other (6).
Some of the reasons which are sufficient to induce the Court
to dissolve a partnership are, however, quite as applicable to
companies as to ordinary firms, e.g., the impossibility of going
on as contemplated (c).
But notwithstanding the often repeated assertion, that at
common law unincorporated companies with transferable shares
are mere partnerships, it ought not to be inferred that what is
sufficient to dissolve a partnership will also dissolve such a
company. The personal relations between the members of a
company are very different from those which exist between
(a) See Jefferys v. Smith, 3 Russ. marginal note is scarcely warranted
158 ; Greenshield’s case, 5 De G. & by the judgment.
8. 599. (c) Electric Telegraph Co. of Ire-
(6) See Thomas v. Wells, 16 C land, 22 Beav. 471.
B. N. 8S. 508, where, however, the
THE WINDING-UP OF COMPANIES.
partners, and the power to dissolve depends on those relations.
But to apply the doctrines relating to the dissolution of part-
nerships to companies would be to destroy and not to uphold
the agreement into which the members have entered. At the
same time it was formerly very generally assumed that an
unincorporated company with transferable shares might, like
an ordinary partnership, be dissolved at the will of any mem-
ber, if no time was fixed for its duration; and, although the
point does not appear to have been ever actually decided,
Lord Eldon, in Van Sandaw vy. Moore (d), and the late Vice-
Chancellor Shadwell in Wheeler v. Vun Wart (e), evidently
thought that, under ordinary circumstances, unincorporated
joint-stock companies might be dissolved by any shareholder
on his giving notice to all the other shareholders. Until,
however, this view shall have been judicially acted upon, it
may be considered as open to question, and, for the reasons
given above, the writer ventures to submit that, on principle,
it cannot be sustained.
Whatever doubt there may be as to unincorporated com-
panies, there can be none with respect to companies incorpo-
rated by the Crown or by special act of Parliament or by
registration. A corporation cannot, by common law, be dis-
solved by the will of all its members; for a charter cannot be
got rid of without the assent of the Crown, nor can an act of
Parliament be got rid of without the assent of the Legislature.
What cannot be done by all the members of a body corporate
is, a fortiori, incapable of being done by less than all, and it
consequently follows that, as regards the power of an indi-
vidual member to insist on a dissolution, there is no analogy
at common law between partnerships and incorporated com-
panies. Moreover, as a corporation is distinct from the
persons composing it, events which affect those persons indi-
vidually, e.g., lunacy, death, or bankruptcy, do not affect the
existence of the body corporate; and here again, therefore,
there is no analogy at common law between partnerships and
companies which are incorporated (f).
(d) 1 Russ. 463. (f) As to the dissolution of cor-
(e) 2 Jur. 292, and 9 Sim. 193. porations, see Grant on Corpora-
See, too, Miles v. Thomas, 9 Sim. 606, tions, p. 295, et seq.
L.C. FRR
609
Bk. IV.
Introductory.
Effect where the
company is
incorporated.
610
Bk. IV.
Introductory.
Causes of the
dissolution of
companies,
Unincorporated
companies.
THE WINDING-UP OF COMPANIES.
Adverting, therefore, solely to the general principles appli-
cable to partnerships and corporations, it is submitted :—
1, That a company which is not incorporated, but the
shares in which are transferable, is not dissolved by the death
or bankruptcy of a shareholder (except as to him), and ought
not to be dissolved by the Court, simply because a shareholder
desires a dissolution. ;
2. That such a company may be dissolved, not only in the
manner and under the circumstances provided for in its deed
of settlement (7), but also (by the Court) whenever it can be
shown that the business of the company cannot be carried on
as intended.
3. That a company which is incorporated by charter may
be dissolved by a formal surrender or cancellation of its
charter, and in such other way, if any, as is pointed out
therein.
4. That a company which is incorporated by act of Parlia-
ment can be dissolved only as therein provided, or by another
act of Parliament.
But as will be seen presently, several acts of Parliament,
commonly called the winding-up acts, have been passed ex-
pressly for the purpose of providing for the dissolution and
winding up of companies, whether unincorporated or incorpo-
rated, and whether incorporated by charter, special act of
Parliament, or registration. These acts do not prevent the
Court from dissolving unincorporated companies in the exer-
cise of its general jurisdiction (h) ; but they greatly extend its
power, especially as regards incorporated companies; and,
practically, the law relating to the dissolution and winding up
of companies may be said to depend almost entirely on the
acts in question.
With respect to bankruptcy, it would seem that unincorpo-
rated companies may be adjudicated bankrupt, as they are not
excepted by the Bankruptcy act, 1888 (i). But it is not pro-
bable that recourse will ever be had to proceedings in bank-
ruptcy against them, as they can be much more readily and
(g) See Lyon v. Haynes, 5 Man. 2713 Clements v. Bowes, 17 ib. 167.
& Gr. 405, (i) 46 & 47 Vict. c. 52, § 128,
(h) Jones v. Charlemont, 16 Sim.
THE WINDING-UP ACTS. 611
completely wound up under the Companies act, 1862, as will ; hee es
ntroduc’ .
be seen hereafter. Incorporated companies cannot now be -
adjudicated bankrupt (xk).
Winding-up acts,
The first of the winding-up acts was 7 & 8 Vict. c. 111, 7 & 8 Viet.
which had three principal objects; viz. 1. to give courts of ae
bankruptcy jurisdiction over incorporated, trading or com-
mercial companies, and to enable those courts to apply the
assets of such companies in payment of their debts; 2. to
enable the affairs of a company adjudicated bankrupt to be
wound up in Chancery, so that if its assets were not sufficient
to pay its creditors in full, the members might be compelled
to raise what might be necessary for that purpose by a contri-
bution amongst themselves, and so that the rights of the
members, inter se, might also be finally adjusted; and 3. to
facilitate the discovery of any abuses which might have
attended the formation or management of the company, and
the causes of its failure, and to authorise prosecutions against
its delinquent directors or officers. This statute, after being
considerably modified by 11 & 12 Vict. c. 45, and 20 & 21
Vict. c. 78, was finally repealed by the Companies act, 1862
(see §§ 205—207).
The next statute passed for winding up companies was 11 & beers
12 Vict. c. 45, which was shortly afterwards amended by 12 & and 1849.
13 Vict. c. 108. These acts were also repealed by the Com-
panies act, 1862; but they have formed the basis of the law of
winding up, and a few observations upon them will not be out
of place.
The main object of the Winding-up acts of 1848 and 1849, Object of the
was to enable companies to be dissolved, and wound up more en pe
expeditiously than was possible by means of an ordinary suit *"¢ 1849
in Chancery, and more completely than was possible under
the act of 7 & 8 Vict. c. 111. This latter act was passed prin-
cipally for the purpose of enabling creditors to obtain payment
of their debts from insolvent companies. The acts of 1848
(k) Ibid. As to remitting winding- the Companies act, 1862, § 8,
up proceedings to bankruptcy, see infra, c. 1, § 1.
RR2
612
Bk. IV.
Introductory.
Defects of these
acts.
1. Creditor’s
right to sue
at law,
21 & 22 Vict.
vw. 78,
2. Creditors
not entitled
to obtain a
winding-up
order.
THE WINDING-UP OF COMPANIES.
and 1849, on the other hand, were passed principally for the
purpose of supplying shareholders with a means by which they
might relieve themselves from their liabilities to creditors, by
having the assets of the company properly got in, and applied
in payment of its debts, and by having any deficiency made
good by contribution amongst themselves. Under these acts
an order for the winding up of a company was obtained by
petition to the Court of Chancery, and was carried into effect
by an officer called the official manager, acting under the
direction of one of the equity judges (or of a master in Chan-
cery) whose duty it was to determine what debts were payable
by the company, who were the persons to pay them, what
calls, if any, were to be made on such persons for their pay-
ment, how the conflicting claims of such persons inter se were
to be adjusted, how the costs of the winding up were to be
provided for, and lastly, how the surplus assets, if any, were
to be divided.
These acts had several great defects. The first defect was
that the creditors were not restrained from pursuing their legal
remedies against the shareholders individually ; so that, not-
withstanding a winding-up order, any shareholder might be,
and frequently was, singled out and utterly ruined by a credi-
tor of the company, although if the creditor could have been
compelled to wait, he would have received his principal and
interest in full from funds provided by a proper contribution
from all the members of the company. ‘This defect was in a
great measure removed by 21 & 22 Vict. c. 78, under which
the creditors could be required to choose a representative (the
creditors’ representative), and be compelled to wait for payment
out of the funds raised by contribution.
A second defect was that the creditors of a company were
not entitled to obtain an order for winding it up. They con-
sequently either sued the shareholders individually, or pro-
ceeded against the company in bankruptcy, under 7 & 8 Vict.
ec. 111. By suing the shareholders individually, the latter
were liable to be, and frequently were, utterly ruined ; when,
under a better machinery, such a result might have been
avoided without detriment to the creditors. By proceeding
against the company in bankruptcy under 7 & 8 Vict. ¢. 111,
THE WINDING-UP ACTS. 612
when the same company was being or might be wound up in a
Chancery under the acts of 1848 and 1849, the Courts of ———————
Chancery and of Bankruptcy were brought into collision, and
questions of great difficulty as to the rights of their respective
officers arose (I).
A third defect was that no provision was made by which a 3. No voluntary
company’s affairs could be wound up by the shareholders eee
themselves without the intervention of the Court of Chancery.
A fourth defect, which was rendered worse rather than 4. Expense.
better by the institution of a creditors’ representative, was the
excessive cost of winding-up proceedings.
All these defects, except the last, were removed by the Acts of 1856
Joint-stock companies acts 1856, 1857, and 1858. Under ei ie
these acts companies might be wound up at the instance ofc. 47.
creditors as well as of contributories ; the creditors could not 2° 2! Viet
sue the shareholders individually, and could only obtain pay- 91 & 22 Viet,
ment from them by means of a contribution; and the share- *
holders themselves were enabled, when not pressed by their
creditors, to wind up their affairs without having recourse to
the expensive machinery of the Court of Chancery. Under
these acts companies with limited liability could only be
ordered to be wound up in bankruptcy; other companies in
Chancery (m).
The last-mentioned acts were themselves repealed by the Companies act,
Companies act, 1862 (25 & 26 Vict. c. 89), which with the
acts amending it will be found in the appendix.
The Companies act, 1862, provides three modes of winding a o
up, viz.—
1, compulsorily, or as it is termed by the Court ;
2, voluntarily, without the intervention of any court; and,
3, voluntarily, but subject to the supervision of the Court
(see §§ 79, 129, and 147).
Companies registered under the act of 1862, or under the
() See on this subject, Aztchison conflict may possibly still arise in
v. Lee, 3 Drew. 637, and on appeal, the case of unincorporated com-
3 Jur. N. S. 95; London and panies. See ante, p. 610.
Eastern Banking Corporation, 2 De (m) See, as to this, Plumstead
G. & J. 484; Mitre Assurance Asso- Water Co, 2 De G. F. & J. 20;
ciation, 29 Beav. 1; Hx parte Col- Welsh Potosi Mining Co., 27 L, J,
lingridge, 14 Jur. 1129, Such a Ch, 311, oS
614
bk. IV.
Introductory.
Malicious
petitions.
--—---.- these three ways.
THE WINDING-UP OF COMPANIES,
former acts of 1856—1858 (rn), may be wound up in any of
Unregistered companies can only be wound
up in the first of them(v) (see § 199, cl. 2). Each of the
above methods requires to be studied separately ; but there is
so much common to them all, that in order to avoid repetition
it will be convenient to consider the subject of winding up
generally under the first head, and then to draw attention
shortly to the differences between winding up by the Court
and the other modes of winding up. The dissolution of rail-
way companies will be alluded to in a separate chapter.
A company is necessarily seriously injured in its credit by
having proceedings taken against it in order to have it wound
up; and an action lies against a person who maliciously and
without reasonable cause presents a petition for the winding
up of a company, and in order to sustain such an action it is
not necessary for the company to prove special pecuniary
damage (p).
(n) Torquay Bath Co., 32 Beav.
581.
(0) To this there are the follow-
ing exceptions. By 25 & 26 Vict. c.
87, § 17 (now repealed by 39 & 40
Vict. c. 45, § 4), industrial and pro-
vident societies registered under that
act can be wound up voluntarily
under the Companies act, 1862, and
hy 39 & 40 Vict. ¢. 45, § 17, societies
registered under that act may be
wound up in the same manner.
This is also the case with building
societies governed by the Building
Societies act, 1874 (37 & 38 Vict. c.
42, § 32), and see Re Sunderland,
c&c., Building Society, 21 Q. B. D.
349,
(p) Quarts Hill Gold Mining Co,
y. Hyre, 11 Q, B,D. 674.
WINDING UP BY THE COURT.
CHAPTER I.
WINDING UP BY THE COURT.
SECTION I.—THE COURT HAVING JURISDICTION OVER THE
WINDING UP OF A COMPANY.
Tue Court, i.c., the Court having jurisdiction to wind up a Bk. IV. Chap. 1.
company under the Companies act, 1862, is—
1. In the case of companies which are or have been engaged
in (a) working mines within and subject to the jurisdiction of
the Stannaries, or have been formed for that object, and are
not actually engaged in, nor bound by contract to engage in,
apy works beyond the limits of the Stannaries (b)—the court
of the Vice-Warden of the Stannaries (§ 81) (c).
2. In the case of registered building societies, and industrial
and provident societies—the county court within the jurisdic-
tion of which their office is situate (d).
3. In the case of other companies registered in England, or,
if unregistered, having a principal place of business there—
the Chancery Division of the High Court of Justice (§§ 81
and 199, cl. 1, and Judicature act, 1873, § 34).
4. In the case of companies registered in Ireland, or, if un-
registered, having a principal place of business there—the
Chancery Division of the High Court of Justice in Ireland (ib.):
5. In the case of companies registered in Scotland, or, if
(a) Silver Valley Mines, 18 Ch. D.
472, overruling East Botallack Min-
ing Co., 34 Beav. 82, which decided
that it was not necessary that the
mine should have been worked. As
to the concurrent jurisdiction of the
Court of Chancery where the com-
pany is not formed solely for the
above purpose, see Penhale and
Lomaz, &e., Co., 2 Ch, 398.
(b) 50 & 51 Vict. c. 43, § 28,
But this section only applies to
metalliferous imines and tin stream-
ing works, see § 3.
(c) See 32 & 33 Vict. c. 19,
amended ly 50 & 51 Vict. c. 43.
(1) See as to building societies,
37 & 38 Vict. c. 42, §§ 4 & 32;
and as to industrial and provident
societies, 39 & 40 Vict. c, 45, § 17,
Sect. 1.
616
WINDING UP BY THE COURT.
Bk. IV. Chap. 1. unregistered, having a principal place of business there—the
Sect. 2.
Mines in
Stannaries.
Proceedings in
bankruptcy.
County court,
Duchy of
Lancaster.
Court of Session in either division thereof (ib.) (e).
If, however, the Vice-Warden of the Stannaries certifies
that, in his opinion, a company engaged in working a mine
within his jurisdiction would be more advantageously wound
up in the Chancery Division of the High Court, then the
Court is such Chancery Division (§ 81).
The Chancery Divisions of the High Courts in England,
and Ireland respectively, after making an order for winding
up a company, may direct all subsequent proceedings for
winding up the same to be had in the Court of Bankruptcy
having jurisdiction in the place in which the registered
office of the company is situate (§ 81) (f), or, if the company
is unregistered, in the place where it has a principal place of
business (§ 199, cl. 1). The Court of Bankruptcy in England
is now the High Court or a county court (f).
Further, by the Companies act, 1867, the Chancery Division
of the High Court in England has power, where it makes an
order for winding up a company, to remit the subsequent pro-
ceedings to a county court (§ 41 et seq.).
When these powers are exercised, the Court in Bankruptcy,
or the County Court, as the case may be, becomes the court
for the purposes of winding up the company, and has all the
powers of the Chancery Division of the High Court (g).
The Court of Chancery of the Palatine Duchy of Lancaster
has power to wind up companies whose registered offices are
within the limits of its jurisdiction (h). But the jurisdiction
of the Palatine Court is not exclusive (2).
SECTION II.—COMPANIES WHICH CAN BE WOUND UP BY THE COURT,
OR SUBJECT TO ITS SUPERVISION.
Under the older winding-up acts, questions of considerable
difficulty arose with respect to what companies were within
(e) See, also, Companies act, 17 & 18 ib. c. 82, the Court of
1886, 49 Vict. c. 23, § 5. Chancery of Lancaster acts, 1850
(f) See 46 & 47 Vict. c. 52, § 92. and 1854, and the general orders of
(g) See the statutes, and Ex parte that Court.
Hirtzel, 2 De G. F. & J. 653. (i) Lancashire Co-operative Build-
(h) See 13 & 14 Vict. c. 43, anl ing Go., W. N. 1867, p. 246,
COMPANIES TO WHICH THE ACT APPLIES. 617
their provisions. Thus the 7 & 8 Vict. c. 111, applied only to Bk. De ae 1,
' commercial and trading companies (k); and whether the Wind-
ing-up act of 1848 applied to companies not falling within the
same description, was by no means free from doubt (1). The
Winding-up act of 1849 greatly extended the operation of the
act of 1848. But, notwithstanding the very general word
association, used in these acts, and although they extended to
associations which were neither partnerships nor quasi-part-
nerships, (¢.g., to friendly societies, and to associations having
for their object the formation of companies,) still associations
not having gain for their object, and in which there were
no shares and no liability to contribute, were not within
them (im).
Under the Companies act, 1862, the following companies Companies
. cf . capable of
may be wound up by the Court, or subject to its supervi- being wound
‘ ‘ up under the
$10n -— act of 1862,
1. All companies registered under the act, whether formed
under it or not (§§ 79, 180, and 196).
2. All companies registered under the acts of 1856—1858
(see §§ 176 and 177).
3. All other partnerships, associations, or companies, except
railway companies incorporated by act of Parliament, consist-
ing of more than seven members (see § 199) (n).
What companies can be registered under the act and what
not, has been pointed out in a former page (0) ; and it is only
necessary to observe that any company or association of per-
sons which is capable of being registered at all may be
registered for the purpose only of being wound up (7p).
(k) See, as to these words, Ha
parte Burge, 1 De G.& 8. 588; Ex
parte Spackman, ib. 599.
(2) See Ex parte Burge, 1 De G. &
London, &c., Ins. Assoc., 6 Ch.
421.
(0) Ante, p. 114, et seq.
(p) 25 & 26 Vict. c. 89, § 180.
8. 588; Lz parte Spackman, ib. 599,
and 1 Mac. & G. 170.
(m) See St. James’s Club, 2 De G.
M. & G. 383.
(n) An unregistered insurance
company formed between the pass-
ing of the Joint Stock Companies
acts, 1856 and 1857, may be wound
np under this section, Bank of
See Northumberland and Durham
Banking Co., 2 De G. & J. 357, and
Liverpool Borough Bank v. Mellor,
3 H. & N. 551, as to registering
banking companies governed by 7
Geo. 4, c. 46, in order that they may
be wound up. Both of these cases
turned on the acts of 1856-8,
618
Bk. IV. Chap. 1.
Sect. 2.
Companies
specially in-
corporated.
Railway com-
panies.
Cost-book
mining com-
“panies,
WINDING UP BY THE COURT.
The circumstance that a company is incorporated by a
special act of Parliament, or by a grant from the Crown,
does not prevent such company from being wound up under
the Companies act, 1862 (q); even although the property of
such company cannot be sold without a special act of Par-
liament (7°); and even though part of its property may be a
railway (s).
Whether a railway company incorporated by special act of
Parliament can be registered under the Companies act, 1862,
and then wound up under it, is doubtful (¢) ; unregistered rail-
way companies (uw) are expressly excepted from the act (see §
199), and can only be wound up under it where they are duly
authorised to abandon their railways under the provisions of
other acts of Parliament (7).
Companies formed on the cost-book principle for working
mines within the jurisdiction of the Stannaries may be wound
up under the Companies act, 1862.
The law as to winding up
these companies was formerly in a very unsatisfactory state (y).
(q) See § 199, and Wey v. Arun
Junction Canal Co., 4 Ky. 197;
Irree Fishermen of Favershum, 36 Ch.
D. 329, where, however, the Court
refused tomake a wiuding-up order ;
South London Fishmarket Co., 39
Ch. D. 324. See, also, under the
older acts, Isle of Wight Ferry Co.,
2 Hem. & M. 597; Llectric Tele-
graph of Ireland, 22 Beav. 471, and
Ex parte Croysdill, 7 De G. M. & G.
199.
(r) Bradford Navigation Co., 10
Eq. 331. This case was appealed,
but the appellant was not entitled
to be heard, see 5 Ch. 600.
(8) Exmouth Docks Co.. 17 Eq.
181.
(t) See ante, p. 116, note (p), and
$$ 79, 180 and 196 ; and Ennis and
West Clare Rail. Co., 3 L. R., Iv. 94,
where such a railway company was
wound up. The Court, after a long
examination of the various statutes
and authorities, expressed a strong
opinion that such a company might
be registered and wound up, but
decided the case on the ground that
§ 192 of the Companies act, 1862,
precluded them from going behind
the registrar’s certificate.
(w) As to what is a railway com-
pany, see Lemouth Docks Co., 17 Ey.
181. A dock company having a
railway was there held not to he a
railway company, and was ordered
to be wound up; but compare Great
Northern Rail. Co. v. Tahourdin,
13 Q. B. D. 320; East and West
India Dock Co., 38 Ch. D, 576. In
Brentford and Isleworth Tramways
Co., 26 Ch. D. 527, a tramway com-
pany was held not to be a railway
company, and was ordered to Le
wound up, though incorporated by
a special act and not registered.
(x) See 32 & 33 Vict. c. 114, § 4;
30 & 31 Vict. c. 127, § 31, et seq. ;
13. & 14 Vict. c. 83. See infra,
c. 4
(y) They were, if formed for
working mines in Cornwall, wholly
COMPANIES TO WHICH TH! ACT APPLIES, 619
Friendly societies, building societies, and industrial and Bk. re Chap, 1,
provident societies, whether registered under 25 & 26 Vict. ie
c. 87, 87 & 88 Vict. c. 42, or 89 & 40 Vict. c. 45, or not, may Soeicties, &e.
be wound up under the provisions of the Companies act,
1862 (z), but as regards registered building and industrial
societies the court having jurisdiction is the County
Court (a).
Serip companies have been ordered to be wound up under Serip companies.
the older acts (b) ; and it is apprehended that they can also
be wound up under the act of 1862; for although shares trans-
ferable to. bearer, and not paid up in full, cannot be validly
created under the Companies act, 1862; yet it by no means
follows that a company with such shares cannot be wound
up (¢). 7
A company which has been dissolved, but the members Dissolved
of which are still under liabilities incurred before the dissolu-
tion may be wound up; and orders have been frequently made
for winding up companies which have amalgamated with, or
excepted from the act of 1848, as
it originally stood, see 11 & 12 Vict.
c. 45,§ 2; Ee parte Wyld, 1 Mac.
& G. 1. Provision was, however,
afterwards made for winding them
up in Chancery in certain specified
cases, 12 & 13 Vict. ce: 108, § 1; 20
& 21 Vict. c. 78, § 12. See, on this
subject, Bosworthon Mining Co., 26
L. J. Ch. 612; Wheal Anne Mining
Co., 10 W. R. 330; and as to the
right of creditors to oppose, see
Tretorl and Messer Mining Co., 2 J.
& H. 421. Cost-book companies
formed for working mines in De-
vonshire might be- wound up in
Chancery even under the act of
1848, see South Lady-Bertha- Mining
Co, 2 J. & He-876: Companies
formed on the -cost-book ‘principle,
but not for working mines within
the jurisdiction of the Stannaries,
were clearly within the Winding-up
acts of 1848 and 1849. See, now,
32 & 33 Vict. c. 19, and 50 & 51
Vict. c. 43, § 28, and ante, p. 615.
(z) See Queen’s Benefit Building
Soc. 6 Ch. 815; Professional, &c.,
Building Soc., ib. 856 ; Sunderland
Building Soc, 21 Q. B. D. 349.
See, also, infra, app. No. 2, on
industrial and provident societies.
Such societies were within the pro-
visions of the Winding-up acts,
1848-9. See St. George's Building
Society, 4 Drew. 154; and as to
loan societies, Hx parte Smith, 1
Sim. N. S. 165. See Crown and
Cushion Loan Fund Soc., 14 Jur.
874. See 39 & 40 Vict. o 45,
§ 17.
(a) See ante, p. 615.
(b) Barclay’s case, 26 Beav. 177 ;
Ex ‘parte -Grisewood, 4 De-G. & J.
544, *
(c) See General Co. for Promotion
of Land Credit, 5 Ch. 363, and
Princess Reuss v. Boss, L. RB. 5
H. L. 176. See, infra, as to illegal
companies.
620
Bk. IV. Chay. 1,
Sect. 2.
Companies not
within the act.
Clubs.
WINDING UP BY THE COURT.
have transferred their assets and liabilities to, other com-
panies (d).
The 199th section of the Companies act, 1862, is expressed
in terms sufficiently large to include all unregistered societies
and corporations of whatever kind consisting of more than
seven members at the date of the petition (e), with the single
exception of railway companies incorporated by act of Parlia-
ment. But the general scope of the Winding-up acts, shows
that there are corporations aggregate to which the winding-
up provisions of the Companies act, 1862, have no application :
€.g., municipal corporations, ecclesiastical corporations aggre-
gate, and societies such as the Royal Society, incorporated by
royal charter for the advancement of science (f). The pro-
perty of all such corporations is liable to their debts, but their
members are not personally lable to pay or to contribute to
the payment of such debts; nor have the members any rights
inter se analogous to those which are capable of being adjusted
in the course of winding up.
Moreover there are some unregistered and unincorporated
societies incapable of being wound up under the act. An
ordinary club is an example (g). Such an association has no
resemblance to a partnership, quasi-partnership, or inchoate
partnership ; it is not formed for the division of profit amongst
its members; they have no shares, in the sense in which that
word is used with reference to partnerships, companies, or
associations more or less like them; and even if the members
wound up, the directors en-
deavoured to get rid of their
shares and reduce the number of
shareholders below seven. Mem-
bers in this section does not neces-
sarily mean shareholders. Bolton
Benefit Loan Soc., 12 Ch. D. 679.
(d) For examples, see Family
Endowment Society, 5 Ch. 118;
and under the older acts, Hx
parte Phillips, 3 De G. & S. 3;
Ex parte Dee, ih, 112; Warwick
and Worcestershire Rail. Co., 18
Jur. 651. A dissolved company,
which had been adjudicated bank-
rupt under 7 & 8 Vict. c 111,
might, nevertheless, be wound up
under the acts of 1848-9, see ante,
p. 613, note (m).
(e) South London Fishmarket Co.,
39 Ch. D. 324, where, in order to
prevent the company from being
(f) See Free Fishermen of Faver-
sham, 36 Ch. D. 329.
(g) St. James's Club, 2 De G. M. &
G. 383, reversing 8. C., 20 L. J. Ch.
630. But it seems that a club might
be registered under the act, see § 6
and 30 & 31 Vict. c. 131, § 23,
COMPANIES TO WHICH THE ACT APPLIES.
621
of a club, are, as amongst themselves, bound otherwise Bk. IV. Chap. 1.
than in honour to contribute to its debts, there is nothing
to prevent any member who has paid his subscription from
sending in his resignation, and so getting rid of any such obli-
gation (h).
Sect. 2.
For similar reasons, it is doubtful whether an unregistered Mutual Marine
Insurance
mutual marine insurance society can be wound up where the gocicties,
members are not in arrear in their contributions.
Such a
society is not a partnership (¢); and although mutual marine
societies have been ordered to be wound up (k), the power of
the court to wind them up does not appear to have been con-
tested until too late, and is very doubtful (J).
The difficulty,
however, of winding up such a society otherwise than under
the act is very great.
The court has power to order a mutual life insurance
society to be wound up, if the society be proved to be in-
solvent, though instead of so doing it may, if it thinks fit,
reduce the amounts of the contracts of the society (m).
Illegal companies (n) cannot be wound up by the court at
the instance of themselves or of their own members (0); nor
at the instance of creditors who had notice of the illegality
when their debts were contracted (p).
It is doubtful whether
other creditors can obtain an order to wind up such a com-
(h) See the last note, and as to
suits for winding up clubs, Richard-
son v. Hastings, 7 Beay. 301, 323,
and 11 ib. 17.
(2) Partn. 51,
(k) E. g., Arthur Average Associa-
tion. See 3 Ch. D, 522, and 10 Ch.
542; Shields Marine Ins. Assoc., 5
Eq. 368; London Marine Ins. Assoc.,
8 Eq. 176; Ex parte Phillips, 3 De
G. & 8. 3. See the special report
made by the Master in this case, 14
Jur, 929,
(1) See Ex parte Hargrove, 10 Ch.
542; Arthur Average Association, 3
Ch. D. 522; London Marine Ins.
Assoc., 8 Eq. 176.
(m) 33 & 34 Vict. c. 61, §§ 21 &
22. Great Britain Mutual Life As-
surance Soc, 16 Ch. D. 246; 19
Ch. D, 39; 20 Ch. D. 351. And
see Rudow v. Great Britain Mutual
Life Ass. Soc., 17 Ch. D. 600.
(n) As to which, see ante, p. 180,
et seq.
(0) See Barelay’s case, 26 Beav.
177 ; Fenn’s case,4 De G.M. & G.
295 ; Hx parte Longworth’s Executors,
Johns. 465, affirmed on appeal, 1 De
G. F. & J.17. See, also, the next
two notes.
(p) See, as to this, Padstow Totul
Loss Association, 20 Ch. D, 137;
South Wales Atluntic Steam Ship Co.,
2 Ch. D. 763, and the cases in the
next note.
Mutual Life
Insurance
Societies.
Illegal com-
panies.
622
Bk. IV. Chap. 1.
Sect. 2.
Forcign
companies,
WINDING UP BY THE COURT.
pany (q); but there is nothing to prevent an illegal company
being wound up by its own members without any judicial
assistance. Moreover, it must be remembered that if a com-
pany is illegal simply because it is not registered, the im-
pediment to being wound up can be removed by registration.
A company formed and registered under the act ean be
wound up under it, although the subscribers of the company’s
memorandum of association may be all foreigners resident
abroad, and although the objects of the company may be
mainly the transaction of business abroad (r). It has
been doubted whether the Court can wind up a company
registered under the act, but shown by its own memorandum
and articles to be formed exclusively of foreigners resident
abroad for the transaction of business abroad (s); but admit-
ting that such a company ought never to have been registered,
its continued existence as a registered company cannot appa-
rently be stopped except through the machinery of a winding-
up order.
A company formed and registered abroad, and having a
branch office (f) in this country, but not registered here, may
be ordered to be wound up under the Companies act, 1862 (a);
and the fact that steps are being taken to wind up the com-
(q) Compare the last case, and Bz
parte Hargrove, 10 Ch. 542, with the
Compare the cases in the next
note.
observations of Jessel, M. R., and
Brett, L. J., in Padstow Total Loss
Association, 26 Ch. D. 137, at pp.
143 & 146, It should be borne in
mind that winding up is the modern
substitute for an action and sci. fa.,
as to which, see ante, p. 277.
(r) General Co. for promotion of
Land Credit, 5 Ch. 363, and Princess
of Reuss v. Bos, L. R. 5 H. L. 176.
(s) Princess of Reuss v. Bos, L. R.
5H. L. 176.
(t) In Lloyd Générale Italiano, 29
Ch. D. 219, Pearson, J., refused to
make an order for winding up a
foreign company which had no
branch office in England, but
carried on business here by agents,
(u) Commercial Bank of India, 6
Eq. 517 ; Commercial Bank of South
Australia, 33 Ch. D, 174; Matheson
Brothers, Limited, 27 Ch. D. 225.
And see the following cases under
the older acts: a Spanish Rail. Co.,
Le parte Turner and Janes, 3 De G.
& 8.127, and 2 Mac. & G. 169; a
German Mining Co., Ha parte Chip-
pendale, 4 De G. M. & G. 19; a
Mexican Mining Co., Barelay’s case,
26 Beav. 177; a Calcutta Bank, see
Ex parte Watson, 3 De G. & 5S.
253, where, however, no order was
made; an Indian Rail. Co, Ev
parte Wolesey, 3 De G.& 8. 101; a
Belgian Rail. Co., Hx parte Moss, 14
Jur. 754.
COMPANIES TO WHICH THE ACT APPLIES.
623
pany in the country in which the company is registered does Bk. 1V Chap. 1.
K
not affect the jurisdiction of the English court (x). But the
writer apprehends that it is not competent for any cot in
this country to dissolve a corporate body created by a compe-
tent foreign authority; and a foreign corporation, therefore,
cannot be wholly wound up and dissolved in this country.
At the same time, if a foreign incorporated company were
registered, the corporate body created by registration might
be wound up and dissolved without any undue exercise of
jurisdiction.
Ifa company which ought not. to be ordered to be wound
up is nevertheless ordered so to be, the validity of the winding
up order can only be questioned (at least by the company or a
contributory) by an appeal (y).
Other cases on the older acts.
The following note of other decisions on the acts of 1848-9 is appended
for reference :—
The general words partnerships, associations, and companies, were held to
include projected, but abortive, railway and other companies, provisionally
registered under 7 & 8 Vict. c. 110(z), But as the subscribers to abortive
companies are neither partners nor quasi-partners, it followed, that, unless
they had done something whereby they had, as between themselves, in-
curred a liability to contribute to the demands to which they were respec-
tively subject, an order to wind up a company, never in fact formed,
was useless; for, except in the case supposed, there could be no con-
tributories (a).
Irish companies were specially provided for by 4 & 5 Vict. c. 45, § 17 (0).
Scotch companies were not subject to the acts at all (c).
(c) Matheson Brothers, Limited, 27
Ch. D, 225; Commercial Bunk of
South Australia, 33 Ch. D. 174.
(y) See the Arthur Average Assc-
ciation, 3 Ch. D. 522; 10 Ch. 542;
and Padstow Total Loss Association,
20 Ch. D. 137.
(2) Bright v. Hutton, 3 H. L. C.
341; La parte James, 1 — N.S.
140; Ex parte Woolmer, 5 De G. &
ci obec ream
17
5;
Ex parte Barber, 1 Mac. & G. 176;
Ex parte Turner and James, 3 De G.
& 5. 127, and 2 Mac. & G, 169;
Ez parte Besley, 2 Mac. & G.176;
Ea parte Holinsworth, 3 De G. &
8.7.
(a) See Ex parte James, 1 Sim, N.
8.140; Ee parte Besley, 3 Mac. &
G, 287,
(0) Ex parte Fisher, 3 De G. & 8.
116.
(c) 11 & 12 Vict. c, 45, § 127, and
12 & 13 Vict. c. 108, § 40,
Sect. 2.
624
Bk. IV. Chap. 1.
Sect. 3.
Creditors,
WINDING UP BY THE COURT.
SECTION IJI.—PERSONS AT WHOSE INSTANCE A WINDING-UP ORDER
WILL BE MADE.
Under the Companies act, 1862, an order for winding up a
company, may be applied for by all or any of the following
persons, v1Z. :—
1. The company ;
2. One or more of its creditors ;
3. One or more of its contributories ;
and every order made on any petition operates in favour of all
the creditors and all the contributories of the company in the
same manner as if it had been made upon the joint petition of
a creditor and a contributory (§ 82).
A company required to be registered is not entitled, whilst
unregistered, to apply for an order to be wound up (¢).
Any creditor (f) of a company is entitled to petition for a
winding-up order, and it is not necessary that his debt should
be of any particular amount; but, as will be pointed out in the
next section, the evidence which he must adduce in support of
his petition depends on the amount of his debt.
A landowner who has a claim against a company for purchasc-
money and compensation in respect of lands taken by the
company under the Lands Clauses act, is not a creditor of the
company until a conveyance has been executed(g). An
assignee of a debt is entitled to petition (h), and an executor of
a creditor may present a petition before he has obtained probate
of the will (i). A secured creditor may also present a petition
without giving up his security or losing any of his rights (h).
(e) See § 210, and Waterloo As-
surance Co., 31 Beav. 586. In this
last case the company was ordered
to be wound up on a contributories’
petition ; but the company was not
illegal : it had been formed and re-
gistered under 7 & 8 Vict. c. 110.
( f) See, as to disputed debts, infra,
p. 637, a person claiming unliqui-
dated damages, and whose claim
is disputed, cannot obtain an order,
Pen-y-van Colliery Co., 6 Ch. D.
477; Gold Hill Mines, 23 Ch. D.
210.
(g) Milford Docks Co., 23 Ch. D.
292.
(hk) London and Birmingham
Alkali Co.,1 De G. F. & J. 257.
(t) Masonic and General Life As-
surance Co., 32 Ch. D. 373.
(k) Moor v. Anglo Italian Bank,
10 Ch. D. 681.
625
PERSONS ENTITLED TO PETITION.
Whether a debenture holder is entitled to. present a petition Bk. oe es 1.
depends upon whether he is entitled to enforce payment of the
debenture by an ordinary action for a debt due and payable by he
the company. Thusin Exmouth Docks Co. (), and Herne Bay
Waterworks Co. (m), it was held that the rights of the debenture
holders were by the statute, under which the debentures were
issued, limited to obtaining the appointment of a receiver, and
that they were therefore not entitled to a winding-up order;
so in. Uruguay Central & Hygueritas Rail. Co. of Monte
Video (n), the holder of an instrument described as a mortgage
bond was held not entitled to a winding-up order, on the ground
that he was not a creditor of the company, the covenant to pay
being entered into by the company with the trustees of a
covering deed, and not with the bond-holders themselves. On
the other hand, in Olathe Silver Alining Co. (0), where there
was an agreement by the company with the bearer of the
debentures to pay him, a debenture holder was held entitled to
present a winding-up petition.
Under the Life assurance companies act, 1870, the holder Policy holders
of a policy granted by a life assurance company may petition
for the winding-up of the company if it is insolvent, although
the policy is not yet due (7p).
The meaning of the word contributory will be examined Contributories.
hereafter ; for the present purpose the term includes an alleged estes
contributory (see § 74). But the legislature has not said what
sort of allegation is to be regarded as sufficient; an admis-
sion by the petitioner that he is a contributory in respect of at
least one share, seems, however, to be necessary (q). It may,
however, be remarked, that several of the older cases in which
orders were made under the Winding-up act of 1848 on the
petition of the subscribers to abortive companies could not be
supported at the present day, upon the ground that the peti-
(2 17 Eq. 181. see § 2. See, also, 35 & 36 Vict. c.
(m) 10 Ch. D. 42.
(n) 11 Ch. D. 372, explained in
Olathe Silver Mining Co., 27 Ch. D.
278.
(0) 27 Ch. D. 278.
(p) 33 & 34 Vict. c. 61,§ 21. A
policy-holder includes an annuitant,
L.C.
41, § 4, as to subsidiary companies.
(q) Ship's case, 2 De G. J. & Sm,
544; Times Fire Ass. Co., 30 Beav.
596 ; Continental Bank, W. N. (1867)
114 and 178; 15 W. R. 548, and 16
L. T. 112.
gg
626
Dx. IV. Chap. 1.
Sect. 3.
30 & 31 Vict,
c. 131, § 40,
Member in
arrear of calls,
Holders of fully
paid-up shares
in limited
companies,
WINDING UP BY THE COURT.
tioners in them were contributories ; if those cases are to be
supported at all, it must be upon the ground that the peti-
tioners claimed to be contributories, without being so in
reality (r).
In order, however, to put a stop to the improper practice of
buying shares in a company, simply with a view to obtain a
right to petition to wind up the company, it is in substance
enacted that no contributory shall be capable of presenting a
windivg-up petition, unless the members are reduced below
seven ; or unless the petitioner is an original allottee of the
shares in respect of which he petitions; or unless he or his
wife, or a trustee for him or her has held and been registered
in respect of such shares for six months during the eighteen
months next before the presentation of the petition; or unless
he has acquired them by the death of their former owner (s).
Registration for six months is enough (t), and if the company
has been ordered to register the petitioner, he need not be
registered in fact (w).
A winding-up order may be made at the instance of a con-
tributory who has not paid his calls (z).
A holder of fully paid-up shares in a limited company is not
entitled to petition for a winding-up order; unless he can show
that the company is in such a state of solvency that there is a
reasonable probability of sufficient assets being left for the
shareholders to give hima tangible interest in having the
company wound up (y).
(r) That the petitioners in Ha
parte Capper, 3 De G. & 8.1; Ee
parte Cooke, ib. 148, and £z parte
Holinsworth, ib. 7, would not at the
present time be held to be contri-
butories, see Bright v. Hutton, 3 H.
L. C. 341.
(s) 30 & 31 Vict. ec. 131, § 40.
The petition need not state the fact,
City and County Bank, 10 Ch. 470.
(t) Wale Wynaad Indian Gold
Mining Co., 21 Ch. D. 849.
(u) Patent Steam Engine Co., 8
Ch. D, 464.
(x) Diamond Fuel Co., 18 Ch. D.
400, explaining Steam Stoker Co., 19
Eq. 416; European Life Ass. Soc.,
10 Eq. 403. Compare the older
cases referred to infra, note (f).
(y) Diamond Fuel Co., 13 Ch. D.
400 ; Rica Gold Washing Co., 11 Ch.
D. 36, modifying the earlier cases ;
Tumacacort Mining Co., 17 Eq. 534;
National Savings Bank, 1 Ch. 547 ;
London Armoury Co., 10 Jur, N. 8.
962 ; Lancashire Brick and Tile Co.,
34 Beav. 330; Patent Artificial Stone
Co., ib. 185 ; Cheshire Patent Salt Co.,
LN. RB. 533.
PERSONS ENTITLED TO PETITION. 627
A person who has been declared by the Court to be entitled Bk. ee 1.
to be a shareholder, but who, owing to the negligence of the —-—-— —
company, has not been registered, is entitled to petition for
a winding-up (z).
A scrip-holder is not entitled to petition for a winding-up Serip-holders.
order unless he is, or admits himself to be, a contributory (a) ;
or unless there are surplus assets which he has a right to have
distributed.
Under the Building societies act, 1874, any member autho- Building
vised by three-fourths of the members present at a general pean
meeting of the society specially called for the purpose, and any
judgment creditor for not less than fifty pounds, may petition
to have the society wound up, either voluntarily under the su-
pervision of the Court, or by the Court; but no other person
may do so (0).
The following persons were held entitled to petition under the Winding-
up acts of 1848 and 1849 ; and the decisions in their cases may be usefully
referred to on questions arising under the act of 1862 :—
A scrip-holder of a provisionally registered railway company, who
had not signed either the subscribers’. agreement or the parliamentary
contract (c) ;
An original subscriber for shares in an abortive company, and a member
of its provisional committee (d) ;
A member of the managing committee of an abortive company, who had
been compelled to pay the charges of the company’s solicitor, but who had
not taken any shares (2);
A member of a company who had not paid his calls (f) ;
A manager of a cost-book company, who was a creditor of the company
for advances made by himself (g) ;
A contributory resident abroad (h) ;
(2) Patent Steam Engine Co.,8Ch. &S. 7.
D. 464. (e) Ex parte Cooke, 3 De G. & 5.
(a) Littlehampton Steam Ship Co, 148.
34 Beav. 256, and2 De G. J. & &. (f) Ex parte Lawton, 1 K. & J.
521, Turner, L. J., dissenting. See
under the older acts, Er parte Cap-
per, 3 De G. & Sm. 1.
(b) 37 & 38 Vict. c. 42, § 32, subs.
4, and see.Sunderland Building Soc.,
21 Q. B. D. 349.
(c) Ex parte Capper, 3 De G.&
8. 1. See note (a).
(d) Ex parte Holinsworth, 3 De G.
204; Ex parte Hodsell, 19 L. J. Ch.
234. See, too, Sherwood Loan Co.,
1 Sim. N. 8. 165. Compare these
with the cases cited supra, note (2).
(9) Ex parte Sedgwick, 2 Jur. N.
S. 949.
(h) Ex parte Latta, 3 De G. & 8.
186. But he may be compelled to
-give security for costs, ibid.
ss 2
628
Bk. IV. Chap 1
Sect. 4.
Circumstances
under which
a company may
be wound up.
a) When
registered,
6) When
unregistered.
WINDING UP BY THE COURT.
The executors of a deceased member, though not members themselves (2) ;
Past members (4) ;
Where a petition was presented by a shareholder who had entered into
an arrangement with his creditors under the Bankrupt act, an order
was refused, the trustees of the deed of arrangement not having been
served (J).
SECTION IV.—THE CIRCUMSTANCES UNDER WHICH A COMPULSORY
WINDING-UP ORDER WILL BE MADE.
A company registered under the act may be wound up by
the Court, i.e., compulsorily under the following circumstances
(§ 79) :—
1. Whenever the company has passed a special resolution,
requiring the company to be wound up by the Court;
2. Whenever the company does not commence its business
here or abroad (if its object be to carry on business abroad)
within a year from its incorporation, or suspends its business
for the space of a whole year (m) ;
3. Whenever the members are reduced in number to less
than seven ;
4. Whenever the company is unable to pay its debts ;
5. Whenever the Court is of opinion that it is just and
equitable that the company should be wound up.
An unregistered company (except a railway company) may
be wound up if it has not less than seven members (n) (§ 199,
el. 3)—
1. Whenever the company is dissolved, or has ceased to
(t) Re Norwich Yarn OCo., 12 doning part of the business is not
Beav. 366. enough, Norwegian Titanic Iron Co.,
(k) Times Fire Assurance Co.,30 35 Beav. 223. Nor is a temporary
Beav. 596. suspension of business with the con-
(1) Ex parte Walter, 3 De G. & sent of a large majority of share-
8. 2. holders, Middlesborough Assembly
(m) See Cupitul Fire Insurance
Associution, 21 Ch. D, 209 ; Tuma-
eacort Mining Co, 17 Eq. 534;
Metropolitan Railway Warehouse
Co., 15 W. R. 1121, L. J. Aban-
Rooms Co., 14 Ch. D. 104.
(n) Bolton Benefit Loan Society, 12
Ch. D. 679; South London Fish
Market Co., 39 Ch. D. 324.
GROUNDS FOR WINDING UP. 629
carry on business, or is carrying on business only for the Bk. y. ea 1.
purpose of winding up its affairs (0) ; =
2. Whenever the company is unable to pay its debts;
3. Whenever the Court is of opinion that it is just and
equitable that the company should be wound up.
Further, by the Companies act, 1880 (43 Vict. c. 19, § 6),
the registrar of joint stock companies is empowered, after the
necessary notices have been given, to strike off the register the
name of any company which he has reasonable cause to think
has ceased to carry on business, and on motice of this being
published in the Gazette, such company is dissolved.
The act declares the circumstances under which a company Inability to
is to be deemed unable to pay its debts, both where the co
company is registered (§ 80), and where it is not (§ 199, cl. 4).
The circumstances mentioned are, in the case of registered «) In case of
registered
companies, in substance as follows (§ 80) : companies,
1. Whenever a creditor for more than 50/. has served on
the company a demand, under his hand, requiring the company
to pay the sum due, and the company has for three weeks
afterwards neglected to pay, or secure, or compound for the
same to the creditor’s satisfaction ;
2. Whenever execution, issued by a judgment creditor
against the company, is returned unsatisfied ;
3. Whenever it is proved, to the satisfaction of the Court,
that the company is unable to pay its debts (7).
In the case of unregistered companies, two other circum- 8) In case of
stances are added (g) (§ 199, cl. 4), viz.: eae ee
1. Whenever a member is sued for a debt of the company,
and notice of the proceeding is served on the company, and the
company has not within ten days paid, secured, or compounded
for the debt, or procured the proceeding to be stayed, or
indemnified the defendant to his satisfaction against the same,
and the costs thereof ;
2. Whenever, in the case of a company working a mine
(0) See Family Endowment Soc., Co. of Utah, 20 Eq. 268; Globe New
5 Ch. 118, which had transferred its Patent Iron, dc., Co., ib. 337.
business to another company. (q) The substance only of the sec-
(p) This lets in any evidence of tion is attempted to be here given,
insolvency, Flagstaff Silver Mining
630
Bk. IV. Chap. 1.
Sect. 4.
Railway
company.
Discretion of
Court,
WINDING UP BY THE COURT.
within the jurisdiction of the Stannaries, a customary decrec
or order absolute for the sale of the effects of the mine has
been made, in a creditor’s suit, in the Vice-Warden’s Court.
Further, in the case of an unregistered railway company
there must be a warrant for the abandonment of the
railway (7).
In connection with the above enactments, it is necessary to
advert to section 86, which empowers the Court, upon hearing
a petition for a winding-up order, to dismiss the same with
or without costs, adjourn the hearing conditionally or un-
conditionally, or make any interim or other order that it
deems just.
Moreover, by sections 91 and 149, the Court is empowered
to have regard to the wishes both of the contributories and of
the creditors, and to have meetings called in order to ascertain
such wishes (s). It is obvious, from the foregoing provisions,
that in all cases the Court has a very wide discretion as to
what it will do when applied to for an order to wind up. But
wide as the discretion is, there are certain principles by which
the Court is guided, and which reduce the practice on this
subject to reasonable certainty. These principles will be best
expounded by considering first the circumstances under which
the act declares that a winding-up order can be made, and
secondly the circumstances by which the Court is usually
influenced in exercising its discretion as to the course it will
pursue.
1. Circumstunces under which @ winding-up order can be made.
No company can be wound up by the Court except in the
cases specified above (¢), and of these the only two which have
given rise to difficulty are thus expressed: 1. “ Whenever it is
proved to the satisfaction of the Court that the company is un-
able to pay tts debts.” 2. ‘ Whenever the Court is of
opinion that it is gust and equitable that the company should
be wound up.”
(r) 32 & 33 Vict. c. 114, § 4. éc., Co., 17 Eq. 1.
(s) This power can be exercised (t) Langham Skating Rink Co., 5
on the hearing of a winding-up Ch. D. 669; Cork Shipping and
petition, Western of Canada Oil, Mercantile Co., 7 L. R. Ir, 148,
GROUNDS FOR WINDING UP. 631
The difficulty as to insolvency has been to determine Pk. ie aR
whether prospective debts ought to be taken into account. E ie 2
This point was discussed in the case of the Huropean Life pay debts.
Assurance Society (wu), and it was there decided that by ooo
inability to pay debts was meant inability to pay debts Society.
actually due and payable; and that liabilities under sub-
sisting policies were not to be reckoned: and this construc-
tion of the clause in question may be taken to be correct,
although it has been since cnacted that in considering the
‘solvency of life insurance companies, the Court is to take
into account the contingent or prospective liabilities under
policies and annuities, and other existing contracts (2).
In considering the question of insolvency, uncalled-up capital Position of
must be estimated as an asset; and unless there is evidence to ee
show that it cannot be recovered it will be estimated at its full
nominal value (y). On the other hand, the paid-up capital of a
company is not a debt within the meaning of the statute (z) ;
it is not a debt of the company in any legal sense.
Assuming a company not to be insolvent, circumstances may 2. Just and
nevertheless exist to render it just and equitable to wind it up. oe i
It is obvious, from the context of the act, that the words,
‘* whenever the Court is of opinion that it is just and equitable
that the company should be wound up,” were intended to
apply to cases other than those previously enumerated ; and it
has been decided that, wide as the words are, they only apply
to cases resembling some one or other of those before described.
Unless, therefore, a company can be brought within one or more
of the previous specific provisions, or unless there are questions
to be settled and rights to be adjusted which can only be
settled and adjusted by converting into money the assets of
the company, whether actual or raiseable by calls, and by dis-
charging the company’s liabilities, distributing the surplus
assets and finally dissolving the company, the Court will not
order it to be wound up (a).
(uw) 9 Eq. 122. (z) See § 80, and § 199, el. 4,
(z) 33 & 34 Vict. c. 61, § 21. (a) The Agriculturist Cattle Ins.
(y) European Life Ass. Soc.,9 Eq. Co., 1 Mac. & G. 170. See, also,
122. See,astoinsurance companies, the judgments in Ex parte Wyld, 1
infra, p. 634. Mac. & G. 1; Ex parte Wise, 1
632
Bk. IV. Chap. 1
Sect. 4.
part of direc-
tors.
Companies
which ought to
be stopped.
Fraudulent
companies.
London and
County Coal
Company.
Abortive
companies,
Misconduct on
WINDING UP BY THE COURT.
In conformity with these principles it has been held, as well
under the older acts as under the Companies act, 1862, that
where the object of the petitioner is to make directors or
others account to the company for the misapplication of its
assets, or to make good losses for which they are liable to the
company (0), or to prevent the directors from exceeding their
powers, ¢.g., by amalgamating with another company (c), the
Court will leave the petitioner to such other remedies, if any,
as he may have, and will not make a winding-up order unless
the liabilities of the company are such as to render it neces-
sary or expedient to have recourse to a general winding-up.
At the same time if it can be shown to the satisfaction of
the Court that a company, although not insolvent, ought to be
annihilated, the Court will order it to be wound up. Proof of
inability to commence business after the lapse of a year (d),
continuing fraud (¢), improper registration (f), will induce the
Court to put an end even to a solvent company.
In a case in which a company had been fraudulently got up,
and was kept on foot by fraudulent practices, the V.-C. Wood
ordered the company to be wound up at the instance of a con-
tributory, although the company had only existed three or four
months, and although it consisted of only eleven members, and
although the majority of them desired to go on, and although
it was not proved that the company was unable to pay its
debts (g). The evidence showed that it would be unjust and
inequitable to allow the company to go on.
Again if it be proved to be impossible for a company to
carry on the business for which it was formed, the Court will
order the company to be wound up even though it has been in
existence less than a year and is solvent; and the fact that
the majority of the shareholders are opposed to the petition,
Drew. 465; Suburban Hotel Co., 2 (c) See Irrigation Co. of France, 6
Ch. 737; Diamond Fuel Co.,13 Ch. Ch. 176.
D. 400. See, also, the other cases (d) Tumacacort Mining Co., 17
referred to in the summary of cases Eq. 534,
at the end of this section, under the (e) See infra, note (9).
head “ Petition dismissed, Company (f) Ante, p. 622, note (7).
not Insolvent.” (g) London and County Coal Co., 3
(b) Anglo-Greck Steam Co.,2 Eq. Eq. 355.
1; He parte IVtse, 1 Drew. 465.
GROUNDS FOR WINDING UP. 683-
does not affect the question, for a majority however large has Bk. IV. Chap. 1.
no power to force a minority to embark in a business into ae
which it has never undertaken to enter (/).
The greatest difficulty, however, is felt in cases where there Company not
are no such circumstances as those just alluded to; but where PSP's
a company is not prospering.
Where a company’s assets are sufficient to meet not merely
its actual debts, but also its existing liabilities, the Court
will not speculate on the possible consequences of continuing
the business of the company, and will decline to wind it
up (i). The fact of there having been fraudulent represen-
tations in the prospectus is not sufficient, as the shareholders
may waive the fraud and decide tou go on(h). The circum-
stance that a company which is solvent will, if not wound up,
probably contract further liabilities, which it will be unable to
pay, is not of itself sufficient to induce the Court to make a
winding-up order (7). But if a company’s assets, including its
uncalled-up capital, are not sufficient to discharge its existing
liabilities ; then, although the company might be able to’pay
its existing debts, the Court will deem it just and equitable to
order the company to be wound up (m).
As regards impossibility of going on at a profit, a difference
exists between a limited and an unlimited company. If a
company is unlimited, and its capital is all paid up and spent,
and the company is making no profit, and is getting worse and
worse, a shareholder is entitled to decline to run further risk,
and to have the company wound up (n). But this reasoning
does not apply to a limited company, and consequently the
Difference be-
tween limited ,
and unlimited
companies,
(h) Haven Gold Mining Co., 20 441,
Ch. D. 151; German Date Coffee Co.,
ib., p. 169; Suburban Hotel Co., 2
Ch. 737. See, also, Diamond Fuel
Co., 18 Ch. D. 400.
(t) Langham Skating Rink Co., 5
Ch. D. 669, noticed infra ; Suburban
Hotel Co., 2 Ch. 737; Joint Stock
Coal Co., 8 Eq. 146 ; European Life
Ass. Soc., 9 Eq. 122 ; Professional,
dc., Building Soc, 6 Ch. 856;
Planet Benefit Building Soc., 14 Eq.
(k) Haven Gold Mining Co., 20 Ch.
D. 154,
(2) See cases in note (2).
(m) See the judgment in the
European Life Ass. Soc. 9 Eq. 122.
(n) Partn. p. 576, and Norwich
Yarn Co., 12 Beav. 366; Electric
Tel. of Ireland, 22 Beav. 471. Com-
pare Professional, dc., Building Soc.,
6 Ch. 856, where the petitioners
were under no liahility,
634
Bk. IV. Chap. 1.
Sect. 4.
Langham
Skating Rink
Co.
Life insurance
companies,
33 & 34 Vict. ec.
6], §§ 21, 22.
WINDING UP BY THE COURT.
Court has on several occasions declined to wind up a limited
company under circumstances which would have induced it to
wind up the company had it been unlimited (0). Thus in the
Langham Skating Rink Company (p) the Court refused to order
a company to be wound up, although the shares were not paid
up in full and there was considerable evidence to show that
profit was not to be expected. ‘The company was not prosper-
ing and had abandoned most of the objects for which it had
been formed; but it was not insolvent, and a majority of
members opposed the petition.
With respect to Life Assurance companies, it has been
specially enacted as follows (¢) :—
“The Court may order the winding-up of any company, in accordance
with the Companies act, 1862, on the application of one or more policy-
holders or shareholders, upon its being proved to the satisfaction of the
Court that the company is insolvent, and in determining whether or not
the company is insolvent, the Court shall take into account its contingent
or prospective liability under policies and annuity and other existing con-
tracts ; but the Court shall not give a hearing to the petition until security
for costs for such amount as the judge shall think reasonable shall be given,
and until a prima facie case shall also be established to the satisfaction of
the judge (r); and in case of a proprietary company having an uncalled
expital of an amount sufficient, with the future premiums receivable by the
company, to make up the actual invested assets equal to the amount of the
estimated liabilities, the Court shall suspend further proceedings on the
petition for a reasonable time (in the discretion of the Court), to enable the
uncalled capital, or a sufficient part thereof, to be called up; and if, at the
end of the original or any extended time for which the proceedings shall
have been suspended, such an amount shall not have been realised by
means of calls as, with the already invested assets, to be equal to the
liabilities, an order shall be made on the petition as if the company had
been proved insolvent.”
“The Court, in the case of a company which has been proved to be
(0) See, in addition to the case in
the text, London Suburban Bank, 6
Ch. 641 ; Suburban Hotel Co., 2 Ch.
737 ; Joint Stock Coal Co., 8 Ey. 146.
In each of these cases, the company
was not prospering, but the majority
of members desired to go on.
(p) 5 Ch. D. 669. The petition
was a contributory’s petition. See
the last note, and compare Diamond
Fuel Co., 13 Ch. D. 400.
(7) 33 & 34 Vict. c. 61, § 21.
This act includes Mutual Life As-
surance companies, see Great Brituin
Mutual Life Assurance Society, 16
Ch. D. 246. For the basis on which
annuities and policies are to be
valued, see Life Assurance Com-
panies act, 1872, 35 & 36 Vict. c. 41,
§ 5, and infra.
(7) This is not necessary where
the company has passed a resolution
to wind up voluntarily, British
Alliance Ass. Corp., 9 Ch. D. 635.
GROUNDS FOR WINDING UP. 685
insolvent, may, if it thinks tit, reduce the amount of the contracts uf the Bk. IV. Chap. 1.
company upon such terms and subject to such cunditionsas the Court thinks! 8 et 4.
just, in place of making a winding-up order(s).
If the Court proceeds under this latter section the contracts
to be included in the scheme for reduction are, in the absence
of special circumstances, those in existence at the date of the
presentation of the petition for winding up; and if there are
two classes of policies, participating and non-participating,
they must be reduced puri passu. The claims of policy-holders
and annuitants, which have matured into debts before the date
of the presentation of the petition, and all outside debts, must
be paid in full by the company; and the company is entitled
to receive in full payment of all monies then due to it, whether
in respect of arrears of premium or otherwise (¢).
2. Circumstances influencing the discretion of the Court.
Assuming that circumstances are proved to exist under
which a company may be ordered to be wound up, it by no
means follows that it will be ordered so to be (uw). ‘The Court,
as already observed, has in all cases a wide discretion as to the
course it will take; but in the exercise of this discretion a
marked difference exists between cases in which a winding-up
order is sought by creditors and those in which it is sought by
contributories.
«) Creditors’ petitions.
When a petition is presented by a creditor for an order to «) Creditors’
wind up a company, and his debt is not disputed, or has been Seay
established by legal proceedings, and there is evidence that the
company is unable to pay its debts within the meaning of the
statute, it is almost a matter of course to make the order (x) ;
(s) 88 & 34 Viet. c. 61, § 22; 20Ch. D. 352,
Great Britain Mutual Life Assurance (u) See this very clearly laid down
Society, 16 Ch. D. 246. If a wind- in Metropolitan Saloon Omnibus Co.,
ing-up order has been made, it must 5 Jur. N. 8. 922.
be discharged before the Court pro- (x) See Western of Canada Oil Co.,
ceeds under this section. 17 Eq. 1, and the cases cited infra,
(t) Great Britain Mutual Life As- notes (c) and (h).
surance Society, 19 Ch. D, 39, affil.
636
WINDING UP BY THE COURT.
Bk. i ee 1. but if other creditors oppose the petition and it appears that
ect. 4.
Creditors
divided in
opinion.
the petitioning creditor will gain nothing by a winding-up
order, the petition may be dismissed at once (y), or ordered to
stand over (z). The opposition of the company, or the wishes
of the contributories, go for little in such a case (a):
the fact that the contributories desire to wind up voluntarily (0)
usually induce the Court to abstain from making a compulsory
order (c). The smaller, moreover, the assets of the company,
the less reason is there to attend to the wishes of the contribu-
tories ; for where a company is clearly insolvent, its assets may
be regarded as belonging rather to its creditors than to its
members (d). But if the assets are very small and the com-
pany is being wound up voluntarily, the Court may make a
supervision order instead of a compulsory order, unless the
creditor shows that he would be prejudiced thereby (e).
The fact that the company is substantially a foreign com-
pany, and that there will be great difficulty in winding it up, is
not sufficient to justify a refusal to make a winding-up order (/);
and a winding-up order may be made even though winding-up
proceedings are pending abroad (9).
If, however, the Court is satisfied by proper evidence that
the majority of the creditors of a company are of opinion thata
compulsory order to wind up is not desirable, the Court will
give effect to their wishes (h) ; although where there had been
nor does
(y) Uruguay Central, dc., Rail. Co.
of Monte Video, 11 Ch. D. 372;
Chapel House Colliery Co., 24 Ch. D.
259; The Free Fishermen of Faver-
sham, 36 Ch. D. 329.
(2) Great Western Coal Consumers’
Co., 21 Ch. D. 769; Olathe Silver
Mining Co., 27 Ch. D. 278.
(a) See the next four notes.
(b) General Rolling Stock Co., 34
Beay. 314.
(c) However, in the Brighton Hotel
Co., 6 Eq. 339, the Court gave the
company time to make some arrange-
ment for paying its creditors. So,
also, in Western of Canada Oil Co.,
17 Eq. 1; St. Thomas’ Dock Co., 2
Ch. D, 116. This indulgence was,
however, refused in Home Ass. Ass.,
12 Eq, 114.
(d) Isle of Wight Ferry Co., 2 Hem.
& M. 597.
(e) New York Exchange, Limited,
39 Ch. D. 415.
(f) Gen. Co. for Promoting Land
Credit, 5 Ch. 363, and Princess of
Reuss v. Bos, L, R. 5 H. L, 176.
(g) Commercial Bank of South
Australia, 33 Ch. D. 174; Matheson
Brothers, Limited, 27 Ch. D. 225.
(h) Olathe Silver Mining Co., 27
Ch. D. 278; Chapel House Colliery
Co., 24 Ch. D. 259; Great Western
Coal Consumers’ Co., 21 Ch. D. 769 ;
Uruguay Central and Hygueritas
Rail, Co. of Monte Video, 11 Ch, D,
GROUNDS FOR WINDING UP.
637
ample time to consult them, and they had not been called bk. IV. Chap. 1.
together, and had not expressed their wishes in such a way as ---
to satisfy the Court, the opposition of a considerable number
of them did not induce the Court either to refuse the order, or
even to direct the petition to stand over until the creditors
could be called together (z) .
Sect. 4.
Again, if the petitioning creditor has assigned or incumbered Assignment of
his debt, so as to have little, if any, interest in it, the Court
will be reluctant to make an order at his instance (k) :
and if
he has assigned his debt after the petition has been presented
the Court will refuse the order (J).
Further, if a company has been specially incorporated for Company for
public purposes the Court will not order it to be wound up at Public pur
the instance of a creditor unless the Court is satisfied that he
cannot otherwise obtain payment (m).
Moreover, it was never intended that a petition to wind up a Disputed debt.
company should be had recourse to for the purpose of trying a
disputed debt (n): and if the petitioner’s debt is bond fide dis-
puted the Court will either dismiss the petition at once (0), or
at least not make a winding-up order, until the debt has been
372; West Hartlepool Iron Works
Co., 10 Ch. 618; Western of Canada
Oil Co., 17 Eq. 1; St. Thomas’ Dock
Co., 2 Ch. D. 116; Langley Mill
Steel, &c., Co., 12 Eq. 26, and the
next note.
(1) See Oriental Commercial Bank,
W. N. 1866, 283. The Imperial
Mercantile Credit Ass., ib, 257, was
decided on a contributory’s petition ;
and Gen. Rolling Stock Co., 34 Beav.
314.
(k) European Banking Co., 2 Eq.
521, where the petition was dis-
missed.
(l) Paris Skating Rink Co., 5
D. 959.
(m) Exmouth Docks Co., 17 Eq.
181, where the petitioning creditor
was an unpaid debenture-holder,
and no application had been made
for a receiver. And see per Fry, L. J.,
Ch.
36 Ch. D. 347.
(n) In Cercle Restaurant Castiglione
Co. v. Lavery, 18 Ch. D. 555 ; Niger
Merchants Co. v. Capper, ib. 557 note,
and Cadiz Waterworks Co. v. Barnett,
19 Eq. 182, injunctions were granted
to restrain the presentation of a
petition, and in Gold Hill Mines, 23
Ch. D. 210, the petition was dis-
missed on motion, and all proceed-
ings under it stayed. As to malici-
ous petitions, see ante, p. 614.
(0) Gold Hill Mines, 23 Ch. D,
210; London and Paris Banking
Corporation, 19 Eq. 444; London
Wharfing and Warehousing Co., 35
Beay. 37, where twenty-one days
after demand had elapsed ; Catholic
Publishing Co.,2 De G. J. & Sm.
116, where they had not. See, also,
Pen-y-van Colliery Co., 6 Ch. D. 477,
ante, p. 624, note (f).
petitioning
creditor’s debt.
poses.
638
Se
Judgment
creditor.
Creditor a
member seeking
an unfair
advantage,
Amount of
debt.
Ground of
petition.
Bk. IV. Chap. 1.
ct. 4.
WINDING UP BY THE COURT.
established (p). But the Court will itself judge whether the
debt is disputed simply to get rid of the petition, or bond fide
because it is not due (q), and unless the company adduce such
evidence as will show that there is a question to be trieda
winding-up order ought to be made (7).
Even if the petitioner has obtained judgment against the
company, still if there is evidence to show that the judgment
was obtained by fraud, and the petitioner declines an inquiry
on the subject, his petition will be dismissed (s). At all events,
a winding-up order ought not to be made in such a case with-
out giving the company an opportunity of impeaching the
judgment.
Where the petitioning creditor was himself a member of the
company, and the debt due to him was due by the rules of the
company, and the company was solvent, and the object of the
petitioner was to force the company to pay him in preference
to other members in the same position as himself, the Court
refused to make a winding-up order (¢).
Except in the case of building societies (uw), it is not necessary
that the petitioning creditor’s debt should amount to 50]. ; but if
it is of less amount he must show that the company is unable
to pay its debts by some other evidence than non-payment of
himself within three weeks after demand. A judgment debt of
less than 501. followed by an unsatisfied execution has been
decided to be sufficient (x). If non-payment within three
weeks after demand is relied upon, that period must have
expired before the presentation of the petition (y).
Inability to pay debts is, in a creditor’s petition, the ground
generally relied upon for obtaining a winding-up order; but
(p) Rhydydefed Colliery Co., 3 De
G. & J. 80; Inventors’ Association, 2
Dr. & Sm. 553. See, also, Brighton
Club and Norfolk Hotel Co., 35 Beay.
204.
(q) Kings Cross Industrial Direl-
lings Co., 11 Eq. 149.
(vr) Great Britain Mutual Life As-
surance Society, 16 Ch. D. 246.
(s) Hope Mutual Life Assurance
Co., 1 N. R. 542, L. J., and Bowes
v. Same Co., 11 H. L. C. 389.
(t) Planet Benefit Building Soc., 14
Eq. 441.
(u) See 37 & 38 Vict. c. 42, § 32,
el, 4.
(x) London and Birmingham Al-
kali Co., 1 De G. F. & J. 257.
(y) Catholic Publishing Co., 2 De
G. J, & Sm. 116. See, also, ante, p.
629, note (7).
GROUNDS FOR WINDING UP.
a creditor’s petition may be supported on any of the other
grounds mentioned in the statute (ante, p. 628).
b) Contributories petitions.
When a petition to wind up a company compulsorily is
presented by a contributory, the Court will take into considera-
tion not only the question whether the company is brought
within one or more of the statutory provisions under which it
may be wound up, but also whether an order to wind up is
necessary or expedient having regard to the interests of the
shareholders generally. This was clearly settled when the
Winding-up acts of 1848—9 were in force (z); and not only
did the Court decline to make a winding-up order under those
acts at the instance of a contributory, where the company was
not shown to be insolvent (a) ; but even where a company was
under heavy liabilities, and had ceased to carry on its business,
the Court would not order it to be wound up if measures were
being taken to wind up its affairs out of court, and there was
good reason to suppose that its liabilities would be discharged
and its assets divided as satisfactorily without the interference
of the Court as with it (U).
The discretion entrusted to the Court by the Companies act,
1862, is certainly not more restricted than that which it
possessed under the older acts (c); and in exercising that
discretion, when a winding-up order is sought by a contributory,
the Court is not only guided by the state of the company, but
also by the utility of the order, if made (d), and by the wishes
(2) See Ex parte Wyld, 1 Mac. &
G. 1, where the company, although
not prosperous, was solvent; Hx
parte Wise, 1 Drew. 465; Metro-
politan Saloon Omnibus Co., 5 Jur.
N.S. 922. In Ex parte Goldsmith,
14 Jur. 734, V.-C. Wigram seems to
have thought that the act of 1848
was more imperative than it really
was.
_ (a) See the last note.
(b) Ex parte Wise, 1 Drew, 465 ;
x parte Watson, 3 De G. & S, 253 ;
Ex parte Guest, 5 ib. 458; Re Mon-
mouthshire and Glamorganshire Bank-
ing Co., 15 Beav. 74. See, too, Ex
parte Phillipps, 1 Sim. N. 8. 605,
where a suit was pending,
(c) See §§ 86, 91, 149, of the act of
1862; Suburban Hotel Co., 2 Ch.
737 ; Professional, d&c., Building Soc.
6 Ch. 856 ; Planet Benefit Building
Soc., 14 Eq. 441,
(d) Middlesborough Assembly Rooms
639
4
Bk. IV. Chap. 1.
Sect.
b) Contributo-
ries’ petitions.
a) Under older
acts.
b) Under the
Companies act,
1862.
6£0
WINDING UP BY THE COURT.
Bk. paar 1. of the majority of the shareholders. Even where it is agreed
Very small
companies.
~ on all hands that the company must be wound up, the Court
will, as a rule, refuse to order it to be wound up compulsorily
at the instance of a contributory, if the majority of other share-
holders prefer to wind up voluntarily, or subject to the super-
vision of the Court, and bond fide intend so to do(e). Ifa
resolution to wind up voluntarily has been duly passed and ccn-
firmed the Court will not order the company to be wound up com-
pulsorily upon a contributory’s petition ; unless it be proved that
the resolution has been improperly obtained, as for instance where
it has been procured by directors or shareholders, whose
conduct is complained of and whose object is to prevent inquiry,
or unless the petition is supported by creditors (f). Nor will
the Court grant a supervision order in such a case, unless special
circumstances are proved (g). If, however, the contributory’s
petition was presented before the resolution for a voluntary
winding-up was confirmed the case may be different (h).
Although one of the circumstances under which a registered
company may be wound up by the Court is when the members
are less than seven in number, the Court will not, at the
instance of a contributory, order a company with very few
members to be wound up compulsorily if a voluntary winding-
up is desired, and there are no circumstances showing that
the company will not be fairly wound up voluntarily (i). But
if the question is whether the company shall be wound up or
Co., 14 Ch. D, 104; and New Gas
Generator Co., 4 Ch. D. 874, where
there were no debts or assets worth
mentioning, and no members except
the subscribers to the memorandum
of association. Compare Tumacacort
Mining Co., 17 Eq. 534, where there
was property and fraud alleged.
(e) See City and County Bank, 10
Ch. 470; London Mercantile Dis-
count Clo., 1 Eq. 277 ; General Inter-
national Agency Co., 36 Beav. 1.
(f) Gold Co. 11 Ch. D. 701,
where the earlier cases of Bank of
Gibraltar and Malta, 1 Ch. 69;
Imperial Bank of China and Japan,
ib. 389; West Surrey Tanning Co.,
2 Eq. 737; Fire Annihilator Co., 32
Beav. 561; and Littlehampton, &c.,
Steam Ship Co. 2 D. J. & 8. 521,
are examined. See, also, London and
Mercantile Discount Co. 1 Ey. 277,
The question turns on the true con-
struction of §§ 79, 129 and 145 of
the Companies act, 1862.
(g) Gold Company, 11 Ch, D. 701,
718.
(h) Gold Company, 11 Ch. D. 701,
717; West Surrey Tanning Co., 2
Eq. 737.
(i) Natal Co., 1 Hem. & M. 639,
where there were nine shareholders.
GROUNDS FOR WINDING UP. 641
go on, and the Court thinks it ought to be stopped, the small Bk. _ oe 1.
ect, 4.
number of the members is no reason why a compulsory order
should not be made (4).
Where, in the case of a limited company, a contributory Majority of
seeks for a winding-up order, and the majority of the members os
are of opinion that there is a reasonable prospect of making
arrangements for paying their debts (J), or of carrying on the
business of the company with success, and they oppose the
application on this ground, the Court will give effect to their
wishes and decline to make a winding-up order (m) ; unless
the company is a fraudulent company which ought to be
stopped (n), or the object for which the company was formed
is clearly unattainable (0). In the case of an unlimited com-
pany, however, the case is different, as has been already
pointed out (p).
Although the act declares that a company shall be wound up acer oa
if it does not commence business within a year from its incor- with others.
poration, or if it suspends its business for the space of a year,
yet, a company which has transferred its business to another
company, and has ceased to carry on business itself only by
reason of such transfer, will not be ordered to be wound up
unless there are other grounds for the order in addition to
suspension of business (gq). If, however, the company which
has transferred its business is unable to pay its debts, and the
company which has taken its business does not discharge them,
an order to wind up the first company will be made (r).
(k) Sanderson’s Patents Assoc., 12
Eq. 188, where there were only seven
shareholders ; London and County
Coal Co., 3 Eq. 355. But see New
Gas Generator Co., 4 Ch. D. 874.
(2) City and County Bank, 10 Ch.
470.
(m) Ante, p. 633. See, also, Fact-
age Parisien Co., 10 Jur. N. 8. 121,
L. J.; Metropolitan Saloon Omnibus
Co., 5 Jur. N.S. 922, L. J.
(n) London and County Coal Co.,
3 Eq. 355,
(0) Haven Gold Mining Co., 20
Ch. D. 151; German Date Coffee Co.,
L.C.
ib. p. 169; Suburban Hotel Co., 2 Ch.
737, and see ante, p. 632.
(p) See ante, p. 633.
(q) British Provident Assur. So-
ciety, 1 Dr. & Sm. 113; Anglo-Aus-
tralian Assurance Co. 1 Dr. & Sm.
113, where the petitioner had con-
curred in the amalgamation; Hx
parte Cookson, 15 Jur. 615.
(r) Ex parte Lawton, 1 K. & J.
204, where the petitioner was being
sued by the creditors. See, also,
Pennant and Craigwen Mining Co.,
15 Jur. 1192; Kx parte Dee, 3 De
G. & Sm. 112; Ee parte Phillips, 3
ep
642
Bk. IV. Chap. 1
Sect. 4.
Amalgamation
under §§ 161
and 162.
Preliminary
inquiries.
WINDING UP BY THE COURT.
It may here be observed, that if a company has passed a
resolution to wind up voluntarily, and has transferred its
business to another company, under §§ 161 and 162 of the
Companies act, 1862, and a contributory is desirous of im-
peaching the validity of such transfer, he can only do so by an
action. If he petitions for leave to bring an action and for a
compulsory winding-up order, the petition will not be dis-
missed, but will be ordered to stand over with leave to bring
an action if the Court is satisfied by the evidence before it
that there are reasonable grounds for impeaching the trans-
actions complained of (s).
Under the Winding-up act of 1848, § 12, the Court was
expressly empowered to direct preliminary inquiries before
finally disposing of a petition to wind up. This power is also
exercisable under the Companies act, 1862, and in several
cases petitions have been directed to stand over, in order that
meetings might be held and the wishes of the creditors and
contributories ascertained (t). At the same time it was de-
cided under the older acts, and the same rule applies now, that
no preliminary inquiries ought to be directed unless the Court
feels unable to come to a satisfactory conclusion as to the
proper course to take; nor unless it is also satisfied that
further inquiry will enable it to form a more correct or
decisive opinion (w).
Where there has been ample opportunity to ascertain the
views of creditors or contributories, the Court will not allow
De G. & Sm. 3 ; Family Endowment
Soc., 5 Ch. 118, where, however, the
petitioner was a creditor. See infra,
as to insurance companies.
(s) See Imperial Bank of China,
India, and Japan, 1 Ch. 339. See,
also, Irrigation Co. of France, 6 Ch.
176, where a compulsory winding-
up order was refused.
(t) See infra. Cases in which
petitions stand over for such a pur-
pose are not usually reported.
(w) See Sherwood Lean Co, 1
Sim. N. 8. 165; Ha parte Pocock,
1 De G. & S. 731; Re Monmouth-
shive and Glamorganshire Banking
Co., 15 Beay. 74; Ex parte Trout-
beck, 13 Jur. 157. In Re The Great
Eastern and Western Ratl. Co., 3 De
G. & Sm, 218, the petition was un-
opposed ; but it was intimated that
it would be well if no winding-up
order were to be made on an unop-
posed petition, without a preliminary
inquiry, as it had been found that
such orders would very often not
have been made if the Court had
been more fully informed of the
facts, This, however, is not the
usual practice.
GROUNDS FOR WINDING UP. 643
futther time for the purpose, unless there is some special Bk. IV. ae th
See
reason for so doing (v); and where the contributories have - — -
already had a meeting and expressed their wishes, a further
meeting will not be directed simply because the first may not
have been altogether regular (y). Nor will a meeting be
directed if no grounds for winding up are established (¢).
With respect to Life Insurance companies, which have amal- oo baa
Insurance
gamated with another which is being wound up, it is provided companies.
as follows by 85 & 86 Vict. c. 41, § 4:
“Where the business or any part of the business of a life assurance 35 & 36 Vict.
company has, either before or after the passing of this act, been transferred ¢- 41, § 4.
to another company under an arrangement in pursuance of which such
first-mentioned company (in this act called the subsidiary company), or the
creditors thereof, has or have claims against the company to which such
transfer was made (in this act called the principal company), then if such
principal company is being wound up by or under the supervision of the
Court, either at or after the passing of this act, the Court shall (subject as
hereinafter mentioned) order the subsidiary company to be wound up in
conjunction with the principal company, and may, by the same or any
subsequent order, appoint the same person to be liquidator for the two
companies, and make provision for such other matters as may seem to the
Court necessary, with a view to such companies being wound up as if they
were one company; and the commencement of the winding up of the
principal company shall, save as otherwise ordered by the Court, be the
commencenient of the winding up of the subsidiary company ; the Court,
nevertheless, shall have regard, in adjusting the rights and liabilities of the
members cf the several companies between themselves, to the constitution
of such companies, and to the arrangements entered into between the said
companies in the same manner as the Court has regard to the rights and
liabilities of different classes of contributories in the case of the winding up
of a single company, or as near thereto as circumstances admit.
“When any subsidiary company, or company alleged to be subsidiary,
is not in process of being wound up at the same time as the principal com-
pany to which it is subsidiary, the Court shall not direct such subsidiary
company to be wound up, unless, after hearing all objections (if any) that
may be urged by or on behalf of such company against its being wound up,
the Court is of opinion that such company is subsidiary to the principal
company, and that the winding up of such company in conjunction with
the principal company is just and equitable.
“Where any subsidiary company and principal company are being
wound up by different branches of the Court, the Court to which appeals
(2) Oriental Commercial Bank, W. (2) Langham Skating Rink Co., 5
N, 1866, 283. Ch. D. 669; Joint Stock Coal Co., 8
(y) Imperial Mercantile Credit As- Eq. 146.
sociation, ib. 257.
TT 2
644
Bk. IV. Chap. 1.
Sect. 4.
Analysis of the
decisions on this
subject.
Analysis of
cases.
1, Order made.
WINDING UP BY THE COURT.
from such branches lie shall make an order directing in which branch the
winding up of such companies is to be carried on, and the necessary pro-
ceedings shall be taken for carrying such order into effect.
“ An application may be made in relation to the winding up of any sub-
sidiary company, in conjunction with a principal company, by any creditor
of, or person interested in, such principal or subsidiary company.
“Where a company stands in relation of a principal company to one com-
pany, and in the relation of a subsidiary company to some other company
or where there are general companies standing in the relation of subsidiary
companies to one principal company, the Court may deal with any number
of such companies together or in separate groups, as it thinks most
expedient, upon the principles laid down in this section.”
3. Summary of cases.
The decisions bearing on the subject above considered are
very numerous, but after the foregoing observations it will be
sufficient to notice the most important of them very shortly,
and this may best be done by collecting them into three
groups, as follows :
1. Cases in which a compulsory winding-up order has been
made.
2. Cases in which a compulsory winding-up order has been
refused.
3. Cases in which a compulsory winding-up order has been
deferred.
The cases in which an order to wind up subject to super-
vision has been made in preference to a compulsory order will
be noticed hereafter (infra, c. 2).
1. Ornper Mape.
A. Creditors’ petitions.
Orders made on creditors’ petitions are seldom reported. It is when no
order is made that a report is needed.
Commercial Bank of South Australia, 33 Ch. D. 174.
Bank incorporated, and carried on business, in Australia ; not
registered here, but had a branch office in London. Winding up
proceedings were pending in Australia. North, J., made an order,
but expressed an opinion that the proceedings here should be
ancillary to those in Australia, and that the liquidator should
only deal with assets in this country. Compare Matheson Brothers,
Limited, 27 Ch. D, 225, when no order was made.
GROUNDS FOR WINDING UP. 645
General Rolling Stock Co., 34 Beav. 314. Bk. IV. Chap. 1.
Company unable to pay its debts. Members desired to wind ___ Sect. 4. 30
up voluntarily, and some creditors supported them. Analysis of
Isle of Wight Ferry Co., 2 Hem. & M. 597. cases.
Company incorporated by act of Parliament, and petitioning for 1. Order made.
further powers, but utterly insolvent, and alleged to have no
saleable assets at all.
Family Endowment Soc., 5 Ch. 118.
National Provincial Life Ass. Co., 9 Eq, 306. }
_ Company amalgamated with another company which was itself
being wound up.
General Co. for Promotion of Land Credit, 5 Ch. 363, and Princess of
Reuss v. Bos, L. R. 5 H. L. 176.
Company formed and registered under the act ; but consisting
entirely of foreigners, and with no assets in this country.
King’s Cross Industrial Dwellings Co., 11 Eq. 149.
Petitioner's debt disputed, but on grounds considered un-
substantial.
Compare cases under head No. 3, p. 652.
Home Assurance Association (No. 2), 12 Eq. 114.
Company insolvent (?), but desiring time to pay.
Flagstaff Silver Mining Co., 20 Eq. 268 ; Globe New Patent Iron Co., 20
Eq. 337.
Company proved to be unable to pay its debts, though no
execution had issued and no statutory demand had been made.
B. Contributories’ petitions.
Haven Gold Mining Co., 20 Ch. D. 151.
German Date Coffee Co., 20 Ch. D. 169. i
In both these cases it was impossible for the company to carry
on the business for which it was formed. The petitions were
opposed by the majority of the shareholders, and in the latter case
a year had not elapsed since the formation of the company,
Diamond Fuet Co., 13 Ch. D. 400.
Company’s business had been carried on at loss, its capital had
been expended and its property, except some patents which had
nearly expired, had been sold at a great sacrifice, and the business
could not be resuscitated. The petitioner was a fully paid-up
shareholder, but it was shown that the company had claims for
large sums against the directors, which if recovered would leave a
considerable surplus to be divided among the shareholders.
Tumacacort Mining Co., 17 Eq. 534.
Company doing nothing after four years; assets to divide; debts
to pay; majority desirous of settling out of Court.
Quere, if an order ought in this case to have been made? see
4 Ch. D. 876.
West Surrey Tanning Co., 2 Eq. 737.
Company doing no business—circuinstances to be investigated—
646
Bk. IV. Chap. 1.
Sect. 4.
Analysis of
cases,
1. Order made.
Contributory’s
petition,
WINDING UP BY THE COURT.
voluntary winding up proposed, but one director able to carry
everything as he liked.
Fire Annihilator Co., 32 Beav. 561.
Voluntary winding up going on for five years, and not ended.
See obs. (ante, p. 640), note (f).
London and County Coal Co., 3 Eq. 355.
Company only three or four months old ; formed dishonestly ;
the directors themselves not paying anything on their shares, and
defraying the expenses out of money obtained from an unwary
secretary, who had taken and paid for shares in order to secure his
appointment.
Sanderson’s Patents Assoc., 12 Eq. 188.
Only seven shareholders, and no business. Compare New Gas
Generator Co., 4 Ch. D. 874,
Metropolitan Railway Warehouse Co., W. N. 1867, 94.
Company unable to commence business within a year.
Ex parte Latta, 3 De G. & Sm. 186.
Pennant and Craigwen Mining Co., 15 Jur. 1192.
Ex parte Sedgwick, 2 Jur. N. 8. 949.
South Lady Bertha Mining Co.,2 J. & H. 376.
Tretoil and Messer Mining Co., 2 J. & H. 421.
Times Fire Assurance Co., 30 Beav. 596.
In all these cases the petitioner was being or had been sued by
a creditor of the company, whom the company either could not or
would not pay. See, also, the Bosworthon Mining Co., 26 L. J. Ch.
612, M. R., where, however, an inquiry was first directed, in order
to ascertain whether the petitioner had paid more than he owed
the company.
Ex parte Holinsworth, 3 De G. & 8. 7.
Ex parte Turner and James, ib, 127, and 2 Mac. & G. 169.
Ex parte Cooke, 3 De G. & 8. 148.
Ex parte Barber, 1 Mac. & G. 176.
Ex parte Woolmer, 5 De G. & S. 117, and 2 De G. M. & G, 665.
Ex parte Goldsmith, 14 Jur. 734.
Larne, Belfast, dc., Rail. Co., ib. 996.
In all these cases the companies had proved abortive and unable
to commence business, but there were liabilities to be provided
against or assets to be shared. In the last of them the directors
would not produce any accounts.
Bastenne Bitumen Company, 3 De G. & Sm. 265.
A suit for a dissolution was pending. The circumstances which
induced the Court to make a winding-up order are not stated. It
could not have done so as a matter of course. See Er parte
Phillipps, 1 Sim. N. 8. 605, infra, p. 652.
Ex parte Walker and Ex parte Troutbeck, 1 De G. & Sm. 585 ; affirmed
1H. & T. 100, and 13 Jur. 157.
The company had no outstanding debts, but it had stopped
business ; a suit for its dissolution was pending, and some of its
members had becn compelled to pay much more than their proper
share of debts.
GROUNDS FOR WINDING UP. 647
Sherwood Loan Co., 1 Sim. N. 8S. 165. Bk. IV. Chap. 1.
St. George’s Building Society, + Drew. 154. } Sect. 4.
Friendly societies which could not go on, and the rights of Analysis of
whose members could not be adjusted without a winding up. cases.
Electric Telegraph Co. of Ireland, 22 Beav. 471. 1. Order made.
The company had spent all its capital, and could not go on Centributory's
without more. PEURS
Norwich Yarn Company, 12 Beay. 366.
The company was insolvent, and daily getting worse, but better
times were hoped for.
Vey and Arun Junction Canal Co., 4 Ey. 197.
Canal company incorporated by special act of Parliament, and
ruined by railway competition.
Bradford Navigation Uo., 10 Eq. 381.
Is another instance of the same sort, but the company itself
petitioned.
Company amalgamated with another.
Ex parte Dee, ib. 112.
Pennant and Craigwen, &e., Mining Co., 15 Jur. 1192.
In each of these cases a company had ceased to carry on
business, and had been amalgamated with another company. In
Ez parte Phillips the company’s assets exceeded its liabilities, and
there was a surplus to divide ; in Hz parte Dee it was objected that
in consequence of outstanding policies, the company’s liabilities
could not be settled for many years ; in the Pennant and Craigwen
Co. creditors were suing the shareholders.
Ee parte Lawton, 1 K. & J. 204.
The company had failed; its liabilities were outstanding ; but
a new company had been formed by all the shareholders of the
first, save the petitioner and another. It was sworn that the
affairs of the old company would speedily be wound up if no
order were made. The petitioner alone desired the Court to
interfere, and he, not having paid his calls, was sued by a creditor
at the instance of the company. The order in this case was made
on the ground that the company in question existed only for the
purpose of winding up its affairs, that its assets were outstanding,
and its liabilities undischarged.
N.B.—For other cases of amalgamated companies, see ante, p. 645, and
infra, pp. 650, 652, 653.
Ex parte Phillips, 3 De G. & S. 3.
2, Perivion DISMISSED.
A. Creditors’ petitions.
Padstow Total Loss Association, 20 Ch. D, 137.
Association illegal under § 4 of the Companies act, 1862, and the
petitioning creditor had notice of the illegality.
648
Bk. IV. Char. 1
Scct. 4.
Analysis of
cases.
2. Petition
dismissed.
Creditor’s
petition,
WINDING UP BY THE COURT.
Herne Bay Waterworks Co., 10 Ch. D. 42.
Uruguay Central and Hygueritas Rail. Co. of Monte Video, 11 Ch. D. 372.
Petitioner a debenture holder (see ante, p. 625, and compare
Olathe Silver Mining Co., 27 Ch. D. 278).
Great Britain Mutual Life Association Society, 16 Ch. D. 247.
Order made on the petition of the second petitioning creditor,
the debt of the first being disputed. On appeal at the desire of a
committee of policy-holders, this order was discharged, and a
scheme for the reduction of the companies’ contracts entered into.
See same case, 19 Ch. D. 39, and 20 Ch. D. 351.
The Fishermen of Faversham, 36 Ch. D. 329.
Chapel House Colliery Co., 24 Ch. D. 259.
Uruguay Central and Hygueritas Rail. Co. of Monte Video, 11 Ch. D. 372.
In these cases the petition was opposed by the majority ot
creditors, and it did not appear that the petitioner would gain
anything by an order.
Bolton Benefit Loan Society, 12 Ch. D. 679.
Company unregistered consisting at the date of the petition of
less than seven members. Compare South London Fishmarket
Company, 39 Ch. D. 324,
Pen-y-van Colliery Co., 6 Ch. D. 477.
Petitioner's claim for unliquidated damages and disputed.
Paris Skating Rink Co., 5 Ch. D. 959.
Petitioner’s debt assigned since petition was presented.
Catholic Publishing Co., 2 De G. J. & Sm. 116.
Petitioner’s debt disputed—twenty-one days after demand had
not expired when petition was presented.
London and Paris Banking Co., 19 Eq. 444. ;
London Wharfing and Warehousing Co., 35 Beav. 37.
Petitioner’s debt disputed—twenty-one days after demand had
elapsed before petition was presented.
Hope Mutual Life Assurance Co.,1 N. R. 542, and 11 H. L. C. 389.
Petitioner’s debt, a judgment debt, disputed on the ground of
fraud, and he declined to try its validity.
Gold Hill Mines, 23 Ch. D, 210.
Petitioner’s debt was small and disputed, and no evidence of the
company’s insolvency was adduced. Petition was dismissed on
motion.
European Banking Co., 2 Ey. 521.
Petitioner’s debt small, and attached by judgment creditor of
his own.
Langley Mill Steam, dc. Co., 12 Eq, 26. :
Petitioner’s debt not disputed, but majority of creditors pre-
ferring a voluntary winding up.
Planet Benefit Building Soc., 14 Eq. 441.
Petitioner, a withdrawing member, seeking to obtain an unfair
advantage over others. Company not insolvent.
GROUNDS FOR WINDING UP. 649
: ‘ a Bk. IV. Chap. 1.
B. Contributories’ petitions. Sect. 4.
Analysis of
cases.
Rica Gold Washing Uo., 11 Ch. D. 36. 2. Pee
Petitioner was the holder of fully paid up shares for small ee
value, but failed to show that there would be a substantial amount petition.
of assets to be divided amongst the shareholders,
The charges of fraud were too vague.
Capital Fire Insurance Association, 21 Ch. D, 209.
Reason alleged was that company had not commenced business
within a year. The company was formed to carry on business
here or abroad. It had commenced business in France, and
intended doing so in England.
Middlesborough Assembly Rooms, 14 Ch. D. 104.
Under the circumstances the suspension of business for more
than a year (the reason alleged in the petition for the winding up)
was reasonable. The majority of shareholders opposed the
petition.
Langham Skating Rink Co., 5 Ch. D. 669.
Company the reverse of prosperous, but not insolvent.
New Gas Generator Co., 4 Ch. D. 474.
Only seven members, and nothing to be gained by making an
order. Compare Sanderson’s Patents Assoc., 12 Eq. 188.
Le parte Wyld, 1 Mac. & G. 1.
Company solvent, and carrying on business; petitioner would
not pay his calls, and was sued by a creditor at the instigation of
the diréctors.
Ex parte Spackman, 1 Mac. & G. 170.
Company solvent, and carrying on business. Petitioner was
dissatisfied with an arrangement by which several shareholders
had retired. This arrangement was subsequently held to be ultra
vores (a). ,
National Live Stock Insurance Co., 26 Beav. 153.
The company was carrying on its business. It was alleged to
be insolvent, and would have been so, if it could not have re-
covered monies due to it from its own directors and others for
calls. But it was in a position to recover such monies, and was
solvent when credited with them.
European Life Ass. Soc., 9 Eq. 122, and 10 Eq. 403.
Company not proved to be unable to pay all its existing debts
and liabilities, but was not flourishing, and would probably
be unable to discharge liabilities it would incur if it continued
business.
Ex parte James, 1 Sim. N.S. 140.
A member of the managing committee of an abortive company
petitioned to have it wound up. There were no bond fide debts
outstanding ; the real object of the petitioner was to obtain pay-
a) Company not insolvent.
(a) See ante, p. 522,
650
Bk. IV. Chap. 1.
Sect. 4.
Analysis of
cases.
2. Petition
dismissed.
Contributory’s
petition,
WINDING UP BY THE COURT.
ment of his brother’s bill of costs, which was disputed, and for
which an action had been brought and discontinued.
Anglo-Greek Steam Co., 2 Eq. 1, ante, p. 632.
Misconduct on part of managers and directors alleged, but no
insolvency, and no reason why business should not be profitable
with better management.
Hop and Malt Exchange Co., W. N. 1866, 222.
Company not a year old, and not in debt; members about
equally divided as to whether they should go on or not, and
articles providing that four-fifths must concur in order to pass a
resolution to dissolve.
Suburban Hotel Co., 2 Ch. 737.
London and Suburban Bank, 6 Ch. 641.
Joint Stock Coal Co., 8 Rg. 146.
Factage Parisien Co., 10 Jur. N. 8. 121.
Metropolitan Saloon Omnibus Co., 5 Jur. N. 8. 922.
Company not prospering, but not insolvent, and majority
desirous of going on. Company limited, and capital not all
paid up.
Professional Building Soctety, 6 Ch. 856.
Similar circumstances, but no limit to liability. Petitioner
under no liability.
Spence’s Patent, de., Cement Co., 9 Eq. 9.
No allegation of insolvency in the petition; but evidence of
insolvency, and allegation and proof of continued loss. Petition
supported by creditor.
Ev parte Fisher, 3 De G. & Sm. 116.
A subscriber for shares in a proposed railway company, peti-
tioned to wind up a company formed for making and working
portion only of the line originally contemplated. The projectors
were authorised to apply for an act to enable the company to make
a less line than that first intended.
Planct Benefit Building Soc., 14 Eq. 441, ante, p. 648.
b) Company amalgamated with another.
Anglo-Australian Assurance Co., 1 Dr. & Sm. 113.
The company’s business had been transferred to another com-
pany, and the petitioner had become a shareholder in it, and was
bound by the transfer. The amalgamation, however, was disputed,
and the selling company was being sued for its debts.
Ex parte Cookson, 15 Jur. 615.
A projected company had been amalgamated with another com-
pany, which had undertaken to buy up the scheme of the first.
There were uo debts of the former company outstanding or
unsettled, but the money agreed to be paid was still unpaid.
The sole object of the petition was to have this money got in and
divided. See, also, the previous heads and next head.
GROUNDS FOR WINDING UP. 651
Bk. IV. Chap. 1.
c) Company being wound up voluntarily. Sect. 4.
Irrigation Co. of France, 6 Ch. 176. ) Analysis of
Imperial Bank of China and Japan, 1 Ch. 339. § rr
: a 2. Petition
Company being wound up voluntarily in order to be amalga- gismissed.
mated with another. Contributory’s
London and Mercantile Discount Co., 1 Eq. 277. petition.
Directors charged with breaches of trust, and commanding a
majority of votes.
Bank of Gibraltar and Malta, 1 Ch. 69,
Gold Company, 11 Ch. D. 701.
Company being wound up voluntarily, petitioner showed no
fraud in the passing of the resolution for that purpose, though
fraud in other matters was alleged. See ante, pp. 639, 640.
General International Agency Co,, 36 Beay. 1.
Majority in favour of voluntary winding up.
Ex parte Watson, 3 De G. & Sm. 253.
The company had carried on business as bankers in India and
in this country, and was being wound up extra-judicially. The
petition was presented by a shareholder, who, declining to pay the
amount required of him, was sued by a creditor.
Ex parte Guest, 5 De G. & Sm, 458.
The company was being wound up in a way approved by a
majority of the shareholders. There was a large judgment debt
to provide for, but the creditor was not pressing for payment.
Ex parte Wise, 1 Drew. 465.
This was a somewhat similar case to the last, and the real object
of the petitioner was to make the directors account to the company
for a misapplication of its assets.
d) Company small, and better wound wp out of Court than in.
Natal, &c., Co., 1 Hem. & M. 639.
Sea, Rwer, and Marine Insurance Co., W. N. 1866, 253. }
Companies having only nine and seven members respectively,
no debts, and no reason why they should not be wound up
voluntarily. In both cases the company desired to wind up
voluntarily.
e) Winding-wp order useless if made.
New Gas Generator Co., 4 Ch. D. 874.
Compare Tumacacort Mining Co., 17 Eq. 534.
Ex parte Inderwick, 3 De G. & Sm. 231.
The petitioner was a subscriber to an abortive company. There
were no outstanding liabilities, and no assets except what might
be recovered from the promoters in respect of matters which
occurred five years before, and which had been already made the
subject of two compromises.
652
Bk. IV. Chap. 1.
Sect. 4.
Analysis of
cases.
2. Petition
dismissed.
Contributory’s
petition,
3. Petition
ordered to
stand over.
WINDING UP BY THE COURT.
Fix parte Murrell, 3 De G. & Sm. 4.
The petitioner was a subscriber to an abortive company, but it
appeared that there were no outstanding liabilities, and no assets
except what could be got by opening accounts which had been long
acquiesced in and acted upon. The petitioner had received back
the greater part of his subscriptions. Compare Ex parte Pocock, 1
De G. & 8. 731; Lx parte Williams, 1 Sim. N. 8. 57.
Ex parte Phillipps, 1 Sim. N. 8. 605.
Suit for dissolution pending, in which everything could be done,
Compare Bastenne Bitumen Co., 3 De G. & 8. 265, ante, p. 646.
Jt) Foreign company.
Lloyd Generale Italiano, 29 Ch. D. 219.
Petition presented by the company. Order refused on the
ground that the Court has no jurisdiction to wind up an un-
registered foreign company which has merely carried on business
in England by agents without having any office in this country.
See ante, p. 622.
8. PETITION ORDERED TO STAND OVER.
A. Creditors’ petitions.
St. Thomas Dock Co., 2 Ch. D. 116.
ELamouth Docks Co., 17 Eq. 181. ‘
Brighton Hotel Co.,6 Eq. 339.
In all these the petition stood over to see if means could be
found for paying dissentient creditors.
Olathe Silver Mining Co., 27 Ch. D. 278.
Petitioner was a debenture holder, and the petition was ordered
to stand over for inquiry whether the company had any assets
other than those comprised in the debentures. See ante, p. 625.
Great Western Coal Consumers’ Co., 21 Ch. D. 769.
Petition was opposed by the majority of creditors, and it was
ordered to stand over for six months on terms, this being considered
more beneficial to the other creditors than dismissing it.
Rhydydefed Colliery Co., 3 De G. & J. 80.
Petitioner’s debt disputed.
Inventor’s Association, 2 Dr. & Sm. 552.
Petitioner’s debt disputed—voluntary winding up proceeding—
action against company commenced by petitioner, but obstructed
by liquidator.
Imperial Guardian Life Ass. Soc., 9 Eq. 447.
Company amalgamated with another and in course of voluntary
liquidation. Petitioner’s debt disputed, and security offered.
N.B.—Compare King’s Cross Industrial Dwellings Co., 11 Ey. 149.
Western Canada Ou Co., 17 Eq. 1.
GROUNDS FOR WINDING UP. 653
: ‘ ean Bk, TY. ibs
B. Contributories’ petitions. me aed
Sect. 4.
City and County Bank, 10 Ch. 470. Analysis of
Company desired to wind up voluntarily and to carry ont an Cases.
arrangement with its creditors, to which they agreed. 3. Petition
ordered to
stand over.
Imperial Bank of China, 1 Ch. 339.
Resolution to wind up voluntarily, in order to amalgamate with
another company. Petition impeached whole proceeding, and was
ordered to stand over, with liberty to file a bill.
British Provident Assurance Society, 1 Dr. & Sm. 113.
The company had transferred its business to another company,
which was not shown to be unable or unwilling to fulfil its
engagements.
Wheal Anne Mining Oo., 30 Beav. 601.
The petition was ordered to stand over with a view to an
arrangement being made. Creditors were suing in the Stannary
Courts. i ,
North Western Trunk Co., 3 De G. & Sm. 266.
The company had proved abortive, but it was not clear that
anything capable of being wound up had really ever existed.
Ex parte Williams, 1 Sim. N. 8. 57.
The company was abortive, and had, in fact, had its affairs
wound up, but, as the petitioners alleged, in an improper manner.
Compare Ex parte Pocock, 1 De G.& 5. 731; Ex parte Murrell,
3 ib. 4; Larne, Belfast, dc., Rail. Co., 14 Jur. 996.
Monmouthshire and Glamorganshire Banking Co., 15 Beav. 74.
The petition was ordered to stand over, to enable the company,
if possible, to wind up its own affairs, which it had begun to do.
Ex parte Collins, 8 W. R. 170.
The petition was ordered to stand over with liberty to apply ;
the solvency of the company depending on its right to enforce
a disputed contract for the sale of its business to another
company.
Ex parte Pocock, 1 De G. & Sm. 731.
The company proved abortive. The great majority of the sub-
scribers had been repaid part of the money they had paid for
deposits and had released the directors, A dissatisfied sub-
seriber, who had not executed the release, presented a petition
for winding up the company, alleging a refusal by the directors
to produce the accounts, and a misapplication of assets by them.
The Court declined to order the company to be wound up; it
also declined to direct any inquiry as to the expediency of wind-
ing it up; at the same time it would not dismiss the petition
but ordered it to stand over, so that the petitioner might have an
opportunity of seeing the accounts which had been withheld from
him. What ultimately became of the petition does not appear.
See, too, Hx parte Capper, 3 De G. & S. 1; and compare Ex parte
Murrell, ib. 4. In The Larne, Belfast, de., Rail. Co., 14 Jur. 996,
the directors refused to produce the accounts, and a winding-up
order was therefore made.
654
Bk. IV. Chap. 1.
Sect. 5.
Petition for
winding-up
order.
Form of
petition.
WINDING UP BY THE COURT.
Bosworthon Mining Co., 26 L. J. Ch. 612, M. R.
Inquiries were directed by consent, in order to see whether the
petitioner, who was being sued by a creditor, had paid more than
he owed to the company. A winding-up order was ultimately
made.
Kx parte Moss, 14 Jur. 754.
An inquiry was directed to ascertain the position of the
company abroad, it being half a foreign and half an English
company.
SECTION V.—PROCEEDINGS TO OBTAIN A WINDING-UP ORDER AND
TO DISCHARGE IT, AND TO STAY PROCEEDINGS UNDER IT ()).
The proper mode of applying to the Court for a winding-up
order, whether by the Court or subject to the supervision of
the Court, is by petition (c).
No form of petition is given, but it must be entitled in the
matter of the Companies acts, 1862 and 1867, and of the com-
pany sought to be wound up (d). The petition should show
the nature of the company, the title of the petitioner to pre-
sent the petition, and the circumstances on which he relies for
obtaining the order ; the petition should state such circum-
stances in sufficient detail to enable the Court to see from the
petition itself that a winding-up order ought to be made, if the
statements in the petition are not denied or satisfactorily
explained by those who oppose it (e). If fraud be alleged the
facts constituting the fraud must be stated (f). A petition
presented by a contributory should show that the provisions of
(b) This section relates only to the
procedure in the Chancery Division
of the High Court. As to the Stan-
naries, see 32 & 33 Vict. c. 19, and
50 & 51 Vict. c. 48. The procedure
in the County Court is the same as
that in the Chancery Division. See
30 & 31 Vict. c. 131, §§ 41-43, and
County Court Rules, 1&86, Ord’
xhi.
(c) 25 & 26 Vict. c. 89, §§ 82 and
148.
(d) See Order of 1868, Rule 1.
-(e) Wear Engine Works Co., 10
Ch. 188. See, also, Langham Skating
Rink Co., 5 Ch. D. 669. Fora form
of petition, see Palmer’s Company
Precedents (4th ed.), 649, 2 Smith’s
Chan, Prac. 319, ed. 7, and for a
form under the older acts, see Ite
North of England Banking Co., 1 De
G. & §. 545.
(f) Rica Gold Washing Co., 11
Ch. D. 36.
THE PETITION AND PRACTICE RESPECTING IT. 655
30 & 31 Vict. c. 181, § 40, have been complied with ; but an Bk. Ty ipo 1,
omission to state this is not fatal to the petition (g). One
petition to wind up two companies is wrong (hk). A petition
may be amended by leave of the Court (2).
Every contributory or creditor is entitled to have a copy of
the petition, on payment of 4d. per folio (Rule 5).
The petition must be advertised seven clear days before the Advertisements.
hearing, once in the London Gazette, and once at least in two
London daily morning newspapers, or local newspapers, accord-
ing to the situation of the company’s office (Rule 2).
The advertisement must state the day on which the petition
was presented, and the name and address of the petitioner, and
of his solicitor and London agent (Rule 2). Forms of adver-
tisement are given in the schedule to the rules (k).
Care should be taken to make no mistake in advertising.
An advertisement that a petition will be heard on Saturday
the 20th of December, when the 20th fell on a Thursday, has
been held insufficient (/) ; and a mistake, although trifling, in
the name of the company may prove fatal (m); but the Court
may give leave to amend the petition either with () or with-
out (0) ordering it to be re-advertised.
In a case where a petition comes on to be heard too soon,
the Court can in its discretion dispense with fresh advertise-
ments (p); or order the petition to stand over in order that
fresh advertisements may be issued (q). The petition may be
(g) City and County Bank, 10 Ch.
470. As to holder of fully paid-up
shares, see ante, p. 626.
(h) Shields Marine Ins. Co., W. N.
1867, 265 and 296.
(2) Queen’s Benefit Building Soc.,
6 Ch, 815.
(k) For the form of advertisement,
see rule 2 and form 1 in the 3rd
schedule to the rules. As to dis-
pensing with fresh advertisements
on a rehearing, Patent Floor Cloth
Co., 8 Eq. 664.
(1) Re The Joint Stock Companies
Winding-up Act, 13 Beay. 434.
(m) City and County Bank, 10 Ch.
470,
(n) Army and Navy Hotel, 31 Ch.
D. 644; Newcastle Machinists’ Co.,
W. N. 1888, 146, and note W. N.
1889, 1.
(0) Cork Constitution Ld., 9 L. R.,
Tr, 163.
(p) City and County Bank, 10 Ch.
470.
(q) London and Westminster Wine
Co.,1 Hem. & M. 561. Under the
older acts, it was held that the ad-
vertisement of the petition in the
London Gazette need not be seven
days before the hearing of the pe-
tition, although the advertisement
in the other papers must, English
and Irish Church and University
656
Bk. IV. Chap. 1.
Sect. 5.
Service of
petition.
WINDING UP BY THE COURT.
presented and the advertisements issued on the same day:
——and where an advertisement stated that a petition had that
day been presented, and the petition was presented on that
day, but not until after the advertisement had been published,
the Court held the advertisement sufficient (r).
It is improper to publish in a newspaper the contents of a
petition before it is heard (s).
The petition, unless presented by the company itself, must
be served at its registered office (¢); and if there is no such
office, then at the company’s principal or last known principal
place of business, if any can be found ; and the service must
be upon some member, officer, or servant (uw) of the company
there; or if no such person can be found there, then by being
left at the registered office or principal place of business of the
company (x). If it is found impracticable to comply with these
directions, application must be made to the Court for leave
to serve the petition upon some member of the company (y).
These rules, however, are directory only; and if the solicitor
of the company accepts service for it, service at the registered
office may be dispensed with (2).
Where a company is being wound up voluntarily, a petition
to have it wound up subject to the supervision of the Court
must be served on the liquidators (a); but, owing probably
to an oversight, the rules do not require that the liquidator
Assurance Society, 10 W. R. 33. This order is meant where no other
It is, however, different now.
(r) Cork and Youghal Rail. Co.,
W. N. 1866, 279.
(s) Cheltenham and Swansea Rail-
way Carriage, &c., Co., 8 Eq. 580.
(t) As to which see the Com-
panies act, 1862, §§ 39, 40, and
rule 3.
(w) These words occurred in 11 &
12 Vict. c. 45, § 10, and it was held
that service on a member of the
provisional committee was insufli-
cient, Re London and Dublin, d&c.,
Railway Company, 3 De G. & 8.
208 ; so service on the company’s
solicitor, Lx parte Dale, ib. 11.
(x) Rule 3 of the order of 1862.
is referred to.
(y) Ib. Service on some member
seems necessary. Under 11 & 12
Vict. c. 45, § 10, service might be
dispensed with altogether. As to
whether service can be dispensed
with by consent, see Re Brighton,
Lewes, de., Rail. Co.,1 De G. & 8.
604; Ha parte Wolesey, 3 ib. 101;
Re Tring, Reading, &c., Rail. Co., ib.
10; Regent United Service Stores, 8
Ch. D. 75, and Panonta Leather
Cloth Co., 13 W. R. 1015.
(z) Regent United Service Stores, 8
Ch. D. 75.
(a) Rule 3.
657
THE PETITION AND PRACTICE RESPECTING IT.
should be served with a petition to have the company wound Bk. he ce 1.
up compulsorily. This, however, ought, it is conceived, to be —
done.
Where a company’s registered office was shut up, the Court
directed the petition to be dropped into the letter-box of the
office, and to be served on the company’s solicitor, and on one
of the directors (b). In another case, where the company was
being wound up voluntarily, service was directed on all the
directors and two or three of the principal shareholders (c).
Service without leave of the Court on a workman at the last
registered office of a company, which had long ceased to carry
on business there and had amalgamated with another company,
is not sufficient (d); but service on two directors at the actual
office of the company has been held sufficient (e).
The petition must be verified by the affidavit of the peti- Evidence in
tioner, or one of the petitioners; or, if the company is the oa
petitioner, by some director, secretary, or principal officer (/).
An affidavit by the petitioner himself will, however, be dis-
pensed with under special circumstances (g). If one company
petitions for an order to wind up another, an affidavit by the
secretary or one of the acting directors of the petitioning
company would probably be sufficient. The affidavit must be
entitled like the petition (h), sworn and filed within four days
after the petition is presented (i); but the time will be en-
larged by the Court if any reasonable grounds for so doing are
shown (k). The affidavit is sufficient primd facie evidence of
the statements in the petition (/).
(6) London and Westminster Wine abroad.
Co., 1 Hem, & M. 561. (h) See note (f), ante.
(c) Inventors’ Assoc., 6 N. R. 349. (*) Rule 4; not before, see
(d) Manchester and London Life
Ass. and Loan Assoc., 9 Eq. 643.
(e) Fortune Copper Mining Co., 10
Eq. 390.
(f) Rule 4. A form of affidavit
is given, see form 2 in the ard
schedule to the rules of 1862, but
as to the heading, see order of 1868,
rule 1,
(9) Fortune Copper Mining Co.,
10 Eq. 390, where the petitioner was
L.C.
Western Benefit Building Soc., 33
Beay. 368.
(k) See rule 73; Patent Screwed
Boot Co, 32 Beav. 142; Kentish
Royal Hotel Co., 5 N. R. 423.
(1) Rule 4. Strictly speaking the
affidavit is seldom proof of anything,
being hearsay as to most matters
sworn to: Gold Hill Mines, 23 Ch.
D. at p. 214, The rule, however,
is a check on reckless assertions,
*u U
656
Bk. IV. Chap. 1.
Sect. 5.
Evidence in
opposition.
Appeacance in
support and
opposition.
Costs.
WINDING UP BY THE COURT.
If the petition is opposed on grounds not disclosed in it, or
in the affidavits filed in support of it, the additional facts
necessary to be proved, must be verified by affidavit.
The persons making affidavits can be cross-examined ; the
Court will, if necessary, order the books of the company to be
produced on such cross-examination (mm).
All persons served with the petition, and also all contribu-
tories and creditors (n), but apparently no other persons (0),
are entitled to appear on the petition, and to support or
oppose it. But as regards costs the following rules are usually
followed :
1. The costs of a petition on which a winding-up order is
made are borne by the company (p); these costs include the
costs of the petitioner and of the company, and the costs of all
other persons, if any, properly served with the petition (q).
2. The costs of a petition which is dismissed are borne by
the petitioner ; unless the Court is of opinion that the petition
was justifiable, in which case the dismissal will be without
costs. If dismissed with costs, such costs include those of
the company, and of all persons, if any, served with the
petition (r).
3. With respect to persons who appear to support or oppose
a petition, although not served with it, the usual practice is:
1, to allow one set of costs to those contributories, and one
set to those creditors, who upon reasonable grounds (without
being served) appear on the petition and support the view
which ultimately prevails—i.e., support a successful, or oppose
an unsuccessful, petition; %, to give no costs to those who
(not being served) support an unsuccessful, or oppose a suc-
It has been suggested that this part
of rule 4 is ultra vires, see Buckley
on the Companies act, 5th ed., p.
615, but in practice no other evi-
dence is adduced in the majority
of cases, at least in the first instance.
(m) Emma Silver Mining Co., 10
Ch. 194, As to inspection of com-
pany’s books, see Credit Co., 11 Ch.
D. 256, and West Devon Great
Consols Mine, 27 Ch. D. 106.
(n) See Marlborough Club Co., 1
Eq. 216, and the next note.
(0) See Bradford Navigation Co.,
9 Eq. 80, and 5 Ch. 600. See, also,
8. C., 10 Eq. 337.
(p) The order is usually silent as
to the costs. It was so under the
older acts, see the form in 1 De G.
& Sm. 547,
(Q) Humber Iron Works Co., 2 Eq.
15.
(r) Humber Iron Works Co., 2 Eq.
15.
.
THE PETITION AND PRACTICE RESPECTING IT.
cessful, petition ; but, 8, to make a petitioner pay the costs o
persons who appear to answer and succeed in refuting un-
founded charges made against them (s).
A provisional liquidator is only in the nature of a receiver,
and will not be allowed his costs of appearing on a winding-up
petition (¢).
Where a petition was presented by a shareholder in a cost- Costs of preli-
minary inquiries.
book mining company, who had been sued by a creditor, and
the petition was opposed on the ground that the petitioner was
indebted to the company and had not been compelled to pay
more than he owed to the company, and an inquiry upon that
point was directed by consent, and the result showed that the
petitioner had paid more than he owed the company, and a
winding-up order was then made, the costs of the preliminary
inquiries were thrown on those whose opposition caused them
to be directed (w).
A petition may be withdrawn by the petitioner (x), and ought
to be withdrawn as soon as his claim is satisfied (y); but as a
general rule, he can only withdraw it on payment of the proper
costs of those who appear on it, whether to support or oppose
it (2), though under special circumstances the Court will allow
the petition to be withdrawn without payment of costs (a).
Separate sets or only one set of costs may be given to the
shareholders and creditors appearing on the petition (0).
(s) See Hull and County Bank, 10
Ch. D. 130; New Gas Co.,5 Ch. D.
703; Anglo-Egyptian Nav. Co., 8
Eq. 660; European Banking Co.,
2 Eq. 521; Anglo-Greek Steam Co.,
ib. 1; Humber Iron Works Co., ib.
15. Lord Hatherley, when V.-C.,
refused costs to persons not served.
See Oriental Commercial Bank, W.
N. 1866, 283; Hop and Malt Eau-
change Co., ib. 222 ; Imperial Mere.
Credit Ass., ib. 256.
(t) General International Agency
Co., 36 Beav. 1. He was, however,
allowed some costs in Times Life
Ass., &c., Soc., 9 Eq. 382, and in
European Banking Co., 2 Eq. 521.
(u) Re Bosworthon Mining Co., 26
L. J. Ch. 612.
(x) Hereford and South Wales
Waggon, &c., Co, 17 Eq. 423;
Times Life Ass., dc, Co, 9 Ey.
383; Home Ass. Association, 12
Eq. 59.
(y) Times Life Ass., &c., Co., 9
Eq. 383.
(2) Nacupat Gold Mining Co., 28
Ch. D. 65; Patent Cocoa Fibre Co.,
1 Ch. D. 617; Hereford and South
Wales Waggon, &e., Co., 17 Eq. 423 ;
Marlborough Club Co., 1 Eq. 216 ;
Home Ass. Association, 12 Eq. 59.
(a) District Bank of London, 35
Ch. D. 576; United Stock Eachange,
Limited, 28 Ch. D. 183.
(b) Paper Bottle Co., 40 Ch. D. 52; -
uuv2
f Bk. IV. Chap. 1.
660
Bk. IV. Chap. 1.
Sect. 5.
feveral peti-
tions.
WINDING UP BY THE COURT.
The petitioner, on the hearing of his petition, may elect to
take a supervision order instead of a compulsory order, and in
this case the costs of creditors who appear to support the
petition for a compulsory order will be allowed, though they
may have opposed the supervision order (c).
There is nothing to prevent the presentation of several
petitions by several persons ; and as no person can prevent the
withdrawal of a petition presented by another person, and as
petitions are frequently presented in order that they may be
withdrawn or pressed on as may be afterwards found con-
venient, it has become common for several persons to present
several petitions to wind up the same company. This practice,
however, is discouraged as much as possible by the courts;
and if the petitions are presented to different branches of the
Court, those subsequent to the first will be transferred to that
branch of the Court to which the first has been presented (d).
Persons who present petitions in ignorance that a petition
has already been presented, are generally allowed the costs
incurred by them before they had notice of the previous
petition (e); but persons who,.without some special justification,
present petitions, or proceed with petitions they have already
presented, after they know of the presentation of a petition
earlier than they own, run great risk of having to pay the
costs incurred by themselves, if not also the costs of the
persons they have served(f). Where, however, the first
petition is presented by persons in the interest of the com-
pany and is of a suspicious character, a second petition is
considered justifiable (g) ; and where there are several justifiable
petitions and a winding-up order is made, one order is usually
made on all the petitions, and the costs of them all are paid by
North Brazilian Sugar Factories, 56
L. T. (N. 5S.) 229; Criterion Gold
Mining Co., W. N. 1889, p. 46.
(c) Chepstow Bobbin Mills Co., 36
Ch. D. 563.
(d) West Hartlepool Iron Works
Co, 10 Ch. 629. In United Ports
and General Ins. Co., 39 L. J. Ch.
146, V.-C. K., the priority of several
petitions was determined by the
dates of their advertisements.
(e) General Financial Bank, 20
Ch. D. 276; G. F. Brooke & Co., W.
N. 1888, 213.
(f) See, on this subject, Hx parte
Turner, 3 De G. & S. 127; Times
Fire Ass. Co., 80 Beay. 596; and
the cases in the next note.
(9) General Financial Bank, 20
Ch. D. 276; Humber Iron Works
Co.,2 Eq. 15 ; Commercial Discount
Co. 1 N. R. 416.
APPEALS AND STAYING PROCEEDINGS. 661
the company (i) ; one set of costs being allowed to the unserved Bk. ON a 1,
creditors and one to the unserved contributories appearing and --— - —
supporting the petitions ({). Each, however, of several petitions
must be dealt with on its own merits (k).
If a petition is presented by a limited company (2), or by a Sccurity for
person resident out of the jurisdiction, or in the case of a life oe
insurance company by a policy-holder‘or a contributory (1m), or
if the petitioner before the hearing has filed a petition in bank-
ruptcy (n), the petitioner can be compelled to"give security for
costs before his petition is heard; and such security can be
applied for, either when the petition comes on for hearing (0)
or before (p) ; and the respondent does not lose his right to
security by filing affidavits in opposition to the petition (q).
Persons opposing the petition cannot be ordered to give
security for costs (r).
If a petitioner dies between the presentation and hearing of Dea of
the petition, his personal representatives] may obtain leave to?” oe
eontinue and carry on the petition (s).
Appeals from and staying proceedings under winding-up
orders.
A winding-up order made by a court having no jurisdiction Improper
to make it, is wholly invalid, and must be so treated although eer
not appealed against (¢); but an order made by a court having
jurisdiction must be treated as valid until reversed on
(hk) See the cases in the last two
notes, and Ex parte Walker, 1 De G.
& Sm. 585.
(2) Ante, pp. 658, 659.
(k) European Bank Co., 2 Eq. 521,
As to the carriage of the order in
such cases, see infra, p. 686.
(1) See the Companies act, 1862,
§ 69.
(m) 33 & 34 Vict. c. 61, § 21.
(n) Carta Para Mining Co., 19
Ch. D. 457, but compare Rhodes v.
Dawson, 16 Q. B. D. 548.
(0) Home Ass, Assoc. (No. 2), 12
Eq. 112; Ee parte Seidler, 12 Sim.
106.
(p) Atkins v. Cooke, 3 Drew. 694.
(q) See last note but one, and
Martano v. Mann, 14 Ch. D. 419;
Lydney and Wigpool Co. v. Bird, 23
Ch. D. 358, and R. S. C. Ord. Ixv. r.
6, which leaves the amount of the
security to be given in the discre-
tion of the judge.
(r) Percy and Kelly Nickel, c&c.,
Co., 2 Ch. D, 531.
(8) Dynevor Duffryn Collieries Co.,
W. N. 1878, 199, and see Atkins’
Estate, 1 Ch. D. 82 ; Commercial Bank
of London, W. N. 1888, 213 and 234.
(t) Plumstead Water Co. v. Davis,
28 Beay. 545, and 2 De G. F.& J. 20.
662
Sect. 5
Appeal from
the winding-up
order.
Discharge of
order
Bk. IV. Chap. 1. appeal (u).
WINDING UP BY THE COURT.
Under the older winding-up acts, if an order were
made upon the petition of a person not entitled to petition,
the order was not void; but it, and all proceedings under it,
were allowed to stand, and its further prosecution was, upon
a proper application to the court, entrusted to a qualified
person(v). There is no express provision to this effect in
the Companies act, 1862, but the old winding-up practice is
so continued that probably the above rule would still be
observed (y).
After an order for the winding up of a company has been
made, such order may be appealed from in the ordinary way (sz),
by a person entitled to appear and be heard on the petition (a)
in 21 days (b). The appointment of a liquidator does not
prevent the directors of the company authorising an appeal (c),
but when a limited company appeals without joining anyone
personally responsible for costs, it will as a rule be ordered to
give security for the costs of the appeal (d).
It does not follow
that because the order is appealed against, proceedings under
it will be stayed until the appeal is disposed of (e).
Before the Judicature acts, a winding-up order might have
(u) Pudstow Total Loss Assoc., 20
Ch. D, 187; Arthur Average Assoc.,
3 Ch. D. 522; Ex parte Hargrove, 10
Ch. 542; London Marine Ins. Assoc.,
8 Eq. 189 and 193; Ex parte Oakes
and Peek, W. N. 1867, 101, and
L. R. 2 H. L. 369.
(x) 11 & 12 Vict. 0. 45, § 9.
(y) See the Companies act, 1862,
§§ 82, 170; the latter section was
repealed by 44 & 45 Vict. c. 59, but
see § 4 of that act.
(2) 25 & 26 Vict. c. 89,§ 124. A
company successfully appealing was
allowed its costs out of its own estate
in National Savings Bank Association,
1 Ch. 554,
(a) See Bradford Navigation Co.,
5 Ch. 600.
(b) See R. S. C., Ord. lviii. rr. 9
and 15 ; National Funds Ass. Co., 4
Ch. D, 305. The time may be ex-
tended by the Court of Appeal, as to
which, see New Callao, 22 Ch. D.
484 ; Manchester Economic Building
Society, 24 Ch. D. 488; Madras
Irrigation and Canal Co., 23 Ch. D-
248. Before the Judicature acts,
the limit of twenty-one days did
not apply to appeals from winding-
up orders. See Re Universal Bank,
1 Ch. 428 ; Anglo-Californian Min-
ing Co., 1 Dr. & Sm. 628; Plumstead
Water Co. 2 De G. F. & J. 20, The
fact that calls had been made and
other proceedings taken did not
prevent an appeal. See National
Permanent Benefit Building Soc., 5
Ch. 309.
(¢) Diamond Fuel Co., 18 Ch. D.
400.
(d) Diamond Fuel Co., 13 Ch. D.
400; Photographic Artists Associa-
tion, 23 Ch. D. 370.
(ce) See R. S. C., Ord. lviii. r. 16,
and Ex parte Barber, 1 Mac. & G, 183.
APPEALS AND STAYING PROCEEDINGS.
been discharged on motion or petition by the judge who made
it; but now no judge can rehear an order, whether made by
himself or another judge, the power to rehear being part of the
appellate jurisdiction which was transferred to the Court of
Appeal (/).
Cases may occur in which a winding-up order has been rightly
made, but in which its further prosecution is not desirable, as
for instance when the Court wishes to reduce the contracts of
a life insurance society instead of making an order to wind the
society up (g). In such a case, application should be made to
the Court which made the order, to stay the proceedings under
it. This the Court has power to do on the application of any
creditor or contributory (hk) ; and the Court will accede to the
application if it is satisfied that it is not for the advantage of
the company, or of any of the persons interested in its winding
up, that further proceedings should be taken (i). Thus in the
case of The Worcester, Tenbury, and Ludlow Raihvay Com-
pany (k), ® winding-up order had been made, an official
manager had been appointed, all the company’s debts had been
paid, and a surplus remained. It had been found impossible
to make out a complete list of contributories, as the allottees
of a considerable number of shares could not be discovered,
but the known allottees held the great bulk of the shares
which had been issued. Upon their petition the Court
ordered the fund in Court to be paid to them, they under-
taking to deal with it as the Court should direct, and to pay
the costs incurred in the winding up. So proceedings will be
stayed in order to enable a company to resume business if cir-
cumstances justify such an order ()).
But a winding-up order is in the nature of a judgment for
the benefit as well of creditors as of contributories (m); and
(f) St. Nazaire Co., 12 Ch. D. 88 ;
Manchester Economic Building Soc.,
24 Ch. D. 488.
(9) Great Britwin Mutual Ltfe
Assurance Soc., 16 Ch. D. 247.
(h) See § 89 of the Companies
act, 1862. A person applying as an
alleged contributory must admit
himself to be a contributory. See
ante, p. 625.
(t) In Ex parte Barber, 1 Mac. &
G. 176, proceedings pending an ap-
peal were not stayed.
(4) 3 De G. & S. 189.
(J) South Barrule Slate Quarry Co.,
8 Eq. 688,
(m) See § 82 of the Companies
act, 1862.
663
Bk. IV. Chap. 1.
Sect. 5.
Staying pro-
ceedings under
order.
Worcester,
Tenbury, &e.,
Railway
Company.
Winding-up
order in the
nature of a
judgment.
664
Bk. IV. Chap. 1.
Sect. 6.
Costs to be
provided for
on staying
proceedings.
1, Compulsorily.
2. Voluntarily.
WINDING UP BY THE COURT.
proceedings under it cannot be stayed without giving those who
— have acquired rights consequent upon it an opportunity of op-
posing the application to stay proceedings (mn). Consequently,
an order to stay proceedings will not be made, unless the con-
tributories, and the creditors who have proved their debts, have
had proper notice of the intention to apply for the order; and
such an order will not, therefore, be made upon notice of a
motion to discharge a call (0), or to be struck off the list of
contributories (p).
Again, where an order has been obtained and acted on and
costs have been incurred under it, these costs must be pro-
vided for by those who seek to have further proceedings
stayed (q).
SECTION VI.—EFFECT OF WINDING UP AS REGARDS DEALINGS
WITH PROPERTY.
1. Commencement of winding up.
When a petition is presented to wind up a company by the »
Court, the commencement of the winding up dates from the
presentation of the petition (r). Hence the importance, when
there are several petitions, of making a winding-up order, if
possible, on that first presented. But if the petition is dis-
missed, the winding up commenced on its presentation will
obviously be at an end.
When a resolution has been passed to wind up a company
voluntarily, the voluntary winding up dates from the passing
of the resolution (s).
(n) See Carew’s case, 5 De G. Mac.
& G. 94; Underwood's case, ib. 677 ;
Clifton’s case, ib. 743. As to serving
the provisional liquidator, see Hx
parte Coleman, 3 De G. & 8, 139,
(0) Carew’s case, 5 De G. M. & G.
94, reversing 8. C., 25m. & G. 1.
(p) Underwood’s case, 5 De G. M.
& G. 677 ; Sharpus’s case, 3 De G. &
8. 49.
But if the company is afterwards ordered
(q) Clarke's case, 1 K. & J. 22; Ea
parte Woolmer, 5 De G. & 8. 117,
and 2 De G. M. & G. 665.
(r) § 84. Taurine Co., 25 Ch. D.
118.
(s) § 130, ¢.¢., the confirmation of
the resolution when the resolution
is special. See Emperor Life Assur-
ance Society, 31 Ch. D. 78; Dawes
case, 6 Eq. 232, and infra, ¢. 2.
COMMENCEMENT OF WINDING UP. 665
to be wound up compulsorily, the commencement of the Bk. Ne eign
winding up will date from the time of the presentation of the —
petition on which the order is made (¢): but not so as to
invalidate what has been done or to let in a distress (wu). The
consequence of altering the date of the commencement of a
winding up is sometimes a good reason for not making a
compulsory order when a company has been for some time
winding up voluntarily.
An order to wind up a company subject to the supervision 3. Subject to
of the Court pre-supposes a prior resolution to wind up volun- i
tarily, and in fact continues the voluntary winding up. The
commencement, therefore, of a winding up subject to super-
vision dates from the passing of the resolution to wind up
voluntarily, and not from the time of the presentation of the
petition on which the order is made (x); and this is the case
although a provisional liquidator has been appointed, and a
compulsory order made before the resolution for a voluntary
winding up was passed, if the compulsory order is subsequently
changed into a supervision order (y); and the Court has no
jurisdiction to alter this date ().
It seems that if a compulsory order is made after an order
to wind up under supervision, the date of the commencement
of the winding up is not altered by the second order (a).
As regards life insurance companies which have transferred Life insurance
their business to others, the enactment contained in 35 & 36 eter
Vict. c. 41, § 4(6), must not be forgotten; it in effect makes
(t) § 84. Taurine Co., 25 Ch. D.
118.
(u) Thomas v. Patent Lionite Co.,
17 Ch. D. 250.
(x) Emperor Life Assurance Society,
31 Ch. D. 78; Weston’s case, 4 Ch.
20, and 6 Eq. 238; Ex parte Col-
borne and Strawbridge, 11 Eq. 478,
§§ 148, 151, and 164. Compare Hx
parte Bradshaw, 15 Ch. D. 472, where
for the purpose of fixing the date of
a debenture-holder’s charge, the date,
at which a provisional liquidator
was appointed, was taken.
(y) Emperor Life Assurance Society,
31 Ch. D. 78 ; Dry Docks Corpora-
tion of London, 39 Ch. D. 306.
(2) West Cumberland Iron and
Steel Co., 40 Ch. D. 361.
(a) See United Service Co., 7 Eq.
76, where a company was being
wound up voluntarily, and an order
was made on one petition to con-
tinue such winding up, subject to
supervision, and a compulsory order
was made on another petition, and
was dated the day after the first
order.
(b) Ante, p. 643.
666
WINDING UP BY THE COURT.
Bk. IV. Chap. 1. the commencement of the winding up of the purchasing com-
Sect. 6.
Importance of
the commence-
ment of wind-
ing up.
Lis pendens.
Retrospective
effect of order
to wind up.
pany the commencement of the winding up of the selling
company, unless the Court otherwise orders; but the enact-
ment does not apply to a purely voluntary winding up.
The exact time of the commencement of the winding up of
a company is important, inasmuch as after that time great
restrictions are put on all dealings with the property of the
company, on all alterations in the status of its members, and
on all proceedings by creditors to enforce payment of their
debts. The leading principle pervading the winding-up provi-
sions of the Companies act, 1862, is that nothing shall be done
after the commencement of the winding up of a company
except with a view to realise its assets and distribute them
ratably first among its creditors, and then, if there is a
surplus, amongst its members (c).
2. Lffect of winding up on dealings with property.
A petition to wind up a company compulsorily is not a lis
pendens (a).
‘When an order has been made to wind up a compamy com-
pulsorily, or subject to the supervision of the Court, all dis-
positions of the property, effects, and things in action of the
company made subsequently to the commencement of the
winding up of the company are void unless confirmed by the
Court (e).
The winding-up order has thus a retrospective effect; and
the section in question apparently even renders void all dispo-
sitions of property made previously to the order by voluntary
liquidators unless the Court expressly sanctions them (/).
After a winding-up order has been made, no disposition of
the company’s property is valid unless made by the liquidators
or the Court (g).
(c) This will be seen by examin- before this act, Ex parte Thornton,
ing the following sections, 85, 87, 2 Ch. 171.
95, 98, 102, 107, 109, 133,153, 158, — (e) § 153.
163, 164, and 196 to 204, And see (Ff) See, also, § 151. But quere
Ashbury’s case, 5 Eq. 223, and Ex if this is the true construction.
parte Grissell, 1 Ch. 528. (g) See §§ 92 and 95.
(d) 30 & 31 Vict. c. 47. See,
EFFECT ON DEALINGS WITH PROPERTY.
After a resolution to wind up voluntarily, no disposition of
a company’s property can, it is apprehended, be made, except
by the liquidators (fh).
It will be observed that what are avoided are dispositions
by the company of its property, not transfers or payments-to it,
e.g., not a transfer of shares to the company (2), nor payment
of a debt to it (k).
Payments by the company after the commencement of the
winding up are however avoided unless sanctioned by the
court; and this rule applies even to the payment of a petition-
ing creditor’s debt if an order is made on his petition or on
any petition presented previously to it (J).
In a recent case it was held that a customer of the Oriental
Bank Corporation, who had paid money in at a branch office
of the bank in the Mauritius in exchange for drafts on the
head office in London, after the presentation of a petition in
London to wind up the bank, and the appointment of a pro-
visional liquidator, but before any notice of these facts had, or
could have, reached the Mauritius, had no right to have his
money refunded, but was only entitled to prove in the winding
up for the amount of the drafts part passu with other cre-
ditors (m).
The Court will, however, confirm bond fide sales (n), mort-
gages (0), or other dispositions of the company’s property
made in the interval which elapses between the presentation of
the petition and the winding-up order. Further, if the pro-
perty in goods sold in that interval has passed to the pur-
chaser, the Court will order the liquidator to deliver such
goods to him (p); but if the property has not passed, the pur-
chaser cannot obtain the goods; he can only prove against
the company in respect of damages (q).
(h) See §§ 131 and 133. (m) Ex parte Guillemin, 28 Ch. D.
(t) Ex parte Contract Corporation, 634. ;
3 Ch. 105. (n) Pearson’s case, 3 Ch. 443.
(k) Mersey Steel and Iron Co. v. (0) Gibbs and West's case, 10 Eq.
Naylor, Benzon & Co, 9 App. Ca. 312.
434, and 9 Q. B. D. 648. (p) Pearson’s case, 3 Ch. 443.
(2) Ex parte Greenwood, 9 Ch, 511 ; (q) Ib.
Daly & Co., 19 L. R. Ir, 83.
667
Bk. IV. Chap. 1.
Sect. 6.
Bona fide sales,
&c., upheld.
668
Bk. IV. Chap. 1.
Sect. 6.
Liens.
Wiltshire Tron
Company v.
Great Western
Railway Com-
pany.
Fraudulent
preference,
WINDING UP BY THE COURT.
Liens acquired on a company’s property before the com-
mencement of the winding-up are not avoided (r), and if a
debt due to a company has been equitably assigned before a
petition to wind it up is presented the assignee’s title is not
affected, by a subsequent winding-up order (s). But a lien
cannot be acquired after the winding up has commenced, ¢.g.,
a solicitor cannot retain documents of the company come to
his hands since that date (¢).
In connection with this subject, an important decision of
the Court of Queen’s Bench and Exchequer Chamber requires
notice. A company had agreed that a carrier should have a
general lien on all goods carried for it; the company was
ordered to be wound up, and the liquidator continued to
employ the carrier without coming to any fresh agreement
with him. The carrier sought to detain goods sent by the
liquidator until he should pay the debt due from the com-
pany ; but it was held that the carrier was not entitled to do
so (u). The Court seems to have thought that the winding-up
order put an end to the previous agreement for a lien, and that
the goods sent by the liquidator were not the goods of the
company. But it is submitted that neither of these views was
correct. As, however, there was no plea on equitable grounds,
the Court was not in a position to give due weight to the
difference between an equitable security and a common law
lien.
Where a company is being wound up, whether by the Court
or subject to its supervision, or voluntarily, the doctrines of
fraudulent preference are applicable to it; and with reference
to these doctrines, the presentation of the petition in the first
two cases, and the resolution to wind up in the last case, is
equivalent to an act of bankruptcy (v).
It has been decided that a disposition of property, which is
invalid on grounds of fraudulent preference, can be set aside
(r) See the next two notes, and (u) Wiltshire Iron Co. v. Great
the authorities there cited. Western Rail. Co., L. R. 6 Q, B. 101
(8) Gorringe v. Irwell India Rubber, & 776, not followed in Llangennoch
c&e., Works, 34 Ch. D. 128. Coal Co., W. N. 1887, p. 22.
(t) Capital Fire Ins. Assoc., 24 Ch. (v) § 164; Bankruptcy act, 1883,
D. 408. § 48; Kent's case, 39 Ch. D. 259;
EFFECT ON ACTIONS, &c. 669°
in an action instituted by the company itself (x); but no dis- Bk. cee 1,
position of a company’s property can be impeached on the .————
ground of fraudulent preference, except for the benefit of the
general body of creditors (y); and the disposition must have
been made in contemplation of a winding up, and without
pressure (z). Pressure, however, by a director of an insolvent
company to obtain security for a debt owing to himself by
that company has been held not to be enough (a).
The doctrines of reputed ownership have no application to Reputed owner-
companies which are being wound up (0). oe
All conveyances or assignments by a company formed under Creditor’s deeds,
the act of 1862 to trustees for the benefit of all its creditors,
are wholly void (c).
The effect of the commencement of the winding up of a Transfers of
company on transfers of shares and the status of members and cna
agreements with them will be examined hereafter.
3. Effect of winding up on legal proceedings against the company
and its members.
No part of the law relating to the winding up of companies @) Old law.
has been more altered or improved than that which relates to
the rights of creditors to enforce payment of their debts by
ordinary legal proceedings (d). Under the Winding-up acts of Acts of 1848
1848 and 1849 it was held (e)— ena
Inns of Court Hotel Co., 6 Eq. 82 ;
Syke’s case, 13 Eq. 255. Compare
Poole Jackson and Whyte’s case, 9
Ch. D. 322.
(x) Gas Light Improvement Co. v.
Terrell, 10 Eq. 168.
(y) Willmott v. London Celluloid
Co., 34 Ch. D. 147, affirming 31 Ch.
D. 425, where it was held that
debenture-holders could not take
advantage of this doctrine to re-
cover money exclusively for their
own benefit; and see Hx parte
Cooper, 10 Ch. 510.
(2) Inns of Court Hotel Co., 6 Eq.
82; Ex parte Birmingham Banking
Co., 6 Ch. 83, N.B. It is not every
disposition of property which would
be an act of bankruptcy, that is void
under § 164. See the last case. See
Partn. 628, for the principles appli-
cable to this subject.
(a) Gas Light Improvement Co. v.
Terrell, 10 Eq. 168, and observe that
the security there included all the
company’s property. Compare Ha-
bershon’s case, 5 Eq. 287, and see
Syke’s case, 13 Eq. 255.
(b) Gorringe v, Irwell India Rubber
Works, 34 Ch. D. 128; Crumlin
Viaduct Works Co., 11 Ch. D. 755,
(c) § 164.
(d) See ante, p. 611 et seq.
(e) The statements in the text
670
Bk. IV. Chap. 1.
Sect. 6.
WINDING UP BY THE COURT.
1. That a winding-up order per se did not prevent a cre-
ditor of the company from obtaining and executing judgments
against it or its members (/).
2. That a winding-up order, and the appointment of an
interim manager, did not preclude a creditor from obtaining
judgment against the company or its members, or from en-
forcing a judgment against the latter; but merely precluded
the judgment creditor from intermeddling with the property of
the company protected by the interim manager (9).
3. That after a winding-up order, and the appointment of
an official manager, proceedings by a creditor of the company
against the company or its members would be stayed until the
creditor had, so far as he was able, proved his debt in the
winding up (h).
4. That this last rule did not apply to persons in a position
to sue one or more individuals by virtue of some contract
binding on them, otherwise than as members of the company,
é.g., upon some separate undertaking or promissory note, on
which they were personally liable (2).
5. That a creditor of the company who had, so far as he was
able (x), proved his debt in the winding up, was at liberty to
proceed to enforce his demand against the company or its
apply to the creditors suing in the (g) Brettell v. Dawes, 7 Ex. 307.
ordinary courts of law. Creditors
suing in the Stannary Courts were
in a much worse position, for their
proceedings were stayed by the
mere presentation to the Court of
Chancery of a petition for winding
up, and notice thereof to the Vice-
Warden. See 12 & 18 Vict. c. 108,
§ 1, and 20 & 21 Vict. c. 78, §§ 12
and 13. It was, however, decided
that a creditor was not entitled to
appear and oppose the petition,
Tretoil and Messer Mining Co., 2
J. & H. 421,
(f) Re India and Australia Steam
Packet Co, 17 Sim. 15; Hill v.
London and County Assurance
Co, 1 H. & N. 398; Re Phillips,
18 Beav. 629.
(h) Hutchinson v. Harding, 11 Ex.
561; Thompson v. Universal Salvage
Co., 3 Ex. 310; Macgregor v. Keiley,
4 Ex. 801 ; Prescott v. Hadow, 5 Ex.
726; Marson v. Lund, 13 Q. B. 664.
But non-proof in the winding up
was no defence to an action, Mac-
kenzie v. Sligo, &c., Rail. Co., 18
Q. B. 862,
(t) Re Sudlow and Kingdom, 12
Beav. 527; Penkivil v. Connell, 5
Ex. 381; Beardshaw v. Londes-
borough, 11 C. B. 498. See, too,
Macgregor v. Keiley, 4 Ex. 801;
Dover and Deal Rail. Co., 17 Sim.
18.
(k) An unsatisfactory affidavit of
debt is not sufficient proof, Hutchin-
son Vv. Harding, 11 Ex. 561.
EFFECT ON ACTIONS, &c. 671
members without further hindrance or delay, save that he Bk. hie ht 1.
could not seize the property of the company vested in the —
official manager. Therefore the Court of Chancery would not
restrain such creditor from issuing execution against a con-
tributory (2); nor would a court of law withhold from a judg-
ment creditor of the company permission to enforce payment
of his debt from the individuals liable to pay it (m); nor was
there anything to prevent such a creditor from suing the
official manager for the purpose of obtaining a judgment,
decree, or order against him (n), or from afterwards enforcing
such judgment, decree, or order against the individuals repre-
sented by him (0).
By 20 & 21 Vict. c. 78, however, these rights of the creditors oa wee
of a company which was being wound up under the acts of « 78.
1848 and 1849, were materially altered. For in the first place,
the Master or Judge acting in the winding up was empowered
to call upon the creditors, by advertisement, to meet and
choose one or more persons, other than the official manager,
to represent them in the winding up; and after they had been
thus called upon by advertisement, the creditors became parties
to the winding up (7).
In the next place, as soon as the creditors had chosen, or When leave
had been required to choose, representatives, no action or suit ee
could be either commenced or prosecuted by any creditor
against the official manager or the company, or any other
person representing the same, or any person as a contributory
thereof, except by leave of the Master or Judge acting in the
\
(l) Re Dover and Deal Rail. Co., 17
Sim. 18; Re Phillips, 18 Beav. 629 ;
Prichard’s case, 5 De G. M. & G,
484,
(m) Morisse v. Royal Brit. Bank,
1C.B. N.S. 67; Palmer v. Justice
Assurance Society,6 E. & B. 1015;
Hilly. London and County Assurance
Co, 1 H. & N. 398; Carroll v.
Kennedy, 6 Ir. Com. Law Rep. 11 ;
Mackenzie v. Sligo, &c., Rail. Co. 4
E. & B. 119.
(n) Robson v. M’Creight, 25 Beav.
272 ; Thompson v. Norris, 5 De G.
& 5. 686.
(0) But a judgment against the
official manager of a so-called com-
pany which has no capacity to sue
or be sued, either by a corporate
name or by a public officer, cannot
be enforced against the individuals
composing such company, Re Weiss,
15 C. B. 331.
(p) 20 & 21 Vict. c. 78,§1. See
Mexican and South American Mining
Oo., 26 Beav. 172.
672
Bk. IV. Chap. 1. winding up (q).
Sect. 6,
6) Under the
companies act,
1862.
1. Where com-
pauy is being”
wound up by
the Court.
Restraining
actions, &c,
WINDING UP BY THE COURT.
It was not, however, incumbent on the Master
or Judge to require the creditors to choose a representative ;
and until they were required to do so, their right to sue was
not affected (7).
The Companies act, 1862, proceeds upon an entirely different
principle ; the leading idea being that when the winding up of
a company has once commenced, its creditors ought to be paid
pari passu (s). In order to give effect to this principle the act
enables the Court, when a company is being wound up either
compulsorily or voluntarily (¢), to stay actions and executions,
not only against companies which are being wound up, but also
against their members in those cases in which such proceedings
against them individually can still by law be taken.
It has been already pointed out that the members of a com-
pany formed and registered under the Companies act, 1862, or
under the former acts of 1856-8, are not liable to be proceeded
against personally by action in respect of the debts of the com-
pany (wu); but it may be otherwise as regards companies not
formed under these acts; and it therefore becomes material
for the present purpose to distinguish companies of the first
class from those of the second.
a) As regards companies formed and registered under the act.
With respect to companies formed and registered under the
Companies act, 1862, or under the repealed acts of 1856-8 (2),
it is enacted that at any time after the presentation of the
petition, and before any winding-up order is made upon it, the
Court may, upon the application of the company, or any
creditor or contributory of the company, restrain further pro-
(q) Ib. § 7. Such leave was ob- W.R. 4.
tained in Chambers, Royal British
Bank, 3 Jur. N. 8. 1114; if not ob-
tained, the court in which the action
was brought would stay proceedings,
Thomas v. Wells, 16 C. B. N.S. 508.
See, as to judgment creditors, Barnes
v. Thrupp, 3 Jur. N.S, 1242.
(r) Robson v. M’Creight, 25 Beav.
272. See, also, Ex parte Tobin, 7
(s) See ante, p. 666, note (c), and
Ex parte Grissell, 1 Ch. 528 ; Ash-
bury’s case, 5 Ey, 223; Wiltshire
Tron Co. v. Great Western Rail. Co.,
L. BR. 6 Q. B. 101 & 776.
(t) See §§ 85, 87, 138, 163.
(u) See ante, p. 276 et seq.
(x) See §§ 176 and 177 of the
Companies act, 1862.
STAYING ACTIONS, EXECUTIONS, &c. 673°
Bk. IV. Chap. 1.
Sect. 6.
ceedings in any action, suit, or proceeding against the com-
pany (y); and further, that after a winding-up order is made,
no action, suit, or other proceeding shall be proceeded with or
commenced against the company, except with the leave of the
Court, and subject to such terms as the court may impose (2).
Moreover, where a company is being wound up by the Court,
or subject to the supervision of the Court, any attachment,
sequestration, distress or execution, put in force against the
estate or effects of the company after the commencement of
the winding up, is declared to be void to all intents («).
There are no similar provisions expressly applicable to Where company
: , f w is being wound
companies which are being wound up voluntarily; but upon up voluntarily.
the application of the liquidators or any of the contributories
of such companies, the Court is empowered to restrain cre-
ditors from proceeding with actions, executions, &., in like
manner as it can where a company is being wound up by the
Court (b) ; and this power has been exercised on several occa-
sions (c).
apparently entitled to apply to the Court to interfere in these
cases (d).
Where a company is being wound up under the supervision Where company
of the Court, the Court has the same jurisdiction over suits nae ae
and actions as it has when the company is being wound up ‘“°™
compulsorily (e).
These enactments do not apply to proceedings by the
Crown (f).
Neither a creditor nor the company, however, is
(y) Companies act, 1862, § 85.
(2) Ib. § 87.
(a) Ib. § 163 ; Ex parte Fourdrinier,
21 Ch. D. 510. In Harford v. Ami-
cable, &c., Asso. Co., Ir, L. R. 5 Com.
Law, 368, the Court set aside a
judgment entered up against a com-
pany after it had been ordered to be
wound up. See infra.
(b) § 188.
(c) Actions stayed, Keynsham Co.,
33 Beav. 123 ; Life Assurance Co. of
England, 10 Jur. N. 8. 762; Thames
Plate Glass Co. v. Land and Sea Tele-
graph Co., 11 Eq. 248; and 6 Ch,
L.C.
643 ; Walker v. Banagher Distillery
Co., 1 Q. B. D. 129; Rose & Co. v.
Gardden Lodge Coal Co.,3 Q. B. D.
235. Execution stayed, Poole Fire
Brick and Blue Clay Co.,17 Eq. 268 ;
Sabloniére Hotel Co. 3 Eg. 74;
Peninsular Banking Co., 35 Beav.
280.
(d) See § 138; Thomas v. Patent
Lionite Co., 17 Ch. D. at p. 257.
(e) §§ 148 to 151.
(f) Oriental Bank Corporation, Ex
parte The Crown, 28 Ch. TD, 643;
Henley & Co., 9 Ch. D. 469.
ey x
674
Bk. IV. Chap. 1.
Sect. 6.
Staying actions.
WINDING UP BY THE COURT.
Notwithstanding the clear words of § 163 they have been
construed as controlled by § 87, and the Court has declared
itself competent to allow attachments, kc., to proceed, if to
stop them will deprive the person putting them in force of all
remedy against the company (g). But an attachment, &c.,
which is void under § 163 is void altogether—i.e., as against
secured creditors, and not only as against the company (i).
Tt is necessary to notice in greater detail the numerous
decisions on the foregoing enactments with respect to actions,
executions, and distresses,
As regards actions.— When the Court is asked to stay an
action, the only material question to be considered is, whether
there are any circumstances which render it necessary that the
action should be continued, or whether the claim of the plain-
tiff is not one which can be as easily dealt with in the winding
up as in any other way. If the claim sought to be enforced is
capable of being satisfactorily dealt with in the winding up,
other proceedings to enforce it will be stayed(i); but the
costs already incurred by the creditor will be added to his
debt(j). Even where a company is being wound up volun-
tarily, actions against it will be stayed upon these terms (k).
If the Court is of opinion that the action ought not to be’
stopped, e.g., where an action is instituted against directors or
other individuals as well as against the company, the Court
will allow the proceedings to go on (J), but will require the
(g) Exhall Coal Mining Co.,4 De Life Assurance of England, 10 Jur.
G. J. & 8. 377 ; Lx parte Carnelley,
35 Ch. D. 656.
(h) Ex parte Fourdrinier, 21 Ch.
D. 510.
(4) Hermann Loog, Limited, 36 Ch.
D. 502, action in Scotland ; Inter-
national Pulp and Paper Co., 3 Ch.
D. 594, action in Ireland ; Australian
Direct Steam Nav. Co., 20 Eq. 325, a
suit to enforce a maritime lien, and
compare Rio Grande do Sul Steamship
Co., 5 Ch. D. 282 ; Re Briton Medical
Assur. Assoc., 32 Ch. D. 503, sum-
monses to recover penalties. See,
also, the next note.
(j) Keynsham Co,, 33 Beav. 123 ;
N. 8. 762; Rose & Co. v. Gardden
Lodge Coal Co 3 Q. B. D. 285,
where the plaintiff's costs of appear-
ing on the application to stay pro-
ceedings were not allowed.
(k) See Rose & Co. v. Gardden
Lodge Coal Co., 3 Q. B. D. 235;
Poole Fire Brick, dc. Co., 17 Eq.
268, and other cases, ante, p. 673,
note (c).
(1) As in Wyley v. Exhall Coal
Co., 33 Beav. 538; Hall v. Old
Talargoch, &c., Co., 3 Ch. D. 749,
and Rio Grande do Sul Steamship Co.,
5 Ch. D. 282.
STAYING ACTIONS.
plaintiff to undertake not to issue execution against the
company without the leave of the Court(m). So the Court
has allowed a suit to go on until the defendants have answered,
but no further (x). A mortgagee will not be restrained from
enforcing his rights against the mortgaged property (0).
Applications for leave to continue proceedings against a
company which has been ordered to be wound up should be
made to the judge who made the order(p); and should be
made by sumimons at chambers (q): and if he gives leave to
proceed, the appeal court will not interfere (r).
The liquidator ought to be the receiver in actions in which
receivers are necessary (s).
By Order XLIX. r. 5, of the Rules of the Supreme Court,
1883, ‘‘when an order has been made by any judge of the
Chancery Division for the winding up of any company, the
judge in whose court such winding up shall be pending shall
have power, without any further consent, to order the transfer
to such judge of any cause or matter pending in any other
court or division brought or continued by or against such
company ”’ (t).
675
Bk. IV. Chap. 1.
Sect. 6.
R. 8.0.
XLVI. 2, 5.
The Court has no power to order the costs of an action Costs.
which has been dismissed by consent in consequence of the
company being wound up, to be paid out of the assets of the
(m) McEwen v. London and Bom-
bay and Mediterranean Bank, W. N.
1866, 407 ; Hagell v. Currie, ib. 1867,
75.
(n) Thames Plate Glass Co. v. Land
and Sea Telegraph Co., 11 Eq. 248,
and 6 Ch. 643.
(0) Lloyd v. Lloyd, 6 Ch. D. 339 ;
Longdendale Cotton Spinning Co., 8
Ch. D. 150, where the company was
being wound up in the County
Palatine Court of Lancashire ;
Morr v. Anglo-Italian Bank, 10
Ch. D. 681, where the property
subject to the mortgage was in
Italy, and proceedings were being
taken in that country ; and Hodson
v. Tea Co., 14 Ch. D. 859.
(p) Wilson v. Natal Investment
Co., W. N. 1867, 68.
(q) Hagell v. Currie, W. N. 1867,
75.
(r) Thames Plate Glass Co. v. Land
and Sea Telegraph Co., 6 Ch. 643.
(s) Perry v. Oriental Hotels Co., 5
Ch. 420. See, also, Campbell v.
Compagnie Générale de Bellegarde, 2
Ch. D. 181. See, in a voluntary
winding up, Boyle v. Bettws Llant-
wit Coll. Co., ib, 726.
(t) Compare Ord. li. r. 2a, of the
Rules of 1875, and Madras Irriga-
tion Co., 16 Ch. D. 702, correcting
Landore Siemens Steel Co. 10 Ch. D.
489,
xx2
676
Bk, IV. Chap. 1.
Sect. 6.
Practice.
Staying execu-
tions,
Executions
levied before
a winding-up
order.
WINDING UP BY THE COURT.
company, although the action was brought by shareholders for
the benefit of the company (w).
Proceedings before a magistrate to recover penalties from a
company may be restrained ().
An application to stay an action in the High Court should
be made by summons in the action, and not to the judge in
whose Court the company is being wound up (y). To stay
other actions application must be made to him.
When a winding-up petition has been presented and has not
been heard, the usual practice is to apply ex parte to have
actions stayed until the petition is heard or disposed of; and
an order to this effect is generally granted, on the usual under-
taking being given as to damages. This practice was adopted,
after consideration, by V.-C. Wickens in London and Suburban
Bank (z), and has been followed. since the Judicature acts by
all the divisions of the High Court. Z
As regards executions.—The Court is much more reluctant
to stay executions than other proceedings. To interfere with
a creditor whose legal right is established, and who is about to
reap the fruit of a successful litigation, is a strong measure
scarcely to be justified by considerations of hardship to the
debtor, but possibly justifiable on the principle that equality
is equity, and that it is unjust to other creditors that one shall
obtain payment in full whilst little or nothing is left for them.
Even as between creditors, however, some preference is fairly
the reward of extra diligence; and where a creditor has
actually issued execution against a company before a petition
to wind it pp has been presented, and the sheriff is in posses-
sion when it is presented, the Court will not interfere and
deprive the creditor of the fruits of his diligence (a), unless
(wu) Hull Central Drapery Co., 15
Ch. D. 326.
(«) Briton Medical, cc., Assoc., 32
Ch. D. 503.
(y) Jud. act, 1873, § 24, cl. 5;
Artistic Colour Printing Co., 14 Ch.
D. 502; Walker v. Banagher Dis-
tillery Co., 1 Q. B. D. 129; People’s
Garden Co., 1 Ch. D. 44; Needham
v. Rivers Protection Co., ib. 253;
Perkins Beach Lead Mining Co., 7
Ch. D. 371, and Kingchurch v.
People’s Garden Co., 1 C. P. D. 45,
contra.
(z) 19 W. BR. 950,
(a) Withernsea Brickworks, 16 Ch.
D. 337 ; Parry’s case, 4 De G. J. &
Sm. 63. See, also, London Cotton Co.,
2 Eq. 53, where the sheriff was kept
out of possession ; Bastow, &c., Co.,
4 Eq. 681.
STAYING EXECUTIONS. 677
under very special circumstances, ¢.g., of oppression or Bk. IV. Chap. 1.
fraud (b). But, as a rule, if the sheriff does not seize before a
the commencement of the winding up, the execution will be
stayed (c); and receivers appointed in the same interval will
be restrained from acting (d). In one case, indeed, of this
description the creditor was allowed to proceed, but was put
under terms as to what property he should seize (e) ; and in
two other cases creditors, who had obtained judgment before the
commencement of the winding up, but had at the request of
the company refrained from issuing execution, were allowed
in one case to issue execution after the commencement of the
winding up, and in the other case to have the same advantages
as if the sheriff had seized before the winding up had com-
menced(f). It has, however, been doubted in a later case
whether the fact of the creditor having given time to the com-
pany is sufficient to entitle him to such an indulgence (g) ; but
if the company has behaved in such a way as to make it unfair
for it to restrain a creditor from proceeding on his judgment,
the Court will allow execution to issue(h). On other
occasions, where the execution preceded the petition to wind
up, the Court, whilst staying the execution, has directed the
liquidator to sell for the benefit of the execution creditor (2),
thus substantially securing to him the fruits of his diligence.
A fortiori will the Court not interfere with an execution
(b) See Perkins Beach Lead Min-
ing Co., 7 Ch. D. 371 ; Hull Pottery
Co., 1 Eq. 649, where the sheriff
had seized before the petition was
presented.
(c) See Ex parte Railhvay Steel and
Plant Co., In re Williams, 8 Ch. D.
192; London and Devon Biscuit Co.,
12 Eq. 190, where the writ was
lodged before the petition was pre-
sented.
(d) Campbell v. Compagnie Générale
de Bellegarde, 2 Ch. D. 181; Perry
v. Oriental Hotels Co., 5 Ch. 420.
But see where the winding up is
voluntary, Boyle v. Bettws' Llantwit
Coll. Co., 2 Ch. D. 726.
(e) Bastow, dc, Co, 4 Eq. 681.
See the cases in note (c). +
(f) Richards & Co, 11 Ch, D.
676; Ex parte Railway Steel anid
Plant Co. In re Taylor, 8 Ch. D.
183.
(g) Vron Colliery Co., 20 Ch. D.
442,
(h) Rudow v. Great Britain Mutual
Life Ass. Soc., 17 Ch, D. 600.
(i) Hill Pottery Co. 1 Eq. 649;
Plas yn Mhowys Coal Co., 4 Eq.
689; Ex parte Railway Steel and
Plant Co., In re Taylor, 8 Ch. D.
183. See, also, Dublin Exhabition
Co., Ir. Rep, 2 Hq. 158.
678
Bk. IV. Chap. 1.
Sect. 6.
Executions
levied after
a winding-up
order.
Garnishee
orders.
Judicature act,
1875, § 10.
Staying
distresses.
WINDING UP BY THE COURT.
creditor who has actually got his money before the winding-
up order is made (k).
Executions issued after a petition for a winding-up order
has been been presented, stand in a different position, and are
stopped (2); even although the property seized may be in a
foreign country (m). But the Court will not interfere with
creditors who have obtained judgments against the company in
actions brought by or against it by its liquidators (n). Indeed,
it is very doubtful whether the statutory provisions in question
have any application to such a case.
In the case of an execution by a writ of fi. fa., the important
date is that on which the sheriff seizes; in the case of an
attachment of a debt by means of a garnishee order, the date
to be considered is the date on which the order nisi is served ;
in other respects the rules applicable to the stay of these two
forms of proceedings are the same (0).
It has been decided that section 10 of the Judicature act,
1875, did not introduce into the winding-up of companies,
section 87 of the Bankruptcy act, 1869, which deprived execu-
tion creditors of the fruits of their execution, where the sheriff
had notice of the bankruptcy within fourteen days after
sale (p); and the same reasoning excludes the application of
sections 45 and 46 of the Bankruptcy act, 1883.
As regards distresses.—The 10th section of the Judicature
act, 1875, does not place a landlord in the position of a secured
creditor by reason of his power of distress, nor give him the
priority for a year’s rent, which is conferred upon landlords by
the bankruptcy acts (q). As regards re-entry, the Court will
(k) Ex parte Hawkins, 3 Ch. 787.
() Ex parte Railway Steel and
Plant Co., In re Williams, 8 Ch. D.
192; Waterloo Life Ins. Co.,31 Beav.
589; Peninsular Banking Co., 35
Beav. 280. See, also, Universal
Disinfector Co., 20 Ey. 162; Dim-
son’s Estate Fire Clay Co, 19 Eq.
202, where leave to issue execution
was refused.
(m) Ex parte Scinde Rail, Co., 9
Ch, 557.
(n) See Re Mackrill Smith, 3 Ch.
125 ; Re Levick, 5 Eq. 69.
(0) Stanhope Silkstone Colliertes Co.,
11 Ch. D. 160. See Hamer v. Giles,
ib, 942.
(p) Ex parte Railway Steel and
Plant Co., In re Taylor, 8 Ch. D.
183 ; Withernsea Brickworks, 16 Ch.
D. 337 ; Richards & Co., 11 Ch. D.
676. Printing and Numerical Regis-
tering Co., 8 Ch. D. 535, is overruled,
and see infra, p. 685, note h.
(q) Thomas v. Patent Lionite Co.,
17 Ch. D. 250; Bridgewater Engin-
STAYING DISTRESSES FOR RENT. 679
not prevent a landlord from exercising his power of re-entry, Bk 1¥- Chap. 1.
if his right to enter under the terms of the lease is clear (")._ § —————
Further, the sections of the Companies act, 1862, under Where landlord
consideration only apply to a landlord who seeks to distrain Coe ae,
upon goods of a company, which is his legal tenant. There-
fore in New City Constitutional Club Co. (s), the Court decided New City Con-
that it could not prevent a landlord from distraining upon eile oa
goods which, although originally the property of the company,
had ceased to be so by being charged for more than their full
value in favour of debenture holders. Again when the land-
lord has no right of proof against the company, ¢.g., where
the company is not the legal tenant (¢) of the landlord but is the
undertenant (w) or the cestui que trust (x) of his lessee, the
Court will not restrain the landlord from levying a distress on
the company’s goods, even although the company may offer to
allow him to prove for his rent in the winding up (y). In one
case of this sort the Court allowed a distress although ‘the
landlord held the company’s promissory note for the rent, and
could therefore prove for it(z). But this case has been
questioned and not without reason (a).
In cases of this class, i.e., where the company is not tenant
to the person distraining, it is immaterial whether the rent, for
which the landlord seeks to distrain, accrued due before, or
after, the commencement of the winding up, for the landlord
not being a creditor of the company in respect of his rent, has
no right to prove for it in the winding up (0).
eering Co., 12 Ch. D. 181; Coal Con- of circumstances at the commence-
sumers’ Co., 4 Ch. D. 625. Stockton
Iron Furnace Co., 10 Ch. D. 335, can
no longer be relied upon as an autho-
rity to the contrary.
(r) General Share Co. v. IWetley
Pottery Co., 20 Ch. D. 260. § 163
of the Companies act, 1862, does not
apply to such a case.
(s) 34 Ch. D. 646. The debenture-
holders after the hearing of the action
in the Court of first instance, offered
to give up their charge on the chat-
tels in favour of the liquidator. The
court of appeal held this could not
affect the landlord’s right, which
must be ascertained from the state
ment of the winding up.
(t) Lundy Granite Co., 6 Ch. 462.
(vw) Carriage Co-operative Supply
Association, 23 Ch. D. 154; Regent
United Service Stores, 8 Ch. D. 616.
(x) Exhall Coal Mining Co., 4 De
G. J, & 8. 377.
(y) Regent United Service Stores, 8
Ch. D. 616. See, also, Lundy Granite
Co., 6 Ch. 462.
(2) Exparte Clemence, 23 Ch. D, 154.
(a) New City Constitutional Club
Co., 34 Ch. D. 646.
(6) See the cases in the last five
notes, and the next note.
680
Bk. IV. Chap. 1.
Sect. 6.
Where landlord
can prove for
the rent.
WINDING UP BY THE COURT.
If the landlord is the legal creditor of the company in
respect of the rent, which he wishes to recover by a distress
upon the company’s goods, he must, in order to obtain leave
to distrain under section 87, show either that it is inequitable
for the company to insist on section 163, or that the rent
ought to be paid in full as one of the expenses of the winding
up (c). In applying these principles to any given case it is
important to ascertain whether the rent for which the landlord
seeks to distrain accrued due before, or after, the commence-
ment of the winding up. If the rent accrued due before the
commencement of the winding up, the landlord will not be
allowed to distrain (d), even though the liquidator may have
retained possession of, and carried on the company’s works
upon the land (e); the landlord must prove for his debt like
any other creditor (e). If the rent accrued since the com-
mencement of the winding up, the landlord will be allowed to
distrain for it, or receive payment in full, if the liquidator has
retained possession of the property for the purposes of the
winding up, or for carrying on the company’s business, or in
order to sell it or do the best he can with it; for under these
circumstances the rent is considered as one of the expenses of
the winding up, and should be paid in full, like any other
debt properly incurred by the liquidator(f). But if the
(c) Oak Pits Colliery Co.,21Ch.D. compulsory winding up, which
330; Lancashire Cotton Spinning Co.
35 Ch. D. 656. A mortgagee who
has a power of distress under an
attornment clause, is in a less favour-
able position for obtaining leave to
distrain than an ordinary landlord.
Db.
(d) Traders’ North Staffordshire
Carrying Co., 19 Eq. 60, where the
distress was for tolls in arrear ;
Coal Consumers’ Association, 4 Ch.
D. 625, where the liquidator retained
possession, but not for any purpose
of liquidation ; Thomas v. Patent
Lnonite Co., 17 Ch. D. 250, where
distress was levied after a resolution
for a voluntary winding up had been
passed, but before the order for a
superseded the voluntary winding
up, had been made.
(e) North Yorkshire Iron Co., 7
Ch. D. 661; Brown, Bayley, and
Dixon, 18 Ch. D. 649 (case of a
mortgagee with power of distress) ;
South Kensington Co-operative Stores,
17 Ch. D.161; Oak Pits Colliery Co.,
21 Ch. D. 322.
(f) Lundy Granite Co., 6 Ch. 462 ;
North Yorkshire Iron Co., 7 Ch. D.
661; Silkstone and Dodworth Iron
Co., 17 Ch. D. 158 ; South Kensing-
ton Co-operative Stores, 17 Ch. D.
161; Brown, Bayley, and Dixon, 18
Ch. D. 649; Oak Pits Colliery Co.,
21 Ch. D. 322.
STAYING DISTRESSES FOR RATES.
liquidator has retained possession by arrangement with the Bk. s oe
ect. 0,
landlord for his benefit as well as for that of the company, or
has done nothing, but has merely abstained from trying to get
rid of the property, and has not agreed to pay rent, the land-
lord will not be allowed to distrain, but must prove for the
rent in the winding up (g). Ifthe rent has accrued due partly
before and partly after the commencement of the winding up,
and the landlord establishes his right to distrain, or be paid in
full, for the latter portion of the rent, the rent will be appor-
tioned and the distress will be allowed for so much as accrued
after the winding up commenced (h).
681
hap. 1,
Questions of a similar nature have arisen in respect to rates. Rates before
It was settled that the local authorities had no right (under
§ 10 of the Judicature act, 1875) to be paid in full rates due at
the commencement of a winding up in priority to other debts (2).
As these rates were debts provable in the winding up, the
overseers were not allowed to distrain for them after the
winding up had commenced (k), and inasmuch as rates,
unlike rent, cannot be apportioned, if a rate had been
assessed before the commencement of a winding up for a
period which extended beyond that date, the local authorities
were not entitled to receive any portion in full, but had to
prove for the whole (J). Now, however, by the Preferential
Payments in Bankruptcy act, 1888 (m), all parochial or other
local rates due from a company at the commencement of the
winding up and which have become due within twelve months
next before that time, have been given a priority and are to be
(g) Progress Assurance Co. 9 Eq.
370; Bridgewater Engineering Co.,
12 Ch. D. 181; Oak Pits Colliery Co.,
21 Ch. D. 322.
(h) South Kensington Co-operative
Stores, 17 Ch. D. 161.
(2) Albion Steel and Wire Co.,7 Ch.
D. 547; Art Engraving Co, W.N.,
1889,38. Bankruptcy act, 1883, § 40.
(k) The Court would have allowed
a distress to be levied before the
commencement of a winding up,
although a provisional liquidator
might have been appointed. See
Dry Docks Corporation of London, 39
Ch. D. 306.
(1) Rates are not within the Ap-
portionment act, 33 & 34 Vict. ¢. 35,
and as the occupation by the com-
pany before the winding up is the
same occupation as that by the liqui-
dator afterwards, there is no change
of occupation, so as to allow the rate
to be apportioned under the Public
Health act, 1875, 38 & 39 Vict. c. 55,
§ 211, sub-s. (8). Wearmouth Crown
Glass Co., 19 Ch. D. 640.
(m) 51 & 52 Vict. c. 62.
winding up.
682
Bk, IV. Chap. 1.
Sect. 6.
Rates after
winding up.
WINDING UP BY THE COURT.
paid, pari passu with certain other preferential debts, if
possible in full, and at once.
The rights of the local authorities with respect to rates
assessed after the commencement of the winding up, have
given rise to some difference of opinion. In the two earliest
cases on this subject (7), payment in full was refused on the
ground that the liquidator’s occupation of the property had
not been beneficial, in that he had made no profit by it. The
Court of Appeal, however, in the other two cases which have
arisen (0), did not approve of this test, but in both cases
ordered the rates to be paid in full, though the liquidator had
made no profit out of his occupation, on the ground that the
occupation of the property was continued with a view to the
more advantageous realisation of the company’s assets. In
the latter of these two cases Lord Justice Bowen expressed an
opinion, in which Lord Justice Fry concurred, that the true
test is whether the liquidator’s occupation has been beneficial
within the ordinary meaning of that expression in cases of
rating. The Court will not, except in a very extreme case,
take into consideration complaints by the liquidator as to the
unreasonable amount of the rates; if the assessment is wrong,
he should appeal against it in the ordinary way (p).
b) As regards companies not formed under the act.
The winding-up provisions of the Companies act, 1862,
apply, as has been seen, not only to companies formed and
registered under it, but also to other companies (q). As re-
gards actions, executions, &c., against companies themselves,
it is not material to distinguish those formed under the act
from other companies (r). But in the case of a company not
(n) West Hartlepool Iron Co. 34
L. T. N.S. 570 ; Watson, Kipling &
Co., 23 Ch. D. 500.
(0) International Marine Hydro-
pathic Co., 28 Ch. D. 470; National
Arms Co., ib. 474.
(p) National Arms Co., 28 Ch. D.
474; and see Watson, Kipling & Co.,
23 Ch. D. 500.
(q) Ante, p. 617. .
(r) See Rudow v. Great Britain
Mutual Life Assurance Society, 17
Ch. D. 600, and §§ 196 to 198, and
199, 201, 202, and 204, An action
against official liquidators in whom
the company’s property is vested
under § 203 in their official capacity
can be stayed as an action against
STAYING PROCEEDINGS. 683
formed under the act of 1862, or under the prior acts of Bk. ae 1.
1856—1858, creditors of the company may be entitled to
proceed against members individually; and accordingly the
act of 1862 contains provisions enabling the Court, before any
winding-up order is made, to stay such proceedings upon the
application of any creditor both when the company has been
registered (s) and when it has not(t): only a creditor, how-
ever, is entitled to apply for a stay of such proceedings (wu).
But after a winding-up order has been made, no action, suit,
or other legal proceeding can be commenced or proceeded with
against any contributory in respect of any debt of the com-
pany except with the leave of the Court, and subject to such
terms as the Court may impose (x). The reasons already
noticed for making a distinction between actions on the one
hand, and executions on the other, and the decisions referred
to in connection with that distinction ought to be borne in
mind when considering these enactments (y).
Where a debt has been contracted by an unincorporated Debts contracted
before registra-
company, and the company is afterwards registered, those tion,
persons only who are members of the company at the time of
registration become members of the incorporated company.
Consequently, even although such company may be afterwards
wound up, the common law liabilities of persons who had
ceased to be shareholders before the registration of the com-
pany remain wholly unaffected, and may be enforced as if the
company had never been registered or ordered to be wound up.
Thus in Lanyon v. Smith (z), a cost-book mining company Lanyon v.
was formed, and whilst the defendant was a member of it the oe
debt to the plaintiff was contracted; the defendant sold and
transferred his shares and ceased to be a shareholder; after-
wards the company was registered and ordered to be wound up.
The defendant’s name was placed on the list of contributories
the company, Graham v. Edge, 20
Q. B. D. 5388; on appeal the action
was decided to be against the liqui-
dators personally, see ib, 683.
(s) § 197.
(t) § 201.
(u) See the sections 197 and 201.
(x) §§ 198 and 202, and see as to
a voluntary winding up, § 138. As
to the Court to apply to, see ante,
p. 676.
(y) Ante, p. 676.
(2) 3 B. & Sm. 938. Harvey v.
Clough, 2 New R. 204, Ex., was a
precisely similar case. See, also,
fountain’s case, 11 Jur. N. § 553.
684
WINDING UP BY THE COURT.
Bk. IV. Chap. 1. as a past member, but the plaintiff nevertheless sued him at
Sect. 7.
Form of order.
Notice of the
order.
law; and the Court of Queen’s Bench held that the action
ought not to be stayed, inasmuch as the defendant never was
a member of the company being wound up, and his name
ought not to have been placed on the list of contributories of
that company.
SECTION VII.—PROCEEDINGS UNDER COMPULSORY WINDING- UP
ORDERS.
1. Generally.
A compulsory winding-up order is in the following form,
“This Court doth order that the company be wound up
by this Court under the provisions of the Companies acts,
1862 and 1867” (a). Under the Winding-up acts of 1848 and
1849, the order dissolved the company (b); but, under the act
of 1862, the company is not dissolved until the winding up is
completed (c).
When a winding-up order is made, notice is to be given to
the registrar of joint-stock companies (d) ; and the order must
be advertised, within twelve days after the date thereof, by the
petitioner in the London Gazette, and be served upon such
persons (if any) and in such manner as the Court may direct (e).
(a) See the orders, schedule 3,
form 3. For a form of order giving
the liquidator power to act without
the previous sanction or interference
of the Court, see Rochdale Property
and General Finance Co., 12 Ch. D.
775.
(b) See 11 & 12 Vict. c. 45, § 16,
and form 2 in the schedule; Ex
parte Barber, 1 Mac. & G. 183; Re
North of England Banking Co.,1 De
G. & 8. 545; and Re Newcastle, cc.,
Bank, 17 Beav. 470.
(c) 25 & 26 Vict. c. 89, §§ 111
and 143. As to the jurisdiction of
the Court over a company actually
dissolved, see Crookhaven Mining
Co., 3 Eq. 69; Pinto Silver Mining
Co., 8 Ch. D. 278, and London and
Caledonian Inswrance Co., 11 Ch. D.
140.
(d) § 88.
(ec) Rule 6. As to dispensing
with the advertisement under the
old practice, see 12 & 18 Vict. ¢.
108, § 16; and Re Worcester Corn
Exchange, 15 Jur. 960, where the
advertisement of an order of refer-
ence as to the expediency of wind-
ing up a company was ‘dispensed
with.
PROCEEDINGS UNDER THE ORDER. 685
A form of advertisement is given in the third schedule to the Bk. oe te 1.
rules promulgated under the act (f).
These rules apply as well to orders for winding up com-
pulsorily as to orders for winding up subject to the supervision
of the Court (g); but the remaining proceedings under such
orders are so different that it is necessary to distinguish the
In the present place the
one class of orders from the other.
proceedings under a compulsory order will be alone adverted
to; those under an order to wind up subject to the supervision
of the Court will be noticed in a subsequent section.
The general practice of the Chancery Division of the High eneral practice.
Court (hk), including the practice in winding up companies
under the older winding-up acts, applies to the winding up of
companies under the Companies act, 1862, so far as such
practice is not inconsistent with that act, and the rules which
have been issued under its authority (i). Those matters only
which have special reference to the winding up of companies
will be found in the present work, and for detailed informa-
tion on minor points of practice the reader is referred to the
Companies act, 1862, and to the rules which, with a full index
to them, will be found in the appendix.
(f) See form No. 5.
(g) See as to the advertisements,
rule 6 ; and as to the notice to the
registrar, see §$ 88 and 151.
(h) Not the practice in bank-
ruptcy as distinguished from that
in chancery. See Smith, Fleming &
Co.’s case, 1 Ch. 543, per Turner,
L. J., as to set off; Kellock’s case,
3 Ch. 769, as to secured creditors ;
Ebbw Vale Co, 5 Ch. 112, as to
interest ; Merchants’ Co., 4 Eq. 453,
_ag to examinations ; Chapman’s case,
1 Eq. 346, as to servant’s wages.
But by the Judicature act, 1875,
§ 10, the rules which in bankruptcy
regulate the rights of secured and
unsecured creditors, the debts and
liabilities provable, and the valua-
tion of annuities, of future and con-
tingent liabilities, are to be observed
in winding up any company whose
assets are insufficient to pay its
debts and liabilities, and the costs
of winding up, which has been
ordered to be wound up since 2nd
Nov. 1875, Joseph Suche & Co., 1
Ch. D, 48. See as to the effect of
this act, infra, p. 719 et seq.,
(«) See § 170, now repealed by 44
& 45 Vict. c. 59, see § 4 and rule 74;
Luard’s case, 1 De G. F. & J. 533;
Ex parte Kintrea, 5 Ch. 95, as to
costs. Although rules have been
made under § 170, it is apprehended
that in cases not provided for the
old winding-up practice would be
followed ; butsee the section. As to
serving notices in the winding up
on persons out of the jurisdiction of
the Court, see Anglo-African Steam-
ship Co., 32 Ch. D. 348; Nathan,
Newman & Co., 35 Ch. D. 1.
686
Bk. IV. Chap. 1.
Sect. 7.
Proceedings in
chambers.
Carriage of the
order.
Proceedings
after the order.
WINDING UP BY THE COURT.
The present practice is for the judge who makes the winding-
up order to refer the prosecution of it to his own chambers ;
the winding up is then proceeded with there by his chief clerk,
and under his own immediate superintendence (k). The deci-
sion of the judge himself can always be required as a matter
of right; no one being bound to abide by the decision of the
chief clerk (2). The judge, moreover, is empowered to do in
chambers everything which the Court is authorised to do by
the Companies act, 1862 (m).
If more than one petition has been presented the carriage of
the order is usually given to the first petitioner(n). As a
general rule the priority of the petitions is determined by the
date of advertisement (0) ; but where two petitions were both
advertised in the same gazette the carriage of the order was
given to the petitioner whose petition was first presented (p).
As soon as practicable after a compulsory winding-up order
is made, it is the duty of the Court to settle the list of contri-
butories, and to cause the assets of the company to be collected
and applied in discharge of its liabilities (q). To work out the
order, a copy of it must be left by the petitioner at the cham-
bers of the judge within ten days after the order has been
passed and entered (7) ; and in default any other person inte-
rested in the winding up may leave the same, and the judge
may, if he thinks fit, give the carriage and prosecution of the
order to such person (s). Upon the copy of the order being
left, a summons to proceed upon it must be taken out and
served upon the parties who appeared upon the hearing of the
(k) See Wheal Virtue Mining Co.,
3 Jur. 659; Re Newcastle, &c., Bank,
17 Beay. 470.
(1) Agriculturist Cattle Insurance
Co., 3 De G. F. & J. 194.
(m) See § 83 and rule 73.
(n) Storforth Lane Colliery Co., 10
Ch. D. 487; General Financial Bank,
20 Ch. D. 276; Dublin Grains Co.,
17 L. R., Ir. 512.
(0) Trades Bank Co., W. N. 1877,
268.
(p) Storforth Lane Colliery Co., 10
Ch. D. 487.
(q) § 98.
(r) Rule 7.
(s) Ib. Ee parte Baker, 3 De G.
& Sm. 243, It is presumed that a
similar rule would apply where the.
petitioner delayed to draw up the
order. The carriage of the order
will not, however, be given to a
person who could not himself ob-
tain a compulsory order, if his
object is to force on proceedings
which others are desirous of stay-
ing, Brighton Club and Norfolk Hotel
Co., 35 Beay. 204.
PROCEEDINGS UNDER THE ORDER.
687
petition (t). Upon the return of the summons the judge may Bk. ye 1.
fix a time for the appointment of an official liquidator, and for —-—-—-——
the proof of debts, and for the list of contributories to be
brought in, and directions may be given as to the advertise-
ments to be issued for such purposes, and generally as to the
proceedings and the parties to attend (w). The proceedings
under the order are to be continued by adjournment, and when
necessary by further summons, and any directions may be
given, added to, or varied, at any subsequent time as may be
found necessary (a).
With respect to the attendance of parties, every contributory Attendance of
on the list, and every creditor of the company whose debt or ee
claim is allowed, is entitled, at his own expense, to attend the
proceedings before the judge, and to have notice thereof (y).
Every person desirous of attending must leave the name and
address of himself and of his solicitor at the judge’s cham-
bers (z). The judge, moreover, may appoint any one or more
of the contributories or creditors to represent before him, at
the expense of the company, all or any class of the contribu-
tories or creditors, upon any question as to a compromise
with any of the contributories or creditors, or in and about
any other proceedings before him relating to the winding up
of the company, and may remove the person or persons so
appointed (a).
Service of notices, &c., upon contributories and creditors Service of
may be effected (when personal service is not required) by apmiae:
letter sent through the post; and such service is to be con-
sidered as made at the time the letter ought to be delivered in
the due course of delivery by the post-office (b). The Court
has no jurisdiction to serve notices of orders or of other pro-
(t) Rule 7. (6) Rules 63 and 64, and see §§
(u) Ib. 62 & 683 of the act. Service of a
(x) Ib. debtor summons by leaving it at
(y) Tb. 60. As to the right of a
creditor to attend the examination
of persons under § 115, see infra.
(z) Ib. 62.
(a) Ib. 61. As to discharging the
petitioner from further attendance,
see Barber's case, 1 De G. & S. 726.
the registered address of a member
will not be good if it is not his true
or last known address. See Hx
parte Chatteris, 10 Ch. 227. As
to the service of notices under the
Stannaries acts, see 32 & 33 Vict.
c. 19, § 8
688
Bk. IV. Chap. 1.
Sect. 7.
Wishes of credi-
tors and contri-
butories to be
consulted.
Inspection of
books, &c.
WINDING UP BY THE COURT.
ceedings in a winding up upon persons residing out of the
jurisdiction of the Court, if the notices are in substance the
commencement of proceedings against the persons on whom
they are served (c); but notices which are not of this character
may be served abroad (d).
In all matters relating to the winding up of companies, the
Court may have regard to the wishes of the creditors or con-
tributories (¢), and may direct meetings to be held in order to
ascertain their wishes, and may appoint a person to act as
chairman (f). When the judge directs a meeting to be held
under this section (g), the official liquidator is to give notice in
writing, seven days before the day appointed for the meeting,
to every creditor or contributory, of the time and place ap-
pointed for the meeting, and of the matter upon which the
judge desires to ascertain the wishes of the creditors or con-
tributories (k). The notice may, however, be given by adver-
tisement, if the judge so directs (i). Votes may be given at
such meetings either personally or by proxy (k), but no credi-
tor can vote by proxy unless his debt has been allowed, and
no contributory can so vote unless he is settled on the
list (1). The form in which the chairman of the meeting is
to report its result is given in the 3rd Schedule to the Rules,
No. 48.
The right of creditors and contributories to inspect the
books of a company being wound up, will be alluded to here-
after when noticing the duties of the liquidators.
(c) Anglo-African Steamship Co.,
32 Ch. D. 348.
(d) Nathan, Newman d& Co., 35
Ch. D. 1; and Baron Liebig’s Cocoa
Works, Limited, W. N. 1888, 120.
(e) § 91. Including alleged con-
tributories, see § 74.
(f) See, as to submitting pro-
posals with reference to matters
arising in the winding up, Slatter’s
Executors, 5 De G. & 8. 34, and 1 De
G. M. & G. 64.
g) § 91. The direction is to be
testified by a memorandum signed
by the chief clerk. See rule 47, and
the form in schedule 3, No. 47.
(h) Rule 45, and, for the form of
notice, see the 3rd schedule, No. 45.
(t) Rule 45.
(k) Rule 46, and, for the form of
proxy, see schedule 3, No. 46.
(1) Rule 46. This, itis presumed,
is what is meant by the expression
“contributory of the company ” at
the end of rule 46.
PROCEEDINGS UNDER THE ORDER.
2. Extraordinary powers of the Court.
In order to enable the Court more effectually to exercise its
winding-up jurisdiction, certain extraordinary powers are con-
ferred upon it which it will be convenient here to notice (m).
The Court which will be referred to in the following pages will,
however, be only the Chancery Division of the High Court of
Justice in England, the reader being referred to the act itself
for information as to other courts (x). Substantially, however,
their powers will be found to be much alike.
In order to enable the Court to ascertain the real state of
its affairs, the Court is empowered, after making a winding-up
order, to summon before it any officer of the company or any
person known or suspected to have in his possession any of
the estate or effects of the company, or supposed to be in-
debted to it, or any person whom the Court may deem capable
of giving information concerning the trade, dealings, estate or
effects of the company; and the Court may require him to
produce any books or documents in his power relating to the
company (0), and may examine him upon oath concerning its
affairs (p). An order may be made under this section on the
application of the liquidator, or of a contributory or alleged
contributory; in the former case the order is made ex parte,
and the liquidator is not required to make any affidavit; it is
sufficient if he makes a written statement showing a case of
suspicion (q); in the latter case, the contributory is generally
required to file an affidavit in support of his application, and
he must serve the liquidator with notice of motion, but he need
not serve the persons for whose examination the order is
wanted (r).
it is entirely in the discretion of the Court whether it will in
(m) These extraordinary powers
are in addition to and not restrictive
of the ordinary powers of the Court,
§ 119.
(n) As to the jurisdiction of the
Stannary Courts, see §§ 68, 83, 108,
116, 120, and 172 of the Companies
act, 1862 ; 32 & 33 Vict. c. 19, and
50 & 51 Vict. ¢. 43.
L.C,
(0) § 115.
(p) § 117. For the summons,
see form 54 in the 3rd schedule to
the rules.
(q) Gold Co., 12 Ch. D. 77; Tn-
perial Continental Water Corporation,
23 Ch. D. 314.
(r) See cases in last note.
Ry y
689
Bk, IV. Chap. 1.
Sect. 7.
Power to sum-
mon and
examine,
§§ 115, 117.
Upon the appli-
cation of
liquidator or
contributory.
690
Bk. IV. Chap. 1.
Sect. 7.
WINDING UP BY THE COURT.
any particular case exercise the powers conferred uponit. The
—————-—— Court of Appeal will not interfere with the Court of first
Commissioners
for taking evi-
dence.
Attendance for
examination,
instance in the exercise of this discretion, except in a very
extreme case (s); but an appeal will be allowed, even by a
person ordered to attend for examination, if the Court of first
instance has decided on a wrong principle, orif it had no juris-
diction to order the appellant to attend (¢).
The judges of the county courts sitting at places more than
twenty miles from London, and the commissioners of bankrupts,
and the assistant barristers and recorders in Ireland, and the
sheriffs of counties in Scotland, are made commissioners for
taking evidence under the act, and examining any witnesses
whom the Court may direct to be examined by them (uw). Pro-
vision, moreover, is made for the examination of persons in
Scotland (z).
The proper mode of obtaining the attendance of a person
for examination under §§ 115 and 117 is by summons, not by
subpeena (y).
A person is not bound to. attend unless his expenses are
tendered him (z). A witness who does not answer to the satis-
faction of the judge acting in the winding up, or who refuses
to produce documents which he ought to produce, is liable
to commitment (a); and a person is not justified in refusing
to be sworn on the ground that it is necessary for him to
have counsel’s assistance during his examination (b); but it
has been decided that he is entitled to the assistance of a
solicitor and counsel, and to be re-examined by them, and to
have notes taken of his own examination (c). A person sum-
(s) Ib., and Hetron’s case, 15 Ch.
D. 139.
(t) Whitworth’s case, 19 Ch. D.
118 ; Hetron’s case, 15 Ch. D. 189
Compare the dicta of Jessel, M. R.,
and Baggallay, L. J., in Gold Com-
pany, 12 Ch. D. 77.
(u) § 126.
(a) § 127.
(y) English Joint-Stock Bank, 3
Eq. 203 ; Gold Company, 12 Ch. D.
77.
(2) See § 115, and Mercer’s case 5
De G. M. & G, 26, and 2 Sm. & G.
87.
(a) Stone’s case, 3 De G. & S. 120.
(6) Ha parte Bunn, 3 Jur. N.S.
1013.
(c) Cambrian Mining Co., 20. Ch.
D. 376 ; Breech-Loading Armoury
Co., 4 Eq. 453; Merchants’ Co., ib.
Compare Ex parte Bunn, 3 Jur.
N. 8. 1013.
PROCEEDINGS UNDER THE ORDER.
moned ex parte, under § 115, must attend before a special
examiner (d). The examination is as a general rule entrusted
to the liquidator, but if necessary, the Court may entrust either
the whole, or some part of it, to a creditor or contributory ; it
will then as a rule point out the extent and limits of the exa-
mination (e). It may be added, that neither the public (/) nor
creditors, who are entitled to attend proceedings at their own
expense, whether under rule 60 of the orders of 1862 (g), or
under an order of court (hk), have any right to be present at an
examination under this section, and the examiner, if requested
to do so, is bound to exclude them ; the Court, however may,
in its discretion allow their attendance (i).
Under this section it has been held that bankers (h),
brokers (J), relatives (m), and other persons (n), acquainted with
the affairs of defaulting contributories, or of persons sought to
be put on the list of contributories, may be examined concern-
ing such contributories or persons, and transfers of shares by
or to them. Moreover, a person is liable to examination under
§ 115, although there may be a pending litigation between him
and the company, and his examination may relate to the subj ect-
matter of such litigation (0). But it seems that a mere creditor
of a company is not as such liable to examination under this
section (p), although he can of course be cross-examined on
his own claim.
This power of summoning persons for examination is con-
(d) Re Contract Corporation, 13
Eq. 27. See Smith, Knight & Co.,
(2) Clement’s case, 13 Eq. 179 n.
(m) Swan’s case, 10 Eq. 675;
8 Eq. 28, as to objecting to the
examiner.
(e) Whitworth’s case, 19 Ch. D.
118.
(f) Western of Canada Oils Co., 6
Ch. D. 109.
(g) Greys Brewery Co., 25 Ch. D.
400.
(h) Norwich Equitable Fire Insur-
ance Co., 27 Ch. D. 515.
(i) Grey’s Brewery Co., 25 Ch. D.
400.
(&) Druitt’s case, 14 Ey. 6; Smith,
Knight & Co., 4 Ch. 421.
Fricker’s case, 13 Eq. 178.
(n) Trower and Lawson’s case, 14
Eq. 8; Blozam’s case, 36 L. J. Ch.
687; Massey v. Allen, 9 Ch. D.
164.
(0) Lisbon Steam Tramways Co., 2
Ch. D. 575; and see English Joint-
Stock Bank, 3 Eq. 2038; Re Cathcart,
5 Ch. 703 ; Venables v. Schweitzer, 16
Eq. 76. Compare Hewron’s case, 15
Ch. D. 1389; Imperial Continental
Water Corporation, 33 Ch. D. 314,
(p) Accidental and Marine Ins.
Corp., 5 Eq. 22.
‘ yYy2
691
Bk,
Sect. 7.
Persons liable
to be cxamined.
1V. Chap. 1.
692
Bk. IV. Chap. 1.
Sect. 7.
WINDING UP BY THE COURT.
ferred upon the Court for the purposes of the winding up, and
—----—— for the benefit of all the persons interested in it; and the
Compelling
production of
documents.
Power to arrest,
Court will not allow the power to be used in a vexatious manner
or for an improper object (gq). It may, however, be exercised
for the purpose of tracing monies of the company, and in-
vestigating any of its transactions (r). Monies due to a com-
pany are part of its estate and effects within the meaning of
§ 115 (s); and a person’s ability to pay what he owes may be
inquired into (¢).
The power of compelling the production of documents only
extends to such documents as may be required to be produced
consistently with established rules (wv). But the solicitors of a
company being wound up are compellable to produce the
accounts, deeds, and documents of the company in their pos-
session, but without prejudice to any lien they may have against
the company for their costs (x).
Liquidators may be examined by contributories, or alleged
contributories, or by creditors, and be compelled to produce
the company’s books for inspection (y).
In order to prevent persons liable to contribute to the pay-
ment of the debts of the company from escaping from justice
and avoiding examination, the Court may, either before or
after making a winding-up order, cause any contributory or
alleged contributory (z) to be arrested, and his books, money,
and effects to be seized, if proof is given that there is probable
(q) Hetron’s case, 15 Ch. D. 139;
Imperial Continental Water Corpora-
tion, 33 Ch. D. 314.
(r) See Smith, Knight & Co. 4
Ch. 421; Contract Corp., 6 Ch.
145.
(s) See Clement's case, ubi supra,
and Devon and Somerset Rail. Co.,
6 Eq. 610.
(t) See Bloxam’s case, ubt supra,
and others of that sort.
(wu) An order will not be made ex
parte, Commercial, dc., Wine Co.,
35 Beav. 35.
(*) Capital Fire Insurance Associa-
tion, 24 Ch. D. 408 ; Ex parte Paine
and Layton, 4 Ch. 215; Cameron’s
Coalbrook Rail. Co. 25 Beav. 1;
Potter's case, 1 De G. & S. 728,
contra, was under the older acts.
(y) Mutual Society, 22 Ch. D.
714; Barned’s Banking Co., 2 Ch.
350; Gooch’s case, 7 Ch. 207. See
Gooch’s case as to the affidavit the
liquidator must make. See, also,
Emma Silver Mining Co., 10 Ch.
194, As to the right of plaintiffs in
an action to compel the liquidator
of a company, which has been wound
up and dissolved, to produce the
books of such company, see London
and Yorkshire Bank v. Cooper, 15
Q. B. D. 478.
(2) § 74.
PROCEEDINGS UNDER THE ORDER. 693
cause for believing that he is about to abscond, or to remove or Bk. IV. Chap. 1.
4 5 Sect. 7.
conceal any of his goods or chattels for the purpose of evading -
the payment of calls, or examination (a).
In order to facilitate the collection of the company’s assets, Sumnary order
the Court may order any contributory settled on the list, and oe
any trustee, receiver, banker, or agent, or officer of the com- g8 100, 48%
pany, to hand over any books, monies, or effects in his hands,
and to which the company may be primé facie entitled (d).
The Court may also order any contributory settled on the list
to pay any monies due from him or from the estate of the
person he represents to the company, exclusively of any calls
made in the winding up(c). If the company is limited, pay-
ment under this section must be made irrespectively of any
set-off; but if the company is unlimited, set-off may be allowed
in respect of monies due from the company otherwise than on
account of dividends or profits(d). The payment of calls is
also enforced by a summary order (¢).
All monies ordered to be paid under these sections are to be
paid into the Bank of England, unless specially directed to be
paid to the liquidator (/).
These summary powers of obtaining money belonging to the
company were introduced in the Winding-up act of 1848 (q) ;
and it was at one time held that these powers ought not to be
exercised where there was a serious question as to the right of
the company to what was withheld from it (h); but recent de-
(a) § 118. See Ulster Land Co., bankrupt shareholders, Mitchell's
Limited, 17 L. R., Ir. 591, where a
form of order will be found ; Im-
perial Mercantile Credit Co., 5 Eq.
264, which shows that an order to
seize property may be made, though
the Court will not on the evidence
order an arrest.
(b) § 100, and see also § 165. In
British Imperial Corporation, 5 Ch.
D. 749, leave was given to serve a
summons for this purpose out of the
jurisdiction.
(c) § 101, and see § 165.
(2d) § 101. As to set-off, see
infra, § 9.
(e) §§ 102 and 103. See, as to
case, 5 Ch. 400.
(f) §§ 103 and 104, and rule 38.
See, as to enforcing payment into
the bank, Leeds Banking Co., 1 Ch.
150.
(g) 11 & 12 Vict. c. 45, §§ 66 and
67. See Hu parte Chadwick, 15 Jur.
597.
(h) See Royal Hotel Co. of Great
Yarmouth, 4 Eq. 244 ; Bank of Gub-
ralter and Malta, 1 Ch. 69, and
Carpenter's and Weiss’s case, 5 De G.
& S. 402 ; Ex parte Johnson, 1 Jur.
N. 8. 913; Ex parte Chadwick, 15
Jur. 597.
694
WINDING UP BY THE COURT.
Bk. IV, Chap. 1, cisions show that the Court will exercise these summary powers
Sect. 7
Not exercisable
over strangers,
Exercisable
over directors,
S$ 165,
wherever it can do so without injustice (2).
The summary powers conferred by § 100 cannot be exer-
cised against a person who is not a contributory, trustee, re-
ceiver, banker, agent or officer of the company (k). Therefore
no order can be made under these sections on the trustee of
a bankrupt solicitor to a company (); nor on the executors of
a deceased contributory or director (m) ; nor on a fully paid-up
shareholder who objects to be on the list of contributories (1) ;
nor on a creditor who has obtained payment after the com-
mencement of the winding up (0); nor on a banker of the
company who cannot be proved to have in his hands money of
the company (7).
Where a company had borrowed money beyond its powers,
and had deposited deeds as a security for it, the Court refused
to order the deeds to be given up, although the debt was not
enforceable against the company (q).
The Court is expressly empowered to examine into the
conduct of any director (r), manager, liquidator, or other officer
if it appears that he has misapplied, or retained in his own
hands, or become liable or accountable for, any monies of the
company, or been guilty of any misfeasance or breach of trust
in relation to the company; and the Court is empowered to
(t) Pearson’s case, 5 Ch. D. 336,
and 4 ib, 222; McKay’s case, 2 Ch.
D. 1; Stringer’s case, 4 Ch. 475 ;
Rance’s case, 6 ib. 104, See, also,
under the acts of 1856-8, Cardiff
Coal Co. v. Norton, 2 Ey. 558,
affirmed 2 Ch. 405.
(k) Ex parte Hawkins, 3 Ch. 787.
(1) Hollinsworth’s case, 3 De G. &
S. 102. See, also, Cow’s case, ib.
180; and Northfield Iron and Steel
Co., W. N. 1866, 253, where the
Court refused to order a railway
company to deliver up goods on
which it claimed a lien.
(m) British Guardian Life Asswr-
ance Co., 14 Ch. D. 335; and Feltom’s
Executors’ case, 1 Eq. 219, decided
on § 165,
(n) Marlbro’ Club Co., 5 Eq. 365.
(0) Ex parte Hawkins, 3 Ch. 787.
(p) Re National Bank, 10 Kq. 298,
where the Court held that it could
not either under § 100, or under
§ 165, compel the bankers of a
company being wound up to re-
fund money improperly paid to
the bank, but not proved to be
the money of the company in
question.
(q) Wilson’s case, 12 Eg. 516.
This case did not, however, turn
on any particular section of the
act.
(r) A director de facto is within
the section, Coventry and Diaon’s
case, 14 Ch. D. 660.
PROCEEDINGS UNDER THE ORDER. 695
compel him to repay such monies, with interest, or to make Bk. Le 1.
such compensation to the company as the Court may deem ——--— -~—--
just (s). This clause applies where a company is being wound
up voluntarily (t). The application may be made by the liqui- Upon the appli-
dator (w) or any creditor (v), or any contributory of the com- aL eae
pany (y). It does not seem necessary, in order to entitle the ° contributory.
liquidator to a summons under this section, that the claim he
seeks to assert should be one which the company itself might
have asserted were it not being wound up; but if any objection
be taken on this ground, the Court will order the summons to
be amended by joining a creditor with the liquidator (z). The
clause does not create any new liability, but only provides a
summary mode of enforcing rights, which must otherwise have
been enforced under the ordinary procedure of the Court (a) ;
and proceedings can only be taken under this section when
there has been some breach of duty towards the company (0),
which has resulted in a loss to the company’s funds (c).
Under the clause in question a director has been compelled
(s) § 165, and see upon it, Rance’s
case, 6 Ch. 104; Stringer’s case, 4 Ch.
475; McKay's case, 2 Ch. D. 1;
Madrid Bank v. Bayley, L. BR. 2
Q. B. 37.
(t) Rance’s case, 6 Ch. 104.
(u) As to the liquidator’s affidavit,
see Mutual Society, 22 Ch. D. 714 ;
he will not, except under special
circumstances, be ordered to make
an affidavit of documents, ib.
(w) Including a policy-holder,
British Guardian Life Assurance Co.,
14 Ch. D. 335.
(y) A bankrupt contributory has
no right to make the application,
Cape Breton Co., 19 Ch.D. 77. And
a contributory who is the holder of
fully paid-up shares must show that
there is some probability if his
application is successful, of there
being assets to be divided amongst
the shareholders, Cavendish Bentinck
y. Fenn, 12 App. Ca. 652.
(z) National Funds Ass. Co., 10
Ch. D. 118; but see Coventry and
Dizon's case, 14 Ch. D. 660. In
British Guardian Life Assurance Co.,
ib. 335, the summons was taken out
in the first instance by the liquidator
and a creditor.
(a) Cavendish Bentinck v. Fenn, 12
App. Ca. 652; Fliteroft’s case, 21 Ch.
D. 519; Coventry and Dizxon’s case,
14 Ch. D, 660, and the concluding
remarks in Forest of Dean Coal Min-
ing Co., 10 Ch. D. 450.
(b) See words “in relation to the
company” and Ambrose Lake Tin
Mining Co., 14 Ch. D. 390 ; British
Seamless Paper Bor Co., 17 Ch. D.
467.
(c) Cavendish Bentinck v. Fenn, 12
App. Ca. 652; Coventry and Dixon’s
case, 14 Ch. D. 660, where it was
decided that for a director to act
without holding the necessary share
qualification is not a misfeasance
under this section.
696
Bk. IV. Chap. 1.
Sect. 7.
Orders under
§ 165.
WINDING UP BY THE COURT.
to refund dividends and bonuses improperly declared and
received by him (d), or improperly paid out of capital (e), or
out of monies borrowed for the purpose(f); to refund sums
improperly paid out of the company’s monies to a promoter for
preliminary expenses (g), to a stockbroker for placing the com.
pany’s shares (h), or to himself for remuneration for his services,
or for commissions on purchases and sales (i); to make good
losses occasioned by the non-investment of funds which ought
by the company’s regulations to have been invested (k) ; to pay
calls made on shares improperly procured by him to be allotted
to his infant children (1) ; to pay the full value of paid-up shares
given him as a qualification or as bribe (mm); or if he paid any-
thing for them, to pay the difference between the price which
he did pay and their full value (x); anda secretary has been
ordered to pay the full value of paid-up shares given to him by
a vendor of property to the company (0).
The section, however, has been held not to apply where it is
sought to charge the estate of a deceased director (p); neither
is a banker (q) nor a solicitor (r), as such within it.
The Court cannot commit a director to prison for non-pay-
ment of money which he has been ordered to pay under this
-section unless the case can be brought within § 4 of the Debtors
act, 1869 (82 & 33 Vict. c. 62) (s).
(d) Rance’s case, 6 Ch. 104.
(e) Oxford Benefit Building Soc.,
35 Ch, D. 502; Denham & Co., 25
Ch. D. 752 ; Flitcroft’s case, 21 Ch.
D. 519; Alecandra Palace Co., ib.
149 ; National Funds Assurance Co.,
10 Ch. D. 118.
(f) Alexandra Paiace Co., 21 Ch.
D. 149. Compare Stringer’s case, 4
Ch. 475.
(g) Englefield Colliery Co., 8 Ch,
D. 388 ; Ex parte Pelly, 21 Ch. D.
492.
(h) Faure Electric Accumulator Co.,
40 Ch. D. 141. This case also
decided that in the absence of dis-
honesty a director could not be
made liable under this section for
sanctioning a transfer to a person
who subsequently turned out to be
insolvent.
(2) Oxford Benefit Building Suc.,
35 Ch. D. 502.
(k) British Guardian Life Asswr-
ance Co., 14 Ch. D. 335.
(1) Ex parte Wilson, 8 Ch. 45.
(m) Carriage Co-operative Supply
Assoc, 27 Ch. D. 322; Mitcalfe’s
case, 13 Ch. D. 169; Pearson’s case,
5 Ch. D. 336, and 4 ib. 222.
(n) Westow’s case, 10 Ch. D. 579.
(0) McKay's case, 2 Ch. D.1; De
Ruvigné’s case, 5 Ch. D, 306.
(p) Feltom’s Executors’ case, 1 Eq.
219; British Guardian Life Assur-
ance Co., 14 Ch. D. 335.
(q) Re National Bank, 10 Eq. 298 ;
ante p. 694, note (7p).
(r) Carters case, 31 Ch. D. 496.
(s) Miteulfe’s case, 13 Ch. D. 815.
PROCEEDINGS UNDER THE ORDER. 697
A director cannot set-off a debt due to him from the company Bk. IV. Chap. 1.
: : wi ‘ : Sect. 7.
against a claim made by the liquidator under this section (¢). ates
Lastly, the Court may order any past or present director, Power to order
manager, officer, or member of a company ordered to be wound lore
up by the Court, or subject to its supervision, or being wound
up voluntarily, to be criminally prosecuted, at the expense of
the company, if it shall appear that he has been guilty of any
offence in relation to the company for which he is criminally
responsible (u).
3. Mode of enforcing orders and appeals from them.
By the Companies act, 1862, provision is made for enforcing
the orders of the English, Irish, and Scotch courts in those
parts of the United Kingdom which are out of their respective
jurisdictions (x).
Orders made by the Chancery Division of the High Court
are enforced in the same way as orders made in an action in
that division are enforced (y). Orders to pay money may be
enforced by the ordinary writs of fiert facias, levari facias,
elegit, and, if necessary, by sequestration (z) ; also by charging
orders (2); and by attachment of debts (b). Where it ‘is
desired to issue a ji. fa., an order should be obtained for pay-
ment to the liquidator himself, and not for payment into the
Bank to his account (c).
Orders and decisions of the Court may be appealed from in Appeals.
(t) Carriage Co-operative Supply formal order. See Hercules Ins. Co.,
Assoc., 27 Ch. D. 322; Ea parte
Peily, 21 Ch. D. 492; Pearse’s case,
ib. 498, n. ; Flitcroft’s case, ib. 519;
and see Ex parte Theys, 25 Ch. D.
587.
(u) §§ 167, 168, and see rule 51.
(a) §§ 122 and 123, See Holly-
ford Copper Mining Co., 5 Ch. 93, as
to orders made by an Irish Court of
Bankruptcy. To enforce in Ireland
an English order to pay calls, it is
not necessary that it should be made
an order of the Chancery Division
of the High Court in Ireland by
Ir. Rep. 6 Eq. 207.
(y) § 120.
(2) See as to persons abroad, Re
William Hall, 2 Dr. & Sm. 284.
(a) As to which see ante, p. 460.
(b) R. 8. C. Ord. xlv. r. 1, which
renders Re Frankland, L. R. 8 Q. B.
18; Best v. Pembroke, ib. 363; and
Cremetti v. Crom, 4 Q. B. D. 225, no
longer applicable.
(c) Leeds Banking Co. 1 Ch. 150.
See, also, Waterloo Life Assurance
Co., 4 N. R. 207.
698
Bk. IV. Chap.
Sect. 7.
Rchearing,
WINDING UP BY THE COURT.
1. the ordinary way; but notice of appeal must be given within
- —three weeks after the making of the order complained of (d),
and the time is calculated in the case of an appeal from an
order in chambers from the time when the order was pro-
nounced, or when the appellant first had notice thereof, and
in all other cases from the time when the judgment or order is
signed, entered, or otherwise perfected, or, in the case of a
refusal of an application, from the date of such a refusal (e).
The court of appeal, however, has power to extend the
time (f).
A judge of the High Court cannot now rehear an order
made by himself or any other judge(g). But an order ob-
tained ex parte or one which is in truth a nullity, may perhaps
even now be discharged by the Court which made it, although
three weeks have elapsed (h).
The application for leave to appeal after the three weeks
have expired ought not to be made ex parte (i). The Court
refuses leave unless some good reason for the delay is
given (k) ; even where an order has been made on the authority
of a recent decision which has been reversed, leave to appeal
against such order will not necessarily be granted (().
(d) § 124. See R. 8. C. Ord. lviii.
rules 9and 15 ; National Funds Ass.
Co., 4 Ch. D. 305.
(e) R. 8. C. Ord. lviii. r. 15.
(f) § 124. New Callao, 22 Ch.
D, 484; Manchester Economic Build-
ing Society, 24 Ch. D. 488 ; Madras
Irrigation and Canal Co., 23 Ch. D.
248 ; Banner v. Johnston, L. R. 5
H. I. 157. Under the older acts
the time could not be extended ;
Kix, parte Sanderson, 1 Mac. & G.
306; Re Green, 1 Jur. N.S. 38;
but see Lx parte Besley, 3 Mac. & G.
287.
(g) St. Nazaire Co., 12 Ch. D. 88.
A» to rehearing an order made in
chambers, see Lx parte Charlesworth;
36 Ch. D. 299,
(h) Ex parte Turnley and Oliver,
8 Eq. 227. See, also, Hopkins’ Er.
cuse,4 De G. J. & Sm. 342; Sander-
sun’s case, 8 De G. & 8. 66; Ex parte
Besley, 3 Mac. & G. 287.
(i) Lama Italian Coal Co., W.N.
1867, 119; but see Hull Forge Co,
15 W. R. 388.
(k) See, as to extending time for
a cross-appeal, Ex parte Kiveton Coal
Co.,’7 Ch. 730. In contributory cases
leave to appeal, after three weeks
had expired, was given in Ea parte
Holroyd, 15 Jur. 696, and in Ex parte
Day, 3 Jur. N. S. 1016, in both of
which cases the appellant had paid
calls. In Ez parte Holroyd, the
appellant was put under terms not
to disturb the payment he had made.
In Ex parte Day, the Court refused
to impose any such terms.
(1) Compare Ebbw Vale Co.’s case,
5 Ch. 112, with Esdatle v. Payne, 40
Ch. D. 526.
LIQUIDATORS.
Fresh evidence may be used on an appeal, even from a final Bk.
order, by special leave, which, however, is only given where
the Court sees that no injustice will be done by admitting
it (m).
An order made in chambers cannot be appealed from unless
the judge certifies that the matter was fully argued before
him (nx). Nor is there any appeal from an order made by a
judge whom the parties have treated as an arbitrator (0) ;
nor will an appeal be entertained on a mere matter of judicial
discretion (p).
699
IV. Chap. 1.
Sect. 8.
Winding-up orders themselves cannot be appealed from, Appeals from
: winding-up
without special leave, after three weeks from their date (q).
orders.
The Judicature act, 1873, has vested the appellate jurisdic- Appeals from
the
tion of the Lord-Warden of the Stannaries in the Court of
Appeal (r).
SECTION VIII.—THE LIQUIDATORS OF THE COMPANY.
Stannaries..
The actual management of the winding up of a company is Liquidators.
entrusted to persons called liquidators, whose powers and
duties are extremely important.
Liquidators are of two different kinds: the one called pro-
yisional liquidators, who are merely temporary officers in the
nature of receivers and are appointed in order to protect the
assets of the company until other liquidators are appointed (s) ;
whilst the other kind of liquidators, called official liquidators,
(m) See Weston’s case, 10 Ch. D.
579; Ex parte Pearson, 3 Ch. 443.
See, also, R. S. C. Ord. lviii. x. 4.
(n) Warrant Finance Co.’s case, 5
Ch. 88.
(0) See Jud. act, 1873, § 49. Ha
porte Wilson, 7 Ch. 45.
(p) Thames Plate Glass Co. v.
Land and Sea Telegraph Oo., 6 Ch.
643; and see the cases on the ap-
pointment of liquidator, and ante,
p. 690,
(q) Ante, p. 662.
(r) 36 & 37 Vict. c. 66, § 18 (3).
The deposit of 20. required by the
Stannaries act, 1869, 32 & 33 Vict.
ce. 19, § 82, must still be paid, West
Devon Great Consols Mine, 38 Ch. D.
51.
(3) Dry Docks Corporation of
London, 39 Ch. D. 306. See Brettell
v. Dawes, 7 Ex. 307, as to the dis-
tinction between an interim and an
official manager under the Windiny-
up acts of 1848-49.
700 WINDING UP BY THE COURT.
Bk. AD Ne 1. or simply liquidators (according as the company is being wound
ect. Oo.
.- up compulsorily or otherwise), are the persons who have the
actual management of the winding up.
1. Provisional liquidators.
A provisional liquidator may be appointed by the Court as
soon as a petition for winding up has been presented (i). The
application for his appointment is made by summons, without
advertisement or notice to any person, unless the judge shall
otherwise direct (uw). .A provisional liquidator may be ap-
pointed without security («); but the other rules relating to
official liquidators apply to those provisionally appointed, so
far as such rules are applicable and subject to any directions
which may be given in any case by the judge (y). A form
of order appointing a provisional liquidator is given in the
rules (2).
Appointment of
provisional liqui-
Alators.
It is not usual to appoint a provisional liquidator before the
hearing of the petition, unless the company is the petitioner,
or the petition is unopposed (a); and where a creditor who
had presented a petition to wind up a company had obtained
ex parte an order appointing a provisional liquidator, the
order was afterwards discharged on the application of the
company (0). ,
A provisional liquidator will not be appointed on a petition
to wind up an insurance company until it is shown to be within
33 & 34 Vict. c. 61 (0).
The appointment of a provisional liquidator is not necessary
in order to invalidate dealings with the company’s property
since the commencement of the winding up (d); nor to stay
actions, &c., by creditors (e).
(é) § 85, and see §§ 196, 199, 204.
(u) Rule 15.
(x) Ib, See Langham Skating
Rink Co., 6 Ch. D. 102; Hammer-
smith Town Hall Co., ib. 112.
(y) Rule 59.
(z) Schedule 3, No. 9.
(a) Cilfoden Benefit Building Soc.,
3 Ch. 462, and see Lord Romilly’s
observation in Emmerson’s case, 2 Eq.
236, and Hammersmith Town Hall
Co., 6 Ch. D, 112,
(b) Railway Finance Co, W. N.
1866, 196.
~(c) London and Manchester Indus-
trial Association, 1 Ch. D. 466.
(d) Ante, p. 666.
(e) Ante, p. 669, et seq.
OFFICIAL LIQUIDATORS.
701
Neither the act nor the rules specify with any particularity Bk. IV. Chap. 1.
what the duties of a provisional liquidator are. But the order
ee a a i i Duties of
appointing him usually removes all ambiguity on this point, provisional
by stating explicitly what he is to do(f). Speaking generally, deters.
his duty is to act as a receiver and to protect the assets of the
company.
A provisional liquidator ought to be served with notice of
any application to discharge or stay proceedings under a
winding-up order (g).
2. Official liquidators.
Sect. 8.
For the purpose of conducting the proceedings in winding Appointment
oe : : f official
up a company, and assisting the Court therein, the Companies Tiqutdaton:
act, 1862, empowers the Court to appoint one or more official
liquidators (h), and to remove them for due cause (i).
For the positien, powers, and duties of the registrar of the
Court of the Vice-Warden of the Stannaries when a company
is being wound up in that court, and no official liquidator has
been appointed, see 82 & 33 Vict. c. 19, § 33.
The appointment of the official liquidators lies with the
judge, and is to be made by a distinct order (k); and the
practice is to make the order in chambers, and not on the
hearing of the petition(/). The appointment may be made
without previous advertisement or notice to any one(m); but
the judge may, by advertisement, fix a time and place for the
appointment. He is not, however, bound to appoint the
person who may be nominated by those who attend pursuant
to the advertisement (7).
The appointment of any particular person as liquidator is so
(f) See the form, schedule 3, (2) General Financial Bank, 20
No. 9. Ch. D. 276. The liquidator was
(g) Ex parte Coleman, 3 DeG.& appointed on the hearing of the
8. 139. As to his costs, see ante, p. petition in Commercial Discount Co.,
659. 32 Beav. 198, and London, Bombay
(h) § 92. and Mediterranean Bank, 1 Ch. 525.
(2) § 93, and in voluntary winding (m) Rule 8.
up, §§ 141 and 150. (n) See rules 8 and 9, and schedule
(k) Rules 8, 11, and schedule 3, 3, Nos. 6-8.
No. 8.
702
Bk. IV. Chap. 1.
Sect. 8.
Security.
Advertisement
of appointment.
Vacancies.
WINDING UP BY THE COURT.
entirely a matter for the discretion of the judge, that the court
of appeal will not review his decision (0); except under very
special circumstances, or unless it can be shown that the judge
has acted upon a wrong principle(p). But the same rule
does not apply to appointments by the judge’s chief clerk ; the
parties interested are entitled to have the appointment con-
sidered and determined by the judge himself; and if he de-
clines to reconsider an appointment by his chief clerk, an
appeal lies (q).
In order to put a stop to contests for the appointment of
liquidator, the person nominated by the petitioner is usually
preferred, unless some good reason can be adduced for not ap-
pointing him (r); and where several amalgamated companies
are being wound up, the same person is preferred as liquidator
in-them all (s).
The official liquidators are required to give security, by
entering into a recognizance, with two or more sureties, in
such sum as the judge may approve (¢). When the proper
security has been given, a certificate to that effect is to be
made by the chief clerk (wv). Fresh securities may from time
to time be required (#).
As soon as an official liquidator has been appointed, and has
given security, his appointment is to be advertised (y).
In the case of the death, removal, or resignation of an
official liquidator, another is to be appointed in his room in
(r) See Albert Average Ass. Ass., 5
(0) London Quays, &c., Co., 3 Ch.
Ch. 597; Northern Assam Tea 0o.,
394; Northern Assam Tea Co., 5 Ch.
644; Albert Average Ass. Ass., 5 Ch.
597; International Contract Co., 1
Ch. 523; London, Bombay, and
Mediterranean Bank, ib. 525. See,
also, Merchant Traders’ Ship Loan
and Association Co., 15 Jur. 981,
and compare this with the case
cited infra in note (q).
(p) Albert Average Ass, Ass. 5
Ch. 597.
(q) Agriculturist Cattle Insurance
Co..3 De G. F.& J. 194. See the
ebservations in this case as to the
employment of accountants,
ib. 644,
(s) Western Life Ass. Soc., 5 Ch.
396. See, also, 35 & 36 Vict. c. 41,
§ 4.
(t) See § 92 and rule 10, and the
forms 10 and 11 in schedule 3. The
appointment is operative before the
security is given, Ex parte Charles-
worth, 36 Ch. D. 303.
(vu) Rule 12.
(x) Rule 13.
(y) Rule 14, and see schedule 3,
No. 15.
OFFICIAL LIQUIDATORS. 703
the same manner as in the case of a first appointment, and the Bk. no eo 1.
proceedings for the purpose may be taken by such person rete
interested as may be authorised by the judge to take the
same (2).
The power to remove a liquidator is exercisable not only if Removal of
the liquidator is personally unfit to act, but also whenever it ees
is shown that it is for the general advantage of those interested
in the assets that he should be removed (a), ¢.g., where the
principal creditors of an insolvent company offered to pay the
other creditors in full if the winding up was entrusted to their
own nominee (b); so where the great bulk of the unsecured
ereditors were not satisfied with the liquidator originally
appointed (c). Personal unfitness includes favouritism to
persons whose interests are opposed to those of others (d).
‘The same principles apply to the removal of liquidators where
the winding up is voluntary (e), or subject to the supervision
of the Court (f). The wishes of the persons interested are
always considered in these cases, although they cannot always
‘be complied with.
A liquidator can appeal from an order removing him (4).
The remuneration of the official liquidator is fixed by the Remuneration.
judge (hk): and is payable out of the assets of the company
next after the costs of the winding up, including therein the
costs of his own solicitor (2).
The official liquidator may, with the sanction of the judge, Solicitor.
appoint a solicitor to assist him in his duties (k). The soli-
citor’s duty is to conduct all such proceedings as are ordina-
(2) Rule 16. (g) Ex parte Charlesworth, 36 Ch.
(a) Ex parte Charlesworth, 36 Ch.
D. 299, explaining Sir John Moore
Gold Mining Co., 12 Ch. D. 325.
(b) Ex parte Charlesworth, ubi
supra.
(c) Association of Land Financiers,
10 Ch. D. 269.
(2) Sir John Moore Gold Mining
Co., ubi supra.
(e) British Nation Lefe Ass. Assoc.,
14 Eq. 492.
(f) Marseilles, dc, Land Co, 4
Eq. 692.
Dz 299.
(h) See § 93 and rule 18, and the
order of May, 1868, in 7 Eq. 105,
note, and 3 Ch. lxiv., and Cannan’s
claim, 7 Eq. 102; North of England
Banking Co., 3 Mac. & G. 362, note,
and Mysore Reefs Gold Mining Co.,
34 Ch. D. 14.
(t) Dronfield Silkstone Coal Co.
(No. 2), 23 Ch. D. 511; Re Massey,
9 Eq. 367.
(k) § 97. See Bass’s case, 1 De G.
& §. 722.
704
Bk. IV. Chap. 1.
Sect. 8.
Passing accounts.
Books of the
company.
Inspection.
WINDING UP BY THE COURT.
rily conducted by solicitors of the court (J). If necessary,
separate solicitors may be appointed to attend to conflicting
interests (m). The solicitor is entitled to payment of his
costs (n) out of the assets of the company, in priority to payment
of the liquidator’s remuneration (0), but not in priority to the
payment of expenses, which the liquidator has properly in-
curred (p). The solicitor has no lien on the file of proceed-
ings in the winding up, nor on the documents relating
thereto (q) ; nor has he any right to payment by the liquidator
personally (r).
Official liquidators are required to pass their accounts like
receivers (s), and to pay all monies which they may receive
into the Bank of England (¢); and to deposit all bills, notes,
and other securities payable to the company in the bank, for the
purpose of being presented by it for acceptance and payment (u).
It is the duty of the official liquidator to take possession of
all the company’s books and accounts (v), and to make up and
rectify the books of the company, and to keep books showing
its debts and credits, and also a ledger, containing the separate
accounts of the contributories (2).
The right of the creditors and contributories of the com-
pany to inspect its books and papers depends upon the order
which the Court may think fit to make upon the subject (y).
The general rules direct all documents relating to the winding
up of a company to be filed and entitle every contributory and
creditor whose debt has been proved to inspect and have
copies of such documents (z). This rule, however, does not
(1) Rule 68. (t) Rules 11 and 36. They have
(m) See Western Life Ass. Society,
5 Ch. 396.
(n) See as to a solicitor demanding
more than the scale fee, United
Kingdom, &c. Building Association,
40 Ch. D. 471.
(0) Re Massey, 9 Eq. 367.
( p) Dominion of Canada Plumbago
Co., 27 Ch. D. 33.
(q) Ex parte Pulbrook, 4 Ch. 627.
(r) Ex parte Watkin, 1 Ch. D.
130; Re Trueman’s Estate, 14 Eq. 278.
(s) Rule 19.
no business to lend money in their
hands even for short periods and on
good security. See Lord Romilly’s
observations in W. N. 1866, 327.
(u) Rules 37 & 41.
(v) See §§ 94 and 100. See,
under the old acts, Pell’s case, 3 De
G. & Sm, 170.
(x) Rule 17.
5 Ch. 487.
(y) § 156. Ea parte Walker, 15
Jur. 853,
(z) Rule 58.
See Wright's case,
OFFICIAL LIQUIDATORS. 705
in terms apply to the books of the company.
of them is desired, an application must be made to the judge
under § 156 of the act (a). An order for inspection will be
made if the Court is satisfied that the inspection is wanted for
a proper purpose (b) ; and liberty will be given to an account-
ant to attend if there are complicated accounts to be investi-
gated (c). Inspection will only be allowed for the purposes of
the winding up (d); and the liberty to inspect must not be
abused ; and the Court will interfere to prevent an improper
disclosure of the contents of the books (e). The rules of the
company as to inspection do not apply to a winding up (f/f).
As between contributories and alleged contributories, the Official liqui-
books, accounts, and documents of the company and of the aoe en
liquidators are prima facie evidence of the truth of all matters ©o™ttibutories.
This is a very im-
If an inspection Bk. IV. Chap, 1.
Sect. 8.
purporting to be therein recorded (q).
portant provision, and one of which unfair use might be made
if there were no means of compelling liquidators to expunge
from their books matters improperly inserted in them, But
a liquidator is not entitled to charge a person with money
without notice, and then require him to show that he does
not owe it; and if any attempt to do so is made, the Court
will order the entry to be removed, and throw upon the
liquidator the onus of showing that such entry ought to be
restored (h).
Under the Winding-up acts of 1848 and 1849, the property Extent to which
of the company vested in the official manager (2); and all es
actions and suits by or against the company had to be brought SomPany under
Acts of 1848
by or against him as its representative (k). He, however, only and 1849.
(a) As to summoning the liqui-
dator as a witness, see Barned’s
Banking Co., 2 Ch. 350.
(b) As to the extent of production,
and the affidavit which a liquidator
can be required to make, see Gooch's
case, 7 Ch. 207, and Mutual Society,
22 Ch. D. 714, and the cases in the
next notes,
(c) Ib.
(d) North Brazilian Sugar Factories,
- 37 Ch. D. 83, and see Morgan’s. case,
28 Ch. D. 620; and under the Stan-
L.C.
naries act, West Devon Great Consols
. Mine, 27 Ch, D. 106.
(e) See cases in note (6).
(f) Yorkshire Fibre Co., 9 Eq.
650.
(g) § 154, and see Arnot’s case, 36
Ch. D. 702.
(h) Ex parte Chadwick, 15 Jur.
597.
(4) 11 & 12 Vict. ¢. 45, §§ 29 and
30.
(k) Tb. §§ 50 and 51. See, on
this subject, Grand Trunk Rail. v.
27
706
WINDING UP BY THE COURT.
Bk, IV. Chap. 1. represented the company which was being wound up; and
Sect. 8.
Under the Act
of 1862.
consequently, actions in which it was sought to charge, not the
company, but one or more of its contributories, individually,
had to be brought against him or them, and not against
the official manager (J). Moreover, where the company bein:
wound up could not have been sued at law, either as a com-
pany or by a public officer, there an action against the official
manager as the representative of the company could not be
sustained. The acts in question did not confer on companies
any capacity of suing and being sued, but simply declared that
companies having that capacity were to sue and be sued by
their official manager (m). Consequently, a company, not
registered or in any way incorporated, but being a mere asso-
ciation of individuals, could not sue or be sued by its official
manager (7).
In the foregoing respects the Companies act, 1862, is very
different from the older winding-up acts. It is the duty otf
the official liquidator to take into his custody the property and
effects of the company (0): and if no liquidator is appointed,
or during any vacancy in his appointment, the property of the
company is in the custody of the Court (p); but the property
of a company registered under the act does not vest in the
Brodie, 3 De G. M. & G. 146; Rid-
dick v. Deposit, &c., Association Co.,
9 Ir. Com. Law Rep. 84; McDowell
v. Davis, 8 ib. 42, As to the mode
of describing him, see Re Heritage,
Kay, App. 29. The official manager
only represented the company if his
appointment was valid. See Official
Manager of Plumstead Water Co. v.
Dawis, 28 Beav. 545, and 2 De G.
F. & J. 20, where the winding-up
order and all the proceedings under
it were invalid, the order having
been made by the wrong Court.
(2) Beardshaw v. Lord Londes-
borough, 11 C. B. 498; McDowell
v. Doyle, 7 Ir. Com. Law, 598 ;
Armstrong v. Normandy, 7 Ex.
409.
(m) Pritchard v. London and
Birmingham, de. Rail. Co., Re
Weiss, 15 C. B. 331; Ernest v.
Weiss, 2 Dr. & Sm. 561.
(n) Ib., and see Russell v. Croys-
dill, 11 Ex. 123, and Ernest v.
Croysdill, 2 De G. F. & J. 175,
where the plaintiff represented one
provisionally registered company,
and the defendant another.
(0) § 94. The doctrines of re-
puted ownership are not applicable
to companies which are being wound
up, Crumlin Viaduct Works Co., 11
Ch. D. 755 ; Gorringe v. Irwell Ind'a
Rubber Works, 34 Ch. D. 128.
(p) § 92. The liquidator is him-
self in the nature of a receiver,
and a receiver will not therefore be
appointed of assets in his hands.
Perry v. Oriental Hotel Co., 5 Ch.
420, Compare Boyle v. Bettws
Llantwit Co., 2 Ch. D. 726.
OFFICIAL LIQUIDATORS. 707
liquidator, and all actions are taken and continued by and Bk. ee 1.
against the company in its corporate name (7). In the case,—
however, of an unregistered company, the Court has power to
make an order vesting its property in the liquidator; and, if
such an order is made, he may sue and be sued in his official
name, or in such other name as the Court may direct, as the
representative of the company (7).
As regards unregistered companies, therefore, the decisions
on the acts of 1848 and 1849 may still be usefully referred
to (s); but it must not be overlooked that the language of the
203rd section of the Companies act, 1862, differs materially
from that of the acts on which those decisions turned; and it
was held that the sanction of the Court to sue, warranted a
suit in equity, in the name of the official liquidator, without
any vesting order (t).
The official liquidators are to be described by their style of Duties of
office, and not by their individual names (uv); and they are to Ee
perform such duties in reference to the winding up of the
company as may be imposed by the Court (1).
Their duties, so far as they relate to the investigation of
claims against the company, to settling the list of contribu-
torics, to making calls and distributing the assets of the com-
pany, will be noticed in the subsequent sections of this chapter.
In the present section it is proposed to notice those general
powers and duties which do not relate to these matters.
Where more official liquidators than one are appointed, it is Power of liqui-
for the Court to declare whether any act authorised or required (ues shee
by the statute to be done by the official liquidator is to be done than one.
by all or any one or more of the persons so appointed (y).
(qg) See §§ 94 and 95, and 198,
196, A bill of sale given by the
company, and not within the Bills
of sale act, 1882, is valid as against
the liquidator, although not regis-
tered, Marine Mansions Co. 4 Eq.
601.
(r) See § 203. Hercules Ins. Co.,
11 Eq. 321, where the company was
registered after the petition was pre-
sented. Liquidators are not person-
ally liable to pay charges on property
vested in them under this section,
Graham v. Edge, 20 Q. B. D. 683.
(s) They are collected, ante, notes
(2) to (n).
(t) See Turquand v. Kirby, 4 Eq.
123; Turquand v. Marshall, 6 Eq.
112, reversed, but not on this point,
4 Ch. 376. Quere these decisions.
(uw) § 94. See, also, § 203.
(a) § 94.
(y) § 92, and see the rules, sche-
dule 3, No. 8. As to the validity
zZ22
708
Bk. IV. Chap. 1.
Sect. 8.
Powers of
liquidator.
WINDING UP BY
THE COURT.
The official liquidator has power to do the following things
with the sanction of the Court, or without it, if previously
authorised by the Court to act without consulting it (z).
1. To institute or defend legal proceedings in the name and
on behalf of the company (a).
2. To carry on the business of the company so far as may
be necessary for the beneficial winding up of the same (b).
8. To sell the property and claims of the company by
auction or otherwise (c).
4. To do all acts, and to execute in the name and on behalf
of the company all deeds, receipts, and other documents, and
for that purpose to use the company’s seal (d).
5. To prove as a separate creditor against the estate of a
bankrupt contributory for money due from him to the com-
pany (¢).
6. To draw, make, accept, and indorse bills of exchange
of the acts of one out of several
liquidators, see Ex parte Agra and
Masterman’s Bank, 6 Ch. 206, and
cases there cited. See, under the
older acts, Bass’s case,1 De G. & Sm.
722,
(2) §.96. For form of order, see
Rochdale Property, &c., Co., 12 Ch.
D. 775.
(a) § 95. See, as to unregistered
companies, ante(t). A liquidatormay
serve a bankruptcy notice on a judg-
ment debtor of the company, Kx
parte Winterbottom, 18 Q. B. D. 446.
The Court has no power to allow
the solicitor of a creditor to institute
proceedings in the name of the com-
pany to get in assets in order to pay
his own costs, Cape Breton Co. v.
Fenn, 17 Ch. D. 198. Astoexamin-
ing directors in actions against them,
see Madrid Bank v. Bayley, L. R. 2
Q. B. 37.
(b) § 95. British Waggon Co. v.
Lea & Co., 5 Q. B. D. 149, and Ex
parte Emmanuel, 17 Ch: D. 35, a
decision under the Bankruptcy act,
1869. The onus of proving that.a
particular contract is not beneficial
for the winding up of the company
lies on the person making the asser-
tion, Hire Purchase Co., Limited v.
Richens, 20 Q. B. D. 387.
(c) § 95. Park Gate Waggon Co.,
17 Ch. D. 234, claims against direc-
tors for misfeasance under § 165.
See, as to sales, rule 32, and as
to transferring the business of the
company, infra, p. 711. As to open-
ing biddings, see Northumberland and
Durham Banking Co., 9 W. RB. 584 ;
and as to getting in the legal estate,
Sheerness Waterworks Co. v. Polson,
3 De G. F. & J. 36, and 29 Beav.
70 ; as to selling, subject to alleged
incumbrances, Radley v. Bramall,
12 Eq. 472 ; as to purchases by old
directors, and irregular proceedings,
at the sale, see Alexandra Hall Co.,
W. N. 1867, 67.
(d) § 95.
(e) §95. As to his power to peti-
tion for an adjudication of bank-
ruptcy against a contributory, see
Williams v. Harding, L. R. 1
H. L. 9.
OFFICIAL LIQUIDATORS.
709
and promissory notes in the name and on behalf of the com- Bk. IV. Chap, 1
pany, and to raise money upon the security of its assets (/).
7. To take out, if necessary, in his official name, letters of
administration to any deceased contributory, and to do in his
official name any other act that may be necessary for obtaining
payment of any monies due from a contributory or his estate,
and which cannot be conveniently done in the name of the
company (9).
8. To do and execute all such other things as may be neces-
sary for winding up the affairs of the company and distributing
its assets (i).
When the company being wound up is a cost-book mining
company governed by the Stannaries act, 1887, it is the duty
of the purser or other person having possession of the club
funds of the mine to account for them to the liquidator, who is
empowered to recover them and whose duty it is to apply them
in accordance with the rules of the club (see 50 & 51 Vict.
«. 48, § 18 (2)).
The official liquidator is further empowered, with the sanc-
tion of the Court, to make arrangements with creditors and
contributories, and to compromise all claims whether by or
against the company (7). A proposed compromise will not be
sanctioned by the Court in the absence of sufficient informa-
tion as to the grounds on which the compromise is to be
entered into (k). Nor will the Court compel a liquidator to
enter into a compromise which he, on behalf of the company,
opposes (1). A compromise entered into by an official liqui-
(f) § 95. The Court will not
allow a liquidator to give accept-
(g) § 95.
(h) Ib. But as to reconstruct-
ances which are valueless, Contract
Corporation, Ebbw Vale Company's
claim, 8 Eq. 14. The liability of
the company upon such bills or notes
is the same as if the company had
issued them in the course of its
business: see the section. As to
negotiating bills in order to avoid a
set-off, see Smith, Fleming & Co.’s
case, and Gledstanes d& Co.’s case,
1 Ch. 538, noticed in the next
section.
ing the company, see Wreck Recovery
Salvage Co., 15 Ch. D. 353.
(z) §§ 159 and 160, and see rule
61.
(k) Ex parte Totty, 1 Dr. & Sm.
273, and on appeal, 6 Jur. N. §.
849,
(1) Pearson’s case, 7 Ch. 309. But
this assumes that the liquidator is
not himself opposing the wishes of
those whom he represents.
Sect. 8.
Cost-book
company.
Compromises.
710
Bk. IV. Chap. 1. dator,
Sect. 8.
Limit of power
to compromise.
33 & 34 Vict.
e. 104,
WINDING UP BY THE COURT.
and approved by a chief clerk, does not require the
personal sanction of a judge to make it binding. But any
person agerieved by it is entitled to have it considered by the
judge in whose chambers the winding up proceeds (m).
A compromise with the sanction of the Court is binding on
all parties, including creditors (n), unless appealed against in
due time (0).
But notwithstanding a compromise with a contributory, who
is a transferee of shares, he remains liable to indemnify his
transferor from all calls which may be made on him as a past
member (/).
If it can be shown that the sanction of the Court was
obtained by the misrepresentation or improper concealment
of material facts, the compromise will be set aside by the
Court which sanctioned it, although the time for appeal has
passed (q).
The power of the Court to sanction compromises under the
above section is confined to claims by or against the company,
and does not extend to claims by individual shareholders
against the directors personally (r).
Opinions differed respecting the power of the Court to bind
dissentient creditors or contributories by sanctioning arrange-
ments approved by majorities of them (s).
The power of the Court in this respect has, however, been
(m) Ex parte Garstin, 10 W. R.
457.
(n) See Cleave v. Harwar, 6 H. &
N. 22, where proceedings by sci. fa.
against a shareholder were stayed, a
compromise having been entered
into between him and the official
manager under 20 & 21 Vict. c. 78,
and see as to enforcing a com-
promise, Gaudet Fréres Steamship Co.,
12 Ch. D. 882.
(0) Lwey’s case, 4 De G. M.& G.
356; Underwood’s case, 5 ib. 677;
Garstin’s case, 10 W. R. 457. See,
also, Hughes’s case. 1 De G. & Sm.
606, and 13 Jur. 530.
(p) Roberts v. Crowe, L. R. 7 C. P.
629 ; Kellock v. Enthoven, L. RB. 9 Q.
B. 241, and 8 ib. 458.
(q) Central Darjeeling Tew Co., W.
N. 1866, 361 ; Clarke’s case, ib. 254 ;
Garstin’s case, 10 W. R, 457.
(r) Ex parte Hankey, W. N. 1869,
226.
(s) See Albert Life Ass. Co., 6 Ch.
381; and compare Risca Coal and
Iron Co., 30 Beav. 528 (an appeal
was dismissed, on the ground that
it was made too late. See 8 Jur. N.
8. 900). Commercial Bank Corpora-
tion of India and the East, 8 Eq. 241.
See, also, Bank of Hindustan, dc. v.
Eastern Financial Assoc., L. R. 2 P-
C, 489,
OFFICIAL LIQUIDATORS. 711
enlarged by the Joint Stock Companies arrangement act, 1870 Bk. oo net 1.
(38 & 84 Vict. c. 104), which (§ 2) enacts that, ——
“Where any compromise or arrangement shall be proposed between Where compro-
a company, which is, at the time of the passing of this act or afterwards, in mise proposed
‘ ‘ ; the Court may
the course of being wound up, either voluntarily or by or under the super- jider a m eoting
vision of the Court, under the Companies acts, 1862 and 1867, or either of of creditors,
them, and the creditors of such company, or any class of such creditors, it &c., to decide
shall be lawful for the Court, in addition to any other of its powers, on the ane
application in a summary way of any creditor or the liquidator, to order
that a meeting of such creditors or class of creditors shall be summoned in
such manner as the Court shall direct, and if a majority in number repre-
senting three-fourths in value of such creditors or class of creditors present
either in person or by proxy at such meeting shall agree to any arrangement
or compromise, such arrangement vr compromise shall, if sanctioned by an
order of the Court, be binding on all such creditors or class of creditors, as
the case may be, and also on the liquidator and contributories of the said
company.”
The order in which the sanctions required are obtained is
immaterial (t). The sanction of three-fourths of those present
is sufficient (wv). Unanimity is not required, and the opposi-
tion of some creditors is not fatal (x). But schemes for
arrangement under this act have failed because of the impossi-
bility of ascertaining and valuing the claims of the creditors (y);
and because those who voted for it had voted in respect of
debentures payable to bearer and not produced, and had not
voted bond fide in the interest of the company (z). So where
a company induced a judgment creditor not to issue execution
against it, and petitions by a creditor and the company were
then presented for winding up the company, and a scheme of
arrangement was proposed and assented to by all the creditors
except the judgment creditor who opposed it, the Court
declined to sanction the scheme (a).
The assets of the company may be sold and realised in the Transfer of
ordinary way by auction or private contract as may be thought mais
(t) Dynevor, &c. Colliertes Co., 11 (y) Albert Life Ass. Co., 6 Ch.
Ch. D. 605. 381.
(w) Bessemer Steel and Ordnance (2) Wedgwood Coal and Iron Co., 6
Co., 1 Ch. D. 251. Ch. D. 627.
(z) Tunis Rail. Co, 10 Ch. D. (a) Richards & Co, 11 Ch. D.
270, note ; aff. on appeal, W. N. 1874, 676.
p. 165.
712
Bk, IV. Chap. 1.
Sect. 8.
Albert Life
Assurance Com-
pany’s case,
Acts done with-
out sanction of
Court,
WINDING UP BY THE COURT.
best. Doubts have been expressed as to the power of the
Court in a compulsory winding up to sanction a sale of a com-
pany’s assets en masse to a new company formed to carry on its
business (4). It is, however, to be remembered that the Court
can stay the winding-up proceedings altogether on such terms
as it thinks proper (c); and this power, coupled with that of
selling the assets of the company (d), and of compromising
with the creditors and contributories (¢) is, it is conceived,
sufficient to give the Court jurisdiction to sanction such a sale
as that under consideration upon any terms the Court may
judicially approve (/).
But in the case of the Albert Life Asswrance Company (g),
which had absorbed several other companies, the Lord Justice
James considered that a majority of creditors could not bind
a minority to accept a composition ; and he refused to sanction
a scheme for reconstructing the Albert Company, and for pay-
ing its creditors and the creditors of the absorbed companies a
composition, by calls, and for transferring to another company
the assets of the Albert, and the monies proposed to be raised
by calls.
Liquidators who act without the sanction of the Court in
matters requiring such sanction, expose themselves to serious
risks ; for if loss ensues to the company the liquidators may
be compelled to make it good, and if they sue or defend an
action unsuccessfully, they may have to pay the costs per-
sonally (h). But an order made in an action and directing a
liquidator to pay the costs personally does not necessarily pre-
clude him from afterwards obtaining such costs out of the
assets of the company (i). The consequences of not obtaining
(b) See §§ 89, 91, 95, 159, and
160. The doubt has arisen by
reason of § 161 being in terms only
applicable to a voluntary winding
up. The act 31 & 32 Viet. c. 68,
only applies to companies being
wound up when it passed.
(c) § 89, ante, p. 663.
(@) § 95.
(e) Ante, p. 709.
(f) See, as to winding up, subject
to supervision, Hic parte Poole’s Eue-
cutors, 8 Ch. 702 ; Imp. Mere. Credit
Ass., 12 Eq. 504; Agra and Master-
mons Bank, 12 Eq. 509, note. ,
(y) 6 Ch. 381, and see General
Exchange Bank, W. N. 1867, 63.
(h) Grand Trunk, &c., Rail. Co. v.
Brodie, 9 Ha. 823, and 3 De G. M. &
G. 146 ; Caldwell v. Lrnest,27 Beav.
39 and 42,
(i) Ib. See, on this subject,
713
PROOF AND PAYMENT OF DEBTS.
the sanction of the Court where such sanction is required, Bk. ae oa 1.
may, moreover, in some cases invalidate the liquidator’s pro- —~- —
ceedings; but it is apprehended that if he sues without leave
the want of leave affords no defence to the action (k).
SECTION IX.—PROOF AND PAYMENT OF DEBTS.
1. General observations.
The Court is empowered to fix a time within which creditors Time for proof.
are to prove their debts, or be excluded from the benefit of
any distribution made before such debts are proved (J). For
the purpose of ascertaining the debts of the company, and of
requiring creditors to come in and prove their debts, an adver-
tisement is to be issued at such time as the judge may direct (m).
The advertisement fixes a time for the creditors to send the
particulars of their demands, and the names and addresses of
themselves and their solicitors (if any) to the official liquidator,
and appoints a day for adjudicating thereon (n).
The creditors need not attend the adjudication, nor formally Mode of proof.
prove their debts, unless required so to do by notice from the
official liquidator: but, upon such notice being given, they are
to come in and prove their debts within the time specified in
the notice (0). It is the duty of the official liquidator to inves-
tigate the claims sent in, and, so far as he is able, to separate
its termination it may be proved,
though the time fixed has passed,
Macfarlane’s claim, 17 Ch, D. 337.
Consols Insurance Co. v. Wood,
2 Dr. & Sm. 358, and infra,
§ 12.
(k) See the analogous cases in (m) Rule 20.
bankruptcy, Lee v. Sangster, 2 C. B. (n) Ib., and see the form in sche-
N. S.1; Piercy v. Roberts, 1 M. & dule 3, No. 16.
K.4; Ex parte Magnus, 3 M. D. & (0) Rule 21. As to what is put-
D. 693; Jones v. Yates, 3 Y. & J.
373.
ting in a claim, see Forwood’s claim,
5 Ch. 18. Probate in this country
() § 107. Kit Hill Tunnel, 16
Ch. D. 590. If a liability con-
tingent at the commencement of a
winding up ripens into a debt before
cannot be dispensed with where a
claim is made by the legal personal
representatives of a deceased credi-
tor, Fernandes’ Exs. case, 5 Ch. 314,
714
Bk. IV. Chap. 1.
Sect. 9.
Creditors’ claims
to be investi-
gated.
Costs of proof.
WINDING UP BY THE COURT.
those which ought to be allowed without further proof from
those which ought not, and to set forth the former in an
affidavit, giving the reasons why, in his opinion, they ought to
be at once allowed (p). In adjudicating upon the debts the
judge may either allow them upon the official liquidator’s
affidavit, or require them to be further proved (q). Notice of
allowance or disallowance, as the case may be, is to be given
to the creditors by the official liquidator (7); and those
creditors whose claims have not been allowed are to have
notice to come in and prove by a day named in the notice
(being not less than four days after the notice), and to attend
at a time to be therein mentioned, being the time for adjudi-
cation (s).
Under the acts of 1848 and 1849, it was held that the master
or judge acting in the winding up must examine into every
claim brought in before him, and either allow it or disallow it,
or allow it as aclaim only; and must do this after hearing
such evidence as the claimant might be able to adduce; and
must not allow a claim as a claim only, in order to avoid the
consideration of the more difficult question, whether the claim
ought to be allowed as a debt of the company (t). These
rules are as applicable under the act of 1862 as under those of
1848 and 1849. If the claimant refuses to produce what
evidence he has relating to his claim, it may be disallowed (u).
Interrogatories may be administered to him ().
Creditors coming in and proving their debts, pursuant to
notice from the official liquidator, are entitled to their costs of
proof (y).
(p) Rule 22, and see the form of and 13 Beav. 426; Hx parte Gwyn,
affidavit in schedule 3, No. 17. 1 Jur. N.S. 800; Ex parte Higgins,
(q) Rule 23. 2ib.178. As to enabling a creditor
(r) Rules 23 and 24. to prosecute his claim in formé pau-
(s) Rule 24, and see the forms in peris, see Ex parte Fry, 1 Dr. & Sm.
schedule 3, Nos. 20 and 21. 318.
(t) See Prichard’s case,5 De G. M. (u) Constantinople and Alexandra
& G. 495; and Terrell v. Hutton, 4 Hotel Co., 35 Beav. 349.
H. L. C. 1091. As to bringing (x) Alexandra Palace Co., 16 Ch.
actions to try a disputed debt, D. 58.
see Hast of England Banking Com- (y) Rule 27.
pany’s case, 5 De G. M. & G. 505,
715
PROOF AND PAYMENT OF DEBTS.
The result of the adjudication upon debts and claims is to Bk. ee Mil 1.
be stated in certificates to be made by the chief clerk. The ———-
certificates are to state whether the debts or claims are allowed soe me
or disallowed, and whether allowed as against any particular
assets, or in any other qualified or special manner (3).
A creditor whose debt is allowed is informed by notice when Notice of
and where he will be paid (a). The sum payable to him by ae
the company is a debt due to him and can it seems be attached
in the hands of the liquidator under a garnishee order (b).
If the judge acting in the winding up disallows a claim Sore PY
brought in before him, the creditor may appeal from the
decision (c) ; he can also, where necessary, apply for leave to
take such proceedings as he may be advised, for the purpose
of establishing his case by action (d); but it is now seldom if
ever necessary to do this.
On the other hand, if the official liquidator or the contribu- Appeal by —
tories, or, it is presumed, the other creditors where they are nae a
prejudiced, are dissatisfied with the allowance of a debt, they
can appeal (e); but if the official liquidator appeals, the con-
‘tributories or other creditors are not usually heard with
him (/).
The time for appeal is the same in this as in other cases (,).
Debts contracted by the liquidators in winding up the com- Debts contracted
pany must not be confounded with debts contracted by the cred ee
company, and provable against it (h).
tracted by the liquidator are part of the expenses of the
winding up, and are payable in full out of the assets of the
company in priority to the other unsecured debts of the com-
pany (2).
Debts properly con-
(2) Rule 28.
(a) See the rules, schedule 3, No.
23.
(b) Prichard’s clam, 2 De G. F. &
J. 354, Compare Cowan’s estate, 14
Ch. D. 638 ; Re Hunter, L. R. 8 C.
P. 24; Dawson v. Malley, Ir. Rep. 1
Com. L. 207.
(c) Ernest v. Nicholls, 6 H. L. C,
401.
(d) As in Armstrong’s case, 3: De
G. & S. 140.
(e) In Ex parte Gwyn, 1 Jur. N.S.
300, a contributory appealed.
(f) Re Norwich Yarn (0o., 13
Beav. 428, note, where, however,
the contributories were heard. See,
too, Bodmin United Mines, 23 Beav.
385.
(g) Ante, pp. 697, 698,
(h) See Ex parte Clark, 7 Eq. 550 ;
Ex parte Smith, 3 Ch. 125, both of
which were cases of set-off.
(2) See, as to distresses for rent and
716
Bk, IV. Chap, 1.
Sect. 9.
Debts provable.
WINDING UP BY THE COURT.
2. Debts provable.
The Companies act, 1862, has for one of its primary objects
the ratable payment pari passu of all creditors and others
Contingent debts having claims against the company (x); and not only all debts
and claims to
damages.
Priorities of
debts.
actually payable, but all debts of the company payable on a
contingency, and all claims against it, present or future, certain
or contingent, ascertained or sounding only in damages, are
admissible to proof against it (1). The value of those debts or
claims which are subject to any contingency, or sound only in
damages, or which, for some other reason, do not bear a
certain value, is to be estimated as justly as possible (m),
according to the value thereof at the date of the winding-up
order (n). But this last rule does not apply to cases of con-
tinuing damage (0), and has not been always regarded even in
other cases, the date of the making of the claim having been
preferred (p). A claim which is contingent at the commence-
ment of the winding up may be proved for in the ordinary way
if it ripens into a debt during the continuance of the winding
up, whether the time limited for sending in claims has expired
or not (q).
The Companies act, 1862, authorises liquidators to pay any
creditors in full under certain special circumstances mentioned
in the act (7), but contains no provision to the effect that one
class of creditors is to be in any better position than any
others. The general scheme of the act is that all shall be
paid out of the assets of the company pari passu (s). Thus a
landlord has no priority for arrears of rent unless he is in a
rates, ante, p. 678 et seg, and as to
secured debts, Lx parte Grissell, 3
Ch. D. 411, and infra, § 12, under the
head Costs.
(k) Ante, p. 666, nute (c).
(1) § 158; see, too, §§ 159, 160.
See, as to remoteness of damage,
Johnston's claim, 6 Ch. 212.
(m) § 158. The valuation of
annuities and future and contingent
liabilities is in the case of insolvent
companies now governed by the
rues in bankruptcy, Jud. act, 1875,
§ 10, infra, p. 719.
(n) Rule 25.
(0) Cambrian Steam Packet Co., 4
Ch. 112, and 6 Eq. 396.
(p) See Kellock’s case, 3 Ch. 769 ;
Creag’s Executor’s case, 9 Eq, 706.
(¢) Macfarlane’ claim, 17 Ch. D.
337,
(r) § 159.
(8) Ante, p. 666, note (c).
PROOF AND PAYMENT OF DEBTS.
position to distrain (¢), nor have persons paying money into a Bk.
bank which stops immediately afterwards (uw), or into the -
branch office of a bank in ignorance that the head office
has already stopped (x) ; nor are policy holders whose policies
are actually payable (y) in any better position as regards
priority than other creditors.
This general rule, however, is subject to the right of the
Crown to be paid in priority to other persons (z); and is also
subject to the following statutory exceptions.
717
IV. Chap. 1.
Sect. 9.
By the Preferential Payments in Bankruptcy act, 1888 (a), Preferential
which applies only to windings up commenced after the
31st December, 1888, priority is given to,
(a) All parochial or other local rates due from the company at the com-
mencement of the winding up, and having become due and payable within
twelve months next before that time(d), and all assessed taxes, land tax,
property or income tax assessed on the company up to the fifth day of April
next before the commencement of the winding up, and not exceeding in the
whole one year’s assessment ;
(b) All wages or salary of any clerk or servant in respect of services
rendered to the company during four months(c) before the commencement
of the winding up, not exceeding fifty pounds (d) ; and
(c) All wages of any labourer or workman not exceeding twenty-five
pounds, whether payable for time or for piece-work, in respect of services
rendered to the company during two months before the commencement of
(t) Thomas v. Patent Lionite Co.,
17 Ch. D. 250; Bridgewater En-
gineering Co., 12 Ch. D. 181; Coal
Consumers’ Association, 4 Ch. D. 625,
and ante, p. 678 et seg. as to distress.
(u) Ex parte Waring, W. N. 1866,
399. 7
(x) Ex parte Guillemin, 28 Ch. D.
634.
(y) McIver’s claim, 5 Ch. 424.
And where a company’s contracts
are reduced under a scheme in
accordance with § 22 of the Life
Assurance Companies act, 1870, see
Great Britain Mutual Life Ass. Soc.,
20 Ch. D. 351.
(2) Henley & Co, 9 Ch, D. 469;
Oriental Bank Corporation, Ex parte
The Crown, 25 Ch. D, 643; and
West London Commercial Bank, 38
Ch. D. 364. A surety to the Crown
who has paid his principal’s debt, is
entitled to the Crown’s priority,
Manisty v. Churchill, 39 Ch. D.
174.
(a) 51 & 52 Vict. c. 62. This act
repealed the Companies act, 1883,
by which servants, clerks, and others
were given a priority for salary and
wages, except as to Ireland, to which
country this act does not apply
(§ 4).
(b) As to rates before this act, see
ante, p. 681.
(c) Le., four months next before,
see Ex parte Fox, 17 Q. B. D, 4.
(d) As to the old law, see Chap-
man’s case, 1 Eq. 346 ; and Associa-
tion of Land. Financiers, 16 Ch. D.
373.
Payments in
Bankruptcy
Act, 1888.
718
WINDING UP BY THE COURT.
Bk, IV. Chap. 1. the winding up: Provided that where any labourer in husbandry has
Sect. 9.
Stannaries
* Act, 1887.
entered into a contract for the payment of a portion of his wages in a lump
sum at the end of a year in hiring, he shall have priority in respect of the
whole of such sum, or a part thereof as the Court may decide to be due
under the contract proportionate to the time of service up to the date of
the commencement of the winding up.
The foregoing debts rank equally between themselves and
are payable in full, unless the assets of the company are in-
sufficient to meet them, in which case they must abate in equal
proportions between themselves (e). Moreover, subject to the
retention of such sums as may be necessary for the costs of
administration or otherwise, the foregoing debts are payable
at once, so far as the assets of the company are sufficient to
meet them (/).
In the event of a distress on the company’s goods within
three months next before the date of the winding-up order,
the above-mentioned debts are a first charge on the goods
distrained on, or the proceeds of sale thereof (gy); but the
person distraining has the same right of priority in respect
of any money paid under any such charge, as the person to
whom such payment is made (h).
Again by the Stannaries act, 1887 (2), (which is not affected
by the last mentioned act (%)), miners are given a first
charge for three months’ wages upon the mining effects, and
the money and other assets of the company in connection with
the mine, having priority, subject to the provisions of the tenth
section of the act, over all claims by the lessors of the mine
or by mortgagees or judgment execution or other creditors (I) ;
and on the company being wound up these wages are to be paid
by the liquidator forthwith in priority to all other costs, except
the costs properly incurred of making the winding-up order,
and, subject to the tenth section of the act, to all claims by
any person whatsoever; and the court has power to charge
the whole or any part of the assets of the company with a sum
(c) 51 & 52 Vict. c. 62, § 2 (2) 50 & 51 Vict, c. 43, § 14.
(f) Ib., § 3. (k) 51 & 52 Vict. c. 62, § 2 (2).
(g) Ib., § 4. (1) See § 4; for other advantages
(h) As to distresses after the com- conferred on miners for their wages
mencement of the winding up, see before the company is being wound
ante, p. 678 et seq. up, see §§ 5-8.
PROOF AND PAYMENT OF DEBTS.
sufficient to pay these wages with interest at 5 per cent. per Bk. ae
ect.
annum in favour of any person willing to advance the
requisite amount or any part thereof (m). By section 10, the
right conferred upon clerks and servants by the Companies
act, 1888, to be paid in the winding up of a company in
priority to other creditors part passu with labourers and
workmen out of such assets only as are distributable by
the liquidator is preserved, except that such priority is
limited to three months’ wages, and does not extend to the
principal agent or manager, purser or secretary (7).
By the 10th section of the Judicature act, 1875, it is enacted
(inter alia) that—
“In the winding up of any company under the Companies acts, 1862
and 1867 (0), whose assets may prove insufficient for the payment of its
debts and liabilities and the costs of winding up (p), the same rules shall
prevail and be observed as to the respective rights of secured and unsecured
creditors, and as to debts and liabilities provable, and as to the valuation
of annuities and future and contingent liabilities respectively as may be in
force for the time being under the law of bankruptcy ” (¢).
This enactment has given rise to much discussion and to
some conflict of judicial opinion, but it appears now to be
settled that the bankruptcy rules which it has introduced into
the winding up of insolvent companies, are confined to those
relating to (1) the respective rights of secured and unsecured
creditors, (2) to the debts and liabilities provable, and (8) to
the valuation of annuities and future and contingent liabi-
lities (r). The section does not affect priorities (s), nor
the funds out of which debts are to be paid. The bank-
ruptcy rules which under certain circumstances deprive execu-
tion creditors of the fruits of their executions (t), allow the
(m) See § 9. Mersey Steel and Iron Co. v. Nay-
(n) 46 & 47 Vict. c. 28, § 4. lor, Benzon & Co., 9 App. Ca. 434.
(0) The enactment does not apply (r) As to what future and contin-
toany winding up commenced before _ gent liabilities may be valued, see
it came into operation, Joseph Suche Hardy v. Fothergill, 18 App. Ca.
& Co. 1 Ch. D. 48. 351.
(p) This must be assumed to be (s) See infra, and p. 685, note (h).
the case until the contrary is proved, (t) Withernsea Brickworks, 16 Ch.
Ex parte Theys, 25 Ch. D, 587. D. 340; Richards & Co.,11 Ch. D.
(q) Notice the words are“asmay 676; Railway Steel and Plant Co.,
be in force for the time being,” 8 Ch. D. 183. Printing and Nu-
719
hap. 1.
9.
Judicature act,
1875, § 10
720 WINDING UP BY THE COURT.
Bk. oe waa 1. trustee in bankruptcy to disclaim onerous property (uw), and
the doctrines relating to reputed ownership (x), and fraudulent
preferences (y) (except so far as introduced by the Companies
act, 1862, § 164), are not introduced into the winding up of
companies.
With regard to the respective rights of secured and un-
secured creditors (z), it must be remembered that previously
to the Judicature act, 1875, by the rules in Chancery a secured
creditor was allowed to prove in the winding up of an in-
solvent company, for the full amount of his debt and to
realize his security afterwards (a). The abolition of this rule
was one of the chief objects of the section, and by it the rights
of secured and unsecured creditors in the winding up of in-
solvent companies, are in this respect made the same as their
rights in bankruptcy (6). But the rule in bankruptcy which
prevents a fully secured creditor, who retains his security, from
presenting a petition in bankruptcy, does not prevent a secured
creditor from presenting a petition for a winding-up order (c).
With respect to the bankruptcy rules relating to ‘‘ debts and
liabilities provable,” it has been decided that the rules intended
to be introduced by this clause, are the rules which determine
what debts or liabilities may be proved in bankruptcy and
Thus it has been held that the rule in
Effect on secured
creditors,
As to debts
provable.
these rules only (d).
D. 250 ; Coal Consumers’ Association,
4 Ch. D. 625. See also Printing
and Numerical Co., 8 Ch. D. 535,
merical Registering Co., 8 Ch. D.
535, is overruled, ante, p. 678.
(u) Westbourne Grove Drapery Co.,
5 Ch. D. 248.
(z) Gorringe v. Irwell Rubber
Works, 34 Ch. D. 128; Crumlin
Viaduct Works Co,, 11 Ch. D. 755.
(y) See Withernsea Brickworks, 16
Ch. D. 340; Winehouse v. Wine-
house, 20 Ch. D, 545.
(2) The class of secured creditors
must be determined by the creditor’s
position at the commencement of
the winding up, and by the defini-
tion of “secured creditors,” con-
tained in the Bankruptcy act. See
§ 168 of the Bankruptcy act, 1883,
Thomas v. Patent Lionite Co., 17 Ch.
and Buckley on the Companies Acts,
5th ed., p. 346.
(a) Mason v. Bogg, 2 My. & Cr.
443 ; Kellock’s case, 3 Ch. 769.
(6) Winehouse v. Winehouse, 20
Ch. D. 545; Williams v. Hopkins,
18 Ch. D. 370; Withernsea Brick-
works, 16 Ch. D. 337; Kit Hill
Tunnel, ib. 590; Lee v. Nuttall, 12
Ch. D. 61; Coal Consumers’ Associa-
tion, 4 Ch. D, 625; Joseph Suche &
Co., 1 Ch. D. 48.
(c) Moor v. Anglo-Italian Bank,
10 Ch. D. 681.
(d) West of England Bank, Ex
PROOF AND PAYMENT OF DEBTS. 721
bankruptcy which allows any liability contingent at the date of Bk. ae = — 1.
adjudication to be proved if it ripens into a debt during the ————
bankruptcy, is introduced mutatis mutandis into the winding up
of insolvent companies (e); and that the bankruptcy rules as
to interest (f), and as to set-off between the company and non-
contributories, are also introduced (9).
A creditor who has priority over others apart from the bank- Effect on
ruptcy laws, is not deprived of such priority by the enactment a
in question ; nor does the enactment confer any priority upon
a creditor who, apart from the bankruptcy law, has no
priority (kh). For example, the Crown is not deprived of
its right to issue process for the recovery of a debt due to
it (i) ; nov is a creditor, who is a shareholder and has paid all
calls made upon him, deprived of his right to prove for his
debt pari passw with any other creditor (j). Nor is a savings
bank deprived of the priority to which it is entitled under the
Savings Bank act, 1863, in respect of monies due to it from
any of its officers in their official capacity (k). On the other
hand, a landlord is not entitled to any priority in respect of
a year’s arrear of rent (1).
Passing now to the general question, what debts are provable What debts, &c.
are provable.
parte Brown, 12 Ch. D. 823 ; Albion
Steel Wire Ca.,'7 Ch. D. 547.
(e) Macfarlane’s claim, 17 Ch. D.
336. This is irrespective of the
question whether such a debt is oris
not provable under § 158 of the
Companies act, 1862; and see Hill
y. Bridges, 17 Ch. D. 342, an ad-
ministration case.
(f) Boswell v. Gurney, 13 Ch. D.
136, and see infra, pp. 724 et seq.
(g) See infra, p. 738, as to set-off.
(h) The decision of V.-C. Malins,
as to servants’ wages in the Associa-
tion of Land Financiers, 16 Ch. D.
373, is not consistent with the text.
But that case is not consistent with
more recent decisions. See as to
judgment creditors and the assets
of deceased persons, Winehouse v.
Winehouse, 20 Ch. D. 545; Smith
L.c.
v. Morgan, 5 C. P. D. 337. See
also as to an executor’s right of
retainer, Lee v. Nuttall, 12 Ch. D.
61.
(1) Ante, p. 717, note (2).
(j) West of England Bank, Es;
parte Brown, 12 Ch. D. 823. The
debt must not be a debt due to him
in his character of member, see § 38,
sub-s. 7 of the Companies act, 1862.
(k) 26 & 27 Vict. c. 87, § 14.
Bankruptcy act, 1883, § 40, Jones
v. Williams, 36 Ch. D. 573.
(1) Thomas v. Patent Lionite Co.,
17 Ch. D. 250; Bridgewater En-
gineering Co., 12 Ch. D. 181; Coal
Consumers’ Assoc., 4 Ch. D. 625.
Stockton Iron Furnaces Co., 10 Ch.
D. 335, so far as it is an authority
to the contrary, must be considered
as overruled.
3a
722
Bk. IV. Chap. 1.
Sect. 9.
Equitable debts.
Debts contracted
ultra vires.
WINDING UP BY THE COURT.
and what not, the guiding principle is that those claims only
are provable on the winding up of a company which are or will
become enforceable against the company which is being wound
up. So long as an order exists for winding up a company the
Court cannot hold that there is no company against which
debts can be proved (m). Demands against the promoters or
directors, or other persons, but not against the company itself,
cannot be proved against it either as a debt (n) or a claim (0).
On the other hand, debts of the company can be proved against
it although some of the shareholders may be entitled to an
indemnity in respect of them from other shareholders (7p).
What is, and what is not, a debt of the company, must be
determined upon the principles discussed in an earlier portion
of the present treatise (q); and in this place it is proposed
merely to notice some general points of practical importance,
and continually arising in the winding up of companies.
A debt may be proved in the winding up, although an action
has been previously brought against the company to recover it,
and such action has been dismissed for want of prosecution (r).
Equitable debts are clearly provable (s); but a debt con-
tracted under seal by a trustee for the company is not provable
against the company (¢); nor are claims founded on agree-
ments fraudulently concealed from the members, even though
payment is stipulated for in the articles of association (u). Nor
can moneys subject to a fraudulent trust be treated as trust
moneys and be paid as such (2).
Nor are claims, founded on contracts which are ultra vires,
(m) Arthur Average Assoc., 3 Ch.
D. 522; Ex parte Hargrove, 10 Ch.
(q) See book ii.
(r) Orrell Colliery and Fire Brick
542.
(n) London Marine Ins. Assoc., 8
Eq. 176 ; Ex parte Lloyd, 1 Sim. N.
8. 248, as explained in 2 De G. M.
& G. 640.
(0) See Wryghte’s case, 2 De G.
M. & G. 636, and Prichard’s case, 4
De G. & 8. 328, and 5 De G. M.
& G. 484. See, too, Ex parte Briggs,
8 W. R. 110.
(p) Shaw’s claim, 10 Ch. 177.
Co., 12 Ch. D. 681.
(s) See Terrell v. Hutton, 4 H. L.
C. 1091.
(t) Pickering’s claim, 6 Ch. 525.
(u) Ex parte Williams, 2 Eq. 216,
where the articles of association
were vitiated by a concealed agree-
ment. See, also, Hereford and Souk
Wales Waggon Co., 2 Ch. D, 621.
(x) Great Berlin Steamboat Co., 26
Ch. D. 616.
PROOF AND PAYMENT OF DEBTS. 723
Bk, IV. Chap. 1.
provable against the company (y). Moreover, solicitors who, on
on behalf of the company conduct legal proceedings arising
out of transactions which are wltra vires, and are known by
them to be so, are not entitled to be paid for their services by
the company (z). Nor can brokers claim in respect of pur-
chases of shares in the company being wound up unless the
company has power to buy its own shares (a). But money
borrowed wlira vires, but proved to have been expended in
paying debts for which the company was liable, or for other
legitimate purposes of the company, is provable as a debt
against it(b). In connection with this subject, it should be
remembered that creditors may be able to dispute claims which
would be binding on the company by the law of estoppel (c).
A debt of the company bought up for less than its full pea uP
amount can be proved for the full amount even by a mem- their amount.
ber (d); but a director who knows that a debt has been im-
properly contracted on behalf of the company, cannot buy it
up cheap and make a profit, by proving for its full amount
against the company (e).
Debts barred by the Statutes of Limitations at the date of sony of Limi-
the winding-up order cannot be proved(f). But debts not
then barred are provable, although no claim may be made in
respect of them until after the expiration of the time which
but for the winding-up order would have barred them (g). A
creditor, however, who neglects to carry in his claim for an Laches in carry-
unreasonable time will not be allowed to disturb dividends '"* ™°2™
already paid (h) ; and he will entirely lose his right to prove if
all the assets have been distributed and the affairs of the com-
pany practically wound up before he has brought in his claim.
(y) Ante, p. 162.
(2) Howard and Dollman’s case,
1 Hem. & M. 433.
(a) Zulueta’s claim, 5 Ch. 444, re-
versing 8. C., 9 Eq. 270. See ante,
p. 206.
(b) Ante, p. 237 et seg., Cork and
Youghal Rail. Co., 4 Ch. 748.
* (c) Mowatt v. Castle Steel and Iron
Works Co,, 34 Ch. D. 58.
(d) Humber Iron Works Co., 8 Eq.
122.
(e) Ex parte Larking, 4 Ch. D.
566.
(f) Mitchell's claim, 6 Ch. 822.
(g) Joint Stock Discount Co.’s claim,
7 Ch. 646; Wryghte’s case, 5 De
G. & Sm. 244; and see Ex parte
Higgins, 2 Jur. N. 8.178; Warwick
and Worcester Rail. Co., 27 L. J. Ch.
735 ; Gloucester, Aberystwith, cc.,
Rail. Co., 2 Giff. 47.
(A) See the last note, and Kit Hill
Tunnel, 16 Ch. D. 590.
3A
iO)
724
WINDING UP BY THE COURT.
Bk. IV. Chap.1. Thus where a solicitor’s bill has been taxed, and ordered to
Sect. 9.
Ex parte
Forest.
Solicitor’s bills.
Interest.
be paid out of the first funds of the company which should
come to the hands of the official liquidator, and the solicitor
took no steps to obtain payment for more than six years, and
in the meantime the affairs of the company were settled by
compromise, it was held that the solicitor was not entitled to
have a call made for his payment (i). Again, in Ez parte
Forest (k), a debt was due from a company ordered to be wound
up. No claim was made by the creditor until more than nine
years had elapsed since the debt became due and the
winding-up order was made; nor until all the other debts of
the company had been paid and the surplus assets had been
distributed amongst the shareholders. The debt was held to be
barred by the laches of the creditor, and by the Statute of
Limitations. As regards the statute, the decision cannot now
be relied upon; but as regards the effect of laches, coupled
with an alteration in the position of others which would render
a proof unjust to them, the case may, it is conceived, be still
considered sound (J).
A claim by a solicitor for costs is subject to taxation (m) ; but
if at the date of the winding up the company could not have
taxed the bill, it is not taxable at the instance of the liqui-
dators (n); but if it is then taxable, the liquidator can have it
taxed even after the lapse of twelve months from the delivery
of the bill(o). The bill, however, may be allowed as a debt
subject to taxation (p).
By the rules and orders issued under the act of 1862,
interest on debts allowed is to be computed, as to such of them
as carry interest, after the rate they respectively carry. Accord-
ing to the rule, creditors whose debts do not carry interest are
entitled to interest, after the rate of 4J. per centum per annum,
from the date of the winding-up order; but only out of any
(t) Ea parte A’ Beckett, 2 Jur. N. (m) Ex parte Quilter, 4 De G. & S.
S. 684. Compare Gloucester, Aber- 183,
ystwith, &e., Rail. Co., 2 Giff. 47. (n) Ex parte Quilter, 4 De G. & 8.
(k) 2 Giff. 42. 183, .
(D) See Joint Stock Discount Co.’s (0) Ex parte Evans, 11 Eq. 151.
claim, 7 Ch. 646, where no injustice (p) Terrell v. Hutton, 4 H. L. C.
was done to any one in admitting 1091.
the claim.
PROOF AND PAYMENT OF DEBTS.
725
assets which may remain after satisfying the costs of the winding Bk. IV. Chap. 1.
up, the debts and claims established, and the interest of such
debts and claims as by law carry interest (q). But the validity
of this part of the rule is very questionable (1) ; and notwith-
standing the rule, interest on a debt not bearing interest
cannot be allowed at all (s), unless the debt is one in respect of
which interest in the shape of damages would be given by a
jury under 3 & 4 Wm. 4, c. 42(t). Evenif a debt bears interest,
the interest stops at the commencement of the winding up if
the company is insolvent (wu). And if a creditor, whose debt
carries interest at a higher rate than 4 per cent., obtains a
judgment for his principal and interest, he will only be allowed
to prove for his judgment debt and interest on it at the rate of
4 per cent., for the original debt will have merged in the judg-
ment (x). If the debt is payable by two companies, the
creditor can prove against each for the principal and interest
up to the date of its winding up, and can receive dividends
from each until each has paid twenty shillings in the pound on
the debt proved against it, or until both companies together
have paid the whole principal and interest up to the date of
payment (y). A dividend paid in respect of principal and
interest is first to be attributed to the interest and then to the
principal (z).
(g) Rule 26. The act is silent on
the subject of interest. See 3&4
Wm. 4,c. 42, §§ 28, 29; 1 & 2 Vict.
c. 110, §§ 17, 18; Dornford v.
Dornford, 12 Ves. 129 ; Mildmay v.
Methuen, 3 Drew. 91.
(r) In truth it seems ultra vires,
see the next note.
(s) Ex parte Greenwood, 9 Jur. N.
S. 997. East Holyford Mining Co.,
Ir. Rep. 9 Eq. 327; East of England
Banking Co., 4 Ch. 14; and Here-
fordshire Banking Co., 4 Eq, 250.
(t) State Fire Insurance Co.,
Times Assurance Co.’s case, 2 Hem,
& M. 722. In this case the com-
pany was being wound up under
the act of 1848, but the reasoning
applies to companies which are
being wound up under the act of
1862. Compare Sargood’s claim, 15
Eq. 43, where a surety, who paid
off a debt bearing interest at 4 per
cent., was allowed to prove for the
principal and interest at 5 per cent.
(uw) See Jud. act, 1875, § 10, ante,
p. 719 et seg. Warrant Finance Co.,
4 Ch. 643 ; Hbbw Vale Co.’s case, 5 Ch.
112; Ex purte Colborne and Straw-
bridge, 11 Eq. 478 ; Hughes’ claim,
13 Eq. 623, the case of a surety.
(c) Ex parte Oriental Financial
Corporation, 4 Ch. D. 33; Ex parte
Hughes, ib. 34 n.; Ex parte Fewings,
25 Ch. D. 338. 7
(y) Warrant Finance Co., 5 Ch.
86.
(2) Warrant Finance Co. (No. 2),
10 Eq. 11.
Sect. 9
726 WINDING UP BY THE COURT.
Bk, IV. Chap. 1.
Sect. 9.
Secured creditors cannot prove for their debts without giving
- up their securities on the property of the company (a). But
they need not give up other securities (b).
Although interest accruing after the commencement of the
winding up is not provable against an insolvent company (c),
yet a creditor who holds a security for principal and interest
can only be redeemed on being paid principal and interest in
full up to the time of payment and his costs (d). A. creditor
who holds two securities of the same company for one debt
can only prove for that debt; he cannot prove in respect of
each security (e). The holder of a debenture containing a
covenant for the repayment of the principal sum on a certain
day and charging property of the company is entitled to
enforce his security—i.e., to be paid out of the assets charged,
although the day for payment has not arrived and no interest
is in arrear (/).
Whether a mortgage is binding on the company, and the
extent of the assets covered by it, depends not only on its terms
but also on the nature of the company and on the powers of its
directors(g). A security of a limited company not registered as
required by § 43 of the Companies act, 1862, is nevertheless
provable as against other creditors, even although given to the
directors or solicitors of the company (h). A bank, with which
a company had deposited its deeds as a security for bills under
discount, was held entitled to apply the proceeds of the sale
of its security, not only to meet bills under discount, but all
other moneys due to it from the company (i).
The ordinary lien which a vendor of land has for his unpaid
purchase-money (k), the right of an unpaid vendor of goods to
Position of
secured cre-
ditors,
Vendor's lien for
unpaid purchase
money.
(f) Hodson v. Tea Company, 14
Ch. D. 859. As to debentures
(b) See Partn. p.,714 et seg., where charging the undertaking, see ante,
the rules in bankruptcy are referred _p. 197.
to. (g) See ante, pp. 186 et seg.
(c) Ante, pp. 724, 725. (h) Wright v. Horton, 12 App-
(@) Warrant Finance Co. (No.2), Ca. 371. See ante, p. 203 n. (u).
10 Eq. 11. (4) Ex parte National Bank, 14
(e) In Metropolitan and Provincial Eg. 507. See, also, Agra Bank's
(a) Jud. Act, 1875, § 10. See
ante, p. 719 et seq.
Bank, W. N. 1869, 148, the creditor
had a bill and a bond; and see
Ex parte European Bank, 7 Ch. 99.
claim, 8 Ch. 41.
(k) See, as to the lien of a vendor
who sells for cash and shares, and
727
PROOF AND PAYME.T JF DEBTS.
stop them in transitu in the event of the insolvency of the Bk. a ee 1,
buyer, and maritime liens (1) are all available against com-
panies which are being wound up (m).
The rule in Ex parte Waring (n), by which, if both the Rute in Ex
drawer and acceptor of a bill of exchange become bankrupt, the Pt? Wan:
holder of the bill is entitled to have any securities held by the
acceptor for the bill applied in taking it up, applies where the
drawer and acceptor are companies in liquidation, at all events
if they are insolvent ; but, it has been said, not otherwise (0).
The rule, however, has no application unless there is a double
forced liquidation (p). Whilst the drawer and acceptor are
solvent they can deal with the securities as they please, and
release them altogether (q); and the transferee of the Dill
acquires no right to have securities pledged to meet it applied
in taking it up, unless that right has been conferred upon him
by some special contract with himself. or its equivalent (7) ;
and where the security consists of a guarantee, the bill-
holder acquires no rights as against the guarantor or his
estate, even although all parties are insolvent (s).
A person who holds shares as a trustee for a company being Tecate tts the
wound up is entitled to prove against it, not only for calls
already made on him, but also in respect of his lability to
the company becomes wholly abor-
tive, Brentwood Brick and Coal Co.,
4 Ch. D. 562. The vendor not
being a creditor at law until a con-
veyance has been executed, never
was entitled in equity to prove for
_ the whole purchase-money, and to
retain his security. See Rome v.
Young, 3 Y. & C, Ex. 199, and 4 ib.
204,
(1) Australian Steam Nav. Co., 20
Eq. 325; Rio Grande do Sul Steam
Ship Co., 5 Ch. D. 282. :
(m) See, as to the lien of a vendor
of a patent, Gore and Durant’s case,
2 Eq. 349.
(n) 19 Vesey, 345. For a fuller
account of this rule, see Partn.
p. 712, and Eddis on Ex parte
- Waring. '
(0) Hickie & Oo’s case, 4 Eq. 226,
sed quere, see Powles v. Hargreaves,
3 De G. M. & G. 430; Ex parte
Alliance Bank, 4 Ch. 423; Bank of
Lreland v. Perry, L. R. 7 Ex. 14.
(p) The rule does not apply when
one of the parties, though insolvent,
remains master of his own property,
Ex parte General South American Co.,
10 Ch. 635.
(q) Ex parte Lambton, 10 Ch. 405.
(r) Compare Inman v. Clare,
Johns. 769, and Agra and Master-
man’s Bank, 2 Ch. 391, where he
had acquired the right, with Hx
parte Stephens, 3 Ch. 753, and Ban-
ner v. Johnston, L. R. 5 H. L. 157,
where he had not.
(s) Ha parte Stephens, 3 Ch. 753.
728
Bk, IV. Chap. 1.
Sect. 9.
Indemnity.
Winding up
no breach of
contract.
Mersey Steel
and Iron Com-
pany v. Naylor
& Company.
WINDING UP BY THE COURT.
future calls (t); and his proof is not to be rejected simply
because he may be indebted to the company on another
account (w).
So other claims against. the company for indemnity by it can
be proved against it, e.g.,a claim by a surety for the com-
pany (x), or a claim arising from an undertaking by the com-
pany to pay a bill accepted by the claimant, and not due at
the commencement of the winding up (y). But as in bank-
ruptcy so in winding up companies, the same debt cannot be
proved twice over; andif in the last case the holder of the
bill has proved, the acceptor cannot prove also without giving
credit for the dividend received by the holder.
Although future claims, and claims for unliquidated damages
are provable against the company, a company neither rescinds
its contracts, nor is necessarily guilty of a breach of contract,
by being wound up. . Hence current engagements to accept
bills, supply goods, &c., are not broken by a winding-up
order; and no claim for damages can be allowed, on the
theory that the winding up was per se a breach of contract, if
the liquidators are ready to perform the contract. But if they
are not the case will be otherwise. The point to determine
is whether what has taken place renders performance by the
company of its contract impossible, or amounts to a refusal
by the company fo perform it.
The principles applicable to this subject were much dis-
cussed in The Mersey Steel and Iron Co. v. Naylor, Benzon &
Co. (2). There a company had agreed to sell 5000 tons of
steel and to deliver them by instalments of 1000 tons per
month. The company delivered some of the steel, and a
petition to wind it up was then presented. The buyer refused
to pay for the steel delivered without the sanction of the
Court (4), and the company treated his refusal to pay as a
(t) Ex parte Oriental Commercial
Bank, 3 Ch. 791.
(uw) Ib.
(x) See, as to sureties, Hughes’
claim, 13 Eq. 623.
(y) Oriental Commercial Bank, 7
Ch. 99, reversing 12 Eq. 501. See,
further as to the rights of sureties,
Gray v. Seckham, 7 Ch. 680.
(2) 9 App. Ca. 434, and 9 Q. B. D.
648,
(a) This was held not to be an
absolute refusal to perform the con-
tract so as to entitle the company
to treat it as rescinded,
PROOF AND PAYMENT OF DEBTS.
breach of his contract and as exonerating the company from
further deliveries. A winding-up order was then made, and
the company brought an action for the price of the steel
delivered, and the buyer counterclaimed for damages for non-
delivery of the rest of the steel. It was held (1) that the
company was entitled to be paid for the steel delivered ;
(2) that the buyer was entitled to damages for non-delivery of
the rest of the steel; (8) that these damages could be set off
against the price. The breach of contract which rendered
the company liable in this case was the refusal to make further
deliveries of steel, not the winding-up of the company.
So an order to wind up a company under supervision was
held to afford no defence to an action by the company for the
breach of an agreement which the liquidators had performed
and were ready to continue to perform (b). So where a bank
had agreed to accept bills against bills of lading, and the bank
was ordered to be wound up, and the liquidators were ready
to carry out the agreement, a claim for damages for its breach
was disallowed (c); and sureties for the bank were held not
discharged (d).
On the other hand, as the winding up of a company renders
it impossible to place shares in it, a person who has agreed with
the company to place them is entitled to damages for the loss
which the winding up has caused him (e).
7
29
Bk. IV. Chap. 1.
Sect. 9.
Similar principles were applied by V.-C. Wood to the dis- Dismissal ot
missal of servants in Ex parte Harding (f). There a clerk to
servants.
Ex parte
a company was engaged on the terms that he should not be Harding.
dismissed without three months’ notice. The company was
ordered to be wound up; but its business was continued by
the liquidator for a time, and the clerk was not dismissed,
but he continued in his employment. He was then
discharged by the liquidator without notice. The Court
(b) British Waggon Co v. Lea & Coffee Co., 17 C. B. N.S. 733.
Co., 5 Q. B. D. 149, the. liquidators (f) 3 Eq. 341. Compare the
had assigned the contract, and the next three notes; and as to the
assignees carried it out. effect of a transfer of the company’s
(c) Ex parte Tondeur, 5 Eq, 160. —_— business, see Stirling v. Maitland,
(d) Barber & Co., 9 Eq. 725. 5 B. & Sm. 840.
(e) Inchbald v. Western Neilgherry
730 WINDING UP BY THE COURT.
Bk. IV. Chap. 1. decided that the winding-up order did not operate as a dis-
Sect. 9. ri é
charge of the clerk, and that he was entitled to his salary up to
the time of his dismissal and the damages in lieu of notice (9).
Discharge of
servants by But on grounds of convenience it has been held in other
eee cases that a compulsory winding-up order operates as a dis-
charge of the company’s servants, and entitles them to
damages as for wrongful dismissal on that day, even if they
are not in fact dismissed but assist the liquidator in winding
up the company.
The general doctrine that a compulsory winding-up order
operated as a discharge of the company’s servants was laid
down by Lord Romilly in Chapman’s case (h) ; and in Shirreff’s
case (i) the same judge held that a resolution to wind up
voluntarily had the same effect on a manager who was
appointed liquidator. In Mac Dowall’s case (k) the liquidator
issued a circular (in effect) treating the winding-up order as a
discharge of the company’s clerks, but saying that he should
require the services of some of them, and should reduce the
staff as little as possible. A clerk who was entitled by his
agreement with the company to three months’ notice continued
to be employed by the liquidator for more than three months,
and afterwards received notice to leave at the end of the then
current month (J), which he did. He was paid for his services
up to that time. He claimed three months’ salary in lieu of
notice, after giving credit for what he received after the notice
to leave; but it was held that he was not entitled to this. He
was treated as having been discharged by the winding-up
order, and on this footing he had sustained no damage, having
been paid more than three months’ wages (m).
The last case on this subject is Reid v. Explosives Co. (n),
where it was held by the Court of Appeal that a winding-up
(g) Observe that if the order had
dismissed him he would have been
entitled to damages, but they would
have been reduced by the sub-
sequent payments to him. See
Lieid v. Explosives Co., infra.
(h) 1 Eq. 346. See, also, Forster
& Co., 19 L. R. Ir. 241.
(i) 14 Eq. 417.
(k) 32 Ch. D. 366.
(1) The notice was given on the
19th August.
(m) See the next case.
(n) 19Q. B. D. 264. A receiver
and manager had been appointed,
and this was held to have discharged
the plaintiff. Sed quere.
PROOF ANID PAYMENT OF DEBTS. 731
order operated as a wrongful dismissal of the plaintiff, but that Bk. a aie 1.
he suffered no damage, as he had been employed and paid by
the liquidator for the period of the notice to which” he was
entitled.
It must therefore be treated as practically settled that the
principle acted on in Lx parte Harding is not applicable to
clerks and servants unless the company’s business is continued
without break as it was there.
A servant engaged for an unexpired term and discharged ae
before its expiration, is entitled to prove for the present value
of all the future payments which would accrue to him if he
continued to serve the whole time, and to add to that the
pecuniary value of any other benefits to which he would have
been entitled under his contract; and then to deduct a proper
sum for the chance of death and bad health, and for his
liberty to obtain fresh employment (0); or if he has obtained
fresh employment what he has been paid for it(p). If the
contract mentions the sum to be paid in case of dismissal,
no deduction from it will be made (q). On the other hand,
nothing is provable in respect of loss of commission on
business which might or might not have been transacted (r).
As to the priority of wages, see ante, p. 717.
Where the company is lessee for an unexpired term of years Future rent.
the lessor is entitled to have a claim entered for the full
amount of the rent which will become due under the lease ;
and he is further entitled to prevent the company from being
dissolved without notice to him. But where the lease has
been assigned, the lessor is not entitled to receive more from
the company than it may ultimately become liable to pay
under the covenants contained in the lease(s). And the lessor
is not entitled to a dividend on his claim until something be-
comes payable to him; nor is he entitled as against the other
creditors to stay a dividend, nor to have any sum impounded
(0) Yelland’s case, 4 Eq. 350; Ex but see the last note.
parte Clark, 7 Eq. 550. (r) Ex parte Maclure, 5 Ch. 737.
(p) Reid v. Explosives Co., 19 Q. (s) See Haytor Granite Co., 1 Ch.
B. D. 264; Shirref’s case, 14 Eq. 77, reversing 1 Eq. 11, and see the
417. next two notes.
(q) Ex parte Logan, 9 Eq. 149;
732
Bk. IV. Chap. 1.
Sect. 9,
Subsisting
policies and
annuities.
How annuities
cand policies are
to be valued.
WINDING UP BY THE COURT.
to meet future possible demands (t). He must trust to his
power of distress and entry, and to his rights against the
assignee if the lease is assigned. But where a company seeks
to reduce its capital, it must make provision for meeting the
lessor’s future demands (uw); and the shareholders are not
entitled to divide the assets amongst themselves without
making similar provision (v7). The same rule applies to the
voluntary winding up of a solvent company (y).
Annuitants, and policy-holders whose policies are not yet
due, are entitled to prove for the values of their respective
annuities and policies (z): and the amount to be proved for is
to be ascertained as at the date when the claim is made (a) ;
but if a claim contingent at the commencement of the winding
up ripens into a debt during its continuance the whole may be
proved for, whether the day fixed for sending in claims has,
or has not, passed (b). Moreover, it is not necessary in order
to prove in respect of a policy to keep it up after the com-
mencement of the winding up(c); and as between policy-
holders, those whose policies have dropped are not entitled to
payment in priority to the others (d).
The proper method of valuing subsisting policies gave rise
to considerable difference of opinion ; the Court of Chancery
holding that the amount to be proved in respect of such a
policy is the sum which would be required by a solvent office
to effect a new policy of the same amount on the same condi-
tions and at the same premium as the policy in respect of
(t) Westbourne Grove Drapery Co.,
5 Ch. D. 248 ; Horsey’s claim, 5 Eq.
561; Ex parte Lord Elphinstone, 10
Eq. 412. As to the proof and dis-
charge of such claims in bankruptcy,
see Hardy v. Fothergill, 13 App. Ca.
351.
(uw) Telegraph Construction Co., 10
Eq. 384.
(«) Oppenheimer v. British and
Foreign Exchange, &c., Bank, 6 Ch.
D. 744,
(y) Lord Elphinstone v. Monkland
Lron Co., 11 App. Ca. 882 ; Gooch v.
London Banking Assoc., 32 Ch. D.
41,
(2) Hunt's case, 1 Hem. & M. 79;
Teete’s case, 4 N. R, 48, and see infra.
(a) Cratg’s Executors’ case, 9 Eq.
706.
(b) Macfarlane’s claim, 17 Ch. D.
337 ; and Hill v. Bridges, ib. 342,
an administration action. Dividends
already paid are of course not dis-
turbed.
(c) Cook's policy, 9 Eq. 703, where
the days of grace had not then
expired.
(d) McIver’s claim, 5 Ch. 424.
PROOF AND PAYMENT OF DEBTS.
733
which the proof is made (e) ; and this principle has the advan- Bk. IV. Chap. 1.
Sect. 9.
tage of doing justice to all parties so far as circumstances —-
admit. But the practical difficulty of applying the rule in-
duced Lord Cairns as arbitrator in the winding up of the
Albert Life Assurance Company, to adopt a different rule, and
to hold that the sum to be proved for was the difference be-
tween the present value of the sum insured and the present
value of the premiums which the insured would have to pay in
order to keep the policy on foot (f). The legislature has, in
substance, adopted Lord Cairns’ rule, for by 85 & 36 Vict.
c. 41, it is enacted as follows :—
““§ 5. Where a life assurance company is being wound up by the Court, 35 & 36 Vict.
or subject to the supervision of the Court, or voluntarily, the value of every & 41.
life annuity and life policy requiring to be valued in such winding up
shall be estimated in manner provided by the first schedule to this Act ;
but this section shall not apply to any company the winding up of which
has commenced before the passing of this Act, unless the Court having
cognizance of the winding up so order, which order that Court is hereby
empowered to make if it think expedient so to do, on the application of
any person interested in the winding up of such company.”
FIRST SCHEDULE.
Rule for valuing an annuity.
An annuity shall be valued according to the tables used by the company
which granted such annuity at the time of granting the same, and where
such tables cannot be ascertained or adopted to the satisfaction of the Court,
then according to the table known as the Government Annuities Experi-
ence Table, interest being reckoned at the rate of four per centum per
annum.
Rule for valuing a policy.
The value of the policy is to be the difference between the present value
of the reversion in the sum assured on the decease of the life, including
any bonus or addition thereto made before the commencement of the wind-
ing up, and the present value of the future annual premiums.
In calculating such present values, the rate of interest is to be assumed
as being four per centum per annum, and the rate of mortality as that of
the tables known as the Seventeen Offices’ Experience Tables.
(e) Holdich’s case, 14 Eq. 72; (f) See Lancaster’s case, 14 Eq.
Bell’s case, Kerr’s and Stubb’s case, 72, note, and Lord Romilly’s obser-
Bleackley’s case, Craig’s Executor’ vations on it in Holdich’s case, ib.
case, and Wilson's case, 9 Eq. 706.
734
Bk. IV. Chap. 1.
Debts of amal-
gamated com-
panies.
1. Where the
amalgamation is
intra vires.
Sect. 9.
WINDING UP BY THE COURT.
The premium to be calculated is to be such premium as according to
the said rate of interest and rate of mortality is sufficient to provide for the
risk incurred by the office in issuing the policy, exclusive of any addition
thereto for office expenses and other charges.
SECOND SCHEDULE.
Where an assurance company is being wound up by the Court or subject
to the supervision of the Court, the official liquidator in the case of all
persons appearing by the books of the company to be entitled to or inte-
rested in policies granted by such company, for life assurance, endowment,
annuity, or other payment, is to ascertain the value of such policies, and
give notice of such value to such persons, and any person to whom notice
is so given shall be bound by the value so ascertained unless he gives
notice of his intention to dispute such value in manner and within a time
to be prescribed by a rule or order of the Court.
Where one company has transferred its assets and liabilities
to another company, and both or either of such companies are
afterwards wound up, questions of some perplexity arise with
reference to the debts to which they are respectively liable.
In the first place it is necessary to ascertain whether the amal-
gamation itself was intra vires and binding on both companies,
or ultra vires and binding on neither(g). Assuming the amal-
gamation to have been intra vires, then it will follow from the
principles investigated in an earlier part of the treatise (h)—
1. That a creditor of the company which has sold its busi-
ness can prove against that company unless he has in some
way released it, or unless his debt is barred by the Statute of
Limitations (2).
2. That such creditor can prove against the purchasing
company, if, but only if, that company has become liable to
him by reason of some agreement, express or tacit, between
it and him (k).
(g) See, on this subject, ante, pp. M. 79. Compare Carr’s case, 33
183, 322. Beay. 542, which turned on the
(h) Ante, pp. 258 et seq. terms of the policy and the com-
(i) Family Endowment Soc.,5 Ch. pany’s deed of settlement.
118; Manchester and London Life (k) Commercial Bank Corporation
Ass., &c., Assoc., 9 Eq. 643, and 5 of India and East, 16 W. R. 958,
Oh. 640; Grifftl’s case,6 Ch. 374; and W. N. 1868, 166; Ex parte
National Provincial Life Ass. Soc., Gibson, 4 Ch. 662; National Provin-
9 Eq. 306; Hunt's case, 1 Hem. & cial Life Ass. Soc., 9 Eq. 306; Ez
PROOF AND PAYMENT OF DEBTS.
735
8. That if there has been a complete novation of his con- Bk. IV. Chap. 1.
tract, the creditor has discharged the selling company, and can
only prove against the purchasing company (I).
4. That the selling company is entitled to be indemnified by
the purchasing company against all the liabilities of the former
agreed to be taken over and discharged by the latter (m) ; but
is not entitled to a lien as for unpaid purchase-money, nor to
the benefit of securities effected by the purchasing company to
cover the debts it had taken over (1).
Sect. 9.
Where, however, the amalgamation is wltra vires, and invalid, 2. Where amal-
the company which has assumed to take upon itself the
liabilities of the other, cannot be made to discharge those
liabilities, either by the other company or by its creditors (0)
and the company which has assumed to transfer its debts,
remains liable to pay them, even though its creditors may
have taken securities from the other company(p). In order to
replace both companies in their former position, it would be
necessary to restore to the transferring company all its assets,
and to the company taking the liabilities of the other, all
moneys paid in discharge of those liabilities. But it does not
necessarily follow, from the mere fact that the companies have
acted beyond their powers, that they are entitled to be restored
to the position in which they would have been, had they never
amalgamated; and it was held that a company which had
taken the assets and liabilities of another, was not entitled to
rank as a creditor against that other, in respect of the excess
of its liabilities which had been discharged, over its assets
which had been taken (q).
parte Blood, 9 Eq. 316 ; Teete’s case,
and Rumney’s case, 4 N. R. 48,
V.-C. K.
(1) Merchants and Tradesmen’s
Ass. Soc, 9 Eq. 694; Times Life
Ass., &c., Co. 5 Ch. 381; Anchor
Ass, Co., 5 Ch. 632 ; Spencer's case,
6 Ch. 362; Fleming’s case, 6 Ch.
393, and see the last two notes.
(m) British Provident and Anglo-
Australian Assurance Cos. 4 N. R.
48.
(n) Western Life Ass. Soc., 11 Ey.
164.
(0) See The Kra Assurance Soc.,
Williame’s case, and Anchor’s case,
2J.& H. 400.
(p) See The Saxon Assurance
Society, Anchor's case, 2 J. & H.
408. See, too, Hardinge v. Webster,
1 Dr. & Sm. 101.
(q) See The Saxon Life Assur-
ance Society, Lira case, 2 J. & H.
408, and 1 De G. J. & Sm. 29. Com-
pare MWood’s claim, and Brown’s
claim, 9 W.'R. 366, and 10 ib. 662.
gamation is
ultra vires.
736
Bk. IV. Chap. 1.
Sect. 9.
WINDING UP BY THE COURT.
A debt due from a company to one of its own members in
——-— -— his character of member by way of dividends, profits, directors’
Debts due to
members,
Cost-book mine.
Insurance
societies.
fees (r), or otherwise, cannot be proved against the company
in competition with creditors who are not members ; but such
a debt must be taken into account in adjusting the rights of
the members inter se (s).
But debts due to members not as such, but in respect of
matters in which they have acted as strangers, may be proved
against the company in competition with other debts (¢).
A person who has taken shares in a company and has
effectually repudiated them before the winding up has com-
menced, or who has been decided not to be a shareholder, may
prove as a creditor for what he has paid to the company in
respect of them (wu); but a person induced by the fraud of the
company to take shares in it, and who is a shareholder when
the winding up of the company commences, cannot prove for
the damages he has sustained; for such a claim is inconsistent
with his position as a member of the company (z).
A shareholder in a cost-book company who has relinquished
his shares and paid his share of the expenses up to the date
of his retirement can prove for the value of his share, even in
competition with the other creditors (y).
Insurance societies (not limited) almost invariably issue
their policies and grant their annuities on terms which render
their funds alone liable to pay the policies and annuities. The
efficacy of such stipulations in limiting the liability of the
and 16 Eq. 417.
(2) Houldsworth v. City of Glasgow
(r) Ex parte Cannon, 30 Ch. D.
629.
(s) See 25 & 26 Vict. c. 89, § 38,
cl. 7,and § 101. See also, Addle-
stone Linoleum Co., 37 Ch. D. 191,
and Exchange Drapery Co., 38 Ch.
D. 171, where some shares had been
paid up in advance.
(t) Grissell’s case, 1 Ch. 528 ; Hx
parte Brown, 12 Ch. D. 828, infra,
p. 742, and ante, p. 727.
(u) See Alison’s case, 9 Ch. 1, and
15 Eq. 394, and compare Campbell’s
case and Huppisley’s case, 9 Ch. 1,
Bank, 5 App. Ca. 317; Addlestone
Linoleum Co., 37 Ch. D. 191, in
which Mudford’s claim, 14 Ch. D.
634, and Lx parte Appleyard, 18 Ch.
D. 587, are doubted. And compare
Gibson & Co., 5 L. R. Ir. 139, where
the action was brought before the
winding up, but quere if this is con-
sistent with Houldsworth v. City of
Glasgow Bank, ubi supra.
(y) Ex parte Palmer, 7 Ch. 286,
and see ante, p. 524,
PROOF AND PAYMENT OF DEBTS.
787
shareholders has been already seen (z); but such societies Bk. vie Nera 1.
often have other creditors, and their policies and annuities mits
are frequently held by their own members. The conflicting
rights of these various persons have all to be adjusted when
such societies are wound up; and after considerable dif-
ference of opinion, the following rules appear now to be
settled :—
A. In the case of an incorporated company with a share Incorporated
Z proprietary
capital : companies.
1. The policy-holders and annuitants, whether members of
the company or not, are entitled to be paid pari passu with
the other creditors out of the funds of the company, including
therein all uncalled-up capital (a).
2. The policy-holders and annuitants are not entitled to be
paid out of these funds in priority to the other creditors ; nor
to throw those creditors on what may be raised by calls beyond
the nominal capital (b).
3. The policy-holders and annuitants can only obtain pay-
ment out of such funds; but the other creditors, whether
members or not, are entitled to be paid, not only out of those
funds, but also by calls beyond the amount of the nominal
capital (c).
4. The costs of winding up are also payable out of the
funds of the company, and so far as they may be insufficient
by calls beyond the share capital (d).
B. In the case of an incorporated company without any Incorporated
capital agreed to be subscribed by the members, the same tees pies
principles would, it is conceived, be applicable: subject, of
(2) Ante, p. 246.
(a) English and Irish Church and
two classes of shareholders.
(b) International Life Ass. Soc., 2
University Assurance Society, 1 Hem.
& M. 79; State Fire Insurance Co., 1
Hem. & M. 457, and 1 De G. J. &
Sm. 634 ; Professional Life Assurance
Co., 3 Eq. 668, and 3 Ch. 167. See,
further, Winstone’s case, 12 Ch. D.
239; Albion Life Ass. Soc., 15 Ch.
D. 79, & 16 ib. 83; and Sander’s case,
20 ib. 403, as to the position of
policy-holders who are members in
a registered unlimited company with
L.C.
Ch. D. 476 ; State Fire Insurance Co.,
and Professional Life Ass. Co., ubi
supra.
(c) See the cases in the last two
notes, which remove the doubts ex-
pressed on this point in Atheneum
Life Assurance Society, Johns. 633.
(d) Agriculturist Cattle Ins. Co., 10
Ch. 1; Professional Life Ass. Co., 3
Ch. 167, and 3 Eq. 668.
*3 B
738
WINDING UP BY THE COURT.
Bk. IV. Chap. 1. course, to this modification—that the members could not be
Sect. 9.
Unincorporated
companies,
Set-off between
non-members
and the com-
pany.
compelled to contribute anything in respect of uncalled-up
capital.
C. In the case of an unincorporated company, whether pro-
prietary (i.¢., with a share capital) or mutual (é.e., where the
insured look only to their own premiums), the rights of the
various claimants against the funds of the company (i.e., what-
ever can be got at without making a call) will be the same as
before ; but the members of the company cannot compete with
their own creditors against the funds raisable by calls (e).
But the holders of policies in such companies are not liable to
contribute to the debts of the company (/).
A provision that policies shall be paid only out of the funds
of a company does not entitle the holder of a policy which has
become payable to any priority over the holders of policies
which are still subsisting (g). The only difference between
the two cases is in the amount provable against the company.
3. Set-off.
a.) As between the company and strangers.
As between a company being wound up on the one hand,
and non-contributories on the other, when the company is
insolvent the rules applicable in bankruptcy to cases of mutual
credit are introduced by the Judicature act, 1875 (h). Before
that act was passed the ordinary rules of set-off were ap-
plicable (i), nor was it essential that both debts should have
been actually due before the winding-up order was made (j).
Since the Judicature act a debtor to the company can set off
a claim for unliquidated damages for a breach of contract by
(e) See, on this subject, The Law (g) McIver’s claim, 5 Ch, 424.
of Mutual Life Assurance, by Thomas (h) 37 & 38 Vict. c. 83, § 10, ante
Brett. p. 719, and Partn. 654 et seq.
(f) Great Britain Mutual Life (t) Anderson's case, 3 Eg. 337;
Ass, Soc., 16 Ch. D. 246. Forthe and see Mersey Steel and Iron Oo. v.
rights of policy-holders when the Naylor & Co., 9 Q. B. D. at p. 667.
company’s contracts are reduced, see (j) Ib., and see Ex parte James, 8
Great Britain Mutual Life Ass. Soc, Eq. 225,
19 Ch. D. 39, & 20 Ch. D. 351,
SET-OFF. 7389
the company (4). Buta creditor of the company cannot set Bk. oo 1.
off a debt due to him from the company against a claim made
by the liquidator in respect of a distinct contract entered into
with him (2). There can be no set-off when the claims on each
side do not result in pecuniary liabilities, ¢.g., a debt cannot
be set-off against a claim for the return of goods (m). It has
moreover been decided that a person who has accepted bills in
favour of the company is not entitled to restrain the liquidator
from negotiating them before they are due, although the result
of such negotiation may be to deprive the acceptor of his right
to set-off against those bills a debt owing to him by the com-
pany (n).
It is a common practice for the debtors of a company which Buying up debts
is being wound up to buy up bills of the company in order to eae oP
set such bills off against what the purchasers themselves owe
to the company. The legality of this practice has been
questioned, and has not yet been settled by decision. The
general scope of the Companies act, 1862, is hardly consistent
with any device by which one creditor obtains a preference
over others after the winding up has commenced ; but it is
doubtful whether the language of the act is sufficiently clear
to defeat the practice in question (0). The effect of the 10th
section of the Judicature act, 1875, on this point has not been
determined (p).
The principles by which rights of set-off are regulated have
been already noticed (q).
As regards debts which have been assigned it is settled a seuss
that a debtor cannot set off against the assignee of a debt due
from him, any claim against the assignor which has arisen
(k) Mersey Steel and Iron Co. v.
Naylor & Co., 9 App. Ca, 434,
affirming 9 Q. B. D. 648, ante, p.
728; and see Lee and Chapman’s
case, 30 Ch. D. 216.
(1) Ince Hall Mills Co. v. Douglas
Forge Co, 8 Q. B. D. 179; and
Sankey Brook Coal Co. v. Marsh,
L. R. 6 Ex. 185, explained in 9
Q. B. D. at p. 669.
(m) Eberle’s Hotels, &c., Co. v. E.
Jonas & Bros., 18 Q. B. D. 459.
(n) Smith, Fleming, and Co.’s case
and Gledstane’s Co.’s case, 1 Ch. 538.
(0) See the case in the last note.
_(») As to the rule in bankruptcy,
see In re Gillespie, 14 Q. B. D. 968 ;
Dickson v. Evans, 6 T. R. 57, which
show that rights of set-off depend
on the state of things at the date of
the bankruptcy ; see, also, Hx parte
Theys, 25 Ch. D. 587.
(q) Ante, p. 273; and Partn. p.
290 et seq.
3B
740
WINDING UP BY THE COURT.
Bk. IV. Chap. 1. since the assignment was completed unless such claim arises out
Sect. 9.
Set-off against
holders of
debentures, &c.
of the same contract from which the debt assigned arose, and is
intimately connected with it (r); and this rule applies to debts
proved against a company and afterwards assigned, and pre-
vents the liquidator from setting-off against the assignee a
claim against the assignor founded on a breach of trust (s);
but not from setting off calls in respect of the assignor’s
shares (t). Again, a debtor may by contract or otherwise
preclude himself from disputing a given debt when the debt
is assigned, and from bringing it’ into account with cross
demands which he may have against his creditor; and where-
ever this has been done (wu) the assignee of the debt so
isolated can sue the debtor for it and obtain payment notwith-
standing any cross demands which he may have against the
original creditor. Advantage of this principle is constantly
taken by companies who issue under seal promises to pay the
assign, or holder, or bearer of the instrument. A promise by
a company to pay A. B. or order, or bearer, if properly
stamped has been held to be a promissory note, although
under the seal of the company (x); and the bond fide holder
for value of such an instrument can, if it is not altogether
ultra vires, prove against the company in his own name, and
he will not be affected by any equities or rights of set-off
which may exist between the company and the original
payee (y). And even where the instrument cannot be treated
as a promissory note, yet if its form and the circumstances
under which it was issued are such as to show that the com-
pany intended that the payee should be able to raise money on
(r) Government of Newfoundland
v. Newfoundland Rail. Co., 13 App.
Ca. 199 and cases there cited.
(s) Ex parte Theys, 25 Ch. D. 587,
and 22 ib. 122. Compare Ex parte
Mackenzie, 7 Eq. 240,
(t) Ex parte Mackenzie, '7 Eq. 240,
but see the last case.
(u) As a rule, assignees of debts
are in no better position than their
assignors, unless, by reason of special
circumstances, Atheneum Life Ass.
Soc. v. Pooley,3 De G. & J. 294;
Financial Corporation’s claim, 3 Ch.
355; Lx parte Mackenzie, 7 Eq. 240,
and Judicature Act, 1873, § 25 (6).
Compare Brunton’s claim, 19 Eq. 302.
(«) Ex parte City Bank, 3 Ch. 758 ;
Ex parte Colborne and Strawbridge, 11
Eq. 478. Bills of Exchange act, 1882,
§ 91, cl. 2. See as to Negotiability
by usage, Goodwin v. Robarts, L. RB.
10 Ex, 337 & 1 App. Ca. 476, and
ante, p. 474,
(y) Tb.
SET-OFF. TAl
it, and that the transferee should take it without reference to Bk. ne Chap. J.
the state of accounts subsisting between the payee and the gee
company, the transferee is entitled to prove on the instrument
in his own name, and his proof will not be subject to any
set-off by reason of claims which the company may have
against the transferor. A leading case on this subject arose
on a debenture of the Blakely Ordnance Company (2). There Blakely Ord-
the debenture was payable to bearer, and the bearer was a Cooney
authorised to give a receipt for the money; the debenture was
issued to a promoter of the company, pursuant to a prior
agreement with him, and the agreement was confirmed by the
company’s articles of association. It was held that the bearer
could prove in his own name without being subject to any
equities between the company and the promoter, to whom the
debenture had been given. 4 fortiori will the company be
precluded from availing itself as against the transferee of any
rights of set-off which the company may have against the
transferor, if the company has induced the transferee to act on
the assumption that he would become the company’s cre-
ditor (a), or has recognised and treated him as such (0).
b.) As between the company and contributories
The right of a member of a company which is being wound Set-off between
. . : . bers and
up to set-off what is owing to him by the company against Syceeeehnr.
what is owing by him in respect of calls, or otherwise, does
(2) Ex parte New Zealand Bank-
ing Corporation, 3 Ch. 154, Com-
pare Financial Corporation’s claim,
ib. 355, where the debenture was
payable to A., his executors, admini-
strators, or transferees, and the person
presenting it was empowered to give
receipts; but there was no agree-
ment to give them in this form, and
the consideration for the debentures
had failed. The case was not one of
set-off at all; and see Romford Canal
Co., 24 Ch. D. 85.
(a) Ex parte Asiatic Banking Cor-
poration, 2 Ch. 391, a case of a letter
of credit shown to the claimant.
Dickson v. Swansea Vale Railway
Co, L. R. 4 Q. B. 44, debenture
issued on purpose to enable the
taker to raise money on it.
(b) Brunton’s claim, 19 Eq. 302;
Higgs v. Northern Assam Tea Co.,
L. R. 4 Ex. 387; Hx parte Uni-
versal Life Ass. Co., 10 Eq. 458.
In both of these the claimant had
been registered as proprietor. See,
also, Woodhams v. Anglo-Australian
Ass. Co, 3 Giff. 238, where he
was told all was right. Hx parte
Chorley, 11 Eq. 157, where the com-
pany had allowed the transferee to
obtain judgment. See, also, Hulett’s
case, 2 J. & H. 306.
742
WINDING UP BY THE COURT.
Bk. ies 1. not depend simply on the general principles applicable to set-
5
Grissell’s case.
off, but also on the special enactments contained in § 388,
cl. 7, and § 101 of the Companies act, 1862. These are not
affected by § 10 of the Judicature act, 1875 (c). By reference
to these sections, it will be seen—
1. That whether a company is limited or unlimited, money
due to a contributory in his character of member, is not to be
treated as a debt of the company payable to him in competition
with creditors who are not members (d).
2. That where a company is limited no set-off whatever
against an order for payment is allowed in favour of a con-
tributory indebted to the company, except when the rights of
the contributories inter se come to be adjusted (e).
8. That where a company is unlimited, money due to a con-
tributory, not as a member, but on some independent dealing
or contract, may be set off as if such money were owing to a
person unconnected with the company (/).
4. That in adjusting the rights of contributories inter se,
monies due to contributories from the company on any account
may be set off against money due from them to the company
in respect of calls or otherwise ; and that in such cases there
is no difference between limited and unlimited companies (4).
The whole subject now under consideration was carefully
considered in Grissell’s case (h), in which it was held—1. That
(f) § 101. See Ex parte Brown,
12 Ch. D. 823; Professional Life
Ass. Co, 3 Ch. 167; Gibbs and
West's case, 10 Eq. 312; a case of
(c) See Gill's case, 12 Ch. D. 755 ;
Ez parte Brown, ib. 823; Re White-
house & Co., 9 ib. 595.
(d) § 38, cl. 7; Eu parte Cannon,
30 Ch. D. 629, and see Addlestone
Linoleum Co., 87 Ch. D. 191 ; and §
101. Observe that the word member
is used in § 38, and contributory in
§ 101.
(e) § 101. See Guill’s case, 12 Ch.
D. 755; Re Whitehouse & Co., 9 ib.
595. This differs from the rule
which prevailed under the acts
of 1856-58. See 21 & 22 Vict. c.
60, § 17, and Garnet and Moseley
Gold Mining Co. v. Sutton, 3 B. &
Sm. 321 ; Barrett’s case, 4 De G. J.
& Sm. 416 and 756.
an insurance company, with the
usual restriction as to liability
being confined to the funds of the
company.
(g) § 38, cl. 7, and § 101.
(h) 1 Ch. 528, and see Black &
Co.’s case, 8 Ch. 254 ; Barnett’s case,
19 Eq. 449; Cualisher’s case, 5 Eq.
214, as to calls made before the
winding up, and Ex parte Mackenzie,
7 Eq. 240. The Judicature act has
not altered the law as laid down in
this case, see ante, note (c).
SET-OFF.
a creditor of a limited company, who was also a contributory
in it, was not bound to pay the full amount remaining unpaid
on his shares before receiving any dividend on his debt;
2. That he was not entitled to deduct the calls made or to be
made upon him from his debt and to receive a dividend on the
balance ; 8. That he was entitled to prove his whole debt, and
to receive a dividend on it part passw with other creditors, and
was liable, on the other hand, to pay all calls upon him in full
as they might be made.
It might be inferred from this decision that the only right
to set off in such cases is to deduct sums actually due and pay-
able by the contributory in respect of calls from the amount
of dividend actually payable to him in respect of his proof.
But it has since been held that where a debt is proved by a
contributory, the company is entitled to set off all calls due
from him and actually in arrear at the time of proof (2), just
as it could set off any other debt due by the contributory to the
company against’a debt due by the company to him.
The provisions of the act and the above decisions do not,
however, apply to debts or costs which have become due to
contributories from the company acting by its liquidators in
the course of the winding up (k); nor where the contributory
is bankrupt, or his estate is being administered under the
bankruptcy acts; for then, whether the liquidator proves
against the bankrupt’s estate (J), or whether the trustee in
bankruptcy proves against the company (m), the balance due
from the one estate to the other, after setting off all mutual
debts and credits, is all that can be proved. Moreover, if two
debts have been actually set off before the winding up com-
menced, the liquidator cannot disturb the set-off so made (n) ;
but agreements as to set-off made when the company is in diffi-
culties, are regarded very suspiciously, and may be altogether
(i) See ante, p. 557. See, also,
Ex parte Mackenzie,'7 Eq. 240, where
the proof was by the assignee of a
(1) Re Duckworth, 2 Ch. 578; Ex
parte Strang, 5 Ch. 492,
(m) Carrallt and Haggard’s claim,
debenture.
(k) See Ex parte Clark,’ Eq. 550 ;
see, also, Ex parte Smith, 3 Ch.
125; General Exchange Bank, 4 Eq.
138.
4 Ch. 174, and the last note.
(n) Habershon’s case, 5 Eq. 286,
and see Spargo’s case, 8 Ch. 407, and
others of that class.
743
Bk, IV. Chap. 1,
Sect. 9.
Exceptions to
this rule.
744
Bk. IV. Chap. 1.
Sect. 9.
Observations
on § 101.
Procecdings
under § 169 of
the Companies
act, 1862.
Companies act,
1867.
WINDING UP BY THE COURT.
void as against creditors on the ground of fraudulent prefer-
ence; and in a case where the agreement was with a director
and related to a debt secured by a debenture not then payable,
the agreement was held invalid (0).
Indeed, the better opinion seems to be, that agreements for
paying calls by setting off debts, which may afterwards become
due from the company, are not binding on the company, at
least when it is being wound up (p).
It is worthy of remark, that § 101, which prevents set-off in
favour of the contributories of limited companies, applies in
terms only to cases in which a summary order is made upon a
contributory for payment of money due by him to the com-
pany ; and in one case it was held that where a company was
being wound up voluntarily, and the liquidator brought an
action for calls made in the winding up, a plea of set-off
afforded a good defence to the action (q). But this decision
has been justly criticised, and cannot be relied upon (r). The
mode of winding up is immaterial with respect to the right of
set-off; and in no case can a contributory defeat an action by
a limited company in liquidation by a set-off, unless he can
show that all the creditors are paid, and that as between
himself and the other contributories, the set-off ought to be
allowed.
A director has no right to set off a debt due to him from
the company against a claim made by the liquidator under
§ 169 (s).
The right of a contributory to set off a debt due to him
from the company against calls made on him is very materially
affected by the Companies act, 1867 (t); and if, in a case to
(0) Habershon’s case, 5 Eq. 286.
(p) See Pellatt’s case, 2 Ch. 527 ;
Calisher’s case, 5 Eq. 214; Barge’s
case, ib. 420; 30 & 31 Vict. c. 131,
§ 25.
(q) Brighton Arcade Co. v. Dow-
ling, L. R. 3 C. P. 175.
(r) Whitehouse & Co., 9 Ch. D.
595; Black & Co.’s case, 8 Ch. 254;
Sankey Brook Coal Co. v. Marsh,
L. R. 6 Ex. 185; and see 10 Eq.
330, per V.-C. Malins in Gibbs and
West’s case,
(s) Carriage Co-operative Supply
Association, 27 Ch. D. 322; Ex
parte Pelly, 21 Ch. D. 492 ; Pearse’s
case, ib. 498, n.; Fliteroft’s case, ib.
519. And see Ex parte Theys, 25
Ch. D. 587, where the director had
assigned the debt due to him before
an order was made against him.
(t) § 25.
CONTRIBUTORIES. 745
which that act applies, a holder of nominally paid-up shares Bk. IV. Chap. 1.
5 : : Sect. 10.
has a call made on him in respect of them, he cannot avail eat
himself of a set-off, agreed upon when the shares were issued,
unless the agreement has been duly registered (wu). But it is
conceived that the act in question does not preclude a set-off
against a call in any other case in which such set-off is admis-
sible under the Companies act, 1862.
SECTION X.—CONTRIBUTORIES.
1. The list of contributories.
The persons who, on the winding up of a company, are com- List of contri-
pellable to pay its debts by contribution amongst themselves, puree
are termed contributories (x); and one of the first duties of the
Court, after making a winding-up order, is to settle the list of
contributories (y). Who are the persons to be put on the list
will be examined presently. With respect to settling the list,
it is to be observed—1. That the Court has power to rectify
the company’s register of members (z); 2. That persons who
are contributories in their own right are to be distinguished
from persons who are contributories as the representatives or
as being liable to the debts of others ; and 3. That where the
personal representative of a deceased contributory is placed
on the list, it is not necessary to add his heirs or devisees,
although they may be added if the Court thinks fit (a).
It is the duty of the official liquidator to prepare the list of Settling the list.
contributories, and to leave it with the judge at chambers (b).
The list is to be verified by affidavit, but it may, from time to
time, be varied or added to by the official liquidator by leave
of the judge (c). Upon the list being left with the judge, the
(u) Cleland’s case, 14 Eq. 387; § 98.
Pagin and Gill’s case, 6 Ch. D. (2) § 98 and § 35.
681. (a) § 99.
(x) This word was introduced by (6) Rule 29.
ll & 12 Vict. c. 45, § 3. (c) Ib., and see the forms in the
(y) See the Companies act, 1862, schedule to the Rules, Nos. 24 to 32
746
WINDING UP BY THE COURT.
Bk, IV. Chap. 1. official liquidator obtains an appointment to settle the same;
Sect. 10.
Forms of lists.
Attendance on
settling list.
and it is his duty to give notice in writing of the appointment
to every person included in the list, whether resident within
the jurisdiction of the Court or not (d), stating in what cha-
racter and for what number of shares or interest he is
included (e). Similar notices are to be given when any varia-
tion or addition is made to the list (f). The notices must be
served four clear days before the day appointed for settling (q).
The result of the settlement of the list is certified by the chief
clerk ; and certificates may be made from time to time for the
purpose of stating the result of the settlement down to any
particular time, or as to any particular person or variation (h).
A person may be summoned to be sworn and examined in
chambers, in order to determine whether he ought to be a
contributory or not, although the list may have been already
settled (2).
Forms of lists of contributories are given in the schedule to
the rules issued under the Companies act, 1862 (k).
Every contributory on the list, and every creditor whose
debt or claim is allowed, is entitled to attend the winding-up
proceedings at his own expense (l); and therefore to attend on
the settlement of the list of contributories. The judge, more-
over, can appoint persons to represent contributories and
(d) See Nathan, Newman & Co.,
35 Ch. D. 1, as to service abroad.
(e) Rule 30.
(f) Ib.
(g) Ib. See the forms of notice
and affidavit of service in schedule
3, Nos. 26 and 27. As to notices
under the older acts, see 12 & 13
Vict. c. 108, §§ 26 and 32, which
altered the law as to notices laid
down in Glaholme’s case, 1 De G. &
S. 583, and Hutchinson’s case, ib.
563.
(h) Rule 31.
(t) See Re The Esgair Mwyn Min-
ing Co, 8 W. R. 660, and ante, p.
689 et seq.
(k) See Forms Nos. 24, 29, 31.
For the form under the older
winding-up acts, see 1 De G. &
8. 548.
(1) Rule 60. This rule does not
give a creditor the right to be heard
in argument, nor to his costs if his
attendance is unnecessary, Lord R.
Montagw’s case and Grey’s case, W.N.
1888, 137, nor to attend proceedings
under § 115, see ante, p. 691. As
to his right of cross-examination, see
Brampton v. Longtown Rail. Co., 11
Eq. 428. See, also, Bugg’s case, 2 Dr.
& Sm. 452, where some of the con-
tributories sought to put on the list
a person omitted by the liquidator,
and see tfra, note (z).
THE LIST OF CONTRIBUTORIES. 747
creditors to attend the settlement of the list of contributories Bk. ae 1,
as well as other matters arising on the winding up (m).
With respect to the power of the liquidator to vary the list Resettling the
after it has been once settled, it is to be observed—l1. That aa
this can only be done by leave of the judge; and 2. That no
time is limited after which it may not be varied with such
leave (n). It therefore seems that even after a person has
been settled on or off the list, and the time for applying to
vary the certificate has expired, the judge has still power to
vary the list if, in his judgment, it ought to be varied. But
it need hardly be said that this power is exercised with great
caution; and only under special circumstances, and when
there are good reasons for not having made the application
sooner.
As instances in which the power to vary and re-settle the Alexander's
list was exercised on the discovery of material facts, reference oa
may be made to Alexander’s case and Shewell’s case. In Alezx-
ander’s case (0), shares had been transferred, mald fide, by A.
to B.; before the facts were known B. was put on the list,
and actually attached for non-payment of calls upon him; but
that was held not sufficient to prevent A. from being placed
on the list after the invalidity of the transfer had been dis-
covered.
In Shewell’s case (p) the shares of the company were trans-
ferable to bearer, and a broker had purchased shares for his
own solicitor, and was improperly put on the list, and calls
were made on him. He referred the matter to the solicitor,
who paid the calls out of his own money, and the broker heard
no more about them. The solicitor died, and further calls
were made on the broker, and he then applied to have his
name removed from the list of contributories, and his name
Shewell’s case.
was removed accordingly.
(m) Rule 61. See Melver’s claim, (n) Rule 29.
5 Ch. 424, and Ex parte Oakes and (0) 9 W. R. 410.
Peek, 3 Eq. p. 634. The creditor’s (p) 2 Ch. 387. For other in-
representative appointed under 20 &
21 Vict. c. 78, had a right to attend
at the settling of the list, Mexican
and South American Mining Co., 26
Beav. 172, and see infra, note (c).
stances, see Hopkin’s case, 4 De G. J.
& Sm. 342; Ex parte Curzon, 3 Drew.
508 ; Crosfield’s case, 4 De G. & S.
338, and 2 De G. Mc. & G. 128 ; Ex
parte Best, 1 Sim. N. 8. 193; Ex
748
Bk. IV. Chap. 1.
Sect. 10.
Laches.
Power to rectify
the register of
members.
Appeals, &c.
WINDING UP BY THE COURT.
This case is valuable as showing that mere laches on the
part of a contributory in allowing his name to remain on the
list does not necessarily preclude him from having it removed
if the company has not been damnified by his delay.
As arule, however, where a person has been settled on the
list in chambers, he must apply to the judge within three
weeks if he desires to question the decision (q). Moreover, a
judge of the High Court cannot now rehear his own decision ;
if not acquiesced in it must be appealed against in proper
time (r). But where there are several cases of the same kind,
all determined alike, and one of them is selected as a test
case and is successfully appealed, the decisions in the others
may, it is conceived, be rectified by the Court below without
separate appeals (s).
In order to settle the list of contributories properly the
Court has power to rectify the company’s register of mem-
bers (¢): and where a company is being wound up by the
Court, the Court, when settling the list of contributories, will
rectify the register without any special application for that
particular purpose (wu); but the power to rectify the register
cannot, it is conceived, be exercised by the liquidators of a
company which is being wound up voluntarily or subject to
the supervision of the Court ; and where in such cases recti-
fication is necessary the Court must be applied to (a).
The practice with respect to certificates settling the list of
contributories, and to applications to vary them, and to appeals
from orders settling persons on or off the list of contributories,
parte Kelly’s Executors, 9 W. R. 329,
and Re The Esgair Mwyn Mining
Co., 8 ib. 660.
(q) Dickson’s case, 12 Ch. D. 298.
(r) St. Nazaire Co., 12 Ch. D. 88,
see ante, p. 698.
(s) See Lz parte Munday, 31 Beav.
206. But see the last note. Where
no test case has been selected, see
Hsdaile v. Payne, 40 Ch. D. 520.
(t) See §§ 98 and 35, and ante, p.
120, and infra, p. 755.
(wu) See § 98, Breckenridge’s case,
2 Hem. & M. 642; Whittet’s case,
2 De G. & J. 577; Birch’s case, ib.
10.
(z) Power to rectify the register
may at first sight be supposed to be
given by § 133, cl. 8, taken in con-
nection with § 98. But a closer
examination of the words of those
sections, and of § 35, will, it is con-
ceived, show that this is not s0.
See Gilbert’s case, 5 Ch. 559 ; but see
Brighton Arcade Co. v. Dowling, L. R.
3C. P. p. 187.
THE LIST OF CONTRIBUTORIES. 749
is the same as in other cases (y). An appeal from the decision Bk. eae 1
of the judge acting in the winding up, may be made not only
by a person who contends that he is wrongly put on, or
excluded from the list, and by the official liquidator on behalf
of the company, but also by any other contributory (2), or (it
is presumed) by any creditor who, under the same act, is a
party to the winding up. The question on the appeal being
simply whether a given individual ought or ought not to be on
the list, it is not requisite to bring before the Court another
person who will have to be put on the list, if the individual in
question is struck off (a). And an appeal cannot be objected
to on the ground that there is no means of settling the person,
who is liable for the shares if the appeal is successful, on the
list of contributories (b). The usual parties to the appeal are
the alleged contributory and the official liquidator (c).
No person ought to be settled on the list of contributories No person to be
until his liability to contribute to some debt, liability, or ee
loss of the company being wound up has been ascertained : ee
he ought not, for example, to be put on the list “in re-
spect of any expenditure which he may be proved to have
authorised ” (d).
Under the acts of 1848—49, it was ultimately held that if As regards per-
there were two classes of persons liable to creditors, but one hate, Poeneee
of those classes was bound to indemnify the other against
all demands, the persons composing the class secondarily
(y) See § 124 and rule 56, Dickson's Ir. Rep. 7 Eq. 362.
case, 12 Ch. D. 298, and ante, p.
697 et seq.
(2) See Bush's case, 6 Ch. 246 ;
Ship's case, 2 De G. J. & 8. 544, and
Downes v. Ship, L. R. 3 H. L, 343,
where a contributory obtained leave
to intervene. See, also, Blackburn’s
case, 3 Drew. 409, and 8 De G. M. &
G.177. Inve Bodmin United Mines,
23 Beav. 385, the official manager
contended that a person ought tu be
on the list ; some contributories ap-
plied to be heard on the same side,
put the Court declined to hear them.
See Re Norwich Yarn Co., 13 Beav.
428, note; and see Re Etna Ins. Co.,
(a) See Curtis’ case, 6 Eg. 455 ;
Sanderson’s case,3 De G. & S. 66;
Halls case, ib. 80.
(6) Duchess of Westminster Silver
Lead Ore Co., 10 Ch. D. 307.
(c) The creditor’s representative
appeared in Nicol’s case,3 De G. &
J. 387, but was not allowed to be
heard. In Ex parte Finlay & Co.,
27 L. J. Ch. 658, his costs were
allowed, and see ante, note(m). As
to the costs of the liquidator, see
Musgrave and Hari’s case, 5 Eq:
193.
(d) Ex parte Riddell, 1 Sim. N. 8,
402.
750
WINDING UP BY THE COURT.
Bk, IV. Chap. 1. liable ought not to be on the list until it became necessary
Sect. 10.
Past members.
1. Under acts
of 1848-49.
to put them there, in order that justice might be done as
between themselves (e).
So, under the Companies act, 1862, past members are only
liable to contribute in the event of the present members being
unable to discharge their liabilities; and until there is evidence
to show that recourse must be had to the past members, they
are not put on the list at all (/).
2. Who are contributories.
General observations.
Under the Winding-up acts of 1848—49 (q), the contributories
were—
1. Persons entitled to shares of the assets or accruing profits
of the company at the time of the presentation of the petition
for winding it up; and,
2. Other persons liable to contribute to the payment of any
of the debts, liabilities, or losses of the company.
But with respect to both classes, it was held that the obli-
gation to contribute with others was the real test of liability
to be put on the list of contributories. There might, there-
fore, be shareholders who were not contributories ; e.g., share-
holders entitled to be indemnified by the company against all
losses: and there might be contributories who were not share-
holders, e.g., persons who had simply agreed to take shares
from the company. Direct liability to creditors was not, how-
ever, the test whereby to determine whether a person was
or was not a contributory under the acts of 1848—1849: for
a person may be liable to creditors, and yet not be liable
to contribute with other persons to the payment of those
creditors; and a person may not be liable to the creditors
at all, and yet may, as between himself and others who are
liable to them, be bound to contribute with those others to
the discharge of the creditors’ demands (h).
(e) See infra, class B. (g) 11 & 12 Vict. c. 45, § 3.
(f) See infra, class B. This (hk) The dictum to the contrary in
practice is warranted by § 38, cl.3, 1 Mac. & G. 315, is apposed to later
and § 74, views. See 1 De G. & 8S. 560, 563 ;
WHO ARE CONTRIBUTORIES,
The Companies act, 1862, draws a distinction between,
1. Companies formed and registered under the act, or
under the repealed acts of 1856 —1858 (2).
2. Companies registered under the act, or the acts of
1856—1858, but not formed under it or them (x).
3. Unregistered companies (().
1. With reference to companies of the first class, the act
declares that the term contributory shall mean every person
liable to contribute to the assets of a company under the act
in the event of the same being wound up(m). In order to
ascertain what persons are thus liable, recourse must be had
not only to § 74 but also to sections 38 and 76—78, the effect
of which is apparently to make the following persons, and
those only, contributories in the companies now under con-
sideration, viz.,
1. Existing members (n), i.e., members at the time of the
commencement of the winding up (0).
2. Past members, i.e., persons who were members and who
have not ceased to be members for one year prior to the time
above mentioned (p).
8. The legal personal representatives of such members and
past members (q).
4, Their heirs and devisees (7).
5. Their assignees in bankruptcy (s).
6. Their husbands (f).
The third, fourth, and fifth classes are only liable to be put
on the list in their representative capacities, unless they them-
selves fall within one of the two first classes. The position of
husbands has been greatly modified by the Married women’s
property act, 1882, as will be seen hereafter.
Former members who have ceased to be members for a year
or more before the presentation of the winding-up petition are
not contributories at all. Former members who have ceased
3 ib. 223, 265; 3 Mac. & G.187;1 —(n) § 38.
De G. M. & G. 576, and 3 De G.& (0) See §§ 84 and 153.
J. 421. (p) 8§ 38 and 84.
(a) See §§ 74 and 176. (q) § 76.
(k) See §§ 177 and 196. (r) Ib.
(1) § 200. (s) § 77.
(m) § 74. (t) § 78.
751
Bk. IV. Chap. 1.
Sect. 10.
2. Under the
Companies act,
1862,
1.) Companies
formed under
act.
752
WINDING UP BY. THE COURT.
Bk. IV. Chap. 1. to be members within that time are liable to be made contri--
Sect. 10.
Observation on
word ‘‘mem-
bers,”
2.) Companies
registered but
not formed
under the act.
3.) Unregistered
companies,
—— butories in the event of the existing members being unable to
satisfy their contributions (u); but even then past members are
only liable in respect of debts and liabilities of the company
contracted before they ceased to be members (x).
From the above remarks it will be seen that in order to
understand the exact signification of the term “contributory ”
as used in § 74, it is indispensable to understand accurately
the meaning of the word ‘‘member’”’ as used in § 88. To do
this, however, will be found extremely difficult; for not only is
the description of a member given in § 23 open to the remarks
made upon it in an earlier part of this treatise (see p. 119),
but the register, which that description assumes to be correct,
is liable to be rectified when the question of contributory or no
contributory has to be determined (y).
2. As regards companies registered under the act of 1862,
or under the acts of 1856—1858, but not formed under it or
them, it seems, 1, that all persons are contributories who come
within the meaning of that word as applied to companies
formed and registered under the act of 1862; 2, that all
other persons are contributories in respect of the debts and
liabilities of the company contracted prior to registration,
who are liable at law or in equity to pay or contribute to the
payment of any of such debts or liabilities, or to pay or con-
tribute to the payment of any sum for the adjustment of the
rights of the members amongst themselves in respect thereof,
or to pay or contribute to the payment of the costs of winding
up, so far as relates to such debts or liabilities (z). The
provisions already noticed respecting representatives, heirs,
devisees, assignees, and husbands, also apply to this last class
of contributories (a).
3. With respect to unregistered companies, the act declares
(u) § 38, cl. 3.
(x) Tb. el. 2.
(y) §§ 98 and 45. Ante, p. 60 et
seq., 120 et seg. And see Arnot’s
case, 36 Ch. D. 702 ; Winstone’s case,
12 Ch. D. 239, and compare Sander’s
case, 20 Ch. D. 403, and Great Britain
Mutual Life Assurance Society, 16
Ch. D. 246.
(2) § 196, cl. 5. See, as to the
application of the older authorities
to this class of cases, Luard’s case, |
De G. F. & J. 533 ; Ex parte Dison’s
Executors, 1 Dr. & Sm. 225.
(a) Ib., and §§ 74-78.
CONTRIBUTORIES.
that every person shall be a contributory who is liable at law
or in equity to pay or contribute to the payment of any debt or
liability of the company, or of any sum for the adjustment of
the rights of the members amongst themselves, or of the costs
of winding up (0). The representatives, heirs, devisees, as-
signees, and husbands of such persons are also contributories
as above (c).
Notwithstanding the words ‘‘ liable at law or in equity to
pay,” &c., which occur in §§ 196 and 200, a transferor of
shares who may be a debtor to the company in respect of calls
due before the transfer, is not a contributory as a present
member. Such a person ought not to be on the register
of members ; he is a mere debtor to the company (d).
Although the above are the main provisions of the Com-
panies act, 1862, bearing directly on the question who are
contributories and who not, that question by no means depends
solely on the sections referred to.
In the first place, it must be borne in mind that creditors of
companies registered under the act of 1862, have no remedy
against the members individually, except under the winding-up
provisions of that act. This circumstance at once goes far to
destroy the analogy between contributories under the act of
1862, and contributories under the acts of 1848—1849; for
although it might be very proper, under the last-mentioned
acts, to hold that liability to creditors was no test of liability
to be put on the list of contributories, the same doctrine cannot
be applied under the act of 1862 without placing the creditors
in a much worse position than the act itself contemplates.
This has been decided by the House of Lords in Overend
and Gurney’s Company, Limited (e), where it was held that
persons, assumed to have been induced by fraud imputable to
the company to take shares in it, and having therefore on this
assumption, and as between themselves and the company,
rights of rescission and indemnity, but who had not exercised
(6) § 200. See the last note but LL. 325, affirming 3 Eq. 576. See,
one. also, Tennent v. City of Glasgow
(c) §§ 200 and 74-78. Bank, 4 App. Ca. 615; Stone v.
(d) Ex parte Littledale, 9 Ch. 257. Crty and County Bank, 3 CO. P. D.
(¢) Oakes v. Turquand, L,R.2H. 282.
L.c. *36
753
Bk. IV. Chap. 1.
Sect. 10,
Liability to
pay, &c.
Distinctions
between the
Acts of 1848-49
and the Act of
1862.
Effect of rights
of creditors.
Oakes wv.
Turquand
754
Bk. IV. Chap. 1.
Sect. 10.
Houldsworth v.
City of Glasgow
Bank.
Liability of
members after
winding up.
WINDING UP BY THE COURT.
those rights before the winding up commenced, ought to be on
the list of contributories, in order that the creditors of the
company might be paid. To this extent, therefore, the credi-
tors of a company being wound up have greater rights against
the contributories than the company itself has before it is
wound up (/).
Again, in Houldsworth v. City of Glasgow Bank (g), a share-
holder induced to become such by the fraud of the company,
and who on the authority of the last case was settled on the
list of contributories, was held not entitled to prove for the
damages he had sustained by reason of the fraud. It was
assumed that he might have maintained an action for damages
against the company if it had not been wound up.
It has, indeed, been said by very high authority, that even
after a winding-up order the creditors of a company formed
and registered under the act of 1862, are creditors of the com-
pany only, and not of the contributories individually, and that
the creditors can only reach the contributories through the
company (h). But this view, if logically carried out, involves
as a consequence that the creditors can have no greater rights
against the contributories than the company in its corporate
capacity itself has. ‘This consequence is not consistent with
the decisions above referred to, nor with other cases in which
persons entitled to indemnity from the company may never-
theless be contributories for the payment of its debts (?).
Whether, however, the true view is, that after a winding-up
order the creditors have against the individual members rights
which cannot be enforced before the winding-up order; or
whether the true view is, that after a winding-up order the
company, as a trustee for its creditors, has greater rights
against its contributories than it had before, is not perhays
(f) See further, on this point,
Wiltshire Iron Co. v. Great Western
(h) See Ship’s case, 2 De G.J.&
Sm. 544; Re Duckworth, 2 Ch. 578 ;
Rail. Co., L. R. 6 Q. B. 101 and 776 ;
and as to set-off, ante, p. 741 et seg.,and
fraudulent preferences, ante, p. 668,
and under § 165, ante, p. 693 et seq.
(g) 5 App. Ca. 317. See, also,
Addlestone Linoleum Co., 37 Ch. D.
191,
Webb v. Whifin, L. R. 5 H. L. p.
734, per Lord Cairns.
(i) See Lord Selborne’s observa-
tions in Black & Co.’s case, 8 Ch. 254
(at pp. 261, 262), and Chapman aud
Barker’s case, 3 Eq. 361.
CONTRIBUTORIES. 755
very material. But one or other of these views must, it is Bk. ce 1
submitted, be correct; any other appears inconsistent with
the decisions before referred to, with the course of legislation
on the subject of Joint Stock Companies, and with those pro-
visions of the act of 1862, which are introduced expressly for
the benefit of creditors, e.g., those provisions which relate to
the register of shareholders, the rights of creditors to obtain
winding-up orders, the effect of such orders, the rights of
creditors under them, fraudulent preference and set-off.
Nay, more, the position of shareholders in companies, Buryess’s case.
whether solvent or insolvent, is very different after an order to
wind up from what it was before the order. This was pointed
out by Jessel, M. R., in an admirable judgment in Burgess’s
case (k), and must never be lost sight of.
Another circumstance which renders it important to be Effect of power
z isi : to rectify the
careful before relying on the older decisions on the question register.
of contributories, as authorities under the act of 1862, is the
power given to the Court to rectify the company’s register of
members (J). This power renders the actual state of the
company’s register of little or no consequence if it is shown to
be wrong.
A third point which it is necessary to bear in mind when peer od in
applying the older decisions to modern cases, is the power of commencement
the Court to sanction the registration of transfers after the Sete Se:
commencement of the winding up. This subject will be con-
sidered hereafter, when treating of the position of persons who
have ceased to hold shares in the company, and it will then be
seen that under the older acts, sellers of shares were held to be
contributories under circumstances which, if they were now to
occur, would render the buyers contributories in their stead.
(k) Burgess’s case, 15 Ch. D. 507, (1) See §§ 98 and 35, and ante,
where shares had been taken on p. 120. This power was first con-
the faith of a fraudulent prospectus, ferred by 19 & 20 Vict. c. 47, § 25.
and their holders were held to be See as to mandamus, &c., ante, pp.
contributories, although the assets 61 and 603.
exceeded the debts and costs.
756
Bk. IV. Chap. 1.
Sect. 10.
Present mem-
bers.
Past members.
A. list.
B. list.
WINDING UP BY THE COURT.
CLASSIFICATION OF CONTRIBUTORIES.
Contributories are primarily divisible into three classes,
viz.: 1, contributories as present members ; 2, contributories
as past members ; 8, their respective representatives.
Persons who are contributories as present members are divi-
sible into four classes, viz. :—
1. Duly constituted shareholders.
2. Persons who are estopped from denying that they are
shareholders.
8. Persons who are bound by agreement to become share-
holders.
4. The representatives of persons belonging to one or other
of these classes.
Persons who are contributories as past members are those
who would have been contributories as present members if they
or those whom they represent had not ceased to hold shares
before the commencement of the winding up.
In practice, the contributories as present members are settled
on what is called the A. list; whilst the contributories as past
members are settled on what is called the B. list.
As regards present members there does not appear to be any
substantial difference between companies formed and registered
under the Companies act, 1862, and other companies (m) ; but
as regards past members there is a very material difference, as
will be seen hereafter.
It is proposed first to investigate the general principles
applicable to the first three classes and then to notice their
application to special cases of difficulty. The 4th class, and
lastly Past members, will follow and complete the subject.
A. CONTRIBUTORIES AS PRESENT MEMBERS.
1. Duly constituted shareholders. (See Bk. I., cc. 2 and 4.)
Subject to one or two exceptions all persons who, at the
time of the commencement of the winding up of a company (n),
are duly constituted shareholders therein, are contributories in
(m) See Ex parte Littledale, 9 Ch. 257. (n) Ante, p. 664.
CONTRIBUTORIES.— ESTOPPEL.
it. It is immaterial whether the persons in question were the Bk. ae
ect.
original founders of the company, or whether they have become
shareholders by a direct allotment of shares to themselves, or
whether they have become shareholders by a transfer of shares
previously held by some one else.
require no comment.
These general propositions
They apply to persons who are made
shareholders by special acts of Parliament (0) ; to all classes of
members and shareholders where there are several in the same
company (p). The particular cases in this class will be found
under the heads 5 to 11, and under head B.
The exceptions are persons under disability and persons like
ambassadors (q), and holders of fully paid-up shares, who are
not liable to any call or contribution and who therefore cannot
be settled on the list against their will although they are entitled
to be on the list to obtain their share of any ultimate surplus
there may be.
2. Persons who are estopped from denying that they are
shareholders.
0
157
p. 1.
It has been already seen that persons who have not com- Persons estopped
plied with all prescribed formalities may be estopped from
denying that they are shareholders (r).
Even before there was any power given to the Court to
rectify a company’s register of shareholders, it was settled that
all persons who, when a petition for winding up a company
was presented, were estopped from denying that they were
shareholders in that company, were also contributories in it,
unless they could show good reason to the contrary. It is
wholly immaterial whether such persons are or are not
properly described in the company’s register of share-
holders (s), or whether they are or are not shareholders in
(0) Kincaid’s case, 11 Eq. 192;
Forbes’ case, 19 ib. 353; O’Brien’s
(q) See Magdalena Steam Co. v.
Martin, 2 E. & E. 94; of course,
case, Ir. Rep. 11 Eq. 422.
(p) South London Fish Market Co.,
39 Ch. D. 324; Winstone’s case, 12
Ch. D. 239. Compare Great Britain
Mutual Life Assurance Society, 16 ib.
246.
they can receive nothing without
being charged in account with
calls.
(r) See, on this subject, ante, pp.
48 et seq.
(s) Yelland’s case, 5 De G. & S.
from denying
that they are
shareholders.
758 WINDING UP BY THE COURT.
Bk. tee 1. the strict sense of the term, and, as such, liable, in the case
of an unregistered company, to be sued by creditors of the
company.
Straffon’s Executors’ case (t) is a leading authority on this
head. There the provisions of a company’s deed of settlement
required that all transfers of shares should be made in a
particular manner, with the consent of the directors testified in
a particular manner, and that the transferee should execute the
company’s deed of settlement. It was also expressly declared
that no transferee should be entitled to any of the privileges
of a shareholder until he had executed the deed of settlement.
A Mr. Straffon bought various shares which were, in fact,
transferred to him, and in respect of which certificates and
dividends were, in fact, given and paid to him. The shares
had never been transferred to him in the manner prescribed
by the company’s deed of settlement ; nor had he ever executed
tbat deed. He had, however, executed a sufficient deed in
respect of some of the shares, but not in respect of the others ;
and his executors had been returned to the stamp office as
shareholders in respect of all his shares. On the winding up
of the company after his death, his executors were made con-
tributories in respect of all his shares; it being perfectly
clear that, although the prescribed formalities had not been
rigorously complied with, enough had been done to estop both
the company and My. Straffon from denying that he was
virtually a shareholder in the company in respect of them all.
So an irregularity in a transfer of shares will not preclude
the transferee from being a contributory if the transfer has been
registered (uw). Indeed, it is now clearly settled, as a general
Straffon’s Execu-
tors’ case.
Persons who
have acted and
been treated as
shareholders,
although they
have not com-
plied with
formalities. 549 and 598, and Cuninghame v.
395, and others of that class noticed
under the next head (3).
(t) 1 De G. M. & G. 576, and
4 De G. & S. 256. See, also, Lx
parte Dixon’s Executors, 1 Dr. & Sm.
225 ; Maguire’s case, 3 De G. & S,
31; Sanderson’s case, ib. 66, and 3
H. L. 698 ; Gordon’s case, 3 De G.
& Sm. 249 ; and the following cases
arising in the liquidation of the City
of Glasgow Bank, Bell and Lang’s
ease, 4 App. Ca. 547; Ker’s case, ib.
City of Glasgow Bank, ib. 607.
(u) Weikersheim’s case, 8 Ch. 831,
where the registration was some-
what irregular. See, also, Bush’s
case, 6 Ch. 246, and Murray v. Bush,
L. R. 6 H. L. 37, where a person
who had irregularly transferred his
shares was held not to be a con-
tributory, and compare that case with
Keene’s Executors’ case, 3 De G. M.&
G. 272; Brown’s case, 19 Beav. 97 ;
CONTRIBUTORIES.—-ESTOPPEL.
rule, that where a person has acted, and been treated as a Bk. ae Chap. 1.
shareholder, he will be a contributory, notwithstanding the non-
observance of those formalities which, according to the strict
letter of the company’s deed or articles of association, ought
to be complied with before a person is entitled to share profits,
or enjoy the other rights or privileges of a shareholder (x).
ord, when oe at elie ons
In applying this principle, however, care must be taken to ee a ni
ascertain whether the conduct relied upon is referable to an ciples.
agreement to take shares or not; for whilst on the one hand if
there be an agreement binding or entitling a person to take
shares, his conduct will effectually preclude him from taking
advantage of any informalities or irregularities, and even from
repudiating the agreement if it be voidable at his option; yet
if he has neither become nor agreed to become a shareholder,
the circumstance that he has acted as a shareholder will not
necessarily render him a contributory. Thus it was decided,
under the old winding-up acts, that a person who had never
become a shareholder, and had never agreed to take shares,
did not become a contributory in respect of shares improperly
allotted to him, although he had executed the company’s deed
of settlement (y) ; or had attended meetings of shareholders (2) ;
and even under the Companies act, 1862, a person registered
as the holder of shares illegally issued’ pursuant to a void
scheme for amalgamation has been held not to be a con-
tributory, although he has acted as a shareholder and a
director (a).
The application of these principles to directors who have
acted as such without being properly qualified, will be
examined hereafter under head (6).
Henderson’s' case, ib. 107, where were really taken, but dividends
persons who had transferred their
shares irregularly were held con-
tributories.
(x) See, in addition to the cases
cited in the last two notes, Hx parte
Contract Corporation, 3 Ch. 105;
Challis’ case, 6 Ch. 266; Leishman
v. Cochrane, 1 Moore, P. C. N. 8.
315; Robinson’s Executors’ case, 15
Jur. 488, and on appeal, 2 De G.
Mac. & G. 517, where no shares
were paid upon them; Bernard’s
case, 5 De G. & 8. 288.
(y) As in Coleman’s case, 1 De G.
J. & Sm. 495, noticed infra, under
head 4 d).
(@) As in Bunn’s case, 2 De G. F.
& J. 275, wnfra, under head 4 d).
(a) As in Stace and Worth’s case,
4 Ch. 682, infra, under head 4 5).
See, also, Smith’s case, 4 Ch. 611.
759
Sect. 10.
760 WINDING UP BY THE COURT.
Bk. IV. Chap. 1.
Sect. 10.
3. Persons who are bound by agreement to become shareholders.
What constitutes a valid agreement with a company to take
shares, and what not, has been examined already, see Book I.,
c 1.
Speaking generally, a person who has agreed to become a
member of a company being wound up is a contributory
whether he is actually a member or not; and, on the other
hand, a person.who is not a member, and has not agreed to
become one, is not a contributory. This will be seen here-
after (b).
The position of persons who have agreed to take shares not
from the company but from persons who are already share-
holders will be examined under the head of Past Members.
It has already been seen that transferees of shares who have
been accepted by the company as shareholders, are contribu-
tories, although they may not have complied with all those
formalities which ought to have been observed in the trans-
fer (c): and it will be seen hereafter that transferees of shares
who have not been accepted by the company as shareholders
were not contributories under the older winding-up acts, and
are not contributories under the Companies act, 1862, except
in those cases in which there is power to rectify the company’s
register (d).
Allottees of With respect to persons who have agreed to take shares
aoe directly from the company, it will be convenient to distinguish
unconditional from conditional agreements. The latter will
be separately considered hereafter (e).
. Further, in dealing with cases resting on agreement, it is
important to distinguish a concluded agreement, whether
simple or conditional, from that which is in truth no agree-
ment, in consequence of there not being a final assent by both
parties to the same terms (/).
(b) Infra, under the head 4 a). pare Pentelow’s case, 4 Ch. 178, with
(c) Ante, p. 758. Peek’s case, ib. 532. And see the
(d) See infra, under head B. judgment of L, J. Cotton in Arnot’s
(e) Infra, under head 4 d), case, 36 Ch. D. 702.
(f) See ante, p. 13 et seg. Com-
CONTRIBUTORIES.—ALLOTTEES OF SHARES. 761
Bk. IV. Chap. 1.
a) Allottees of shares in formed companies. Sect. 10.
The following are the leading older authorities for the pro-
position that a person who agrees to take shares from a com-
pany is a contributory :—
Yelland’s case, 5 De G. & S. 395, affirmed on appeal, 16 Jur. 509, where
the allottee had not executed the company’s deed.
Sharpus’ case, 3 De G. & S. 49.
Mansfield’s case, 3 De G. & 8. 58, and on appeal, 2 M. & G. 57.
In these the allotment was made before the company was com-
pletely registered. The allottees did not execute the deed, and
the proposed capital was never raised. See, also, Lyon’s case,
35 Beav. 646.
Cookney’s case, 26 Beav. 6, and 3 De G. & J. 170.
Barton’s case, 4 Drew. 535, and on appeal, 4 De G. & J. 46.
In these the applications for shares were verbal only, and they
were allotted ; but nothing more was done.
Hawkins’ case, 2 K. & J. 253 (a cost-book company).
Bird’s case, 1 Sim, N.S. 47.
Also illustrate the same principles.
More modern authorities to the same effect abound in the
books. One of the most recent is The Licensed Victuallers’
Mutual Trading Association (g), where a promoter of a company
who had agreed to underwrite 10,000 shares for a commission
of 15 per cent. was held a contributory in respect of 8,500 shares
which he had not been able to induce other persons to take.
Although an agreement to take shares need not (in general) Agreement to
be in writing, there are exceptions to this rule. By the statute bie ae in
80 Vict. c. 23, relating to marine insurances, all agreements writing.
for such insurances were required to be in writing, and to be
stamped; and consequently the members of a mutual marine
insurance company, which did not issue stamped policies, were
not contributories (h).
Moreover, if a person has agreed to take shares, he will be No allotment.
a contributory, even although there may have been no allot-
ment (i); or he may have no notice of it(k). Allotment and
(g) The Licensed Victuallers’ Mutual
Trading Assoc., W. N. (1889) 71.
(h) Smith’s case, 4 Ch. 611. Com-
pare Blyth d& Co.’s case, 13 Eq, 529 ;
Martin’s claim, 14 Eq. 148. Marine
policies can now be stamped after
their execution on payment of a
penalty. See 39 Vict. c. 6, § 2,
but a written policy is still neces-
sary.
(i) Bird’s case, 4 De-G. J. & Sm.
200.
(kt) Adam’s case, 13 Eq. 474;
Harward’s case, 13 Eq. 30 ; Sidney’s
762
WINDING UP BY THE COURT.
Bk. IV. Chap. 1. notice are in truth only material where there is no agreement
Sect. 10.
Agreement to
take fully paid-
up shares.
Agreement to
take shares at a
future time.
Barrett’s case.
Option to pay
in cash or
shares.
without them. In the ordinary case of an application for
shares, there is no agreement in the absence of allotment and
notice of it; but there may well be a binding agreement
without either of them (().
An allotment following an application for shares will, unless
otherwise expressed at the time, be treated as an allotment of
such shares as are applied for. Consequently, if after the
application, and before the allotment, the nominal value of
the shares has been altered, and the allottee has no notice
of the alteration, he will be a contributory in respect of
such shares as he applied for, but not in respect of them as
altered (m).
A person who has only agreed to take fully paid-up shares
cannot be treated as a contributory in respect of shares not
paid up (n).
An agreement to take shares at a future time will not render
a person a contributory, if the winding up of the company has
commenced before that time arrives (0); but if shares are
agreed to be taken at once, the person agreeing to take them
will be a contributory, although they are not to be paid for
until a future day, and the certificates for them are not to be
delivered until payment (/p).
Again, where a person has agreed to take cash or shares at
the option of the company in payment of his claims against
the company, and he has not received either cash or shares, he
cannot be compelled to take shares after the company has
been ordered to be wound up; and he is entitled to rank as a
creditor in respect of what the company may owe him (q).
case, ib. 228; Fowler’s case, 14 ib.
316. See, also, Richards v. Home
p. 19 et seq.
(n) Arnot’s case, 36 Ch. D. 702.
Assur. Assoc, L. R. 6 C. P. 591,
where an agent applied for shares,
and was registered as their holder.
(1) See, as to this, ante, p. 13 et
seq.
(m) Gustard’s case, 8 Eq. 488,
where the allottee was held to be a
contributory for them. Compare
this with the cases noticed ante,
See infra, as to paid-up shares,
(0) Barrett’s case, 2 Dr. & Sm.
415, and 3 De G. J. & Sm. 30.
(p) Ib. The case turned on the
true construction of the correspon-
dence.
(9) Sharon’s claim, W. N., 1866
231.
CONTRIBUTORIES.—ALLOTTEES OF SHARES. 7638
So also in winding up companies in which there are share- Bk. Hate i
. . . % ect, .
holders and scripholders, and in which the scripholders are
entitled to become shareholders, but are not bound so to do,
Scripholders.
so long as they remain scripholders, as distinguished from
shareholders, they are not contributories (r).
An agreement to take shares which has not been acted upon Agreements not
for so long that neither party can enforce it against the other ere
will not render the person who agreed to take them a contri-
butory. This follows from the ordinary doctrines applicable
to the specific performance of agreements ; and where a person
in this position sought to be put on the list in order to obtain
a share of surplus assets, he was held not entitled to be on
it (s). So it is apprehended he could not have been made a
contributory against his will if there had been a deficiency (¢).
An agreement to take shares which has been duly rescinded Agreements
before the commencement of the winding up, will not render nee
the party to it a contributory unless it be as a past member.
But, primd facie, directors have no more power to rescind an
agreement to take shares than they have to accept a surrender
of therm when taken; and there are numerous authorities to
show that persons who have agreed to take shares are contri-
butories as present members, «lthough the directors have sub-
sequently agreed to relieve them from their obligation (wu).
These cases, however, will be more conveniently noticed when
treating of persons who have ceased to be members (2).
An agreement which is void cannot per se render a person a Voidable and
contributory ; but an agreement which is voidable at his option Vee
may do so. This subject will be alluded to hereafter (y).
b) Allottees of shares in contemplated companies.
An abortive company, 2.e., an unregistered association of Allottees of
individuals engaged in the formation of a company, and not ae
- panies.
(r) See scripholders, infra, head 8. _ five years.
(s) Ex parte London Bank of Scot- (u) See, for example, Adams’ case,
land, 12 Eq. 268. 13 Eq. 474. And compare Nicol’s
(t) Nicol’s case, 29 Ch. D. 421. case, Tufnell and Ponsonby’s case, 29
Compare Sidney’s case, 13 Eq. 228, Ch. D. 421.
where a person who signed a com- (x) See infra, class B.
pany’s memorandum of association (y) See under head 4,
was put on the list after a delay of
764
Bk. IV. Chap. 1.
Sect. 10.
Liability of
subscribers to
contribute.
Upfill’s case.
WINDING UP BY THE COURT.
succeeding in their attempts to form it, might be wound up
under the acts of 1848 and 1849 (zs). But persons engaged in
the formation of a company are neither partners nor quasi-
partners, nor is each the agent of the others for doing that
which may be necessary to start the company (a). It follows
from this, that if an abortive unregistered company is being
wound up, a person who has done nothing more than act as
a promoter, without rendering himself liable with the other
promoters, to third parties, or to those others in respect of
liabilities incurred by them, is not a contributory.
It was at one time thought that there was an equitable, as
distinguished from a legal obligation on the part of every
promoter of a company towards the other promoters, to con-
tribute with them towards the discharge of debts incurred
by them in the prosecution of their common design; but it
has long been settled that a promoter, or subscriber, to an
abortive company is not liable to contribute to the liquidation
of debts or expenses which have been incurred without his
authority, or which he has not agreed to share. Unless,
therefore, a person has agreed to share, or has rendered him-
self directly liable with others to pay, the debts incurred in
the attempt to form an abortive company, he will not be a
contributory on the winding up of that company (b).
The non-liability of a mere promoter of a company to be
made a contributory, unless he has done something besides
act with others in getting up a company, was established com-
paratively early ; but it was nevertheless decided by the House
of Lords, in Upjfill’s case (c), that if a promoter of a company
agreed to accept shares in the company when formed, he ought
to contribute to the expenses incurred in attempting to form it.
The impossibility, however, of upholding this decision was
felt as soon as attention was drawn to it; and although it was
followed for a time, it was repudiated by the House of Lords
(2) Ante, p. 623. son, and Norris v. Cooper, ib. 161.
(a) See Partn. p. 23. See, too, Hamilton v. Smith, 7 W.
(b) See Norris v. Cottle, 2 H.L. RB. 173,
C. 647, affirming Hx parte Cottle, 2 (c) Hutton v. Upfill, 2 H. L. ©.
Mac. & G. 185; Bright v. Hutton, 674.
3H. L. C. 341; Hutton v. Thomp-
CONTRIBUTORIES.—ALLOTTEES OF SHARES. 765
itself in Bright v. Hutton (d), which has ever since been the Bk. co 1.
leading authority upon the present subject.
Many cases had been decided on the authority of Up/fill’s
case, and they, of course, fall with it. With reference, there-
fore, to the subject now under discussion, it is necessary to
separate the cases decided before, from those decided after the
reversal of Upjill’s case. But itis to be observed, that cases
decided before such reversal, and in which promoters or sub-
scribers were held not to be contributories, are still entitled to
weight. It is only those which decided such persons to be
contributories that must now be disregarded.
The following cases must be considered as overruled Cases falling
: all’
(directly or indirectly) by Bright v. Hutton, 3 H. L. C. 341:— en —
Upfill’s case, 2 H. L. C. 674.
Besley, Ex parte,2 Mac. & G.176. This case occurs three times in
the books. It was first decided by Vice-Chancellor Knight Bruce
(Besley’s case, 3 De G. & 5. 224), who held that Besley was not a
contributory. This decision was appealed against, and was re-
versed by Lord Cottenham (2 Mac. & G. 176). But the appeal was
reheard by Lord Truro, who affirmed the decision of the Vice-
Chancellor (3 Mac. & G. 287). The case, as reported in 3 De G. &
S. 224, and 3 Mac. & G. 287, is still law.
Bright's case, 1 Sim. N. S. 602. This was reversed on appeal (3 H. L.
C. 341).
Brittain, Ex parte, 1 Sim. N.S. 281, decided reluctantly on the autho-
rity of Upfill’s case.
Hole’s case, 3 De G. & S. 241, decided on the authority of Ex parte
Besley, 2 Mac. & G. 176.
Markwell’s case, 5 De G. & 8. 528, decided on the authority of Upfill’s
case, but after the decision of Bright v. Hutton. It cannot, however,
be considered law. See Ex parte Capper, 1 Sim. N. S. 178, and
Carrich’s case, 1 Sim. N. 8. 505.
Morrison, Ex parte, 15 Jur. 346, and 20 L. J. Ch. 296, decided on the
authority of Upfill’s case, and in effect overruled by Sharp and
James's case, 1 De G. M. & G. 565.
Nicholay’s case, 15 Jur. 420, decided on the authority of Upfill’s case.
Sichell, Ex parte, 1 Sim. N. 8. 187, decided reluctantly on the authority
of Upfill’s case.
Studley, Ex parte, 14 Jur. 539. This case is very shortly reported, but
it seems inconsistent with such cases as Hall’s (3 De G. & S. 214),
Stock’s (22 L. J. Ch. 218) and Carrick’s (1 Sim. N. 8. 505).
Upon the principles which are now settled to be applicable Result of
authorities.
(d) 3H. L. C, 341,
766
WINDING UP BY THE COURT.
Bk. IV. Chap. 1. to the case of an abortive unregistered company, it may be
Subscribers to
abortive com-
panies not con-
tributories.
Provisional
committee men
not contribu-
tories.
A fortiori,
subscribers
who have not
Sect. 10.
taken :
1. That a mere subscriber to or allottee of scrip in an
abortive company is not, by virtue of his subscription, or
acceptance of scrip, a contributory on the winding up of the
company, whether he has paid his deposit (e) or not (f).
2. That such a person does not become a contributory by
being one of the committee from which the scheme emanates,
and by which it is encouraged; or, in other words, by being
what is commonly called a promoter of the company (9).
This holds, even although he may have subscribed something
towards the expenses, if he did so under the erroneous sup-
position that he was liable for them (h), or merely for the
sake of peace (2); so, although he may have concurred in
the appointment of persons, and have incurred liability by so
doing, if all liability on that score is at an end (k) ; so, although
he may have been party to the appointment of a managing
committee, by which debts still unpaid have been incurred (J) ;
so, although his name may have been put on that com-
mittee, if he never assented to join it, and he never acted
on it (m).
8. That, a fortiori, subscribers to and promoters of an
abortive company are not, as such, liable to be made con-
(c) As in Maudslay and Field's
case, 17 Sim. 157 ; He parte Beard-
Jur. 539; Ex parte Clarke, 20 L. J.
Ch, 14.
shaw, 1 Drew. 226. See, too, Ha
parte Walstab, 20 L. J. Ch. 58,
where the deposit had been paid
and recovered back.
(f) As in Hutton v. Thompson,
and Norris v. Cooper, 3 H. L. C. 161;
Ex parte Capper, 1 Sim. N.S. 178 ;
Carrick’s case, ib. 505; Ex parte
Hirschel, 15 Jur. 942. See, too, the
cases in the next seven notes.
(g) Bright v. Hutton, 3 H. L. C.
341, reversing Bright’s case, 1 Sim.
N. 8. 602; Norris v. Cottle, 2H. L.
C. 647, affirming Ex parte Cottle, 2
Mac. & G. 185. See, too, Mait-
land’s case, 3 Giff. 28; Ex parte
Roberts, 2 Mac. & G. 192, and 14
(h) Lx parte Besley, 3 Mac. & G.
287, affirming Besley’s case, 3 De G.
& 8. 224; Halls case,3 De G. &S,
214,
(2) Ex parte Stocks, 22 L. J. Ch.
218 ; Halls case, 3 De G. & S. 214;
Carrick’s case, 1 Sim. N. 8. 505;
Ex parte Roberts, 1 Drew. 204 ;
Tanner's case, 5 De G. & S. 182.
(k) Carrick’s case, 1 Sim. N. §.
505 ; Ex parte Hight, 1 Drew. 485.
(1) Tanner’s case, 5 De G. & 8. 182,
(m) Ex parte Roberts, 1 Drew. 204.
See, too, Ex parte Osborne, 15 Jur.
72. Compare Spottiswoode’s case, 6
De G. M. & G, 345.
CONTRIBUTORIES.—REPUDIATION. 767
tributories on its winding up, if they never have, in fact, Bk. aoa 1.
entered into a binding agreement to take shares. Even ——-———
before Upfill’s case was reversed, this proposition was well na ee
established (n).
4, That if persons are actively engaged in forming a com-
pany, if they act as a body, and as a body incur debts for
which they are all liable, if not directly, at all events as be-
tween each other, then they form a company or association
which may be wound up, and on its winding up they will be
contributories, whether they have actually subscribed for shares
or not (0).
5. That persons who, without being actively engaged in
forming a company, agree not only to take shares in it, but
also to share the expenses incurred in forming the company,
are, on its winding up, liable to be made contributories (p).
The writer is not aware of any case having arisen under the Application of
Companies act, 1862, and in which the above rules have been ere pie
adverted to. The reason of this is that there is no recent P@e-
instance of an order to wind up an unregistered association of
promoters of a company. At the same time, such an associa-
tion, at least if consisting of less that twenty persons, might
be legally formed and be wound up (q); and if such an event
should occur, the principles and rules followed under the older
acts would apply; subject, however, to this qualification, that
liability to creditors is now a ground for being put on the list,
which was not the case under the older acts (r).
4. On the repudiation of shares after the commencement of
the winding up.
A person who is sought to be made a contributory in respect
of shares which he has agreed to take or which may be regis-
(n) See Mathew’s case, 3 De G. &S.
234; Carmichael’s case, 17 Sim. 163 ;
and Ontons’s case, 1 Sim. N. 8. 394.
(0) Norbury’s case, 5 De G. &
Sm. 423; Sharp and James’ case,
1 De G. M. & G. 565; Pearson’s
Executors’ case, 3 De G. M. & G.
241 ; Spottiswoode and Amsinck’s
case, 6 De G. M. & G. 345. See,
also, Bowen and Martin’s case, 20 L.
J. Ch. 856, and Ex parte Apps, 18 L.
J. Ch. 409.
(p) See the last note.
(q) See Companies act, 1862, §§ 4
and 199,
(r) Ib., § 200.
768
Bk. IV. Chap. 1.
Sect. 10.
Cases in which
a person has
neither become
nor bound him-
self by agree-
ment to become
a shareholder.
Sureties, &c.
Admissions,
WINDING UP BY THE COURT.
tered in his name, may be entitled to repudiate them on various.
grounds. But it by no means follows, that because he might.
have repudiated them before the winding up commenced, he
can repudiate them afterwards. The leading principles.
applicable to this subject appear to be as follows :
1. Shares placed in a person’s name pursuant to an alleged
agreement, which is in truth no agreement, may be repudiated
by him after the winding up has commenced, unless he has
chosen to accept them on the terms on which they have been
placed in his name (s).
2. Shares which the company has no power to issue, can be
repudiated after the winding up has commenced (i).
8. Shares placed in his name under an agreement which is
voidable, ¢.g., on the ground of fraud (wu), or the non-perform-
ance of a condition (v), cannot be repudiated after the winding
up has commenced.
4, Shares which a person has agreed to take, but which have
not been placed in his name, and in respect of which he is not
a shareholder at the commencement of the winding up, may be
repudiated by him if he can show that for any reason the agree-
ment is not binding on him (w).
a) Repudiation on the ground of no agreement.
By way of contrast with the decisions noticed under the
last head, those cases will now be adverted to, in which it
has been held, that a person is not a contributory, he not
having become a shareholder or agreed to become one, and
there being no other grounds on which to hold him a con-
tributory.
Persons who are merely sureties to a company for the pay-
ment of calls by shareholders are not contributories (x). It
will be seen hereafter that cestwis que trustent are not con-
tributories (y). A person who has never agreed to take shares
and has never acted or been treated as a shareholder, but who
(s) See infra, under head a). (w) See infra, under head d).
(t) See infra, under head 6). («) Harrison’s case, 6 Ch, 286 ;
(u) See infra, under head c). Lee and Moor’s case, 5 Eq. 368.
(v) See infra, under head a). (y) See infra, head 9.
CONTRIBUTORIES.—NO AGREEMENT. 769
by mistake has admitted, even under seal, that he is a share- Bk. IV. Chap. 1.
holder is not a contributory (z). ae
A person who agrees to place shares does not agree to take
them himself and he is not a contributory (a).
A person who is entered on the register of shareholders Effect of being
: ee . on register,
without due authority is not a contributory, unless he has pre-
cluded himself from denying the propriety of the entry (0).
This he may do by express ratification or by acting as a share-
holder (c). Even where an applicant for shares authorised
them to be registered in his name, and executed a blank
transfer of them before allotment, the subsequent entry of his
name in the register was held not to affect him, as he had no
notice of such entry or of the allotment (d).
With respect to applicants for shares, the following pro- Applicants for
ap Mae B _ shares.
positions follow, from the principles explained in Bk. I. c. 1,
§ 1, where the requisites of an agreement to take shares were
examined (e).
1. If shares have been applied for and the deposit on them 1. No allot-
has been paid, and a receipt has been given for the money, ee
but the shares have never been allotted, the applicant will
not be a contributory, although the application may have been,
in form, an agreement by him to accept the shares applied
for or any less number which might be allotted (f). If indeed
there is some other evidence clearly showing that the applica-
tion had been accepted, the fact that there was no formal
allotment will be immaterial (9).
2. If an application for shares is followed by allotment and 2. No notice of
entry on the register, but the allottee is not informed of these aeeae
facts, he will not, without more, be a contributory (h). But
(2) Empson’s case, 9 Eq. 597. 592; Ward's case, 10 Eq. 659.
See, also, Davies’s case, 4 De G. F. &
J. 78.
(a) Gorrissen’s case, 8 Ch. 507.
Otherwise if he underwrites so many
shares, ante, p. 761.
(b) See Hallmark’s case, 9 Ch.
D. 329 ; Somerville’s case, 6 Ch. 266 ;
Gorrissen’s case, 8 Ch. 507 ; Wynne’s
case, ib. 1002; Beck’s case, 9 Ch.
392; Pellatt’s case, 2 Ch. 527 ;
Baily’s case, 5 Eq. 428, and 3 Ch.
L.C.
(c) See the cases on the effect of
varying from the prospectus, infra,
p. 771.
(d) Ward’s case, 10 Eq. 659.
(e) Ante, p. 13 et seq.
(f) Best’s case,2 De G. J. & Sm.
650.
(gy) See Adam’s case, 13 Eq. 474 ;
bird's case, 4 De G. J. & Sm. 200.
(h) Gunn’s case, 3 Ch. 40; Ward's
case, 10 Eq. 659, and others cited
*3 D
770 WINDING UP BY THE COURT.
Bk. ere 1. direct formal notice is not necessary; and notice may be
ee inferred from conduct, and may even be wholly dispensed
with (i).
3. If an application for shares has been revoked before it
has been accepted, the applicant will not be a contributory,
although shares may afterwards be allotted to him (k). But re-
vocation after notice of allotment has been posted is too late (1).
4. If an application for shares is not accepted within a.
reasonable time, a subsequent acceptance will not render
the applicant a contributory unless he has assented to
it (m); and this applies as well to directors and to persons
who take an active part in getting up the company as to
others (n).
5. If a person applies for shares himself and they are
allotted to some one else, there is no concluded agreement,
and he is not a contributory. Thus, where reserved shares
were offered to old shareholders and their executors, and a
3. Application
for shares
revoked.
4, Allotment
too late.
5. Applicant and
allottee different
persons.
Mallorie’s case.
person who was a relative of a deceased shareholder and acted
for his executors applied for some reserved shares, and they
were allotted to the executors, there being no power to allot
them to the applicant himself, it was held that he was not a
contributory (0).
oo 6. If shares are applied for, or offered, on terms which are
sented to. never assented to by both parties to the negotiation, the person
applying for them, or to whom they are offered, will not bea
contributory in respect to them (p).
ae es 7. Moreover, the conditions must be accepted by those per-
authority.
ante, p. 14; Bloxam’s case, 4 De G.
J. & Sm. 447, contra, turned on its
own special circumstances. See
ante, p. 15.
(i) See Adam’s case, 13 Eq. 474,
and the cases collected ante, p. 14,
to which add Richards v. Home Ass,
Assoc., L. R. 6 C. P. 591. See, also,
the cases relating to directors, infra,
head 6, p. 790.
(k) Ritso’s case, 4 Ch. D. 774, the
case of a director; Gledhill’s case, 3
De G. F. & J. 713, and others of
that class noticed ante, pp. 13, 14.
(2) Harris's case, 7 Ch. 587;
Wall's case, 15 Eq. 18, ante, p. 14.
(m) Mathew’s case, 3 De G, & Sm.
234, and others of that class noticed
ante, p. 15.
(n) Ritso’s case, 4 Ch. D. 774,
Carmichael’s case, 17 Sim. 163.
(0) Mallorie’s case, 2 Ch. 181.
(p) See Jackson v. Turquand, L.
R. 4 H. L. 305, and the other cases
collected ante, p. 16. See, also,
Davies case, 4 De G. F. & J. 78,
which was a case of fraud as well as
of no contract ; Empson’s case, 9 Eq.
597; compare Gustard’s case, 8 Eq.
438.
771
CONTRIBUTORIES.—NO AGREEMENT.
sons who are competent to bind the company by assenting to Bk. a ae 1.
them, or the allottee will not be a contributory (q). The fats az
application of this principle to cases in which shares have been
issued on terms which are wltra vires will be noticed hereafter
(see sub-heads b and d, pp. 774 and 778).
A difficult class of cases arises where an application for Semen
shares is followed by an allotment, but there has been in the objects of the
interval some change in the nature or objects of the company. Fyre ind as
If this change is material the allotment is no acceptance of Projected.
the application, and the allottee can, at his option, accept or
repudiate the shares (7). If, knowing the facts, he does not
repudiate them before the commencement of the winding up,
the inference will be that he has in fact accepted them, and he
will be a contributory. If, on the other hand, he repudiates
them in time, he is not a contributory (s).
His option to
accept or repudiate does not, however, necessarily continue
until he knows the facts; it must be exercised, if at all, as
soon as, with reasonable diligence, he might have known
them (t). From this it follows that, as regards companies
formed and registered under the Companies act, 1862, inas-
much as every person can obtain a copy of a company’s
memorandum of association, an applicant for shares in a pro-
jected company who neglects to inform himself in reasonable
time after its formation of its nature and objects as formed,
and who keeps shares which have been allotted to him until
the company is wound up, will not escape from being a con-
tributory by proving that the company as formed is materially
different from that which he agreed to join.
The following are instances (under the older Winding-up
acts) of persons who were held not to be contributories by
reason of a change in the nature and objects of the company.
(q) Howards case, 1 Ch. 561, and
ante, p. 17.
(r) See on this subject generally
ante, p. 19 et seg. The non issue of
the whole number of shares promised
to be issued is not sufficient. Lyon’s
case, 35 Beav. 646 ; Sharpus’ case, 3
De G. & S. 49; Mansfield’s case, ib.
58, and 2 M. & G. 57.
(s) Smith’s case, 2 Ch. 604, and
L. R. 4 H. L. 64, where the repu-
diation was before the winding up.’
(t) See Peel’s case, 2 Ch. 674;
Lawrence’s case, 2 Ch. 412; Wilkin-
son’s case, 2 Ch. 536.
3 D2
772
Bk. IV. Chap. 1.
Sect. 10.
Cox’s case and
Naylor’s case.
Goldsmid’s
case.
Meyer’s case.
Other cases.
Delay in repu-
diation.
WINDING UP BY THE COURT.
Cox’s case and Naylor’s case (u) ; persons who had taken shares in a com-
pany, the liability of the members of which was limited, were held not to
be contributories in a company, the liability of the members of which was
unlimited. The constitution of the company had been fraudulently altered,
and they had not acquiesced in the alteration.
Goldsmid’s case (a). Goldsmid took, and paid for shares in a projected
steam-packet company. The directors afterwards determined to abandon
the scheme, and to join a company already existing; and at a general
meeting of the shareholders of the projected company, it was resolved
unanimously that the new scheme should be substituted for the old one,
and that the capital originally contemplated should be doubled. At this
meeting Goldsmid was present. He did not approve of the proposed
departure from the original scheme, but he did not actively oppose it : he,
in fact, remained passive, and never did anything more ; and two years
after the meeting referred to, his shares were cancelled. He was held not
to be a contributory.
Meyer’s case (y) was the case of another allottee of shares in the same
projected company. He originally had ten shares: he did not accede to
the change in the scheme ; but ultimately he took one share in the new
company, and nine out of the ten shares which he originally agreed to
take were cancelled. He was held nota contributory in respect of these
nine shares.
Rye’s case (z), Blackburn’s case, as decided by V.-C. Kindersley (a), Ship’s
case (b), Stewart's case (c), Webster’s case (d), Nichol’s case (e), and Baily’s
case (f), all of which have been already referred to, further illustrate the
same principle, although in applying them to winding-up cases it is
necessary to bear in mind that all of them related to companies which
were not in course of liquidation.
Upon the subject of delay in repudiation, it is important to
distinguish those cases in which there has been repudiation
before any winding up has commenced, from those in which
there has been no repudiation until after that time. Where a
person having a right to repudiate shares has duly repudiated
them before the commencement of the winding up, he will not
(u) 4 K. & J. 308 and 314, cited
in Richmond’s case. Compare Shef-
Jield’s case, Johns. 451.
(x) 16 Beay. 262.
(y) 16 Beav, 383.
(z) 3 Jur. N. 8. 460, ante, p. 20.
(a) 3 Drew. 409, reversed on ad-
ditional evidence, 8 De G. M. & G.
177. See ante, p. 25.
(5) 2 De G. J. & Sm. 544, affirmed
L. R. 3 H. L. 343, under the name
of Downes v. Ship. See ante, p. 20.
N.B.—In this case, Ship applied
for shares in one company, and was
allotted shares in another company,
there having been two memoranda
of association.
(c) 1 Ch. 574, ante, p. 26.
(d) 2 Eq. 741, ante, p. 26.
(e) W. N. 1867, 77, and aute,
p. 26.
(f) 3 Ch. 592, and ante, p. 27.
CONTRIBUTORIES.—NO AGREEMENT. 773
be a contributory (g); but where he has not he will (h), unless, Bk. IV. Chap. 1.
indeed, a reasonable time has not elapsed within which he SS
might have ascertained the facts and repudiated the shares.
That he may do so in this case follows from the hypothesis,
viz., that there is no agreement between him and the company.
The decisions bearing on the right of repudiation before the
winding up commenced have been noticed already ().
A leading authority on the effect of repudiation after the Peel’s case.
winding up has commenced, is Peel’s case (k), which may be
usefully contrasted with them. There a person applied for
shares on the day the company was registered; the applica-
tion was made on the faith of a prospectus previously issued,
and from which the memorandum of association materially
departed ; shares were allotted; the allottee paid the allot-
ment money and a call pursuant to the prospectus; he was
registered as a shareholder, and received a dividend ; after the
company had been ordered to be wound up he repudiated his
shares, deposing that he had never seen the memorandum of
association, and did not know of its departure from the pro-
spectus. It was held, however, that as he had had ample time
to ascertain the real facts, he was too late, and was a con-
tributory.
By reason of the stringency of § 18 of the Companies acts Alteration of the
1862, a subscriber of the memorandum of association is a con- ce meen
tributory, although the memorandum as registered may have **7@tion.
been somewhat altered since he signed it (J). An alteration in
the articles of association, not affecting the objects of the com-
pany, will not enable the allottee to escape from being a con-
tributory, although such alteration be made after an applica-
tion for shares, and before allotment (m).
(g) See Smith's case, 2 Ch. 604,
and L. R. 4 H. L. 64. Compare
Hare’s case, 4 Ch. 503.
(h) See below.
(t) Ante, p. 25 et seg. See, also,
Wynne’s case, 8 Ch. 1002; Becks’
ase, 9 Ch. 392, where there was
very little delay.
(k) 2 Ch. 674. See, also, Perrett’s
case, 15 Eq. 250; Wilkinson’s case,
2 Ch. 536; Peel’s case, 2 Ch. 674;
Hare's case, 4 Ch. 508, where the
contributory remained on the re-
gister. See Persse’s case, Ir. Rep.
6 Eq. 298, where there had been
gross fraud, and an action for calls
before the liquidation had failed,
but the shareholder was retained on
the list. Queere this case.
(2) See infra, under head 7, p.
797.
(m) See Lyon’s case, 35 Beav. 646.
774
Bk. IY. Chap. 1.
Sect. 10.
Repudiation of
illegally issued
shares.
Iegal sub-
division of
shares.
Stace and
Worth’s case.
Amalgamation
of companies.
WINDING UP BY THE COURT.
b) Repudiation of illegally issued shares.
With respect to the right to repudiate shares issued impro-
perly, a distinction must be made between shares which the
company has no power to issue, and shares which the company
has power to issue, although not in the manner in which, or
upon the terms upon which, they have been issued. The
holders of shares which the company have no power to issue,
in truth, hold nothing at all, and are not contributories. The
only possible ground for holding them to be contributories
would be by applying to them the doctrines by which a person
who holds himself out as a partner incurs liabilities as if he
were a partner (nm). These doctrines might suffice to render
an ostensible member of an unincorporated insolvent company
liable as a contributory in it; but they have little, if any,
bearing on the statutory liability of persons to be made con-
tributories in incorporated companies in respect of shares
which do not exist in point of law (0).
Thus where shares had been illegally subdivided, the holders
of them were held not to be contributories in respect of the
reduced parts (p): although where such parts could be
identified with the original shares which they represented,
the holders of those parts were held to be contributories in
respect of the original shares which the parts made up (q).
A much more difficult case is Stace and Worth’s case (r).
There company A. amalgamated with company B., under
circumstances which rendered the amalgamation wholly void.
(n} See Partn. 40 ef seg, and 2Ch. 714; Sewell’s case, 3 Ch. 131.
ante, p. 43 et seq.
(0) See, as to the non-application
in such a case of the doctrine of
estoppel by conduct, Bank of Hin-
dustan, &c. v. Alison, L. R. 6 C. P.
54, and 222, ante, p. 58; Royal Bank
of India’s case, 4 Ch. 252; Stace and
Worth’s case, 4 Ch. 682 (anfra) ;
Smith’s case, 4 Ch, 611.
(p) See Holmes’s, Pritchard’s, and
Adam’s cases, 2 Ch. 714.
(q) Feiling and Rimington’s case,
(r) 4Ch. 682. See, also, Dougan’s
case, 8 Ch. 540; Alison’s case, 9
Ch. 1; Alabaster’s case, 7 Eq. 278,
which were decided on the same
principle. Wynne’s case, 8 Ch.
1002, and Beck’s cause, 9 Ch. 392,
were somewhat similar cases, but.
were decided on the ground that
there was no binding agreement to
take shares, and nothing to prevent
their repudiation.
775
CONTRIBUTORIES.—-ILLEGAL SHARES.
Pursuant, however, to the scheme for amalgamation, a member Bk et 1,
in company A. exchanged his shares in it for fully paid-up —~—~~—
shares in company B., which, however, that company had no
power to issue: he was put on the register of company B.
in respect of the shares taken by him, and he became a director
of company B., and acted as such. The shares, if they had
been legally issued, could not have been treated as fully paid
up by reason of 30 & 31 Vict. c. 131, § 25. It was, neverthe-
less, held that he was not a contributory in company B., the
issue of the shares to him being void, and all his acts being
referable to these shares, and to the arrangement between the
two companies and nothing else (s).
But the mere circumstance that a person has become a
shareholder pursuant to a scheme which is ultra vires will
not relieve him from liability as a contributory if the shares
which he has taken can be considered as legally existing.
Thus in Challis’s case (t) and Hare’s case (uw), which were in Challis’s case.
many respects similar to Stace and JWorth’s case, the member Hare's case.
who had exchanged his shares was held to be a contributory
in the purchasing company ; he having in effect entered into a
distinct agreement with that company to take shares in it, and
that agreement being valid, although resulting from an invalid
agreement for an amalgamation (x). In Hare’s case there was
a distinct and separate application for shares which was duly
accepted; and in Challis’s case, certificates of shares in the
purchasing company had been sent to and accepted by the
contributory, and he had attended meetings of the share-
holders. The Court of Appeal held the agreement with
him was not void but was capable of ratification.
The holder of shares existing in point of law, but held upon
(s) See the importance of this,
8 Ch. 546.
(t) 6 Ch. 266. And see Muller's
Dale Lime Co., 31 Ch. D. 211, where
there was an irregularity in the issue
of the shares. 7
(wu) 4Ch. 503. In this case Hare
had repudiated his shares, but not in
time. See, also, Campbell's case, and
Hippisley’s case, 9 Ch. 1, which were
very similar to the two last, and in
which the holders of shares de-
clared by a court of law in another
case to have been illegally created
were held contributories.
(z) This distinguishes these cases
from those cited ante, note (0). See
8 Ch. 546,
776
Bk. IV. Chap. 1.
Sect. 10.
Repudiation
on the ground
of fraud,
Oakes’ case and
Peek’s case.
WINDING UP BY THE COURT.
terms not binding on the company, may be a contributory in
respect of them, as will be seen presently (y).
c) Repudiation on the ground of fraud.
It has been already seen that fraud cannot be relied upon as
a defence to a proceeding by a creditor, whether by action or
by scire facias (z); and it follows that such fraud does not
enable a shareholder in an insolvent company registered under
the Companies act, 1862, to escape from being put on the list
of contributories, there being no other method by which the
creditors can have recourse to him. This is now completely
settled by the cases which arose in winding up Overend,
Gurney, and Company. It was there held, that where the
prospectus of a company formed and registered under the
Companies act, 1862, had been issued, and such prospectus
was expressed in terms calculated to deceive those who read it
with respect to the true position of the company, the issuing
of the prospectus was in point of law a fraud on the part of the
company, and that such fraud entitled persons taking shares
directly from the company on the faith of such prospectus to
repudiate their shares ; but that they were, nevertheless, liable
to be placed on the list of contributories of the company, it
being proved that the creditors of the company would other-
wise remain unpaid (a).
This important decision has been followed in other cases, to
which it is unnecessary to refer in detail (b). Moreover it has
been extended to cases of solvent companies on the ground
that a winding-up order entirely alters the position of the
shareholders (c).
Oakes took his shares
(y) Infra, head d), p. 778, and the
table on p.796. Ex parte Daniell,
1 De G. & J. 372, and Robinson’s
Executors’ case,2 De G. M. & G. 517,
illustrate the position of directors
who improperly appropriate shares
which the company can repudiate.
(z) Ante, p. 283.
(a) Ex parte Oakes and Peek, 3 Eq.
576, affirmed L. R. 2 H. L. 325,
under the name of Oakes v. Tur-
quand.
directly from the company. Peek
bought his from a previous share-
holder. Both were put on the list.
(b) See Ashley’s case ; Kent v. Free-
hold Land, é&c., Co., both cited below ;
Stone v. City and County Bank, 3 C.
P. D. 282 ; Tennent v. City of Glasgow
Bank, 4 App. Ca. 615.
(c)- Burgess’s case, 15 Ch. D, 507,
see ante, p. 755.
CONTRIBUTORIES.—FRAUD.
777
Where, however, a person entitled to repudiate his shares on Bk. eae 1.
the ground of fraud has repudiated them before the commence- a
ment of the winding up, and has procured himself to be re- ens
moved from the register of members, he will not be a con- “™
tributory (d), even as a past member (e). And even if he has
not procured himself to be so removed, still if he has insti-
tuted legal proceedings to have his name removed, that will be
sufficient (f). So, where he has repudiated his shares, and
has been guilty of no laches in obtaining the removal of his
mame (g). But laches on his part will be fatal to him (h).
Even where only two months elapsed between the repudiation
of the shares and the commencement of the winding up, the
shareholder was held a contributory (i).
The principles on which Oakes v. Turquand and Burgess’s Other voidable
case proceed are by no means confined to contracts which are py
voidable on the ground of fraud. They extend to all void-
able contracts entered into by persons who are sui juris: but
they do not extend to infants nor to contracts which are void
as distinguished from voidable(j). Their application to con-
ditional contracts and to shares which have been accepted will
be noticed hereafter (k).
Further, the same principles apply to all companies wound oe
up under the Companies act, 1862, whether formed or regis- the Act of 1862.
tered under it or not: for the winding up machinery of that
act cannot be applied consistently with any other principles (0).
(d) This follows from the cases
cited in the next two notes.
(e) Wright's case, 7 Ch. 55, re-
versing 12 Eg. 331, but quere
whether the V.-C. Wickens was not
right.
(f) Reese River Co. v. Smith, L.
R. 4H. L. 64, affirming Smith’s case,
2 Ch, 604, where the proceedings
were stayed by the winding up.
(g) McNiell’s case, 10 Eq. 503;
Pawwle’s case, 4 Ch. 497 ; Foa’s case, 5
fq. 118. See next note but one.
But in Persse’s case, Ir. Rep. 6 Eq.
298, the name was retained on the
list, although an action brought
before the winding up for calls had
failed. Sed queere.
(h) Ashley's case, 9 Eq. 263 ;
Scholey v. Central Rail Co. of Vene-
zuela, ib. 266, note. See, also, The
Scottish Petrolewm Co., 23 Ch. D. 413,
(t) Kent v. Freehold Land and
Brickmaking Co., 3 Ch. 493, re-
versing S. C. 4 Eq. 588. It is very
difficult to reconcile this case with
those cited in the last note but one.
It was not apparently referred to in
them, and quere whether Smith’s
case can be properly extended.
(j) See the last head 6), p. 774.
(k) See pp. 778 and 781.
(1) See the judgment in Burgess’s
case, 15 Ch. D. 507.
778
Bk. IV. Chap. 1.
Sect. 10.
Repudiation on
the ground of
non-performance
of conditions.
Conditions
precedent.
Rogers’ case.
Wood's case.
WINDING UP BY THE COURT.
The older authorities on this subject will be found collected |
on pp. 79 et seq., but they cannot be relied upon with reference
to the question of contributory or non-contributory.
d) Repudiation on the ground of non-performance of conditions,
The position of a person who has agreed to take shares upon
special conditions is generally one of considerable difficulty. If
the conditions have not been assented to by both parties to the
agreement (m), or if the conditions, having been assented to in
point of fact, are ultra vires, so that the company could not
assent to them in point of law(n), there is in truth no con-
cluded contract. This class of cases has been already
examined. For the present, it will be assumed that there is a
concluded agreement, but an agreement upon special conditions.
Under such circumstances, the points to determine are—
1, whether the condition is a condition precedent to the
person’s becoming a shareholder, or a condition subsequent ;
and 2, whether, assuming the condition to be precedent, it has
been performed or waived.
If the condition is precedent, and has not been performed,
and its performance has not been waived, the applicant will not
be a contributory (0).
Thus in Rogers’ case (p), a person applied in the usual form
for shares, and his application was sent to the directors with a
letter stating that the application was made on condition. that.
the applicant should be appointed agent to the company; he
never obtained the agency, and had done nothing which
amounted to an acceptance of the shares without it; he was
held not a contributory, although the shares had been allotted
to him.
The following case was one of greater difficulty, but decided
on the same principle. In Wood's case (q), Wood agreed to take
(m) Ante, p. 17.
(n) See Pellatt’s case, 2 Ch. 527.
(0) See, in addition to the case
referred to in the text, Mainwaring’s
case, 2 De G. M. & G. 66; Robert’s
case, 3 De G. & S. 205, and 2 Mace.
& G. 192; Austin’s case, 2 Eq. 435.
(p) Rogers’ case, 3 Ch. 633. See,
also, Simpson’s case, 4 Ch. 184;
Wood's case, 15 Eq. 236. Compare
Thomson’s case, 4 De G. J. & Sm.
749,
(q) 3 De G. & J. 85. See, too,
Shackleford’s case, 1 Ch. 567, ante,
CONTRIBUTORIES.—NON-PERFORMANCE OF CONDITIONS.
shares upon condition that he should obtain a contract for the
supply of certain goods. The shares were allotted, and Wood
was informed thereof, and he was registered as a shareholder.
Nothing more was done, and Wood never obtained the contract.
The Court held that Wood was not a contributory, first,
because the conditions on which alone he agreed to take shares
had not been assented to by the company with sufficient dis-
tinctness, and secondly, because, even if they had, they were
conditions precedent, which had not been performed or waived.
Where, however, the condition is not precedent to a person’s
becoming a shareholder; or where if precedent he has waived
its performance, either wholly or for a time subsequent to that
at which he is to become a shareholder; or if the so-called
condition is not in truth a condition at all, but only an agree-
ment giving rise, in the event of its breach, to a right of action ;
in all such cases as these, the person who has agreed to become
a shareholder will be a contributory, whatever his rights may
be by reason of the breach by the company of the condition or
agreement.
The following are leading authorities on this head (r) :—
In Fisher’s case (s), an application for 700 shares was made
on aspecified condition. 700 shares were allotted to the appli-
cant and were registered in his name with the word conditional
againstit. He did not know of this, but he afterwards sold and
transferred 400 of the shares. He was held a contributory for
the remaining 300 shares on the ground that the condition if
precedent had been waived; and that if the condition was a
condition subsequent to his becoming a shareholder, its non-
performance did not entitle him to reject the shares after the
winding up of the company had commenced.
In Ex parte Burton (t), a person was persuaded to apply to
an insurance society for an appointment as agent, and also for
shares to qualify him for the appointment. His application
was apparently acceded to, but before he paid for his shares, or
p. 17, and Pellatt’s case, 2 Ch. 527, case, 31 Ch. D. 120.
infra, p. 781. (t) 16 Jur. 967; and see Har-
(r) See, also, infra, p. 780, as to rison’s’ case, 3 Ch. 633; Thomson’s
conditions which are ultra vires. case, 4 De G. J. & Sm. 749,
(s) Fisher's case, and Sherrington’s
779
Bk. IV. Chap. 1.
Sect. 10.
Conditions sub-
sequent, &c.
Fisher’s case.
Ex parte
Burton.
780
Bk. IV, Chap. 1.
Sect. 10.
Payment in
shares,
Elkington’s case.
Conditions
which are
altra vires,
WINDING UP BY THE COURT.
executed the company’s deed, he relinquished the appointment,
and expressed a desire to relinquish the shares. This, however,
he was not permitted to do, and he was held a contributory.
So whcre a person agreed to supply the company with goods
to the value of 3000I., and to take shares in the company to
half that amount in part payment, and to take cash for the
residue, and he applied for the shares in the ordinary form, and
paid the deposit on them, and they were allotted to him, and
he received the certificates and paid the sum required upon the
allotment ; it was held that he was a contributory in respect of
the shares, although no goods were ever ordered or supplied ;
and although it was contended that the agreement to take
shares was conditional upon goods being required (uw). A for-
tiort is a person a contributory who actually sells goods to a
company and receives shares in part payment, and is registered
in respect of them (x). The circumstance that the goods have
not been wholly paid for is immaterial (y).
Similar principles apply to agreements to take shares in a
company upon terms or conditions which are not binding on
the company. Ifthe person who has agreed to take shares on
such terms has not, in fact, accepted them and become a share-
holder in respect of them he will not be a contributory. If on the
other hand he has accepted the shares and become a share-
holder in respect of them he cannot repudiate them after the
winding up, and will be a contributory in respect of them.
Both of these propositions require illustration.
The following cases arising under the older Winding-up acts
and in which persons were held not to be contributories, may be
usefully referred to on the first point :—
Woodfall’s case, 3 De G. & Sm. 631 (2).
A creditor of the company paid in scrip, which he sold. It was
agreed that he should not execute the company’s deed, and he did
not ; but his name was returned as a shareholder.
Bunn’s case, 2 De G. F. & J. 275 (a).
(uw) Elkington’s case, 2 Ch. 511. (z) See, too, Mowatt and Elliott's
Compare Pellatt’s case, ib. 527, infra. case,3 De G. M. & G. 254. Com-
(x) Gore and Durant’s case,2 Eq. pare Davidson’s case, 3 De G. & 8.
349. 21.
(y) Tb. (a) See, too, Sawnders’s case, 2 De
CONTRIBUTORIES.—NON-PERFORMANCE OF CONDITIONS. 781
The company agreed that Bunn should have paid-up shares Bk. IV. Chap. 1.
transferable by delivery, but that he should incur no liability __ Sect. 10.
and not be required to execute the company’s deed. He never
did, but he attended meetings.
Coleman’s case, 1 De G. J. & Sm. 495.
Coleman had executed the company’s deed, but other conditions
of membership had not been complied with, and his agreement to
take shares contained terms not binding on the company.
Lord Westbury also held that even if Mr. Coleman had become
a shareholder, the proper inference from the facts would have
been that his shares had been forfeited pursuant to the promise of
the managing director. The directors had power to forfeit.
Pellatt’s case, 2 Ch, 527 (0).
Pellatt agreed to take shares on condition that goods to a certain
amount should be taken of him, and that he should pay a
small sum per share in cash, and that the goods should be taken
in payment of the rest. He paid a deposit on his application for
shares, and they were allotted to him, and he was put on the
register ; but he did not know of the allotment or registration.
Before anything further was done, and before any goods were
ordered, he withdrew from his engagement ; three years afterwards
the company was wound up.
Howard’s case, 1 Ch. 561.
Reserved shares were accepted by Howard on conditions which
were assented to by persons who had no authority to assent to
them.
Upon precisely similar principles if a person agrees to take
fully paid-up shares he is nota contributory in respect of shares
not paid up if he has not accepted such shares and become a
shareholder in respect of them (c).
These cases, however, must not be confounded with others Cases where the
which do not rest merely on agreement. If persons have aes sis
become shareholders upon terms which are not binding on the
company, such persons will be contributories in respect of the
shares they have in fact accepted ; and although they need not
- have taken them they cannot repudiate them after the winding-
up has commenced. The following are the leading cases on
this point. The reader will observe the difference between
this class of cases and those discussed above (p. 774, head 4 b)
G. J. & Sm. 101. Bunn was held (6) Compare Elkington’s case, 2
not to have accepted the shares. Ch. 511, ante, p. 780.
This circumstance distinguishes his (c) Arnot’s case, 36 Ch. D. 702;
case from Daniell’s and others of Carling’s case, 1 Ch. D. 115, and
that class noticed below. infra, head 5, p. 783, &c.
782 WINDING UP BY THE COURT.
Bk. IV. Chap. 1. where the shares were themselves illegally issued and could not
Sect. 10. ;
aul be legally recognised.
Addison’s case, 5 Ch. 294,
Addison paid for and accepted shares upon the terms that they
should be cancelled and all money paid for them returned on his
giving a certain notice. He gave the notice, received his money
back, and transferred his shares to a nominee of the company.
He was nevertheless held to be a contributory: the directors
having had no power to bind the company by the terms mentioned
nor to cancel the shares.
Bridger’s case, 5 Ch, 304, and 9 Eq. 74 (d).
An agent of the company agreed to take shares upon the terms
that he should pay for them out of his commission on shares
which he might dispose of. He applied for and received an
allotment of shares and certificates, and he was registered as a
shareholder and acted as such, and was held to be a contributory
notwithstanding the collateral agreement as to the mode of paying
for them.
Ex parte Daniell, 1 De G. & J. 372, and 23 Beav. 568 (¢).
The directors of a company allotted fully paid-up shares to
themselves. Daniell was a shareholder and a director, and he
took some shares under this resolution, and he obtained a certifi-
cate that they were fully paid. He was held a contributory and
liable to calls as if the shares were not paid up. The importance
of this case is due to the fact that the court held that although
Daniell could not repudiate his shares the company was not bound
by the terms on which alone he had accepted them. The shares
allotted by the directors to themselves were treated as assets of
the company misapplied by the directors (f). Lord Justice Knight
Bruce dissented. See on this case Carling’s case, 1 Ch. D. 1.
Nickoll’s case, 24 Beav. 639.
Is another case in which a promoter was fixed with shares
which had been issued to him as fully paid up in payment of
services. He had accepted the shares, and the company was not
bound by the agreement that they should be treated as fully paid
up.
There are numerous other cases illustrating the same prin-
ciple, but they mostly relate to paid-up shares, and will be found
under the next head (see p. 787, 9).
(d) See, also, Davidson’s case, 3
De G. & Sm. 21 ; Chapman and
Barker’s case, 3 Eq. 361.
(ec) See, also Daniell’s case, 22
Beav. 48, where he was held to be a
contributory, although he had en-
deavoured to get rid of his shares.
The later report relates to calls.
(f) See, also, Robinson's Execu-
tors’ case, 2 De G. M. & G, 517.
CONTRIBUTORIES.—PAID-UP SHARES. 783
Bk. IV. Chap. 1.
Sect. 10.
5. Holders of paid-up shares. -
With respect to holders of fully paid-up shares in a limited Holders of fully
company, as they are not as a rule liable to calls (), they can- PY" "? 2"
not be placed on the list of contributories against their own
consent ; they are entitled to be on in order to share the surplus
assets, if any ; but if they disclaim all interest in this respect,
they ought not to be put on the list (J).
In order to prevent the frauds which were committed by 30 & 31 Vict.
treating shares as paid up in full when they had only been paid “ See
for in land, goods, or services of very questionable value, it is
enacted by 30 & 31 Vict. c. 181, § 25, that shares in companies Payment up of
registered under the Companies act, 1862, are to be taken to cheiee aeien,
be issued and held subject to the payment of the whole amount
thereof in cash, unless there is a contract in writing to the
contrary filed with the registrar of joint-stock companies at or
before (m) the issue of such shares. This enactment applies
whether a company is being wound up or not (n).
This section applies to subscribers of the memorandum of
association (0), and even a subscriber of the memorandum is
protected by a duly registered agreement (7).
Shares are issued within the meaning of this section when
they have been registered in some person’s name (q), or when
a certificate of their ownership has been given (r). Probably
an allotment would be held to be an issue (s).
(&) There are exceptions. See, as (m) Pools case, 35 Ch. D. 579.
to banking companies issuing notes,
§ 6 of the Companies act, 1879 ;
and as to companies limited by
shares, but the articles of which
specially bind the holders of paid-
up shares to pay certain specified
debts. See McKewan’s case, 6 Ch.
D. 447; Macwell’s case, 20 Eq.
585. :
(1) Marlbro’ Club Co., 5 Eq. 365 ;
Baglan Hall Colliery Co., 5 Ch.
346; Anglesea Coll. Co., 1 Ch. 555,
and 2 Eq. 379; Leifchild’s case, 1
Eq. 281 ; Hollyford Mining Co., Ir.
Rep. 1 Eq. 39.
(x) For general object of the
section, see Almada and Tirito Co,
38 Ch. D. 415. As to companies
not being wound up, see Burkinshaw
v. Nicolls, 3 App. Ca. 1004; Gibson
é& 00,5 L. R., Ir. 139.
(0) See Coates’ case, 17 Eq. 169 ;
Fothergill’s case, 8 Ch. 270, infra,
head 7.
(p) Anderson’s case, '7 Ch. D. 75.
(q) Blyth’s case, 4 Ch. D. 140;
Gibson & Co., 5 L. R., Ir. 139,
(r) Bush’s case, 9 Ch. 554,
(s) But see Clarke’s case, 8 Ch. D.
635, where the allotment was made
784: WINDING UP BY THE COURT.
Bk. IV. Chap. 1.
an The contract in writing required to be filed must be some
ect, .
contract distinct from the company’s articles of association (t) ;.
and must refer distinctly to the shares in question (wu), but need
not mention their numbers (2).
The duty of registering the contract seems to be on the
person seeking to enforce it (x), and where a company owed a
Non-registration
by inadvertence.
person money, and he agreed to accept payment in fully paid-
up shares, but none were in fact allotted to him or accepted by
him, he was held not liable to be placed on the list of con-
tributories in respect of unpaid-up shares (y). Further, where
shares have been allotted as paid up in full pursuant to a con-
tract to that effect, but which contract has inadvertently not.
been registered, the Court has ordered it to be registered on
being satisfied that no creditor would be prejudiced (zs). In
Clarke’s case (a), the contract was inadvertently not registered
until after a resolution to allot the shares had been passed, nor
until after some of the allottees had agreed to sell them; but
the mistake was discovered, and the contract was registered
before any certificates were issued, and before any entries were
made in the register, and it was held that the statute had been
complied with in time.
In construing the expression payment in cash, the Courts
have upheld honest transactions in which no cash has passed;
they have treated payment in cash as equivalent to payment
within the meaning of a plea of payment at common law, and
have held payment in cash to mean payrent as distinguished
from set-off or accord and satisfaction (b).
Clarke’s case.
Payment in
cash.
Accordingly, pay-
by mistake. As to the issue of
debentures, see Mowatt v. Castle
Steel, dec., Co., 34 Ch. D. 58.
(t) Crickmer’s case, 10 Ch. 614;
Pritchard’s case, 8 Ch. 956 ; Gibson
ad Co, 5 L. RK. Ir, 189. Apple-
(x) See next note. As to com-
pelling the Registrar to register, see
ante, p. 395, note (p).
(y) Arnot’s case, 36 Ch. D. 702.
(2) Dublin v. Wicklow Manure
Co., 13 L. R., Ir. 200, ante, p. 395,
treewick Lead Mining Co., 18 Eq. note(p).
95, contra, must be treated as over- (a) 8 Ch. D. 635.
ruled. (b) See Spargo’s, 8 Ch, 407;
(u) Coates’ case, 17 Eq. 169.
Fothergill’s case, ib. 270 ; Pagin and
(w) Ex parte Forde, 30 Ch. D. 153.
Gill’s case, 6 Ch. D. 681; Andress’s
Quere, in the case of a Banking
Company, see 30 & 31 Vict. c. 29,
§ 1, ante, p. 489.
case, 8 Ch. D. 126 ; Gibson & Uo., 5 L.
R., Ir. 189. Cleland’s case, 14 Eq. 387,
was decided before this construction
785
CONTRIBUTORJES.—PAID-UP SHARES.
ment of a balance of an account stated, and in which the Bk. oe 1.
nominal amount of the shares is entered, is sufficient (c); and
even the settlement of an account treating the amount of the
shares as paid by the sums on the other side of the account is
sufficient if those sums are bond fide due from the company to
the shareholder (d). On the other hand, if the original contract
is that property or services shall be paid for in fully paid-up
shares (¢), or may be so paid for at the option of either party (/),
the person who accepts the fully paid-up shares, will not be
considered to have paid for them in cash. And neither giving
nominally paid-up shares in satisfaction of the liability to calls
on unpaid-up shares (g), nor an agreement to apply a debt
payable by the company in futuro in paying up shares in
advance is a payment in cash (h).
Previously to the above enactment it had been decided, and Eee eter
where the statute in question does not apply, it may be taken cash.
as settled, that shares may be fully paid up, not only in money,
but in money’s worth ; and shares which are bond fide given as
paid up, in payment of property transferred to the company, or
of services rendered to it, or of other claims against it, must,
on the winding up of a company be treated as paid-up
shares (i); and in the absence of fraud the Court will not
inquire into the value of that which is taken by the company
in payment instead of money (k) ; for example, where payment
was settled, and cannot be relied
upon, It was there held that a
creditor of a company who accepted
fully paid-up shares in satisfaction
of his debt was a contributory, and
liable to calls in respect of them.
(c) Spargo’s case, 8 Ch. 407;
Barrow-in-Furness Investment Co.,
i4 Ch, D. 400.
(d) Coates’ case, 17 Eq. 169, was
decided on this principle, but qucre
whether there was there a sufficient
settlement of the account. See, also,
Maynard’s case, 9 Ch. 60; Ferrao’s
case, ib, 355, which, however, did
not turn on this section.
(ce) Pagin and Gills case, 6 Ch. D.
681; Andress’s case, 8 Ch. D. 126;
L.Cc.
Whate’s case, 12 Ch. D. 511; Burkin-
shaw v. Nicolls, 3 App. Ca. 1004.
Ex parte Bentley, 12 Ch. D. 850, does
not seem to be in accordance with
the other authorities.
(f) Barrow’s case, 14 Ch. D, 432.
(g) Fothergill’s case, 8 Ch. 270.
(h) Kent’s case, 39 Ch. D. 259,
affirming 37 Ch. D.508. The trans-
action in this case was also invalid
on the ground of fraudulent pre-
ference.
(4) See ante, p. 395 ; Currie’s case,
3 De G. J. & Sm. 367; Anglesea
Colliery Co., 2 Eq. 379, and 1 Ch.
555; and the cases in the next
notes.
(k) Pell’s case, 5 Ch. 11, and 8 Eq.
*3 5
786
Bk. IV. Chap. 1.
Sect. 10.
Payments in
respect of
shares,
WINDING UP BY THE COURT.
was made in paper, which turned out to be worthless, it was
nevertheless treated as duly made (J). But a fictitious pay-
ment, by taking money from the company and returning it, is no
payment at all: e.g., where a promoter in this way paid up the
shares of a director (m); or where a director prepays his shares
and takes back the money in payment of fees (n). Such pay-
ments can only be valid where the honesty of the transaction
and the solvency of the company are unquestionable. Wherea
director pays up his shares out of money paid to him, but
which can be recovered from him by the company, the shares
may be treated as not paid up unless they have been issued
pursuant to a duly registered agreement (0).
Moreover, if a shareholder pays money to the company upon
the terms that the money shall be treated as a loan, or as pay-
ment in respect of shares, according as the company continues
business or is wound up, the money so paid cannot on the
winding up of the company, be treated as having been paid
on account of the shares, and in anticipation of calls on
them (7).
In order that money may be treated as paid in respect of
shares, it must be paid to the company on account of the
shares in question (g). When one company amalgamates with
another, and the shareholders in the old company exchange
their shares for shares in the new company, payments to the
new company in respect of the new shares cannot be treated as
payments to the old company, in respect of the old shares (r).
222. See the observations of V.-C.
Stuart on this and other cases in
Leeke’s case, 11 Eq. 100, atfirmed 6
Ch. 469.
(2) Schroder’s case, 11 Eq. 131.
(m) Englefield Colliery Co., 8 Ch.
D. 388 ; Leeke’s case, 11 Eq. 100, and
6 Ch. 469; Disdert & Co, 11 Eq.
242, where a cheque of the company
was given, and given back.
(n) Syke’s case, 13 Eq. 255.
(0) Hay’s case, 10 Ch. 593. If
there has been such an agreement
the shares must, it seems, be treated
as paid up. See znfra, pp. 790, 796.
(p) Barge’s case, 5 Eq. 420. The
case turned on the fact, that the
agreement was made after a petition
to wind up had been presented ;
but the judgment goes far to support
the statement in the text.
(q) See case in next note, and
Carriage Co-operative Supply Asscc.,
27 Ch. D. 322. And see Duchess of
Westminster Silver Lead Ore Co., 10
Ch. D. 307, where a payment gene-
rally in respect of a number of shares
was apportioned equally between
them.
(r) See Ex parte Jeaffreson, 11 Eq:
109.
CONTRIRUTORIES.—PAID-UP SHARES. 787
A payment by a director in advance of the amount of shares Bk. ae oo 1.
held by him will discharge him, although the payment may —~-————
have been made to enable the company to pay off a debt for
which the director was liable as guarantor (s).
If a holder of paid-up shares has had part of the capital of Returm of
the company returned to him, e.g., by receiving a bonus or i
dividend paid out of capital, and not out of profits, he could
perhaps be treated as the holder of shares not paid up, and be
put on the list accordingly (t).
Even a registered contract will not bind the company to treat Shares issued at
a share issued at a discount as a fully paid-up share. To the * oe
extent of the discount, nothing has been paid for it. The
statute assumes that every share is paid for in money or money’s
worth, and, to the extent to which there is neither, a registered
contract affords no protection. Consequently the holders
of such shares will be contributories (wu), unless they are pur-
chasers for value without notice.
A company may be estopped from proving that shares issued Purchasers for
by it as paid-up, are in truth not paid-up. But this doctrine ce nmnaiat
will not avail persons who know the truth (x) ; it only applies
in favour of a bond fide purchaser for value without notice of
the real facts. But it does apply to him, and protects him
from being put on the list as a contributory (y), but not a pur-
chaser from him with notice (2).
Few questions present more difficulty than those which arise Repudiation of
= ‘ unpaid-u
when a person, who has agreed to take paid-up shares, is sought ee »
(s) Poole, Jackson, and Whyte’s
case, 9 Ch, D. 322.
(t) See Stringer’s case, 4 Ch. 475,
and Rance’s case, 6 ib. 104; and
compare Re Cardiff Coal and Coke
Co., 11 W. R. 1007, and Cardiff, éc.,
Co. v. Norton, 2 Eq. 558, and 2 Ch.
405. See, also, McKay's case, 2 Ch.
D. 1.
(w) London Celluloid Co., 39 Ch.
D. 190; Almada Tirito Co., 38 Ch.
D. 415 ; Addlestone Linoleum Co., 37
ib. 191 ; Sandy’s case, infra, p. 789 ;
Plaskynaston Tube Co., 23 Ch. D.
542 ; Ince Hall Rolling Mills Co., ib.
545, are overruled.
(x) See below, and Simm v. Anglo-
American Tel. Co., 5 Q. B. D. 188.
(y) Burkinshaw v. Nicolls, 3 App.
Ca. 1004; A. W. Hall & Co., 37
Ch. D. 712; Waterhouse v. Jamieson,
L. R. 2 H. L. 29, and see Guest
v. Worcester Rail. Co., L. R. 4 C. Pz
9. Blyth’s case, 4 Ch. D. 140, contra,
cannot be relied upon.
(2) London Celluloid Co., 39 Ch. D.
190, correcting in this respect
Barrow’s case, 14 Ch. D. 482.
3 E 2
788
Bk. IV. Chap, 1,
Sect. 10.
Effect of Com-
panies act, 1867.
WINDING UP BY THE COURT.
to be put on the list in respect of shares which are not paid
up. He naturally desires to repudiate them, but it is seldom
that he can do so.
The leading cases on this subject will be found collected
below. In companies to which the Companies act, 1867,
applies the question whether a person is to be treated as a
member in respect of paid-up or unpaid-up shares, resolves
itself into two others, viz., (1) is he, or ought he to be treated (a)
as a member in respect of any shares? and (2) can they, con-
sistently with the act, be treated as paid-up? If a person is
not a member and cannot properly be treated as a member in
respect of any shares, he will escape (b), but otherwise he will
be fixed unless the shares have been paid for in cash, or
are to be treated as paid-up, pursuant to a duly registered
contract (c), or unless he is a purchaser for value without
notice (d). In companies not governed by the act in question,
similar principles will apply, but the proof that the company is
bound to treat the shares as paid-up, may be easier.
It must be borne in mind, that shares in companies governed
by the Companies act, 1862, and issued at a discount, are not
paid-up, and cannot be treated as paid-up even, if a contract
that they shall has been registered (e).
In the following cases, persons who had agreed to take or
had taken paid-up shares, were held not contributories:
Arnot’s case, 36 Ch. D. 702.
Arnot had agreed to take paid-up shares in payment of services,
the agreement was not registered, but no shares were allotted to
him or registered in his name. He was held not bound to take
unpaid-up shares,
Brown’s case, 9 Ch. 102,
was a similar case, but there was no registered contract. On
the other hand, there was no agreement to take any shares unless
they were paid-up.
Carling’s case, 1 Ch, D. 115, reversing 20 Eq. 580.
Hespeler’s case, ib.
Walsh’s case, ib.
(a) Te, having regard to the (c) As in Carling’s case, infra.
power to put his name on the (d) As to which, see ante, p. 787.
register, if not on already. (e) Ante, p. 787.
(b) As in Arnot’s case below.
CONTRIBUTORIES.—PAID-UP SHARES.
De Ruvigne’s case, 5 Ch. D. 306, Bk. I
In all these cases directors had paid-up shares transferred to 5
them by a promoter : the shares were registered in their names.
They were issued as paid-up pursuant to a duly registered contract.
It was held not right, therefore, to put them on the list for unpaid-
up shares. Their liability in respect of their corrupt bargain with
the promoter was another matter. As to this, see infra, p. 790.
Currie’s case, 3 De G. J. & Sm. 367 (f).
Directors had agreed to take paid-up shares, but no others. The
state of the register does not appear.
Miller’s case, 5 Ch. D. 70, and 3 ib. 661.
Miller was a director, but had retired. 25 fully paid-up shares
were registered in his name as his qualification shares, but they
were treated as forfeited when he retired.
In the following cases, persons who had agreed to take paid-
up shares, were held contributories :
Currie’s case, 3 De G. J. & Sm. 367.
Directors had agreed to qualify themselves ; 100 shares quali-
fied ; they endeavoured to discharge their obligation by means of
fully paid-up shares partly obtained from promoters and partly
voted to themselves.
Ex parte Daniel, 1 De G. & J. 372.
Niceotly case, 24 Beay. 639. \ Ante, pete:
Leeke’s case, 6 Ch. D. 469, and 11 Eq. 100. See infra, under the
Disderi & Co., 11 Eq. 242. } next head.
Barrow’s case, 14 Ch. D. 432.
A director was registered as the holder of 300 paid-up shares,
but they were neither paid-up nor protected by a registered
contract.
Other shares were treated as paid-up, he being regarded as a
purchaser for value without notice; but see as to this, London
Celluloid Co., 39 Ch. D. 190.
Cleland’s case, 14 Eq. 387,
Pagin and Gill's case, 6 Ch. D. 681,
Andress’s case, 8 Ch. D. 126,
were all cases in which paid-up shares had been given in pay-
ment of goods or services, and registered in the name of the
creditor ; but there was no registered contract (¢).
London Celluloid Co., 39 Ch. D. 190.
Addlestone Linoleum Co., 37 Ch. D. 191.
Sandy’s case, In re Railway Fume Tables,
d&c., Co., W. N. 1889, p. 77.
Holders of shares at a discount.
(f) The shares here referred to (g) See, as to this class of cases,
are those indicated as (a) and (0) in ante, p. 785.
he report.
789
V. Chap. 1.
ect. 10.
790
Bk. IV. Chap. 1.
Sect. 10,
Directors’ quali-
fications.
No qualification
necessary.
WINDING UP BY THE COURT.
When shares are issued to promoters or their nominees as
fully paid up pursuant to a duly registered contract, but under
circumstances which render the transaction a breach of trust
as against the company, the holders of the shares will not be
contributories in respect of them (h); although the holders
may be compelled to pay the value of the shares by other pro-
ceedings, ¢.g., by proceedings under § 165 of the Companies
act, 1862 (2).
6. Directors in respect of their qualification shares.
The cases in which directors and other officers of a company
ought to have had a certain number of shares as a qualifica-
tion for their office, and they have acted more or less without
qualifying themselves, have given rise to considerable difference
of opinion.
In the first place, mistakes sometimes arise from supposing
that a certain number of shares are required to qualify all
directors, when in truth the qualification is only necessary
with respect to some of them, ¢.g., for elected directors, as
distinguished from those originally named (j), for town as dis-
tinguished from country directors (k). Cases such as these
turn on the true construction of the company’s deed of settle-
ment or articles of association, and not upon any rule relating
particularly to contributories.
Again, a resolution of the board of directors to the effect
that all the members of the board shall hold a certain number
of shares as a qualification does not necessarily impose any
obligation to qualify, and a director who acts without obeying
the resolution will not necessarily be a contributory (/).
Special acts of Parliament are sometimes so worded as to
make first directors shareholders to the extent of the shares
(h) De Ruvigne’s case, 5 Ch. D. (j) As in Forbes’ case, 8 Ch. 768 ;
306 ; Carling, Hespeler, and Walsh’s Lord Claud Hamilton’s case, ib. 548 ;
case, 1 Ch. D, 115, Stock’s case, 4 De G. J. & Sm. 426)
(t) See Carriage Co-operativeSupply Tothull’s case, 1 Ch. 85.
Assoc.,27 Ch. D. 322, where the agree- (&) As in Cotterell’s case, 11 W. R.
ment was not registered ; Pearson’s 13.
case, 5 ib. 336 ; McKay’s case, 2 ib. 1, (1) De Ruvigne’s case, 5 Ch. D.
and ante, p. 694. 306.
CONTRIBUTORIES.—QUALIFICATION SHARES. 791
necessary to qualify them, and where this is the case such Bk. ae 1.
directors will without more be contributories in respect of
such shares (m).
Where no qualification is necessary, the circumstance that a Repudiation
person has agreed to become a director, and has acted as such, gg *e
will not make him a contributory in respect of shares allotted
to him and placed in his name without his authority or know-
ledge; and if, in truth, he did not know that shares were in
his name, knowledge of the fact will not be imputed to him on
the ground that he might have seen the entries in the books if
he had looked into them (n). But if the regulations of the
company do require a director to hold a certain number of
shares, and they are allotted to him and are registered in his
name, he will be a contributory in respect of them (0), although
he may not have applied for them or known of their allotment
to him (p), provided he has no other shares sufficient to
qualify him (q).
Still less can a director who accepts the shares necessary to
qualify him take advantage of any want of formality, and repu-
diate them on the ground that he never was, properly speaking,
a shareholder in respect of them (r).
But, generally speaking (s), a director is not bound by Qualification
a 3 ‘ igs a 7 may be obtained
accepting office to obtain his qualification shares direct from by transfer.
the company; he may obtain them by purchase from other
people, and if he obtains them within a reasonable time after
he becomes a director he cannot be made a contributory in
(m) Kineaid’s case, 11 Eq. 192,
where shares had been allotted to
the directors ; Forbes’ case, 19 Eq.
353 ; Knoa’s and Nugent’s case, Ir.
R. 11 Eq. 294; O’Brien’s case, ib.
422, where no shares had been
allotted. See, also, Portal v.
Emmens, 1 ©. P. D. 201 & 664,
and South London Fish Market Oo.,
39 Ch. D. 324.
(n) Hallmark’s case, 9 Ch. D. 329.
(0) Saunders’ case, 2 De G. J. &
Sm. 101, is not opposed to this. It
arose under older acts.
(p) See the cases collected in the
2nd table infra, p. 796.
(q) See infra, as to this.
(r) Walter’s case, 3 De G. & Sm.
149, affirmed on appeal, 19 L. J. Ch.
501 ; Roney’s case, 4 De G. J. & S.
426 ; Curries case,3 De G.J.& S.
367. And see Bird’s case, 4 De G.
J. & S, 200, where the director ap-
plied for shares as agent.
(s) The regulations of the com-
pany might be exceptional. So if
no shares could be obtained except
from the company, see Hamley’s case,
5 Ch. D. p. 707.
792
Bk, IV. Chap. 1.
Sect. 10.
General
prineiples.
Observations on
the cases.
WINDING UP BY THE COURT.
respect of any additional shares on the ground that he did not
qualify himself soon enough, and ought to be treated as
holding shares as soon as he accepted office or acted as a
director (t).
Assuming that qualification shares are necessary, then (in
the absence of any special statutory enactment applicable to
the case) the questions to be determined in each case are—
1. Has the director expressly or impliedly agreed with the
company to take the necessary shares from it? 2. Has he so
acted as to be estopped from denying that he has so agreed?
If either of these questions is decided against him he will be a
contributory, but not otherwise. The state of the register is
very important; for if he has been registered as a member in
respect of his qualification shares his assent to take them will
be readily inferred, and he'will be a contributory unless he
can prove that his name ought to be removed from the register
even after the winding up has commenced (u). On the other
hand, if he has not been registered as a member, the evidence
against him must establish that he ought to be on the register
in respect of the qualification shares.
The application of these principles depends on facts and
inferences of fact, and, as might be expected, the cases on the
subject are by no means all consistent. An attempt has been
made below to classify the most important of them for conve-
nience of reference, but the principles underlying them all will
be found to be those stated above.
The cases apparently warrant the following inferences :—
1. Notwithstanding § 16 of the Companies act, 1862, ren-
dering a company’s articles binding on its members, a person
who is a member (by subscribing the memorandum of associa-
tion or by having shares), and who becomes a director, is not
necessarily a contributory in respect of the shares necessary to
qualify him for the office (x).
(t) Brown’s case, 9 Ch. 102;
Karuth’s case, 20 Eq. 506; Marquis
of Abercorn’s case. 4 De G. F. &
J. 78.
(u) This was done in Austin’s
case, 2 Kq. 435.
() Karuth’s case, 20 Eq. 506;
Wheat Buller Consols, 38 Ch. D. 42;
and see Hewitt’s case and Brett’s case,
25 Ch. D. 283; and Browne v. La
Trinidad, 37 Ch. D. pp. 13, 14.
Compare Bilton Hotel Co. 9 L. R.,
Ir. 338.
CONTRIBUTORIES.—QUALIFICATION SHARES.
2. The Courts have often declined to infer an agreement by 3k.
a director with the company to accept qualification shares from
it, although he has accepted the office of director and acted as
such without being qualified. The cases on this point, how-
ever, are by no means uniform; nor can they be expected to
be so, as they all turn on inferences of fact (y).
3. If a company is wound up before the lapse of a reason-
able time for the acquisition of qualification shares, directors
who have not acquired them will not be contributories in
respect of them (z).
4, So, if a person has agreed to become a director, but has
changed his mind or has retired almost immediately, and has
not accepted qualification shares, and has not agreed to take
them otherwise than inferentially by being a director, he will
not be a contributory (a). So if he retires on the ground
‘that conditions on which he accepted office have not been
fulfilled (6).
5. If the holding of qualification shares is a condition pre-
cedent to election as a director, and an unqualified person «is
elected and acts for a short time, and then retires before he
obtains his qualifying shares, he will not be a contributory (c).
His election will have been void. Nor in such a case will he
be made a contributory if qualification shares are allotted to
him after his retirement (d).
6. A director may treat any shares he holds as qualification
shares unless he has agreed to take them in addition to
others (e).
(y) Compare the cases in the two
tables below, and see the Irish case,
Re Bilton Hotel Co., 9 L. R., Ir. 338,
where the director was held liable.
(2) Hewitt's case and Brett’s case, 25
Ch. D. 283; Wheal Buller Consols,
* 38 Ch. D. 42.
(a) Marquis of Abercorn’s case, 4
De G. F. & J. 78, explained and
approved in Brown’s case, 9 Ch. 102 ;
Karuth’s case, 20 Eq. 506 ; Barber’s
case, 5 Ch. D. 963. See, also, the
next note.
(b) Austin’s case, 2 Eq. 435 ;
Green’s case, 18 Eq. 428. Compare
Sidney’s case, 13 Eq. 228.
(c) Hamley’s case, 5 Ch. D. 705 ;
Barber's case, ib, 963 ; Jenner’s case,
7 ib. 132.
(d) Barber’s case, 5 Ch. D, 963.
See, as to estoppel, per James, L. J.,
at p. 968.
(2) As he had in Fowler’s case, 14
Eq. 316, but not in Duke’s case, 1
Ch. D. 620, where Fowler’s case is
doubted ; Brown’s case, 9 Ch. 102,
and Muller’s case, 3 Ch. D, 661, are
the leading cases on this point.
793
IV. Chap. 1.
Sect. 10,
794
Bk. IV. Chap. 1.
Sect. 10.
§ 165.
WINDING UP BY THE COURT.
7. Apart from any special circumstances, if a director is the
registered holder of the requisite number of shares, he will be
qualified, although the articles require him to hold them in his
own right, and he may have mortgaged them or even have no
beneficial interest in them (/).
8. As regards paid-up shares, nothing need be added to
what has been stated already when dealing with that sub-
ject (g). It has been said that shares which are nominally
fully paid up cannot satisfy the requirements of the qualifica-
tion clause (hk); but if the company is bound to treat the
shares as paid up, whether by reason of a duly registered
contract or otherwise, that must be sufficient.
Acting as a director without a qualification does not amount
to a misfeasance within § 165 of the Companies act, 1862 (i).
TABLE I.
In the following cases directors were held not to be contri-
butories in respect of their qualification shares: the Court
coming to the conclusion that no agreement to take shares
was established, and that the directors were not estopped from
denying their due qualification :
Abercorn’s case, 4 De G. F. & J. 78.
Director accepted office and was advertised, but he never acted,
and did not know qualification was necessary.
See, also, Mather v. National Ass, Assoc., 14 C. B. N.S. 676.
Karuth’s case, 20 Eq. 506 (&).
Director subscribed memorandum and articles of association,
and was advertised ; but he withdrew from the company and
never acted.
Brown’s case, 9 Ch. 102.
Director had fully paid-up shares registered in his name, and no
agreement to take others was proved.
(f) Pulbrook v. Richmond Cons.
Mining Co., 9 Ch. D.610; Cumming
v. Prescott, 2 Y. & C, Ex. 488. Sed
quere, if he is only a trustee of
them, see Bainbridge v. Smith,
W. N. 1889, 72.
(g) Ante, p. 783 et seq., and see the
tables below.
(h) Currie’s case, 3 De G. J. & 8.
367.
(i) Coventry and Dixon’s case, 14
Ch. D. 660.
(&) In all these cases the directors
were put on the list for the shares
for which they signed the memor-
andum of association.
CONTRIBUTORIES.—QUALIFICATION SHARES.
Miller’s case, 5 Ch. D. 70, and 3 ib. 661.
Director had fully paid-up shares to qualify him, and they were
forfeited when he retired.
Hamley’s case, 5 Ch. D. 705.
Barber's case, ib. 963.
Jenner’s case, 7 Ch. D, 132.
In all of these the qualification was a condition precedent to
election, and the directors were not duly elected, and they had
retired before obtaining any shares.
Hewitt’s case and Brett’s case, 25 Ch. D. 283.
Wheal Buller Consols, 38 Ch. D. 42.
Directors signed the memorandum and articles of association,
but had not had a reasonable time to qualify before winding up
commenced. In Wheal Buller Consols directors had three months
to qualify, and the winding up commenced directly afterwards.
Tothill’s case, 1 Ch. 85.
Director signed memorandum and applied for qualification
shares, but never got them. His name was in a list for the shares,
but he did not know it. N.B.—The articles did not require
directors named in them to qualify.
Compare Roney’s case, 4 De G. J. & Sm. 426.
Stock’s case, 4 De G. J. & Sm. 426.
Forbes’ case, 8 Ch. 768.
Lord Claud Hamuiton’s case, 8 Ch. 548.
The last observation applies to these also.
Chapman’s case, 2 Eq. 567.
Director signed memorandum and articles of association, and
was named in them as a director. He applied for qualification
shares, but never got them. He resigned.
Currie’s case, 3 De G. J. & Sm, 367 (2),
Carling’s case, 1 Ch. D. 115, ante, pp. 788, 789.
Arnot’s case, 36 Ch. D, 702,
are all cases in which directors were entitled to say that they
were only liable, if at all, in respect of fully paid-up shares.
Arnot’s case was not a case of qualification shares.
Saunders’ case, 2 De G. J. & Sm. 101.
Saunders was registered, but he was not liable to creditors as a
member, and he was entitled to be indemnified by the company
under the older winding-up acts, therefore he was not a contributory.
Hallmark's case, 9 Ch. D. 329.
Shares were registered in a director's name without his know-
ledge. No qualification shares were necessary.
Austin’s case, 2 Eq. 435.
The director was on the register for the qualification shares, but
he did not know it. He had retired on the ground that the con-
ditions on which he became a director had not been performed.
N.B.—None of the above were registered in respect of unpaid-
up shares, except Austin, Saunders, and Hallmark.
()) As to the shares a, see ante, p. 789, note (f).
Bk. IV. Chap. 1.
796
Bk, IV. Chap. 1.
Sect. 10.
WINDING UP BY THE COURT.
TABLE II.
In the following cases directors were held to be contribu-
tories in respect of their qualification shares, the Court coming
to the conclusion that an agreement to take them was
established, or that the directors were estopped from denying
their qualification :
Leeke’s case, 6 Ch. 469, and 11 Eq. 100.
Director had qualification shares allotted to him ; they were
registered in his name as paid up, which, however, they were not.
He knew he had the shares, and acted as a director.
Harward’s case, 13 Eq. 30.
Director acted, and had qualification shares allotted to him, but
he did not know it.
Levita’s case, 3 Ch. 36,
Bird’s case, 4 De G. J. & Sm. 200,
were both cases of express application for shares by a director,
and registration in his name.
See, also, Barrow’s case, ante, p. 789; and Roney’s case below.
Disderi & Co., 11 Eq, 242.
11 directors had qualification shares allotted to them and
registered in their names as fully paid-up, which, however, they
were not.
Walter's case, 3 De G. & 8. 149, affirmed 19 L. J. Ch. 501.
Qualification shares were placed in director’s name with his
consent ; but the formalities necessary to make him a shareholder
were not duly complied with.
Duke’s case, 1 Ch. D. 620.
Fowler's case, 14 Eq. 316.
The question in these cases was how many shares over and
above the qualification number the director was liable for. Each
was decided according to his real agreement.
Curries case, 3 De G. J. & Sm. 367 (m).
The directors had signed the articles which required them to
hold 100 shares. They had voted themselves paid-up shares.
They were treated as holders of 100 unpaid-up shares. Shares for
which they had signed the memorandum were reckoned as part of
their 100 qualification shares. Currie acted as a director; see
20 Eq. 510.
Esparto Trading Co., 12 Ch. D. 191.
Goddard had accepted the office of director, and had acted as
such : he was registered in respect of his qualification shares ;
they had been marked in the books as cancelled, but they had not
been duly forfeited.
(m) The shares here referred to are those indicated as } and ¢ in the
report. See ante, p. 789.
CONTRIBUTORIES.—SUBSCRIBERS OF MEMORANDUM. 797
Roney’s case, 4 De G. J. & Sm. 426.
Roney acted as a director and agreed to take 100 shares; but
there was no allotment of them, nor were they registered in his
name.
Hay’s case, 10 Ch, 593.
Hay had signed the memorandum of association for the shares
for which he was held liable. The only question was, whether he
had paid for them.
Bk. IV. Chap, 1.
Sect. 10.
7. Subscribers of the memorandum of association.
In companies formed under the act of 1862, the sub- Subscribers of
seribers (n) of the memorandum of association are members, ee
and liable to be put on the list of contributories, although
the memorandum may have been somewhat altered since they
signed it (0); and although no shares may have been allotted
to them, and they may never have been registered as share-
holders (p); and although the directors may have cancelled
the shares at the request of the subscribers (q). If, however,
all the shares in the company have been ‘duly allotted to other
persons, so that none are left which a subscriber of the memo-
randum can hold, he will not be a contributory, but must be
treated as having transferred his shares (r).
In Felgate’s case (s) it was held that a person who signed Felgate's case,
the memorandum and articles of association was not a con-
tributory, the articles having been altered after he signed them,
but before they were registered. But it is very difficult to
reconcile this decision with the provisions of the act (t).
Shares allotted to the subscribers of a company’s memo-
randum of association are prima facie allotted in respect of, or
(n) Signature by an agent is
equivalent to signature by oneself,
Whitley Partners, Limited, 32 Ch.
D, 337.
(0) Peel’s case, 2 Ch. 674; Oakes
v. Turquand, L. R. 2 H. L. 325.
Compare Felgate’s case, 2 De G. J. &
Sm. 456.
(p) London and Provincial Con-
solidated Coal Uo. 5 Ch. D. 525;
Sidney’s case, 13 Eq. 228; Evans’
case, 2 Ch. 427; Hall’s case, 5 Ch.
707. See, also, the cases in the next
five notes.
(q) Esparto Trading Co., 12 Ch.
D. 191. Compare Nicol’s case, 29
Ch. D, 421.
(r) Mackley’s case, 1 Ch. D. 247;
Drummond's case, 4 Ch, 772. See 4
Ch.776. See, also, Kipling v. Todd,
3 C. P. D. 350.
(s) 2 De G. J. & Sm. 456, decided
on 19 & 20 Vict. c. 47.
(¢) See §§ 11, 18, and the cases in
note (0), ante.
798
Bk. IV. Chap. 1.
Sect. 10.
Duke’s case.
WINDING UP BY THE COURT.
include, the shares subscribed for; consequently, unless there
are circumstances to rebut this inference, a subscriber’s lia-
bility is not for the number of shares subscribed for, plus
the number allotted, but only for one of such numbers, or
the larger of them if they are unequal (u).
In Duke’s case (x) there were two classes of shares, A.
shares and B. shares. Both classes were of the same nominal
amount, but the B. shares were preference shares. A person
subscribed the memorandum for 50 B. shares; but he applied
for and had allotted to him 25 A. shares and 25 B. shares
instead of 50 B. shares. It was sought to place him on the
list in respect of 25 A. shares and 50 B. shares, but it was
held that this being contrary to the intention of all parties,
and the act only requiring the memorandum to state the
. number of shares applied for, he was only liable to be a con-
Shares sub-
scribed for when
to be treated as
paid up.
tributory in respect of 25 A. shares and 25 B. shares.
The shares which a subscriber to the memorandum agrees
to take are prima facie shares not paid up (y); and the acqui-
sition by him of fully paid-up shares to which some one else
was entitled will not relieve him from his liability to be a con-
tributory in respect of the shares for which he subscribed the
memorandum of association (z). Before the passing of the
Companies act, 1867 (30 & 31 Vict. c. 181, § 25, already
noticed), it had been decided that if the memorandum or
articles of association showed that the shares subscribed for
were shares fully paid up, and the subscriber had given value
to the company for them, he would not be a contributory in
respect of any other shares (a); and that, if the articles of
association stated that paid-up shares were to be issued to a
subscriber of the memorandum, the shares for which he sub-
scribed were primd facie the same as those which he was
(u) Galman’s case, 31 Ch. D. 420 ;
Elliot?s case, W. N. 1866, p. 342.
(xz) 1 Ch. D. 620. See, also,
Maynard’s case, 9 Ch. 60.
(y) Maynard’s case, 9 Ch. 60;
Hay’s case, 10 Ch. 593, where theshares
were paid for out of the company’s
money. See, also, the cases collected
in Table II., ante, p. 796, and the
cases in the next four notes.
(z) See Migotti’s case, 4 Eq. 238 ;
Forbes and Judd’s case, 5 Ch. 270;
Dent’s case, 15 Eq. 407, and 8 Ch.
768.
(a) Baglan Hall Colliery Co., 5
Ch. 346; Baron de Beville’s case, 7
Eq. 11. See note (c), infra.
CONTRIBUTORIES.—HOLDERS OF SCRIP. 799
or in Bk. IV. Chap. 1.
entitled to receive under the articles of association ; an
ect. .
other words, shares paid in full (b). However, notwith- :
standing these decisions, it was held in Dent’s case (c), that a Ree
person who subscribed the memorandum of association was a
contributory and liable to calls, although the articles of asso-
ciation declared that all the shares subscribed for were to be
allotted as fully paid up, and although the company was bound
by agreement and by its articles to allot fully paid-up shares
to a third person, or his nominees, of whom the subscriber
was one. It is extremely difficult to reconcile this decision
with the case of the Baglan Hall Colliery Co. and others
of that class; and it may be safely assumed that they
will not be extended even if they should be ever followed
again.
With respect to companies formed since 1867, it has been Anderson’s case.
held by the Court of Appeal, in Anderson’s case (d), that
shares for which a person signs the memorandum of associa-
tion must be treated as paid up if there is a bond jide con-
sideration for them, and if an agreement that they are to be
treated as paid up is duly registered pursuant to 380 & 31
Vict. c. 181, § 25, at the same time as the memorandum
itself. Such an agreement was held not to be invalid on the
ground that it altered or was inconsistent with the memo-
randum of association, which was the view adopted in the
court below.
8. Holders of scrip.
With respect to scrip companies, i.e., companies the shares Shares in scrip
in which pass by the delivery of the scrip certificate, he who Deets
when the company is ordered to be wound up, is the bond fide
holder of a certificate, and is bond fide entitled to a share as
such holder, is a contributory in respect of such share (e).
(b) Jones’ case, 6 Ch. 48; Pell’s
case, 5 ib. 11; Drummond's case, 4
Ch. 772. See the next note.
(c) Dent’s case, 15 Eq. 407, and
8 Ch. 768; Fothergill’s case, 8 Ch.
270.
(d) 7 Ch. D. 75. The articles
also stated that the shares were paid
up; but this alone would not be
sufficient, see ante, 784, note (t).
(e) See Grisewood and Smith’s case,
De Pass’s case, 4 De G. & J. 544;
Finlay Hodgson’s case, 26 Beav. 182;
Barclay’s case, ib. 177 ; Shewell’s case,
2 Ch. 387, and the cases in notes (j)
and (k) infra.
800
WINDING UP BY THE COURT.
Bk. IV. Chap. 1. But as will be seen hereafter, malé fide transfers of the certi-
Sect. 10,
ficates to persons who hold them for the transferors, will not:
enable the latter to escape from being made contributories (f).
If, as sometimes happens, the scripholders are a distinct class.
from the shareholders, not enjoying the same rights, and not
subject to the same liabilities, difficult questions arise as to
the liability of the scripholders to be put on the list of con-
tributories. A company of this sort has been ordered to be
wound up on the petition of a transferee of scrip, but only on
his admitting himself to be a contributory. The very fact,
however, that this admission was required, shows that the
Court was not satisfied that he would have been a contributory
without it (g); and in other cases arising on the winding up
of the same company it was held that even an allottee of scrip
was not a shareholder (h).
As has been seen above (7), an agreement to take shares which,.
owing to the non-performance of conditions precedent or other-
wise, cannot be specifically enforced, does not render the per-
son who has agreed to take them a contributory. Allottees of
scrip are frequently in this position ; and when they are, they
are not contributories. Thus, where scrip transferable to
bearer is issued, and it is provided in substance that on regis-
tration of the scrip, shares will be exchanged for it, an allottee
of scrip who transfers it without registering it (j), or whose
scrip is forfeited for non-registration (k) (power to forfeit in
such case being reserved), will not be a contributory, and it is
very questionable whether he will if he holds the scrip and it
remains unforfeited ; unless, indeed, he is registered as a
shareholder, and he allows himself'so to continue.
Under the Companies act,
(f) Lund’s case, 27 Beav. 465 ;
Hyam’s case, 1 De G. F. & J. 75;
Costello’s case, 2 ib, 302. Compare
De Pass’s case,4 De G. & J. 544,
These will be noticed hereafter.
(g) Littlehampton Steam Ship Co.,
2De G. J. & Sm. 521.
(h) Ormerod’s case, 5 Eq. 110.
Compare Gregg’s case, 15 W. R. 82,
where the allottee was registered as
1862, shares transferable to
a member, and was held to be a
contributory. See, also, Weston’s
case, § Ch. 614, where the son had
caused the shares to be registered,
and the father was put on the list.
(2) Ante, p. 778 et seq.
(j) Eustace v. Dublin Trunk Rail.
Co., 6 Hq. 182.
(k) Ex parte Collum, 9 Eq. 236 ;
Kelk’s case, ib. 107.
#4 CONTRIBUTORIES.—TRUSTEES, ETC. 801
bearer, and not paid up in full, are illegal (J); the question who Bk. ae 1,
ought to be a contributory in respect of such a share in a com-
pany formed and registered under the act, is by no means free
from difficulty, and has not been decided. In such a case the
only contributories appear to be the subscribers to the memo-
randum of association (m), and other duly constituted share-
holders, if any, although they may have parted with their
scrip (n).
9. Trustees and Cestuts que trustent.
A trustee who is a shareholder is, like any other share- Trustees con-
holder, liable to be made a contributory, and he must look for oe
his indemnity to his cestui que trust. The trustee, as between
himself and the other shareholders, is bound to contribute
with them to the payment of the company’s debts; and he
therefore, is in ordinary cases the person to be on the list.
There are numerous cases to this effect in the books. The
matter was considered and settled by the House of Lords in
several cases of great hardship arising on the failure of the
City of Glasgow Bank ; there some of the persons held liable city of Glasgow
were described as trustees in the register of shareholders, but PB Cases-
Even if the trustee has
not complied with all the formalities which ought to have been
complied with according to the company’s articles of associa-
tion or deed of settlement, yet if the shares have been assigned
this circumstance was of no avail (0).
(D) This has never been actually
decided ; but see General Co. for
Promotion of Land Credit, 5 Ch.
363, and see 30 & 31 Vict. c. 131,
§ 27, et seg.
(m) But see the cases in note (e),
ante.
(n) McEuen v. West Lon. Wharves
Co., 6 Ch. 655.
(0) Muir v. City of Glasgow Bank,
4 App. Ca. 387, and other cases, ib.
L.C.
547; Cuninghame v. City of Glasgow
Bank, ib, 607 ; Cree v. Somervail, ib.
648 ; Lumsden v. Buchanan, 4 Macqu.
950. Their liability is joint and
several, Gallespie v. City of Glasgow
Bank, 4 App. Ca. 632. See, also,
Dawidson’s case, 3 De G. & Sm. 21;
Ex parte Jones, 27 L. J. Ch. 666,
and Barrett’s case, 4 De G. J. & Sm.
416.
*3oF
802
Bk. IV. Chap. 1.
Sect. 10.
Cestui que trust
not a contribu-
tory.
Bugg’s case.
Transfers into
persons’ names
without their
authority.
Dishonest
trusts,
Cox’s case,
WINDING UP BY THE COURT. P .
to him and he has accepted them he will be a contributory in
respect of them (y).
The cestui que trust on the other hand is not liable to be put
on the list. The leading case on this head is Bugg’s case (2);
there a person bond fide bought shares in the name of his
brother, in order that it might not be known that he was him-
self connected with the company: there was evidence to show
that the trustee was unable. to meet the calls upon him, but
the cestut que trust was held not a contributory. Moreover,
subject to the observations which will be made hereafter on
maldé fide transfers (a), it is immaterial whether the trustees
acquire the shares by allotment, as in Bugg’s case, or by
transfer (b); and the fact that the object of the cestui
que trust was to avoid liability will not make him a con-
tributory (c).
But although the general rule is that the trustee and not
the cestut que trust is a contributory, still, a person in whose
name shares have been placed without his knowledge or con-
sent, and who has not himself accepted them or ratified what
has deen done (d), cannot be made a contributory in respect of
them (e).
Again, the rule that the trustee, and not the cestui qui trust,
is a contributory, will not be adhered to where a departure
from it is required in order to defeat fraud. In a case where
a promoter of a company took a number of shares, and placed
them in the names of various persons in order to swell the
(y) Hoare’s case, 23. & H. 229 ; Ex
parte Drummond, 2 Giff.189. Com-
chell’s case, 9 Eq. 363.
(c) Williams’ case, 1 Ch. D. 576 ;
pare Ex parte Scully, 6 Ix. Ch. 72 ;
and Ex parte Hall, 1 Mac. & G. 307,
reversing 3 De G. & Sm. 80. Observe
that in this case non-liability to
creditors was relied on.
(2) 2 Dr. & Sm. 452. See, also,
Fenwich’s case, 1 De G. & 8. 557;
Newry and Enniskillen Oo. v. Moss,
14 Beav. 64; Wilson v. Keating, 27
Beav. 121, and 4 De G. & J. 588,
(a) See infra, class B.
(0) King’s case, 6 Ch. 196; Mit-
and the cases in the last note.
(d) A ratification of a transfer
previously made without authority
is sufficient. Ker’s case, 4 App. Ca.
549, 598. Compare Bell’s case, 4
App. Ca. 547 (Janet Hiil’s case).
(e) Pim’s case, 3 De G, & S. 11,
and 1 Mac. & G. 291; Henessey’s
Ex. case, 3 De G. & S. 191, and 2
Mac. & G. 201, in both of which the
evidence of acceptance was insufli-
cient.
CONTRIBUTORIES.—TRUSTEES. 803
apparent number of shareholders, and so to deceive the public, Bk. oe 1.
he was put on the list in respect of all such shares; he was —-—
in fact, treated as holding the shares in various names which
he had chosen to assume for purposes of his own (f). Whether
his nominees were also liable to be put on the list was not
decided, but was expressly left open for determination (g). So
where a father bought shares from a company in the name of
a son, who was under age, the father was placed on the list,
the son’s name being treated as his (h).
So where a person procured a married woman to apply for Name of trustee
shares for him, and she did so, and shares were allotted to oa
her, it was held that he was a contributory: her name being “"*
treated as his own disguised (i).
Upon the same principle, viz., in order to defeat fraud, if a Mala fide
person transfers his shares to a nominee of his own, in order "srs.
to put the nominee forward in case of reverse, but at the same
time to retain for himself whatever advantages may accrue
from the shares, the real owner will be treated as himself hold-
ing the shares, and will be placed on the list accordingly (k).
In all these cases the dishonest purpose of the trust
prevents its recognition for the purpose for which it was
created.
But, as already seen, a purchase of shares in the name of Name used to
a person to avoid liability does not entitle the company to put eee
the purchaser on the list, if the transaction is a real trans-
action (J).
Further, in companies, the shares of which are transferable Holders of
shares passing
by delivery of certificates, the person who may happen to hold by delivery.
the certificates for another when the company is ordered to be
(f) Cox’s case, 4 De G. J. & Sm. («) Pugh and Sharman’s case, 13
53, on appeal from the Stannaries. Eq. 566. Compare London, Bombay
Compare King’s case, 6 Ch. 196. and Mediterranean Bank, 18 Ch. D.
(g) See, as to this, Barrett’s case, 581, where there was no fraud.
4 De G. J. & Sm. 416, arid Dawid- (&) Chinnock’s case, Johns. 714,
son’s case, 3 De G. & Sm. 21. and others of that class noticed
(h) Weston’s case, 5 Ch. 614; infra, under class B., p. 826. Com-
Richardson’s case, 19 Ey. 588. pare Williams’ case, 1 Ch. D. 576,
Compare Ea parte Scully, 6 Ir. Ch. (2) Ante, p. 802.
72,
3Fr2
804
WINDING UP BY THE COURT.
Bk. IV. Chap.1. wound up, is not necessarily the proper person to be on the
Sect. 10.
Finlay’s case.
Trustees for
company.
--—--~ list of contributories.
Whether he is, or is not, depends upon
whether he held them as a principal and legal owner, or
simply as the agent of the person to whom they belonged.
This is shown by Finlay’s case (m), which arose in winding up
a Scrip company. In this case Messrs. Finlay & Co., who
were merchants and bankers, were the allottees and holders of
1455 shares. Of these sixty were their own, and the rest
belonged to their customers. Messrs. Finlay & Co., however,
received all dividends and paid all calls on all the shares, and
they did so in their own names, without making any distinc-
tion between the shares which belonged to themselves and
those which did not. One at least of the directors of the
company knew that Messrs. Finlay & Co. held shares as agents
merely. It was decided that Messrs. Finlay & Co. were con-
tributories only in respect of the sixty shares which were their
own. The shares in this case were transferable by delivery,
there was no rule of the company to the effect that trusts
should be ignored, and there was, therefore, no reason why the
cestui que trustent should not be treated as the holders of the
shares. It may however be doubted, whether it therefore
followed that the agents could not have been treated as the
holders ; for their principals were undisclosed.
A person who holds shares in a company as a trustee for
that company, is obviously entitled to be indemnified by the
company against all losses (n), unless the transaction in respect
of which he holds the shares is ultra vires, or fraudulent, and
not binding on the shareholders (0). It follows from this, that
where the transaction is valid, the trustee ought not to be on
(m) Finlay, Hodgson’s case, 26
Beav. 182, and 27 L. J. Ch. 664.
See, also, Shewell’s case, 2 Ch. 387.
The company had no deed of settle-
ment, and was not incorporated.
It had a prospectus, which set out
the constitution and regulations of
the company, so far as it had any.
The scrip certificates declared that
the holder was (or on making cer-
tain payments would be) entitled to
a certain number of shares in the
company. The certificates passed
by delivery, and the holder was
treated as the owner. See ante, p.
799 et seq., as to scrip.
(n) James v. May, L. R. 6 H. L,
328 ; Ex parte Oriental Commercial
Bank, 3 Ch. 791.
(0) In a case of fraud the trustee
CONTRIBUTORIES.—TRUSTEES. 805
the list of contributories except in respect of his liability to aa he 1.
creditors ; and under the older winding-up acts he would not ---—~--
have been a contributory at all(p). But as regards companies
registered under the Companies act, 1862, members are con-
tributories although they may be trustees for the company ;
their right to indemnity can only be taken into account when
the creditors have been paid, and the rights of the contribu-
tories inter se come to be adjusted. This point was decided
by the V.-C. Wood, in Chapman and Barker’s case (q), where Chapman and
a shareholder in a company borrowed money of it, and trans- es
ferred his shares to a trustee for the company as a security for
the loan. The trustee was put on the list.
A trustee of shares is entitled to be indemnified by his cestut Trustee’s right
que trust against all calls paid and to be paid, and all expenses Seas
properly incurred by the trustee in the execution of his trust (r),
and he may obtain a declaration of his right to an indemnity
before any call upon him has been made(s). It not unfre-
quently happens that the trustee is insolvent, while the cestut
que trust is not. Even under these circumstances the cestut
que trust cannot be put on the list of contributories (¢).
Whether in such a case the company can compel the trustee
could be fixed: with the shares,
whilst his right to indemnity might
be repudiated. See Ex parte Daniell,
1 De G. & J. 372, and 23 Beav.
568; Nickoll’s case, 24 Beav. 639 ;
Davidson’s case, 3 De G. & Sm. 21.
Compare Saunders’ case, 2 De G. J.
& Sm. 101.
(p) Saunders’ case,2 De G. J. &
Sm. 101. Observe that there the
creditors could not have succeeded
at law against Saunders.
(q) 3 Eq. 361. See, also, Cree v.
Somervail, 4 App. Ca. 648, and
Munster Bank, Limited, 17 L. R.,
Ir. 341; Ennis and West Clare
Railway Co, 3 L. R., Ir. 187,
The Court will not rectify the
register and treat the trustee as not
a member after the company has
gone into liquidation. See Cree
v. Somervail, ubi sup. Queere if it
will do so before. See Beattie v.
Lord Ebury, L. R. 7 H. L. 102.
In Gray’s case, 1 Ch. D. 664, where
the trustee was never registered as
a holder, and it was agreed that he
should not be, he was held not a
contributory.
(7) See Cruse v. Paine, 6 Eq. 641,
and 4 Ch, 441; Butler v. Cumpston
7 Eq. 16; James v. May, L. R. 6 H.
L, 328, and see Hughes-Hallett v.
Indian Mammoth Gold Mines Co.,
22 Ch. D. 561.
(s) Hobbs v. Wayet, 36 Ch. D, 256,
and compare last case.
(t) Bugg’s case, ante, p. 803 ;
Williams’ case, 1 Ch. D, 576,
806
Bk. IV. Chap. 1.
Sect. 10.
Resignation of
trustee.
Mortgagees.
Price and
Brown’s case.
WINDING UP BY THE COURT.
to enforce his right of indemnity, and so reach the cestui que
trust, has not been decided (wu).
A trustee who is a shareholder does not terminate his
liability to the company by a mere resignation of his office,
in order to do this he must transfer his shares or in some
other way cease to be a shareholder (v).
10. Mortgagees.
The principle on which a trustee is made a contributory
applies to mortgagees. Price and Brown’s case (x) shows that
a person who holds shares only as a security for a debt, and is
known to do so by the directors of the company, is as much a
contributory as if he were the absolute owner of such shares.
But an equitable mortgagee of shares is in the same position
as a cestut que trust, and not a contributory (y). If a com-
pany borrows money on the security of its own shares, which
are transferred to the mortgagee, it has been held that the
mortgagee will not be a contributory and that the Court will
rectify the register so as to give effect to the real intention of
the parties (z). But this requires reconsideration, and seems
inconsistent with the cases that show that persons registered
as holders of shares are contributories, although they hold
them in trust for the company (a).
(u) See Hemming v. Maddick, 9
Eq. 175, affirmed 7 Ch. 395; Massey
(«) 3 De G. & Sm. 146; Weiker-
shetm’s case, 8 Ch. 831 ; Royal Bank
v. Allen, 9 Ch. D. 164, and British
Nation Life Ass. Assoc., 8 Ch. D, at
p. 708. If the trustee were made
bankrupt, his trustee in bankruptcy
could, it is conceived, enforce the
right to indemnity ; and what was
recovered would be distributable
like the rest of the bankrupt’s
estate.
(v) Alexander Mitchell’s case, 4
App. Ca, 548 & 567; Rutherfurd’s
case, ib. 548 & 581; Buchan’s case,
ib. 549 & 583; Ker’s case, ib. 549 &
598.
of India’s case, 7 Eq. 91, and 4 Ch.
252 ; Addison’s case, 5 Ch. 294. As
to the mortgagee’s right to indem-
nity from his mortgagor, see Phené
v. Gillan, 5 Ha. 1.
(y) Stchell’s case, 3 Ch. 119, where,
however, the company had refused
to register the mortgagee. See, also,
Gray's case, 1 Ch. D, 664.
(2) South-Eastern Rail. Co.’s claim,
14 Eq. 10; Beattie v. Lord Ebury,
L. R. 7 H. L. 102.
(a) Chapman and Barker's case, 3
Eq. 361, ante, p. 805.
CONTRIBUTORIES.—-MARRIED WOMEN.
11. Persons under disability.
a) Companies holding shares in other companies.
A company holding shares in another company is a contri-
butory in respect of such shares, unless to hold shares is
beyond the power of the shareholding company (b). It is not
necessary that the transfer to the holding company should be
executed by it under its corporate seal (c). Partners who hold
shares in the name of their firm are contributories in respect
of them (d).
b) Married women and their husbands (e).
Before the Married women’s property act, 1882, it was
decided that if a company chose to deal with a married woman
as a principal, and not as the agent of her husband, and she
being known to the company to be a married woman, was
allowed to become a shareholder in her own right; and if
further, by the rules of the company, her husband was not a
shareholder in respect of her shares, and she had no separate
estate, then, on the winding up of the company, neither she
nor her husband was a contributory. Not the wife, because
she was not capable of binding herself by contract; not the
husband, because, ex hypothesi, he had nothing to do with the
shares or the company, and the latter had not dealt with his
wife as his agent(f). In Angas’s case (g), a lady known to a
company to be married, bought shares, and was accepted as a
shareholder in respect of them, without any participation on
the part of her husband. He received the dividends, but
always as her agent; he attended meetings, and once held a
proxy for another shareholder ; his name had been placed on
the list of shareholders, but this had been done without the
knowledge either of himself or his wife, He was held not to
(b) Asin Ex parte British Nation (d) Wetkershetm’s case, 8 Ch. 831.
Life Ass. Assoc., 8 Ch. D. 679, and (e) See ante, p. 41.
see Ex parte Contract Corporation, 3 (f) Ex parte Rhodes,7 W. R. 510.
Ch. 105; Royal Bank of India’s case, (g) 1 De G. & 8. 560. Compare
4 ib. 252, and 7 Eq. 91. Luard’s case, 1 De G. F. & J. 533.
(c) Ib.
807
Bk. IVY. Chap 1.
Sect. 10.
Companies
holding shares.
Married women
shareholders.
Angas’s case
808
Bk, IV. Chap. 1.
Sect. 10.
London,
Bombay, and
Mediterranean
Bank.
Female share-
holder marrying.
WINDING UP BY THE COURT.
be a contributory; for, by the rules of the company, he was
not a shareholder in respect of her shares.
Again, in the London, Bombay, and Mediterranean Bank (i),
a merchant applied for shares in a limited company in the
name of his wife: and shares were allotted to her accordingly.
The husband subscribed the memorandum and articles of
association for his wife, and paid the deposit money and all
calls made on the shares for her, and subsequently transferred
some of the shares, executing the transfers in her name or on
her behalf. The wife had no knowledge of any of these
transactions. The wife’s name as ‘‘M., the wife of 8.” was
on the register. She had no separate estate, and the liqui-
dator sought to put the executors of the husband, who was
then dead, on the list of contributories, on the ground that
the husband was the true owner of the shares, and that the
wife’s name had only been used to enable him to escape lia-
bility. V.-C. Hall, however, held that the liquidator was not
entitled to do this, as the company had accepted the wife as a
shareholder without any misrepresentation or concealment on
the part of the husband.
The case of a woman holding shares and marrying is specially
provided for by the Companies act, 1862. In such a case her
husband is liable during the continuance of the marriage to
contribute what she would have been liable to contribute if she
had not married (k). She also is liable in respect of her
separate estate, if any, under § 18 of the Married women’s
property act, 1882 (1). Further, in the event of her surviving
her husband, she will be liable in respect of such shares (1m).
Both she and her husband ought therefore to be on the list.
His liability does not appear to be limited in this case to the
amount of the property he acquired from his wife (n); but as
(t) 18 Ch. D. 581, and compare (m) Ibid., and see under the old
Pugh & Sharman’s case, 13 Eq. 566. law Burlinson’s case, 8 De G. &S.
(&) Compare §§ 78, and 38 & 74, 18; Sudler’s case, ib. 36; White's
and see Bx parte Hatcher,12Ch. D. case, ib. 157; Kluht’s case, 3 De G.
284, decided on this act and the &S.210. See, also, Luard’s case, 1
Married women’s property act, DeG. F. & J. 533.
1874; Bell's case, 4 App. Ca. 550. (n) See note (k), and 45 & 46
(1) 45 & 46 Vict. c. 75, § 13. Vict. c. 75, § 14.
CONTRIBUTORIES.—INFANTS. 809
between him and her he is entitled to be indemnified out of her BE. citer 1.
separate estate (0).
By the Married women’s property act, 1882, shares stand- Effect of Mar-
ing in the sole name of a married woman are deemed to belong aig ait
to her for her separate use unless the contrary can be proved (p), ae
and her husband ought not now to be put on the list (q) in respect
of them unless his wife held the shares before her marriage (r).
She will be liable to be on the list in respect of her separate
estate (s), but not further : so that if she has no separate estate
except the shares in question and the company is not solvent
no one will be liable to contribute in respect of her shares.
If shares belonging to a married woman having separate
estate are held by trustees for her, they will be the contribu-
tories, and will be entitled to indemnity out of her separate
estate (t).
_ If the married woman is herself a trustee she and her
husband ought apparently to be both on the list (wu).
c) Infants.
The writer is not aware of any case in which an infant has {yfant share-
been put on the list of contributories. Upon principle, how- >!
ever, there does not appear to be any reason why he should
not, if it be for his benefit; and this, if there are surplus
assets, may be the case (x). Except, however, where it is for
an infant’s benefit to accept shares, and with them the burdens
attaching to them, it is not easy to see how an infant can be held
to be acontributory. In the ordinary case of an insolvent com-
(0) See note (1).
(p) 45 & 46 Vict. c. 75, § 6 & 7,
ante, p. 42.
(q) See ib. §§ 6 and 13. See, as
to the old law, Luard’s case, 1 De G.
F. & J. 533.
(r) See Ex parte Hatcher, 12 Ch.
D. 284, noticed above.
(s) So under the old law, see
Matthewman’s case, 3 Eq. 781;
Luard’s case, 1 De G. F. & J. 533.
(t) Butler v. Cumpston, 7 Eq. 16,
and see ante, p. 801 et sey., as to
trustees.
(u) See Bell’s case, 4 App. Ca,
547, the order made as to Janet Hill,
p. 562.
(#) See ante, p. 39. The 39th
section of the act of 1848 (11 & 12
Vict. c. 45, § 39), which enacted
that if any contributory were a
minor, he might attend the pro-
ceedings in the winding up by his
father or guardian, evidently con-
templated the possibility of an in-
fant’s being a contributory.
810
Bk. IV. Chap. 1.
Sect. 10.
Shrapnell’s
case.
WINDING UP BY THE COURT.
pany, the infant’s shares would be repudiated (y). The principle
acted on in Oakes v. Turquand (z), has never been applied to in-
fants. If an infant fraudulently represented himself as of age,
he might perhaps be fixed (a) ; but nothing short of this can,
it is conceived, deprive him of his right of repudiation. Even
if he signs the memorandum of association, he will, it is sub-
mitted, not be bound (b).
If an infant shareholder does not repudiate his shares either
whilst he is an infant or within a reasonable time after he
attains twenty-one, he will be a contributory (c); @ fortiori will
he be so if, after attaining twenty-one, he does anything incon-
sistent with his right of repudiation, ¢.g., acts as a shareholder,
receives a dividend, or pays a call(d). But if he is an infant.
when the winding up commences, or if he is not then pre-
cluded from repudiating his shares, he does not lose that right
by mere delay. Thus in Shrapnell’s case (e), an infant who
had applied and paid for shares, and had paid calls, and
received dividends, attained his majority one week before the
company stopped payment; three months afterwards he was
settled on the list of contributories after due notice, but he paid
no attention to the notice, and allowed the time for varying the
chief clerk’s certificate to expire. A call was afterwards made
upon him as a contributory, and he then took out a summons
for leave to apply to vary the chief clerk’s certificate putting
him on the list. This leave was granted on payment by the.
infant of the costs of the application. He then applied to vary
the certificate, and to be removed from the list of contributories,
and he was struck off. He had done nothing after attaining
twenty-one which could be regarded as an election to take the
shares, and his repudiation was held not to be too late(f). It
(y) See Reid’s case, 24 Beav. 318.
(2) Ante, pp. 753 and 776.
(a) See Wright v. Snowe, 2 De G.
& 8. 321.
(6) See §§ 11 & 18 of the Com-
panies act, 1862. § 18 renders the
infant a member, but does not ex-
clude his right to repudiate.
(c) Ebbett’s case, 5 Ch. 302. See
ante, p. 39, and the next note. See
the curious case of a female infant
trustee marrying after she attained
21, Bell’s case, 4 App. Ca. 547;
Janet Hill’s case, p. 562.
(d) Lumsden’s case, 4 Ch. 31;
Mitchell’s case, 9 Hq. 363.
(e) Shrapnell’s case, Re Barned’s
Banking Co., before Lord Romilly,
at Chambers, 24 April, 1867.
(f) See, also, Mann’s case, 3 Ch.
459, note ; Capper’s case, ib. 458 ;
Hart’s case, 6 Ey. 512 ; Curtis’s case,
811
CONTRIBUTORIES.—LUNATICS.
has been decided in other cases that a person who was an Bk oa 1.
infant when the winding up commenced cannot on his attain-
ing twenty-one elect to hold shares transferred to him, and
thereby defeat the right of the company to reject him, and to
have his transferor put on the list in his place (g).
The right of a company to reject an infant transferee, and Right of the
to put his transferor on the list, is clearly established (hk); but seer. a an
this right may be lost by the company’s own laches prior to the
winding up (i); and if an infant transferee has himself trans-
ferred his shares, and his transferee has been accepted as a
shareholder, the transfer to the infant cannot be treated as a
nullity (&).
Where shares are taken direct from the company in the
names of infants, the persons who really take them, and not
the infants, will be contributories (J) ; unless the infant and the
company are precluded from repudiating them. Even in the
case of a transfer to an infant, if his name is a mere alias for
that of some other person, such person may be put on the list,
and the company although entitled to fall back on the trans-
feror is not bound to do so (m).
d) Lunattes.
The writer is not aware of any decision on lunatic contribu-
tories. The principles applicable to them have been already
alluded to (see ante, p. 40).
ib. 458 ; Weston’s case, 5 Ch. 614;
Boker’s case, 7 Ch. 115, where there
was some evidence of adoption.
(g) Symons’ case, 5 Ch. 298 ; Cas-
tello’s case, 8 Eq. 504,
(h) See the last two notes.
(4) Parson’s case, 8 Kg. 656 ; Max-
well’s case, 24 Beav. 321.
(k) Gooch’s case, 8 Ch. 266, rever-
sing S. C. 14 Eq, 454.
(1) See Weston’s case, 5 Ch. 614;
and compare London, Bombay, and
Mediterranean Bank, 18 Ch. D.581 ;
Pugh and Sharman’s case, 13 Eq. 566,
and cases ante, p. 803.
(m) Richardson’s case, 19 Eq. 588.
812
Bk. IV. Chap. 1.
Sect. 10.
Executors of
deceased share-
holders.
WINDING UP BY THE COURT.
12. Representatives.
a) Executors, heirs, and devisecs.
If shares are registered in the names of more persons than
one, and one dies, the survivors and not his executors are con-
tributories in respect of them (n).
Although the executors of a deceased shareholder may not
be themselves shareholders, they will nevertheless be liable to
be placed as executors on the list of contributories in respect of
the shares held by their testator (0). Moreover, an executor is
liable to be made a contributory as executor, if his testator was
virtually, although, owing to the non-compliance with certain
forms, not perhaps strictly, a shareholder (p). So, although
the shares were such as the directors had no right to create (q),
or, although more than three years have elapsed since the tes-
tator’s death, and the company is one in which shareholders
are not liable to creditors for more than three years after their
retirement (r); or, although the debts of the company have
been incurred since the testator’s decease (s) ; or, although the
executor swears he has no assets, and has wound up the
estate (t). Even if a share has been bequeathed and the exe-
cutor has assented to the bequest, he will still be a contribu-
tory in his character of executor, if the legatee has not been
accepted by the company as a shareholder in respect of the
share in question (wu). If the executor is himself legatee, he
(n) Hills case,20 Eq. 585. The 187. See, also, Powis v. Butler, 3
executors might be put on as repre-
senting a past member.
(0) 25 & 26 Vict. c. 89, §§ 76, 99,
105. Baird’s case, 5 Ch. 725 ; Thomas's
case, 1 De G. & S. 579.
(p) Straffon’s Executors’ case, 1 De
G.M. & G.576; Ey parte Dixon’s
Executors, 1 Dr. & Sm, 225.
(q) Robinson’s Executors’ case, 2 De
G. M. & G. 517, and 13 Jur. 438,
where a deceased director had taken
shares which the company might
have repudiated. Compare ante,
774,
(1) Gouthwatte’s case, 3 Mac. & G.
C. B. N. 8. 645, and 4 ib., 469.
(s) Baird’s case, 5 Ch. 725; Ex
parte Blakeley’s Executors, 3 Mac. &
G. 726, and 13 Beay. 133; Hamer’s
Devisees’ case, 2 De G. M. & G.. 366.
(t) Thomas’s case, 1 De G. & 8.
579 ; Crosfield’s case,2 De G. M. &
G. 128. See Henderson v. Gilchrist,
17 Jur. 570, ante, p. 537.
(u) Keene's Executors’ case, 3 De
G. M. & G. 272; Crosfield’s case,
2 ib. 128, and 4 De G. & S. 338;
Hamer’s Devisees’ case, 2 De G.
M. & G. 366, and 3 De G. & 5.
279.
CONTRIBUTORIES.—EXECUTORS, ETC. 818
will be a contributory as executor only until he has himself Bk. ie 1
been accepted as a shareholder (v). =
But if a share is bequeathed and the executor has assented Whon executor
to, and the legatee has accepted the bequest, and the company mer rele
has accepted the legatee as a shareholder in respect of such
share, then, on the subsequent winding up of the company,
the legatee and not the executor is the person to be made con-
tributory (x); and if an executor applies to the directors to
know what shares his testator had in the company, and is told
none or a certain number only, and the executor acts upon the
faith of this statement and winds up the estate of the deceased,
transferring those shares, if any, which, according to the state-
ment of the directors, belonged to him, and the company is
afterwards wound up, the executor cannot be made a contribu-
tory ; although his testator may in fact have had shares in the
company other than those mentioned by the directors (y).
The official liquidator is entitled to bring an action for the Rights against
administration of the estate of a deceased shareholder, and to oe
prove against the estate for all calls made and to be made, and
he is entitled to have a fund set apart to meet such-claim (2).
If a deceased shareholder’s personal estate is insufficient to Heirs and
pay his debts, his heir or the devisees of his real estate may be ae .
made contributories (a). ‘They may be added to the list when
it becomes necessary to have recourse to them (0).
After the shares of a deceased shareholder have been duly Effect of transfer
by executor.
Effect of wind-
ing up estate
of deceased on
the faith of
statements made
by the company.
(v) Bulmer’s case, 33 Beay. 435.
(a) See the cases cited in the last
two notes, and post, under the head
Retired shareholders, Crosfield’s case,
2 DeG. M. & G.128,and4DeG.&
S. 338, may be referred to with re-
ference to the acceptance of one of
several executors as a shareholder.
See, too, Pim’s case, 3 De G. & S.
11.
(y) Meua’s Executors’ case, 4 De
G. & S. 331, and 2 De G.M.& G.
522.
(2) 25 & 26 Vict. c. 89, §§ 76 and
95, cl. 7, Re Muggeridge, 10 Eq.
443; Buck v. Robson, 10 Eq. 629;
Turquand v. Kirby, 4 Eg. 123.
Executors of deceased shareholders
in going companies cannot safely
pay legacies without providing for
future calls, see Taylor v. Taylor, 10
Eq. 477.
(a) 25 & 26 Vict. c. 89, §§ 76, 99,
105. Hamer’s Devisees’ case, 2 De
G. M. & G. 366, reversing S. C.,
3 De G. & S. 279. See Broughton
v. Hutt, 3 De G. & J. 501, as to
setting aside deeds executed by heirs
or devisees on the assumption that
the shares were real estate.
(b) 25 & 26 Vict. c, 89, § 99.
814 WINDING UP BY THE COURT.
Bk. era 1. transferred by his executors, they cease to be liable to be made
contributories in respect thereof. This will be seen hereafter,
when the position of persons who have ceased to have any con-
nection with the company is being considered. It may how-
ever here be observed that, unless the constitution of a company
warrants the surrender of shares, executors who surrender the
shares of their testator do not thereby get rid of their liability
to be made contributories (c).
If executors themselves become shareholders, they will be
contributories, without reference to the character in which they
became entitled to the shares taken by them. Thus, where the
directors of a company offered reserved shares to the share-
holders and the executors of deceased shareholders in propor-
tion to the amount of their original shares, and the executors of a
late shareholder accepted some of such reserved shares, but
accepted them only in their representative character, they were
nevertheless put on the list of contributories in respect of these
shares without any qualification (d).
Executors, however, do not render themselves personally
liable as shareholders by keeping a testator’s shares and
receiving the dividends until the shares are sold (e); and even
if the shares of the deceased are registered by the company in
the names of the executors they will not be personally liable
unless they authorised or ratified the registration (f).
Executors be-
coming share-
holders.
(c) La parte Richmond’s Executors,
13 Jur. 727.
(d) Fearnside and Dean’s case, and
Dobson’s case, 1 Ch. 231. See, also,
Duff’s Executors’ case, 32 Ch. D. 301;
Jackson v. Turquand, L. R. 4 H. L.
305 ; Spence’s case, 17 Beav. 208,
where the executors had purchased
shares. Compare Pim’s case, 3 De
G. & 8. 11, where the acceptance
by the executor was held not to
bind him. In Mallorie’s case, 2 Ch.
181, the applicant was not executor,
but acted for him.
(e) See Bulmer’s case, 33 Beav.
435, where the executor was legatee
of the shares. See, also, Armstrong's
case, 1 De G. & S. 565 ; Gouthwaitte’s
case, 3 Mac. & G. 187, and 3 DeG.
& 8. 258 ; Doyle’s case, 2 Hall & T.
221 ; Hamer’s Devisces’ case, 2 De G.
M. & G. 366 ; Crosfield’s case, ib. 128,
and 4 De G. & S. 338. In Pim’s
case, 3 De G. & §. 11, the shares
exchanged by the executor were in
no sense his testator’s. See the
analogous case of trustee’s in bank-
ruptcy, noticed infra, note (n).
(f) Buchan’s case, 4 App. Ca, 549,
at p. 589.
CONTRIBUTORIES.—TRUSTEES IN BANKRUPTCY.
b) Trustees in bankruptcy.
815
Bk. IV. Chap. 1.
Sect. 10.
A bankrupt member of a company being wound up under Position of the
the Companies act, 1862, who has obtained his order of dis-
charge under the Bankruptcy act, 1869, or under the Bank-
ruptey act, 1888, is not a contributory either as a present (9)
or as a past member (hk); nor was he under the older acts,
unless he retained his shares and remained a member after his
order of discharge, and the company was ordered to be wound
up at some subsequent period, in which case his order of dis-
charge did not protect him (i).
bankrupt.
By the Companies act, 1862, the trustee of a bankrupt con- position of the
tributory represents him, and is “‘ deemed to be” a contribu-
tory accordingly, and can be required to admit to proof against
the bankrupt’s estate what is due from him in respect of his
liability to contribute (k); and not only calls already made, but
the estimated value of those to be made, may be so proved (I).
The expression ‘‘ deemed to be” leaves it uncertain whether
the trustee ought to be settled on the list of contributories or
not; but itis clear that he cannot be made a contributory in
any other than his representative character, unless he does
something to render himself a shareholder (m).
The payment
of calls to preserve the shares from forfeiture, and the receipt
of dividends paid in respect of the shares, does not render a
trustee in bankruptcy liable to be made a contributory per-
sonally (n).
trustee in bank-
ruptey.
If the company being wound up is insolvent and the bank- Disclaimer by
(g) 25 & 26 Vict. c. 89, §§ 75 and
77. See Ex parte Marshall, 7 Ch.
324 ; Ex parte Budden & Roberts, 12
Ch. D. 288; Mercantile Mutual
Marine Ins. Assoc., 25 Ch. D. 415.
A bankrupt contributory is a
stranger to the company, Cape
Breton Oo., 19 Ch. D. 77. 7
(h) McEwen’s case, 6 Ch. 582.
(i) See Hastie’s case, 4 Ch. 274,
and 7 Eq.3; Martin’s Patent Anchor
Co. v. Morton, L. R. 3 Q. B. 306;
Financial Corporation v. Lawrence,
L. R.4C. P. 731; Ea parte Malone,
Irv. Rep. 6 Eq. 272, and ante, p.
556.
(k) 25 & 26 Vict. c. 89, § 77.
(2) Ib., § 75, and 46 & 47 Vict. ¢.
52,§ 37; Mercantile Mutual Marine
Ins. Assoc., 25 Ch. D. 415.
(m) Stone’s case, 3 De G. & S. 220.
(n) See, as to paying calls, Stones
case, 3 De G. & S. 220, and as to re-
ceiving dividends, Armstrong’s case,
1 De G. & 8S. 565. See, too, South
Staffordshire Rail. Co. v. Burnside, 5
Ex. 129. See the analogous case of
executors, ante, note (e).
trustee,
816
Bk. IV. Chap. 1.
Sect. 10.
Late share-
holders.
WINDING UP BY THE COURT.
rupt’s shares are not fully paid up his trustee can disclaim
~- them; and in that case the company can prove for damages.
against his estate (0).
Where a call is provable, an order under the Companies
act, 1862, for its payment ought not to be made, even although
the shares may be standing in the name of the bankrupt (p).
B.—ConTRIBUTORIES AS PAST MEMBERS.
General observations on past members.
The liability of shareholders, and of persons who are bound
to take shares, at the time of the commencement of the
winding up having been now examined, it is necessary to
advert to the position of persons who would have been contri-
butories if they had not ceased to hold their shares before the
time in question.
The liability of a retired member of a company to be placed
on its list of contributories depends primarily on the effect of
the retirement as between himself and the other members, and
secondarily on its effect as between himself and the creditors
of the company.
The extent to which a member of a company who leaves it
gets rid, as between himself and the other members, of his
obligations to contribute with them to the discharge of the
debts and liabilities of the company depends theoretically on
the constitution ofeach particular company. Practically, how-
ever, it will be found that, as a general rule (g), a member of a
company, whose shares have been duly transferred, surrendered,
or forfeited, is discharged, as between himself and the other
members, from all liability as well in respect of past as of
future transactions: the acceptance by the company of the
transfer or surrender, or the declaration by the company of the
(0) 46 & 47 Vict.c. 52,§ 55. See
ante, p. 553. See under the act of
1869, Ex parte Budden & Roberts, 12
Ch. D. 288 ; Hardy v. Fothergill, 13
App. Ca. 351.
(p) Mitchell’s case, 5 Ch. 400.
(q) There are exceptions, as in
Helby’s case, 2 Eq. 167, and others of
that class, noticed infra. By the
Stannaries act, 1887, 50 & 51 Vict.
c. 43, § 22, the relinquishment of a
share in a mine subject to that act
has no effect if the company goes
into liquidation within six weeks.
CONTRIBUTORIES—PAST MEMBERS. 817
forfeiture, being, generally speaking, equivalent to a release by Bk. as aa 1.
the company of the member whose shares are thus dealt with,
from all liability in respect of them. Where this is the case,
he is not liable, on the subsequent winding up of the company,
to be put on the list of contributories with the present mem-
bers ; and his lia)ility to be put on the list at all can only arise
from some necessity of having recourse to past members in
order to pay the debts of the company or to adjust the rights
of such members inter se.
Under the Winding-up acts of 1848 and 1849, the liability Under the Acts
of a late shareholder to be made a contributory depended upon a me
the simple question whether he had, as between himself and
the company, got rid of the obligations which, by supposition,
he was once under. If he had, he was not a contributory with
the existing members, whatever his liability to creditors might
have been; whilst if he had not, he was a contributory,
although he might have been under no liability to the creditors
at law (r). But there might be, and, in fact, there usually
were, a considerable number of retired members who, although
not liable to contribute with the existing shareholders, were,
as between themselves, liable to contribute to the payment of
those debts which were enforceable against them at law, and
which the existing shareholders were unable to discharge.
‘The question then arose whether these transferors ought not
to be contributories, seeing that they might be ultimately
called upon to defray debts of the company, although they
were entitled to be indemnified against such debts by the
existing shareholders. This question was formerly answered
in the affirmative (s); but the later practice was not to make
such persons contributories until it actually became necessary
to do so, in order to prevent one or more of them from bearing
more than his or their share of loss. In other words, retired
shareholders were not placed on the list of contributories
(r) See Ea parte Gouthwatte, 3 571, and on appeal, 1 Mac. & G. 49.
Mac. & G. 187; Stirling’s case,6 Tr. The transfer took place within, and
Ch. 180, and the cases in the next not (as stated in the marginal note
two notes, in 1 De G. & S. 571) more than
(8) Ex parte Morgan, 1 Mac. & G, three years before the winding up of
225 ; Hawthorn’s case,1 De G.& 8. the company.
L.c. ¥34
818
Bk. IV. Chap. 1.
Sect. 10.
Under the Com-
panies act, 1862.
1. Unregistered
companies,
WINDING UP BY THE COURT.
simply because they might possibly be called upon to make
good losses which, as between themselves and the existing
shareholders, ought to be borne by the latter (¢). Before the
retired shareholders could be made contributories, it had to be
shown that there was some necessity for putting them on the
list for the purpose of equitably adjusting these claims against
each other (w).
This practice is also followed in winding up companies
under the Companies act, 1862 (x): and a person improperly
put on the list as a present member will be struck off the list
altogether, although he may possibly be put on again as a past
member. Nor is it necessary when striking him off the list
(i.e., the list of present members), expressly to reserve, or to
add without prejudice to, his liability to be put on the list as a
past member. The removal from the list of a person sought
to be put on as a present member is understood in practice to
leave open for future decision the question whether he ought
to be on the list as a past member (y).
In winding up companies under the Companies act, 1862,
and in considering the liability of a person who was a share-
holder before, but not at the time of the commencement of the
winding up, to be put on the list of contributories, it is neces-
sary to distinguish,—
1. Unregistered companies ;
2. Companies registered but not formed under the act;
8. Companies formed as well as registered under the act.
1. The liability of a past member of an unregistered com-
pany depends on § 200, which contains no statutory limit as
to the time after which a past member ceases to be liable. His
(t) Carew’s case,'7 De G, M. & G.
43 ; Sutton’s case,3 De G. & 8. 262;
Holme’s case, 4 ib. 312, and 2 De G.
M.& G.113; Ew parte Stirling, 6
Tr. Ch. Rep. 180.
(u) Compare the cases in the last
two notes, and observe that in
Hawthorn’s case, the transferor was
made a contributory at the instance
of a person in the same position as
himself.
() See § 170, now repealed by 44
& 45 Vict. c. 59. See, as to Part’s
case, 10 Eq. 622, infra, note (z).
(y) See Wright's case, 12 Eq. 331.
See pp. 345-6, per L. J. Selwyn.
Where, however, the register of
members, as distinguished from the
list of contributories, is rectified, it
may be necessary to add, without
prejudice, &c., see Marshall v. Gla-
morgan Iron, &c., Co., 7 Eq. 129.
CONTRIBUTORIES—PAST MEMBERS. 819
position, therefore, depends on his liability to existing creditors, Bk. NN 1.
and on the constitution of the company of which he was a- aa
member. It very rarely, however, happens that a past member
can be put on the list by reason of any rights which the
present members have as against him: and speaking generally
no past member of an unregistered company is liable to be on
the list at all, unless there are debts to which he was liable
before he retired, and unless the present members are unable
to pay such debts (2).
With respect to cost-book mining companies the Stannaries Cost-book
act, 1869, renders past members not liable to be put on the list "”"™
if they have ceased to be shareholders for two years or upwards
before the mine has ceased to be worked, or before the date of
the winding-up order (a).
2. The liability of a past member of a company registered, ee oes
but not formed under the Companies act, 1862, depends on the Act of 1862,
§ 196, which renders § 88 applicable to the company from the ee
time of its registration(b). But this is subject to the im-
portant qualification that the liabilities of members at the
time of registration to their existing creditors are preserved
(see §§ 195, 196, cl. 5, and § 197). Consequently, in dealing
with companies of this description it is necessary to subdivide
the past members into three classes, viz. :—
(a.) Those who ceased to be members before registration.
(b.) Those who ceased to be members afterwards, but
more than a year before the commencement of the
winding up.
(c.) Those who ceased to be members after registration,
and less than a year before such commencement.
(a.) As regards the first of these classes it seems that they Class (a).
are not liable to be put on the list of contributories of the
registered company, never having been members of it (c). But
(2) See Part’s case, 10 Eq. 622. (a) 32 & 33 Vict. c. 19, § 25. See
Tf, in this case, there were present Chynoweth’s case, 15 Ch. D. 13, and
members capable of paying the see ante, p. 816, note (q).
debts in respect of which Part (6) Ramsay’s case, 3 Ch. D. 388.
was held liable, the decision was (c) See Lanyon v. Smith, 3 B. &
not conformable with the usual Sm. 938; and Kelk’s case, 9 Eq.
practice. 107.
3a2
820
Bk. IV. Chap. 1.
Sect. 10.
Class (5).
Class (c).
3. Companies
formed and
registered under
the Act.
WINDING UP BY THE COURT.
if this technical difficulty is got rid of, by an order winding up
the unregistered company, as well as the registered company,
the liability of the past members now under consideration
will be the same as that of past members in unregistered
companies.
(b.) As regards the second of the above classes, § 38 frees
them from all liability in respect of debts contracted by the
company after its registration ; but §§ 195 to 197 leave those
persons who were members before registration exposed to
liability in respect of such debts as existed at the time of
registration, and at the commencement of the winding up, and
as the present members are unable to pay. In respect, there-
fore, of such debts, if any, such past members of this class may
be liable to be put on the list.
(c.) The third of the above classes may include persons who
became members before the registration of the company, as
well as those who became members since. The position of
those who became members since the registration of the com-
pany depends entirely on § 88, and is the same as that of
past members in companies formed and registered under the
act (see § 196) (d). The position of those who became members
before the registration of the company is more complicated:
for first they are by § 38, under the same liability as those last
spoken of; and, secondly, they are by §§ 195, 196, and 197,
liable to be made contributories in respect of debts existing
before registration, and still unpaid; and whilst their liability
under § 388 may be limited, their liability under § 196 may be
unlimited.
3. The position of retired members of companies formed
and registered under the Companies act, 1862, is defined by
§ 388. Persons who have ceased to be members twelve months
before the commencement of the winding up are not liable to
be put on the list at all (e); whilst persons who have ceased
to be members less than twelve months before that time are
liable to be put on the list, but only as past members; and no
person is under any liability as a past member unless two
things can be proved, viz. :—
1. It must be shown that there is some undischarged debt
(d) Ramsay's case, 3 Ch. D. 388. (¢) See Gooch’s case, W. N. 1872, p. 227.
CONTRIBUTORIES—PAST MEMBERS. 821
or liability of the company contracted before the person in Bk. eae 1.
question retired (f).
2. The Court must be satisfied that the existing members
are unable to satisfy their contributions (9).
Hence, as under the older winding-up acts, it is not the Contributories as
practice to put any person on the list of contributories as a eee
past member until the inability of the present members to dis-
charge their liabilities is apparent (hk). But it is not necessary
to obtain from them all that they can pay before settling a
past member on the list (2).
It is now settled that the lability of past members is only
to pay those debts contracted before they ceased to be mem-
bers, which the present shareholders are unable to pay. The
past members get the benefit of all dividends paid by calls on
present members; and their liability is confined to calls in
respect of what remains of the debts in question. It follows
from this that if these debts are paid or released, no calls can
be made on past members, and they ought not to be put on the
list of contributories (k).
Settling a person on the list of contributories as a past
member does not of itself decide or prejudice any question as
to his liability to any particular call (2).
Past members are not sureties; and a compromise by the Past members
liquidator with present members, even when made without par
notice to a past member, does not discharge him from his
liability to be a contributory, at least if such liability is
reserved, as in practice it alwaysis(m). The right, however,
of a past member to be indemnified by his own transferee is not
affected by a compromise between him and the liquidator (n).
(f) Weston’s case, 6 Eg. 17; they can be shown to be wrong.
Bretts case, 6 Ch. 800, and 8 Ch.
800 ; Webb v. Whifin, L. BR. 5 H. L.
711.
(g) See § 38, cl. 2 and 3.
(h) See Needham’s case, 4 Eq. 135,
and ante, pp. 749, 750.
(i) Andrew’s case, 3 Ch. 161. See
Helbert v. Banner, L. R. 5 H. L. 28,
which shows that the Court will act
on the liquidator’s estimates, unless
(k) See Brett’s case, 8 Ch. 800, a
rehearing of S. C., 6 Ch. 800.
(2) See Andrew’s case, 3 Ch. 161.
(m) Hudson's case, 12 Eq. 1;
Nevill’s case, 6 Ch. 43; Helbert v.
Banner, L. R. 5 H. L, 28.
(n) Roberts v. Crowe, L. R. 7 C. P.
629. See, also, Kellock v. Enthoven,
L.R. 8 Q. B. 458, and 9 ib, 241;
Heritage v. Paine, 2 Ch. D. 594,
822 WINDING UP BY THE COURT.
Bk, IV. Chap. 1.
on Having made these preliminary remarks on the liability of
ect. .
persons who have retired from a company before the com-
mencement of its winding up, to be put on the list of con-
tributories as past members, it is proposed to examine the
position of such persons more in detail, and to point out when
they are liable to be put on the list as present members, and
when as past members only.
It has already been seen that, where a person has, in fact,
become a shareholder, he is a contributory, although all pre-
scribed formalities may not have been observed(o). On similar
principles, where a person has, in fact, retired from a company,
he will not be a contributory (at least as a present member),
although his retirement may have been somewhat irregular in
point of form (p). But this proposition assumes that the
shareholder had the right to retire; and that his retirement
would have been unimpeachable if all proper formalities had
been duly observed. Where this is not the case, the retired
member will, in point of law, be a shareholder still; and will
be liable to be made a contributory accordingly, as a present
member, subject only to the question whether there is any
statutory or other limit of time, after the lapse of which the
retirement cannot be called in question. Statutory limit there
appears to be none, unless it be twenty years (q); but there is
the highest authority for the proposition that where a person
has retired bond fide and openly, so that all the shareholders
ought to be treated as aware of the fact, the equitable doctrines
of laches and acquiescence ought to be applied against a
company, and preclude it from disputing the validity of the
Trregular
retirement.
Effect of lapse
of time.
retirement (7).
(0) Ante, A (2), p. 757. (q) See § 16 of the Companies act,
(p) See Taurine Co., 25 Ch. D.
118; Bush’s case, 6 Ch. 246, affirmed
Murray v. Bush, L. R. 6 H. L. 37.
Upon the application to such cases
of the maxim, omnia preswmuntur
rite esse acta, the following cases are
particularly instructive : Lane’s case,
1 De G.J.& Sm. 504; Knight's case,
2 Ch. 321 ; Woollaston’s case, 4 De
G. & J. 437.
1862 ; Helby’s case, Stoke’s case, and
Horsey’s case, all in 2 Eq. 167.
(r) See ante, p. 522; Murray v.
Bush, L. R. 6 H. L. 37; Evans
v. Smallcombe, L. R. 3 H. L. 249,
affirming Smallcombe’s case, 3 Eq.
769 ; Brotherhood’s case, 31 Beav.
365, and 4 De G. F. & J. 566. See
ante, pp. 517—523. See, also, Hunt’s
case, 32 Beav. 387.
CONTRIBUTORIES—TRANSFERORS. 825
Bearing these observations in mind, it is proposed to con- Bk. IV. Chap. 1.
sider the liability, to be put on the list of contributories, of— a
1. Persons who have transferred their shares to others.
2. Persons who have surrendered their shares to the com-
pany.
3. Persons whose shares have been forfeited.
1. As regards persons who have transferred their shares
to others.
In considering the position of a person who has parted with
his shares to another, two classes of cases must be distin-
guished from each other: viz., 1, cases in which the transferee
has actually been substituted by the company for the transferor
before the commencement of the winding up; and 2, cases in
which there has been no such substitution.
a) Where the transferee has been accepted by the company in the place of the
transferor.
If a person has transferred his shares to another, if the Transferors of
transferee has accepted the transfer, and if he has been accepted mene plea me
by the company as a shareholder in respect of those shares,
then, on the subsequent winding up of the company, the
transferee, and not the transferor, is the person to be made
a contributory as a present member in respect of the shares
transferred.
A leading case on this head is Cape’s Executors’ case (8), Cape's Execu-
in which it was held that the purchaser of shares in a banking *™
company governed by 7 Geo. 4, c. 46, was liable as a contri-
butory, as well in respect of debts contracted before as in
respect of those contracted after he became a shareholder. It
was considered that, in the absence of any special provisions
in the company’s deed to the contrary, the purchaser took the
shares as they stood, subject to the state of the concern at
the date of his purchase. This may safely be taken to be
(s) 2 De G. M. & G. 562, affirming case,2 De G.M.&G.113 ; Mayhew’s
the decision of the Master of the case, 5 ib. 837, a case of a cost-book
Rolls, 16 Jur. 787. See, too, Holme’s mine,
824
BE. IV, Chap. 1.
Sect. 10.
Harrison’s case.
WINDING UP BY THE COURT.
the general rule; and it follows from it that, as between
the company, the buyer, and the seller, the seller, when he
transfers his shares, transfers his liability to be made a
contributory.
The proposition that in such cases the transferor is not a
contributory, is established indirectly by the cases just cited,
and more directly by others; ¢.g., Harrison’s case (t), where
the directors assented to a transfer on the terms that the
transferor should guarantee payment of future calls by the
transferee; and it was held that the transferor was not a con-
tributory, although the transferee was insolvent.
Even where the transfer is in some respects irregular, still
if it is intra vires, and the transferee has accepted the transfer,
and has been accepted by the company, the transferee (u), and
not the transferor (z), will be the contributory as a present
member. The same rule holds good in the case of a bond fide
transfer without value (y). But a transfer which is wholly
invalid cannot be treated as good, simply by. being acted
upon (z). Even in this case, however, the transferee and not
the transferor will be a contributory, if there was in effect an
agreement between them both and the company, that the
transferee should take the shares instead of the transferor (a).
(t) 6 Ch. 286. For other illustra-
tions of the same principle, see
Croxton’s case, 1 De G. M. & G.
600; Nicol’s case, 3 De G. & J.
387; Orpen’s case, 9 Jur. N. S.
615.
(u) Meusx’s Executors’ case, 2 De
G. M. & G. 522; Straffon’s Exe-
cutors’ case, 1 De G. M. & G. 576;
Sanderson’s case, 3 De G. & S. 66,
and 3 H. L. C. 698; Gordon’s case,
3 De G.& 8. 249; Walters’ case, 3
De G. & S. 149. Compare the cases
cited infra, p. 830 et seg., where the
transferee had not been accepted by
the company in the place of the
transferor.
(x) Murray v. Bush, L. R. 6 H. L.
37, affirming Bush’s case, 6 Ch. 246,
where the transferor was an outgoing
director ; Ex parte Littledale, 9 Ch.
257, where the transferor had not
paid his calls; Rivington’s case, 3
Ch. D. 10; Doman’s case, ib. 21,
where the transfer had not been en-
rolled as required by act of parlia-
ment. See, also, the cases in the
last note.
(y) Maguire's case,3 De G.& 8S.
31; Fenwick’s case, 1 De G. & S.
557.
(2) See Chappell’s case, 6 Ch. 902 ;
and the cases of scrip, McEuen v.
West London Wharves Co., 6 Ch.
655; Hast Gloucester Rail. Co. v.
Bartholomew, L. R. 3 Ex. 15, which,
although not contributory cases, are
applicable to them. Compare Taurine
Co., 25 Ch. D. 118,
(a) See Morton’s case, 16 Eq. 104.
CONTRIBUTORIES——TRANSFERORS. 825
Moreover, the fact that the transfer has been made to a man Bk. oe 1.
of straw simply to avoid liability makes no difference (b). —
In Hyam’s case (c), Lord Campbell threw some doubt upon Transfer made to
‘ Fi _ , wy : id liability.
this doctrine ; but, notwithstanding his Lordship’s remarks, it Brereseniragh
seems to be settled that, where the transfer is a real trans-
action, it will stand, although the transferor’s sole object in
making it may be to get rid of liability (d); except, perhaps,
in the case of a director transferring his qualification
shares (e).
By the Stannaries act, 1869, 32 & 33 Vict.c. 19, § 35, a
transfer of shares made for the purpose of getting rid of
liability for a nominal consideration, or to a person who is
insolvent, or in the domestic service of the transferor, is pre-
sumed to be fraudulent and need not be recognised either by
the Court or the company. Still, if the company, knowing
the facts, has recognised the transfer, it cannot afterwards set
it aside (f).
But, independently of any statutory enactment, such Mala fide
transfers are naturally viewed with great suspicion, and if a
there is any doubt as to whether the transferor has bond fide
parted with all his interest in the shares, or if the directors
having power to reject the transferee have been imposed upon
in accepting him, the transfers will be treated as invalid. The
following are the leading cases on this head :—
Furst, where there is no real transfer.
In Lund’s case (g) a holder of 100 shares, of 102. each, in an insolvent 1. No real
company, sold them all to one of his servants for half-a-crown. The shares transfer.
passed by delivery, and it was not necessary that the purchaser should be Lund’s case.
accepted as a shareholder by the company. The sale was held to have
been made mald fide, and the seller was held to be a contributory.
(b) De Pass’s case,4 De G.& J. 3915 Costello’s case, 2 De G. F.& J.
544, and cases below. 302 ; Garstin’s case, 10 W. R. 457;
(c) 1 DeG. F. & J. 75. Hatton's case, 8 Jur. N. S. 380.
(d) Taurine Co., 25 Ch. D. 118; (e) South London Fish Market Co.,
Master’s case, 7 Ch. 292; Hakim’s- 39 Ch. D. 324, at p. 381, and Gilbert's
case, ib. 296, note; Bishop’s case,ib.; case, 5 Ch. 559.
Harrison’s case, 6 Ch. 286 ; Weston’s (f) Chynoweth’s case, 15 Ch. D. 13.
ease, 4 Ch. 20 ; Slater’s case, 35 Beav. (g) 27 Beay. 465.
826
Bk. IV. Chap. 1.
Sect. 10.
Hyam’s case.
Chinnock’s case.
Costello’s case.
Alexander’s case.
Budd’s case.
Hatton’s case.
De Pass’s case.
WINDING UP BY THE COURT.
Hyam’s case(h) was a similar case, the transferor in effect giving the
transferee the money expressed to be paid for the shares. The Cowt
treated the whole transaction as a mere fable which the parties were acting
and held upon the evidence that they never intended the transfer to have
any effect as between themselves. In this case also the shares passed by
delivery.
In Chinnock’s case (i), there was a formal transfer, and the company’s deed
contained a clause that trusts should not be recognised ; but the transferor
was nevertheless put on the list, as it was clear that the transferee had no
real interest in the shares, and the trust was merely created to screen the
transferor from liability.
In Costello’s case (j), a son transferred his shares to his father, who was old
and was supported by his family. The sale was expressed to be made for a
trifling consideration, after the company had been ordered to be wound up,
and was clearly not a bond fide transaction, but a mere device to substitute
the father for the son. The son was put on the list.
Aleaxander’s case(k). There a shareholder, who was a broker, transferred
his shares to a clerk for an alleged consideration of 971. 10s., which was
never paid. The transfer was registered, but the transferor kept the certifi-
cates, and his clerk sent all notices to him. The clerk was settled on the
list, and was ultimately attached and imprisoned for not paying the calls
made upon him. He then took the benefit of the Insolvent act. The
transferor was afterwards examined, and the result was that the transfer
was held invalid, and he was put on the list in the place of the clerk.
This case is the more instructive as it is plain that the clerk was himself
estopped from denying that he was a shareholder.
Budd’s case (1). There a solicitor transferred shares to his servant without
consideration, and solely for the purpose of escaping from liability. The
solicitor was held to he a contributory. It was considered that the servant
might have repudiated the transaction, and that the company was entitled
to show that the transfer was invalid, although the transferee did not him-
self impeach it.
Hatton's case(m). There the transfer was made after notice of a call, and
in order to avoid payment of it. The directors had refused to register the
transfer. The transaction was plainly a mere device to avoid liability.
De Pass’s case (n) was the first case of this class in which the transferor
was held not a contributory. There a shareholder knowing that the com-
pany was in difficulties transferred his shares to a clerk for a nominal con-
sideration. The shares were transferable by delivery, and the Court of
Appeal came to the conclusion that the transfer was a real transfer out and
out. This case is extremely difficult to reconcile with the others noticed
above, and is generally admitted to be unsatisfactory (0).
(h) 1 De G. F. & J. 75. appeal, 3 De G. F. & J. 297.
(7) Johns. 714. See, also, Scully’s (m) 8 Jur. N. S. 380. Compare
case, 6 Ir. Ch. 72. Orpen’s case, 9 ib. 615.
(j) 2 De G. F. & J. 302. (n) 4DeG. & J. 544, For other
(k) 9 W. R. 410. See ante, p. cases to the same effect, see ante,
» 747. note (y).
( 30 Beav. 143, affirmed on (0) The Master of the Rolls put
CONTRIBUTORIES—TRANSFERORS. 827
Whether De Pass’s case was rightly decided or not, both Bk. IV. Chap. 1.
that and the other decisions above referred to establish, that sional
notwithstanding a transfer in form, the transferor will be held
a contributory if the evidence shows not only that the transfer
was made to get rid of liability, but that the transfer was not
a real transaction, and was not intended to divest the interest
of the transferor, and to render the transferee the Lond fide
owner of the shares, but that the transferee held them subject
to the orders of the transferor: and although it cannot, per-
haps, be denied that, in the cases in question, the relation of
trustee and cestui que trust was created, it is obvious that
the sole object of the trust was to screen the transferor from
liability. The cases show that such devices will not have the
effect desired by the persons who practise them (7).
Secondly, where the company has been imposed upon.
The power of directors to reject a transferee depends on the 9, company
company’s regulations (q) ; if there is no power to reject him a ™Posed upon.
misdescription is immaterial, and if he is sui juris and becomes
a shareholder, the transferor escapes (7). Butif the directors
have power to object to a transferee, and shares are transferred
to a pauper or a man of straw, who is misdescribed, so that
the directors are imposed upon and induced to make no in-
quiry about him, the company can, on ascertaining the facts,
repudiate the transfer and place the transferor on the list of
contributories. This has been done where the transferee was
a clerk, and was paid to accept a transfer, and he was de-
scribed as agentleman paying for the transfer(s). So where
the transferee was a ship’s steward, paying nothing for the
transfer, but was described as of a certain place, where he did
not live, and as paying the market price for the shares (t).
De Pass on the list. The Lords et seg., A (9), trustees and cestuis que
Justices reversed the decision. An trustent.
appeal to the House of Lords was (q) Weston’s case, 4 Ch. 20. See
prevented by a compromise. ante, p. 464.
(p) See ace. King’s case, 6 Ch. 196, (r) Ib.
where the difference between trans- (s) Payne’s case, 9 Eq. 223.
fers and allotments is alluded to. (t) Ex parte Kintrea, 5 Ch. 95.
Williams case, 1 Ch. D. 576, wasa He was not described asa gentleman
case of allotment. See ante, p. 801 or anything.
828
Sect. 10.
WINDING UP BY THE COURT.
Bk. IV. Chap. 1. Moreover in cases of this description, proof that the directors
Transfers to
infants.
were not in the habit of inquiring about transferees is not
material ; it is their duty to inquire where their suspicions are
aroused, and the mis-statements are of course made to lull
suspicion (w).
However, the mere fact that the transferee is described as a
‘“‘ gentleman,” when he is not entitled to be so called, is not
sufficient to invalidate an otherwise valid transfer (x).
If the directors have accepted the transferee with knowledge
of the facts, the transferor cannot be made a contributory (y).
Transfers to infants are voidable not only by the infant
whilst under age, or within a reasonable time after coming of
age (z), but also by the company (a); unless it has accepted
him, knowing him to be an infant (b), or has allowed him to
transfer and has accepted his transferee (c). Hence, except
under special circumstances, transferors to persons who are
infants at the commencement of the winding up (a), or who, if
then of age, can repudiate their shares (ec), or can be repudiated
by the company(/), are contributories, and not the infant
transferees. Moreover, the fact that the infant transferee has
got rid of some of the shares transferred to him, does not
prevent the transferor from being settled on the list in respect
of the rest (g). The only cases yet reported in which trans-
(u) See Williams's case, 9 Kq. 225,
note.
case, 6 Eq. 455; Weston’s case, 5
Ch. 614 ; Castello’s case, 8 Eq. 504 ;
(x) Masters’s case, 7 Ch. 292;
Bishop’s case, ib. 296, note; and,
see, as to an allottee, Williams’ case,
1 Ch. D. 576.
(y) Chynoweth’s case, 15 Ch. D. 13,
a case in a company governed by the
Stannaries act, 1869, as to which, see
ante, p. 825.
(z) Ante, pp. 39 et seq., and p. 809,
All (c).
(a) Symons’ case, 5 Ch. 298 ; Cas-
tello’s case, 8 Eq. 504.
(b) Parson’s case, 8 Eq. 656.
(c) As in Gooch’s case, 8 Ch. 266,
reversing 8. C. 14 Eq. 454.
(d) As in Hart’s case, 6 Eq. 512 ;
Capper’s case, 3 Ch. 458; Curtis’s
Symons’ case, 5 Ch. 298. See, also,
Reid's case, 24 Beay. 318 ; Reaveley’s
case, 1 De G. & S. 550, where the
transferee was untruly stated to be
of age; Ltchfield’s case, 3 ib. 141,
where he was described as Master.
(e) As in Shrapnell’s case, ante, p.
810.
(f) This follows from Symons’
case, 5 Ch. 298, and Castello’s case, 8
Eq. 504, where the transferee tried
to screen his transferor by keeping
the shares. See, also, Mann’s case,
3 Ch. 459, note.
(g) Mann’s case, 3 Ch. 459, note ;
Curtis's case, 6 Eq. 455.
CONTRIBUTORIES—-TRANSFERORS. 829
Bk. IV, Chap. 1.
ferors to infants have escaped being put on the list are: 1, ay te
cases (h) where the company was precluded by its own conduct
before the winding up commenced, from repudiating the
transfer; and 2, cases where the infant attained 21 before the
commencement of the winding up, and was precluded from
repudiating the shares (i). A transferor to an infant more
than one year before the commencement of the winding up of
a company formed and registered under the Companies act,
1862, is not liable to be put on the list either as a past or as a
present member, if the shares have been since transferred by
the infant to a person on the register (k).
Again, if a shareholder transfers shares into the name of a Transfers to
person without his authority, and the transferee never accepts Poss 1°
the shares, the transferor will be the contributory (J).
If the directors of a company make a mistake, and uninten- Mistake of
tionally pass a transfer, and it is registered, but the mistake”
is discovered and corrected before anything more is done, the
transferor will be a contributory if the transferee does not
object (m).
Again, where a transfer is part of an illegal scheme for Other cases
amalgamating the company with another (n), the transferor a
will be a contributory. So where a director transfers his
shares under circumstances entitling the company to impeach
the transfer, as where he postpones a call to enable him to get
rid of his shares, he will be a contributory (0).
Where a company has transferred its assets to another, and Transfer after
company has
has ceased to carry on business, a member of it who after- discontinued
wards transfers his shares is nevertheless a contributory () ; siacaca
(h) Parson’s case, 8 Eq. 656; Mac-
well’s case, 24 Beay. 321.
(2) Ebbeti’s case, 5 Ch. 302;
Mitchell’s case, 9 Eq. 363; Lums-
den’s case, 4 Ch. 31; and the next
note.
(&) Gooch’s case, 8 Ch. 266, revers-
ing S. C., 14 Eq, 454.
(1) Cartmell’s case, 9 Ch. 691;
where the transfer was to two direc-
tors at the request of the manager,
and was registered. Herttage’s case, 9
Eg. 5; Henessey’s Executors’ case,
3 De G. & Sm. 191, and 2 Mac. &
G. 201; Pim’s case, 3 De G. & Sm.
11, and 1 Mac. & G. 291, noticed
ante, p. 802.
(m) Anderson’s case, 8 Eq. 509,
(n) As in Clack’s case, 11 W. R.
986.
(0) Gilbert’s case, 5 Ch. 559; and
see South London Fish Market Oo.,
39 Ch. D. at p. 331.
(p) Chappell’s case, 6 Ch. 902;
Lankester’s case, ib. 905, note; Allin’s
case, 16 Eq. 449, Lord Justice Mel-
830
Bk. IV. Chap. 1.
Sect. 10.
Transfers to
directors.
Cases where
the transferor
remains liable
to losses not-
withstanding
the transfer.
Holme’s case.
Helby’s, Stokes’,
and Horsey’s
cases,
WINDING UP BY THE COURT.
for, the company having virtually ceased to exist, practically
there are no shares to transfer, and a transfer of them is
inconsistent with the general scheme for putting an end to the
company.
A bond fide transfer to a director as an individual, and not
as a trustee for the company, has the same effect as any other
transfer (q). So has a bond fide transfer to a director or other
person who is a nominee for the company ; provided the trans-
feror acted throughout in the belief that he was dealing with
an ordinary individual, and had no notice of any trust for the
company (r). But, as will be seen in the next section, a sur-
render of shares to the company does not release a share-
holder from liability to be made a contributory, unless the
surrender is warranted by the constitution of the company.
Before leaving this branch of the subject, it is necessary to
allude to those difficult and exceptional cases which occasion-
ally arise on winding up old companies, the deeds of settle-
ment of which contain clauses to the effect that a transfer of
shares shall not release the transferor from liability in respect
of antecedent losses. In Holme’s case (s), where there was such
a clause, and where it was proved that there were debts in-
curred before the shares in question had been transferred, and
which debts were still unpaid, it was nevertheless held that
the transferor was not a contributory; for both before and
after he sold his shares, accounts not showing any losses had
been laid before the shareholders, and by those accounts the
company was held bound.
In Helby’s case, Stokes’ case and Horsey’s case (t), however,
which arose under the Companies act, 1862, on winding up
an old banking company, the deed of settlement of which con-
tained a similar clause, the V.-C. Kindersley held (1), that a
lish dissented, but see Lord Selborne’s
observations in 16 Eq. 455.
(q) Jessopp’s case, 2 De G. & J.
638, and the cases cited in the next
note.
(r) See Grady’s case, 1 De G.J.
& 8. 488, and others of that class,
noticed infra, p. 841.
(s) 2 De G. M. & G. 113, and 4
De G. & S. 312.
(t) 2 Eq. 167. See, also, Sunder-
son’s case, 3 De G. & Sm. 66, which
was afterwards observed upon in
Dodgson’s case, ib. 85, and was ap-
pealed to the Lords, 3 H. L. C. 698,
when the order of the Court below
was varied by consent.
CONTRIBUTORIES—TRANSFERORS. 831
person who had transferred his shares more than twenty years Bk. oe 1.
before the commencement of the winding up ought not to be
put on the list at all; but (2) that persons who had transferred
their shares within that time were liable to be put on the list,
but that their liability was to be confined to their proportions
of the losses, if any, which had accrued whilst they held their
shares. There was evidence to show the existence of such
losses.
b) Where the transferee has not been accepted by the company in the place of
the transferor.
In all cases of this class, something remains to be done
before the transferor ceases to be a shareholder, and he there-
fore prima facie remains a contributory. There is generally a
clause to this effect in a company’s articles or deed of settle-
ment, but even where there is no such clause, the moment it is
established that where shares are held in trust, the trustee and
not the cestui que trust is the contributory (w), it follows that
a seller of shares, who, as between himself and the company,
remains the holder of them when the winding up commences,
must be the contributory in respect of them (2).
For similar reasons the executors of a deceased shareholder Transfers by
remain liable to be made contributories after they have sold eta
the shares of their testator, until the purchaser has been
accepted by the company as a shareholder in respect of
them (y).
The principle of these cases is particularly applicable to Transfers to or
transfers by or to directors ; for it is more especially the duty °Y “et
of directors to observe all requisite formalities. If therefore
they transfer their own shares informally, it is their own
fault (z); and if shares are transferred to them informally,
although it may not be the fault of the transferor, it will
(u) Ante, p. 801. cases of Hx parte Scully, 6 Ir. Ch.
(2) Humby’s case, 5 Jur. N. 8. Rep. 72, and Hx parte Kennedy, ib.
215; Chartres’ case, 1 De G.& 8. 121.
581; De Castro’s case, 2 Jur. N.S. (y) Keene’s Euecutors case, 3 De
1203; Ex parte Walton & Hue, 3 G.M. &G. 272.
ib. 853. Compare Mayhew’s case, (2) Ex parte Brown, 19 Beay. 97.
5 De G. M. 837. See,also, the Irish See, too, Hyre’s case, 31 Beav. 177.
882 WINDING UP BY THE COURT.
Bk, IV. ay 1.
a strongly corroborate other evidence tending to show that the
transfer was not made bond fide (a). Such evidence may, of
course, be rebutted, and then the informality will be of less
consequence (b).
The general rule, illustrated by the foregoing decisions, is
as applicable at the present day as formerly (c), subject to the
qualification introduced by the Companies act, 1862, and
which it is proposed now to examine.
By § 158 of the Companies act, 1862, it is enacted, that
where a company is being wound up by the Court, or subject
to its supervision, every transfer of shares or alteration of the
status of the members of the company made between the com-
mencement of the winding up (d) and the order for winding up
shall be void, unless the Court otherwise orders; and by § 181,
it is enacted, that where a company is being wound up volun-
tarily, all transfers of shares, except transfers made to or with
the sanction of. the liquidators, or alteration in the status of
the members of the company, taking place after the commence-
ment of the winding up, shall be void. Transfers made after
a winding-up order are a fortiori void if not sanctioned by the
Altering register Court or the liquidators (e). The effect of these enactments
of members. a ys
appears to be that after the commencement of the winding up
of a company its register of members cannot be lawfully
altered, except by the order of the Court (f), or, perhaps, in a
case of voluntary winding up, by the sanction of the liqui-
dators (g). But the act does not invalidate contracts for the
sale of shares made but not completed before the commence-
ment of the winding up (hk). The act, it will be observed,
applies not only to cases where shares have been transferred
Companies act,
1862, § 153.
(f) A consent order removing a
(a) Ex parte Henderson, 19 Beav.
person’s name from the register is
107,
(b) Murray v. Bush, L. R. 6 H. L.
37, affirming Bush’s case, 6 Ch. 246 ;
Ex parte Bagge, 13 Beav. 162.
(c) See infra, p. 833 et seg.
(d) As to date at which a winding
up commences, see ante, p. 664, and
Taurine Co., 25 Ch. D. 118.
(e) See §§ 38 and 74, and compare
1] & 12 Vict. c. 45, § 76; Glanville’s
case, 10 Eq. 479.
not invalidated by the fact, that on
the same day a petition to wind up
is presented on which a winding up
order is afterwards made. London
Suburban Bank, 15 Eq. 274. Com-
pare Barge’s case, 5 Eq. 420.
(g) See, as to this, ante, p. 748.
(h) Chapman v. Shepherd, and
Whitehead v. Izod, L. R. 2 C. P.
228.
CONTRIBUTORIES—TRANSI'ERORS. i 8383
after the commencement of the winding up, but also to cases Bk. yy eee 1.
where they have been transferred previously, but the transfers —
have not been registered. The words “alteration of the status
of the members” plainly include the last-mentioned cases.
But it is by no means clear from the language of the act,
whether the Court can, under § 153, alter the register in cases
to which § 85 does not apply; or whether § 35 restricts the
general power to sanction transfers which is conferred on the
Court by § 153. The tendency of the more modern decisions
is in favour of the latter view (2).
Again, whether the Court can exercise the discretion, which
is generally reposed in the directors, of permitting or refusing
transfers is another very important matter on which there is
also a conflict of judicial opinion. This question, it will be
observed, does not depend on the power of the Court to rectify.
the register, but on its power to substitute its own judgment
for that of the persons in whom the discretion of accepting or
rejecting transferees has been reposed by the members of the
company. The better opinion is that this cannot be done (k);
although the absence of approval is not material where there
were no grounds for disapproval, and where the approval was
not a condition precedent to the transferee’s becoming a share-
holder (2).
The following observations it is hoped will be found to be
in accordance with the most recent decisions (m) :—
a) Where the sale has taken place before the commencement of the winding up.
1. If a person has sold his shares, and has unnecessarily Delay on the
delayed compelling the purchaser to complete the transfer, ae Po
and the seller remains the registered holder at the commence-
ment of the winding up, he, and not the purchaser, will be
placed on the list (n) ; although, as between the seller and the
(2) See, as to the construction of Giffard in Marshall v. Glamorgan
§ 35, ante, p. 120, et seq. Iron and Coal Co.,'7 Eq. at p. 187.
(k) Infra, pp. 834—837. See, (n) Ward and Henry’s case, 2 Ch.
also, Shepherd’s case, 2 Ch. 16. 431, reversing Ward’s case, 2 Eq.
(1) Ward and Garfit’s case,4 Eq, 226; Walker’s case, 6 Eq. 30; Head’s
189, and infra, p. 834. case, 3 Eq. 84; White's cuse,ib. The
(m) See the summary of V.-C. observations of the Master of the
L.c. *3 H
834
Bk. IV. Chap. 1.
Sect. 10.
No delay, and
transfer com-
plete although
not registered,
Discretion of
directors exer-
cised by the
Court,
WINDING UP BY THE COURT.
purchaser, the former may be entitled to an indemnity from
the latter (0), and although each of them may be as solvent as
the other (p).
2. Where before the commencement of the winding up
shares are bond fide sold, and the transfer has been executed
by both transferor and transferee, and has been left for regis-
tration at the company’s office, and there has been no un-
necessary delay on either side in completing the transfer, and
nothing remains to be done except to register it, and the
company, having had an opportunity of registering, have
neglected, but not declined to do so (q): under these circum-
stances, the Court will allow, and indeed order, the trans-
feree’s name to be substituted for that of the transferor, unless
there is some good reason why the transfer should not be
completed (r). Even if the transferee has not executed the
transfer, still if he has accepted the shares, and has been
accepted by the directors as a shareholder, the transferee will
be treated as the owner (s).
3. Where, as is generally the case, the directors have power
to decline to register a transfer if the transferee is not approved
by them, and a transfer has been left for registration in suffi-
cient time to be approved before the commencement of the
winding up, but has not been approved; still, if no delay is
imputable to the parties to the transfer, and there are no
grounds on which the directors could have properly declined
to accept the transferee, the Court will accept him, and order
his name to be registered (t).
Rolls in Ward’s case, 2 Eq. 226, were
commented upon and explained by
him in these two last cases.
(0) Head’s case and White's case, 3
Eq. 84.
(p) Ibid. In Heads case, the
liquidator was indifferent as to
which of the two was put on the
list.
(q) See infra, 3, 4, and 6, as to
this, And compare Lord R.,
Montagws case, W. N. 1888, 136,
where the transferor had neglected to
see that the transfer was registered,
But if the directors did object
and there was no default on the part
of the company.
(r) Fyfes case, 4 Ch. 768 ; Hill's
case, ib. 769, note; Lowe’s case, 9 Eq.
589; Ward and Garfit’s case, 4 Ey.
189; Nation's case, 3 Eq. 77 ; and
see Ward’s case, 2 Eq. 226.
(s) General Floating Dock Co., W.
N. 1867, 27, where the transferee
was registered.
(t) Weston’s case, 4 Ch. 20, where
the transferee was a man of straw,
but the directors had no right to
object to him. See, also, Ward and
CONTRIBUTORIES—TRANSFERORS.
on proper grounds, the Court clearly cannot interfere ;
has been held competent for directors, seeing that the com- -
pany is in extremis, to resolve that no more transfers shall be
registered without their express sanction; and where this is
done, the Court will decline to complete a transfer left for
registration just before the passing of the resolution (w),
although the Court will complete a transfer which was left for
registration, and ought to have been registered before the
resolution was passed (x).
4. It is always material, in these cases, to ascertain whether
the directors have received a proper transfer in sufficient time
before the commencement of the winding up to enable them
to pass or reject the transfer in the ordinary course of business.
Where there has been no board meeting in the interval between
the leaving of the transfer and the commencement of the
winding up, the Court has never yet completed the transfer,
and it is very doubtful whether the Court has any power to do
so(y). But where there has been such a meeting, although
only one, delay is imputable to the company in not passing
and registering the transfer, and the Court can and will order
it to be completed if the parties to the transfer have not
themselves been guilty of delay (z).
5. But this assumes that the transfer left for registration is
one which the directors were bound to accept: if it be not, no
delay is imputable to the company, and the transferor will be
the contributory.
This has been decided where no transfer has been left for
registration (a); where the transfer left was not executed by
the transferee, as was required by the practice of the com-
Garfit’s case, 4 Eq. 189; Nation’s (y) See Ward and Henry's case, 2
835
and it Bk. IV. Chap. 1.
Sect. 10.
Delay in regis-
tering transfer.
Improper
transfers,
case, 3 Eq. 77; and compare Wes-
ton’s case, with Ex parte Parker, 2
Ch. 685.
(u) Alexander Mitchell’s case, 4
App. Ca. 548 & 567; Rutherfurd’s
case, ib. 548 & 581 ; Mitchell v. City
of Glasgow Bank, ib. 624 ; Shepherd’s
case, 2 Ch. 16, and 2 Eq. 564.
(x) Nation’s case, 3 Eq. 77 ; and
see Lowe’s case, 9 Eq. 589.
Ch. 431; Shepherd’s case, ib. 16.
(2) See Nation’s case, 3 Eq. 77;
Hill’s case, 4 Ch. 769, note ; Lowe's
case, 9 Eq. 589, where petitions for
winding up, which were afterwards
withdrawn, were pending. Qu. this
case,
(a) Musgrave and Hart's case, 5 ~
Eq. 193.
3H 2
836
Bk. IV. Chap. 1.
Sect. 10.
WINDING UP BY THE COURT.
pany (2); where the transferee was a person to whom the com-
pany might have objected (c) ; where the transferor not having
paid his calls was not entitled to transfer (d). But a transfer
executed in blank and filled up afterwards, but before being
sent in for registration, has been held sufficient (¢).
The directors of a mutual insurance society are entitled to
evidence of the assignment of a policy, and if reasonable time
for inquiry has not elapsed before the winding up, the Court
will not register the transferee (/).
6. It must be borne in mind in these cases that if the com-
pany has refused to register the transferee before the company
was in difficulties, the company cannot insist on having his
name put on the list of contributories instead of that of the
transferor (g); and the creditors of the company are in this
respect in no better position than the company (h).
B) Where the sale has taken place since the commencement of the winding up.
Tf, in order to rectify a company’s register and to substitute
the name of a transferee for that of the transferor, it is essential
that the transfer shall be left for registration before the func-
tions of the directors cease, it will follow that a person who
sells his shares after that time must, under all circumstances,
be a contributory. But if this is not essential, there will be
the same power of making the substitution where sales are
made after, as where they are made before, a petition to wind
up (i). It is obvious, however, that to allow shareholders to
get rid of their liabilities by selling their shares after the
commencement of the winding up of the company would lead
to the greatest fraud; and it is difficult to conceive any cir-
cumstances which can entitle such a seller to have the pur-
chaser substituted for him, if the liquidators or the creditors
(6) Marino’s case, 2 Ch. 596 ; (f) See Sanders’ case, 20 Ch. D.
Walker's case, 2 Eq. 554, and see 403.
last note. (g) Stchell’s case, 3 Ch. 119.
(c) Shipman’s case, 5 Eq. 219. (h) Ib.
(d) Holdew’s case, 8 Eq. 444. (1) See acc, Emmerson’s case, 1
(e-) Contract Corporation, 3 Ch. Ch. 433.
105.
CONTRIBUTORIES— TRANSFERORS. 837
oppose the substitution (k). Nor is there yet any reported Bk. we
case in which the substitution has been made, even where -——-———
there has been no opposition on their part. In Emmerson’s Emmerson’s
case (1), indeed, the Master of the Rolls made the substitution ;“"""
but the decision was reversed on appeal (m). This case, more-
over, was decided before it was held, as it now is, that the
question who ought to be on the list of contributories, is
materially different from the question whether the seller is
entitled to indemnity from the purchaser. In ]Valker’s case (1), Walker's case.
the Court declined to make the substitution, on the ground
that the Court could not itself exercise the discretion of ap-
proving or rejecting transferees, and which discretion was
vested by the articles of the company in the directors. In
each of the above cases the liquidator was indifferent as to
which person was on the list.
In connection with this subject it is to be remembered that
sales of shares after the commencement of a winding up are
not void under § 153 of the Companies act, 1862; and trans-
fers after that date may be approved by liquidators (0).
2. As regards persons who have surrendered their shares to the
company.
The right of shareholders to retire from a company has been Surrenderors
discussed in an earlier chapter (p), and it was there seen that os
in the absence of an express agreement, except in the case of
cost-book mining companies, the only mode in which a share-
holder can retire from a company is by transferring his shares
to some other person. If, therefore, a shareholder has sur-
rendered his shares, and even if they have been cancelled by
the directors, he will, nevertheless, be a contributory, as a
(k) Under the acts of 1848 and
1849 the transferor has been decided
wind up, and that under those
circumstances a decree for specific
to be the contributory. Glanville’s
case, 10 Eq. 479. ;
(1) 2 Eq. 231.
(m) 1 Ch, 483. It was reversed
upon the ground that neither buyer
nor seller knew of the petition to
performance could not have been
made against the purchaser.
(n) 2 Eq. 554.
(0) See Rudge v. Bowman, L. R. 3
Q. B. 689.
(p) Ante, p. 517.
838
Bk. IV. Chap. 1.
Sect. 10.
Morgan’s case.
Stanhope’s case.
Munt’s case.
WINDING UP BY THE COURT.
present member, unless he can show that the company is bound
by what has taken place. Primd facie, directors have no right
to accept a surrender of shares.
Morgan’s case (q), Stanhope’s case (r), and Munt’s case (s),
and the cases which arose on winding up the Agriculturist
Cattle Insurance Company (t), the facts of which have been
before stated (uw), are leading authorities upon the subject now
in question, and it appears from them, and other cases which
will be found in the notes below, that, unless the constitution
of a company is such as to warrant directors in accepting a
surrender of shares, or unless an unauthorised surrender has
been so acquiesced in by the company as to become binding
upon it (@), a person whose shares have been surrendered will,
nevertheless, remain liable to be a contributory, as a present
member. This has been held where the directors would have
had power to buy shares of the company out of certain accu-
mulated funds if they had existed, but which, in fact did not
exist, and the shares were nevertheleless purchased by the
directors for the company in pursuance of a resolution passed
at one general meeting of the shareholders (y), and ratified at
another similar meeting (z). So, where the shares had been
surrendered and cancelled considerably more than six years
before the company was ordered to be wound up (a) ; where the
cancelled shares had been allotted without authority (b); where
it was part of the bargain when they were issued that they
should be cancelled (c); where they had been transferred to
(q) 1 De G. & 8. 750, and 1 Mae.
& G. 225, ante, p. 518.
(r) 3 De G. & S. 198, ante, p. 518.
(s) 22 Beav. 55, ante, p. 519.
(t) Stanhope’s case, 1 Ch. 161;
Stewart's case, ib. 511; Spackman
Evans, L. R. 3 H. L. 171 ; Houlds-
worth v. Evans, ib. 263.
(u) Ante, p. 522.
(z) As to which, see Evans v.
Smalicombe, L. R. 3 H. L. 249, and
other cases noticed, ante, pp. 517
to 523; and Hunt’s case, 32 Beav.
387.
(y) Ex parte Morgan, 1 Mac. & G.
225, and 1 De G. & S. 750, ante, p.
518.
(z) Lawes's case, 1 De G. M. & G.
421. See, also, the cases in note (£).
Such a power in the case of a limited
sompany would now be invalid,
Trevor v. Whitworth, 12 App. Ca.
409.
(a) See the cases in note (t), and
Addison’s case, 5 Ch. 294. See, also,
Stanhope’s case, 3 De G. & S. 198,
and Richmond’s Executors’ case, ib.
96.
(b) Holt’s case, 1 Sim. N. 8. 389.
(c) Addison’s case, 5 Ch. 294.
CONTRIBUTORIES—SURRENDERORS.
839
the surrenderor in an informal manner (d); where they were Bk. IV. Chap. 1.
those of dissatisfied shareholders, whose retirement was one
of the terms of a compromise effected with them (e); where
the shares were those of dissatisfied directors wishing to have
nothing more to do with the company (f); where the shares
were those of a person who had released all his claims upon
the other shareholders, for such a release is not a release by
them of their claims on him (g); where the shares were can-
celled on non-payment of a call made for the purpose of
enabling the shareholder to get rid of his shares (h); where
the shares were cancelled at the request of the holders (2) ;
where the shares were held by a trustee, and were cancelled
pursuant to a compromise between the cestwi que trust and the
company (4); where the shares were cancelled and exchanged
for other shares, pursuant to a scheme for amalgamating the
company with another (J).
Upon precisely the same principles it has been held that
persons who have agreed to become shareholders are contri-
butories as present members, although the directors may have
since agreed to cancel their shares (m)."
Moreover, where there is a power to accept a surrender, and
a surrender is made colourably, but not bond fide in exercise
of it, the surrenderor will be a contributory (n).
Compare Miiler’s case, 3 Ch. D. 661.
and 5 ib. 70.
(d) Walter’s 2nd case, 3 De G. &
S. 244.
(e) Bennett's case, 5 De G. M. &
G. 284, and 18 Beav. 339. London
and Provincial Consolidated Coal Co.,
5 Ch. D. 515, where the persons re-
tiring had subscribed the memo-
randum of association and no shares
had been allotted. See, also, the
cases ante in note (t), noticed ante,
p. 522,
(f) Munt’s case, 22 Beav. 55;
Daniell’s case, ib. 43, and on appeal, 3
Jur. N.S. 803; Stanhope’s case, 3 De
G. &S. 198. See Walker's case, 8 De
G. M. & G. 607 ; Hx parte Brown,
19 Beav. 97, and the cases noticed,
ante, pp. 517 to 523.
(g) Ex parte Apps, 18 L. J. Ch.
409.
(h) Richmond’s case, 4 K. & J.
305.
(1) Esparto Trading Co., 12 Ch.
D. 191.
(k) Barrett’s case, 4 De G. J. &
Sm. 416. See, infra, p. 842 as to
compromises.
(1) Austin’s case, W. N. 1867, 138.
(m) See Adams’s case, 13 Eq. 474;
Sidney’s case, 18 Eq. 228; Hall’s
case, 5 Ch. 707; London and Pro-
vincial, de., Coal Co., 5 Ch, D. 525.
(n) Halls case, 5 Ch. '707, and see,
infra, p. 842, under the head For-
feiture.
Sect. 10.
840
Bk. IV. Chap. 1.
Sect. 10.
Persons who
have duly sur-
rendered their
shares not con-
tributories.
Distinction
between sur-
rendering shares
and transferring
them.
WINDING UP BY THE COURT.
Where, however, the shareholders have power to relinquish
their shares, and do relinquish them in the exercise of that
power, then, as between themselves and the company, their
liability is at an end, and on the winding up of the company
they are not liable to be made contributories, unless it be as
past members (0). There are many decisions under the older
acts to the effect that, under the circumstances now supposed,
persons who had surrendered their shares were not contribu-
tories (p), even although the surrender was somewhat irre-
gular (q). The same principles are applicable to surrenderors
of shares in companies formed and registered under the Com-
panies act, 1862 (7). The writer conceives the same to be
true of unregistered companies wound up under that act,
although, if there are no present as distinguished from past
members, surrenderors will be liable to be contributories if
there are debts for which but for the act they could be sued at
law (s).
Before quitting this subject it is necessary to advert to the
distinction between a transfer of shares and a surrender of
them. A surrender which is carried out by a transfer to a
nominee of the company is treated as a surrender and not as a
transfer (t); but if what is called a surrender of shares is in
fact a bond fide transfer of them, the transferor will, as between
(0) As to companies governed by
the Stannaries act, 1887, see 50 &
51 Vict. c. 43, § 22.
(p) See Fenn’s case, 4 De G. M.
& G. 285, and 1 Sm. & G. 26;
Birch’s case, 2 De G. & J. 10; Loft-
house’s case, ib. 69; Bodmin United
Mines, 23 Beav. 370, all cases of
cost-book mines.
(q) Lane’s case, 1 De G. J.& 8.504;
Grady’s case, ib. 488 ; Busk’s case, 3
De G. & 5. 267, affirmed on appeal,
see 16 Jur. 343; Cockburn’s case, 4
De G. & 8. 177; Ex parte Bagge,
13 Beav. 162; Hawthorn’s case, 10
W. R. 572.
(r) Teesdale’s case, 9 Ch. 54, where
the power was given by special reso-
lution altering the articles. But see
the observations on this case in
Hope v. International Financial
Soc., 4 Ch. D. 327; Thomas's case,
13 Eq. 487; Snell’s case, 5 Ch, 22,
where the surrenderor had sub-
scribed the memorandum of associa-
tion. Compare Hall’s case, ib. 707,
where the transaction was held not
to amount to a surrender.
(s) Part’s case, 10 Eq, 622, See
ante, p. 819, note (2).
(t) See Addison’s case, 5 Ch. 294 ;
Lankester’s case, 6 Ch. 905, note, as
explained by L.-J.- Mellish, at p.
910; Eyre’s case, 31 Beav. 177;
Benham’s case, 13 W. R. 4838;
Clack’s case, W. N. 1866, p. 275,
where dissentient shareholders re-
tired. . Compare next two notes.
841
CONTRIBUTORIES—SURRENDERORS.
himself and the company, be released from liability, and will Bk. E
not be a contributory, although the main object of the transfer —
may have been to enable him to get quit of the company (w).
Moreover, even if the transfer is made to a person in trust for
the company, but the transferor is ignorant of this fact, and
throughout acts in the bond fide belief that he is transferring
his shares to the transferee as an individual, the transfer will
be valid, and the transferor will not be a contributory (2).
A transfer to an individual director, moreover, will not
relieve the transferor from his liability if the transfer is not
made with perfect bona jides, and so as to constitute the
transferee a shareholder in respect of the shares transferred.
In Ex parte Brown (y), a transfer by a director to a director was Ex parte Brown.
held invalid as between the transferor and the company, on
the ground that the transfer was made irregularly, and the
transferee had already as many shares as he was entitled to
hold in his own right ; and in Ex parte Henderson (2), a transfer Ex parte
: : 7 : e Henderson.
by an auditor to a director was held invalid as against the
company, because, in addition to the grounds relied upon in
the last case, the transferor had made no attempt to transfer
his shares in the proper manner, and had acted throughout
with want of good faith.
A person who has not bound himself to take shares, can Difference
waive any right to take them which he may have acquired ; ak
and an arrangement by which he abandons some and retains 24 ¢ecjinins
the rest, does not entitle the company to hold him a con-
tributory in respect of more shares than he ultimately agrees
to take (a). So if shares are allotted pursuant to an invalid
resolution which is afterwards rescinded, and the shares are
Chap. 1.
10,
cancelled, the allottee will not be a contributory ().
(uw) Jessopp’s case, 2 De G. & J.
638. See, also, the next note.
(x) Grady’s case, 1 De G. J. & Sm.
488; Reeve’s case, 10 W. R. 817;
Hollwey’s case, 1 De G. & 8.777;
Nicol’s case, 3 De G. & J. 387;
Hughes’ case, 15 W. R. 476. Com-
pare these with the last two notes.
(y) 19 Beav. 97.
(2) Ib. 107. Compare Murray v.
So shares
Bush, L. R. 6 H. L. 37, affirming
Bush’s case, 6 Ch. 246, where there
was irregularity, but no mala fides.
(a) See Sahlgreen and Carrall’s
case, 3 Ch. 323; Meyer's case, 16
Beay. 383 ; Coleman’s case, 1 De G.
J. & Sm. 495 ; Hebb’s case, 4 Eq. 9.
See, also, Nicol’s case, 29 Ch. D.
421,
(b) Barnett’s case, 18 Eq. 507.
842
Bk. IV. Chap. 1.
Sect. 10.
Compromise
of doubtful
liability.
Surrender under
§ 161.
Position of
persons whose
shares have
been forfeited.
WINDING UP BY THE COURT.
allotted by mistake as paid up may be withdrawn, and re-issued
when the mistake has been rectified (c). Such cases as these
do not turn on a shareholder’s right to retire from a company,
but on a person’s right to withdraw from an unconcluded
agreement, and to have mistakes corrected.
Moreover, if there is a bond fide question whether a person
jis or is not a shareholder or bound to take shares, and such
question is settled by a compromise, and he gives up all his
rights (if any) against the company, and the company relin-
quish all claims upon him, he will not be a contributory as a
present member; although he might have been had there been
no compromise, and although shareholders in the company
may have had no right to surrender their shares (d).
Moreover, this principle applies although the parties may
not have got so far as to dispute the question capable of
being disputed between them (e). But in the absence of a
bona fide dispute, or of a question capable of being bond fide
made a matter of dispute, there can be no compromise, and
no room therefore for the application of the principle in
question (f).
A shareholder who in the course of winding up surrenders
his shares under § 161 of the Companies act, 1862, does not
cease to be a contributory (4).
3. As regards persons whose shares have been forfeited.
It was seen in a previous chapter, that the right to forfeit
shares does not exist except where it is expressly conferred (h).
Consequently, persons whose shares have been declared for-
feited, do not cease to be shareholders, and are not relieved
from their liability to be made contributories as present
(c) Hartley's case, ib. 542, and 10 606, reversing Dizon’s case, 5 Ch.
Ch. 157. 79.
(d) Lord Belhaven’s case,3 De G. (f) Adams’s case, 138 Eq. 474;
J. & Sm. 41; Fox’s case, 5 Eq. 118; Dizxon’s case, 5 Ch. 79, was decided
Blake’s case, 34 Beav. 639. See, on this principle, but was reversed
also, Bath’s case, 8 Ch. D. 334; onappeal. See the last note.
Hesketh’s case, 13 Ch. D. 693. (9g) Vining’s case, 6 Ch. 96.
(e) Dixon v. Evans, L. R. 5 H. L. (h) Ante, p. 528.
CONTRIBUTORIES—FORFEITED SHARES. 843
members, unless the forfeiture is warranted by the constitu- Bk. ae 1,
tion of the company.
On the other hand, where there is power to forfeit shares, Persons whose
and shares are bond fide forfeited in pursuance of the power, ben aie
the shareholder who is thereby deprived of all interest in the ae,
company, is not liable to be made a contributory, as a present
member, on its winding up (2), unless, notwithstanding the
forfeiture, he continues, as between himself and the company,
liable for its debts, which, although not an impossible, is a
very improbable case.
A power to forfeit is, however, one which must be exercised Irregular
with great attention to the formalities prescribed by the instru- ae
ment conferring it (k), and a person whose shares have been
improperly forfeited will be a contributory as a present member
under ordinary circumstances (I).
Nevertheless, if everything required to be done is substan-
tially done by the company, and if the shares have been treated
both by the company and by the shareholder as forfeited, the
shareholder will not be a contributory. This is well exempli-
fied in Knight’s case (m), where there was power to forfeit for Knight’s case.
(i) See, in addition to the cases
cited in the next three notes, Dawes’s
case, 6 Eq. 232, where the forfeiture
was in the interval between a reso-
lution to‘wind up voluntarily, and a
resolution confirming it; Kelk’s case
and Pahlen’s case, 9 Eq. 107, and
Ex parte Collum, ib. 236, where the
forfeiture was for not bringing in
certificates for registration. See,
also, Beresford’s case, 3 De G. & S.
175, and 2 Mac, & G. 197 ; Ex parte
Bailey, 15 Jur. 29. These cases
show that if a company’s deed con-
fers a power of forfeiture, that power
may be exercised against a person
who ought to execute, but has not,
in fact, executed that deed. And
see Strick v. Swansea Tin Plate Co.,
36 Ch. D. 558, where members
expelled from a trade association
were held to have no claim to share
in the division of surplus assets.
(k) Ante, p. 532.
(1) Esparto Trading Co., 12 Ch. D.
191, where there was no intention
to forfeit the shares, but merely to
cancel them; Bottomley’s case, 16
Ch. D. 681, where the forfeiture was
invalid owing to the number of
directors being insufficient ; Garden
Gully Mining Co. v. McLister,1 App.
Ca. 39, where the forfeiture was
invalid on the ground that it was
made by persons not properly elected
directors.
(m) 2 Ch. 321. See, also, Wool-
laston’s case, 4 De G. & J. 437, re-
versing, on this point, Woollaston’s
case, 5 Jur. N. 8. 617 ; Lyster’s case,
4 Kq. 233, where the forfeiture was
by two out of six directors ; King’s
case, 2 Ch. 731 and 735, where the
shares forfeited were illegally sub-
divided shares; and see Webster’s
case, 32 L. J. Ch. 135; Grady’s case,
844
WINDING UP BY THE COURT.
Bk. IV. Chap. 1. non-payment of calls, on giving certain notices, and by a reso-
Sect. 10.
Intention to
forfeit not
carried out.
Bigg’s case.
improper exer-
cise of power
to forfeit.
lution to that effect: a shareholder from whom calls were due,
received notice in proper form that if his calls were not paid
on a certain day his shares would be forfeited. He made
default, and the secretary thereupon made an entry in the
company’s books to the effect that the shares were forfeited,
and had been transferred to the company. By the regulations
of the company the shareholder ought to have had notice of
this; but no notice was sent to him; and no resolution to
forfeit appeared in the company’s books: indeed, it was
tolerably plain that there had been no such resolution. The
shareholder in question, however, had never acted or been
treated as a shareholder after the forfeiture; and it was held,
that a resolution to forfeit ought to be presumed, and the
shareholder was accordingly held not to be a contributory.
In the above case, it will be observed that there was power
to forfeit, an intention to forfeit, and notice of that intention:
and the intention was actually carried into effect, although not
with due regularity. But, as has been seen on a former occa-
sion, an intention to forfeit not carried into effect is no forfei-
ture at all(n); therefore, where a shareholder received notice
that if he did not pay his calls in arrear by a certain day his
shares would be forfeited without further notice; and he paid
his calls on some of his shares but not on others, stating that
he should submit to their forfeiture, but the directors after all
did not forfeit them, but kept his name on the books as it had
been before the notice; he was held, on the subsequent wind-
ing up of the company, to be a contributory in respect of all
his shares (0).
Even when there is a power to forfeit, that power can only
be exercised bond fide for the benefit of the company. If,
therefore, a shareholder procures his shares to be forfeited in
order that they may be cancelled and got rid of, or as part of
1DeG. J. & 8. 488, and Coleman’s (0) Biggs case, 1 Eq. 309, In
case, ib. 495, as to presuming for- Miller’s case, 3 Ch. D. 661, and 5 ib.
feiture. See, also, Miller’s case, 3 70, there was no notice or declara-
Ch. D. 661, and 5 ib, 70, infra tion of forfeiture, but it was a con-
note (0). sequence of ceasing to be a director
(n) Ante, p. 533,
CONTRIBUTORIES—FORFEITED SHARES. 845
a scheme by which he may be enabled to surrender his shares Bk. a 1.
and retire from the company, he will remain a contributory =—— ~——
notwithstanding the forfeiture (p). On the same principle a
surrender of shares which is ultra vires cannot be treated as
valid by being referred to a power of forfeiture, which was
never really exercised (q).
A forfeiture of shares taken or agreed to be taken, must be ra
distinguished from the withdrawal of shares allotted to a per- feiting shares
son, but which he has not bound himself to take, and has eee
expressly or impliedly declined to accept. Whether any power _ to be
to forfeit shares exists or not, such a person is not a con-
tributory (7).
The forfeiture of a share within a year before the commence- Liability as past
ment of the winding up of a company formed and registered pe
under the Companies act of 1862, does not relieve the former
holder from his liability to be put on the list of contributories
as a past member (s), even although he may have transferred
them before the forfeiture (¢); and even although the com-
pany’s regulations are to the effect that forfeited shares are to
be treated as extinguished (w).
(p) Richmond’s and Painter’s case,
4K. & J. 305, ante, p. 532. See
also, Spackman v. Evans, L. R. 3
H. L. 171; Houldsworth v. Evans,
ib. 263 ; Stanhope’s case, 1 Ch. 161;
Stewart’s case, ib. 511 ; noticed ante,
pp. 518 to 523 ; Gower’s case, 6 Eq.
77, where the member’s name was
still on the register.
(q) Halls case, 5 Ch.707; Esparto
Trading Co., 12 Ch. D. 191.
(r) Goldsmid’s case, 16 Beav. 262 ;
Coleman’s case, 1 De G. J. & S. 495;
Belhaven’s case, 3 ib. 41. See, also,
Dizon v. Evans, L. R. 5 H. L. 606,
reversing Dvwxon’s case, 5 Ch. 79.
ante, p. 842,
(s) Bridger’s case, and Neill’s case,
4 Ch. 266; Bath’s case, 8 Ch. D.
334. Compare Hesketh’s case, 13 Ch.
D. 693.
(t) Bridger’s case, and Netil’s case,
4 Ch. 266.
(u) Creyke’s case, 5 Ch. 63.
846
Bk, IV. Chap. 1,
Sect. 11.
Calls on con-
tributories.
Purposes for
which calls may
be made.
Time and
amount of
calls.
WINDING UP BY THE COURT.
SECTION XI.—CALLS FOR DEBTS, ETC.
1. Generally.
Having settled the list of contributories so far as he is able,
the next thing which the judge acting in the winding up
usually finds it necessary to do, is to make calls on the con-
tributories for the payment of the debts, losses, and liabilities
of the company (x).
Calls may be made:
1. For the payment of the company’s debts and liabilities ;
2. For the payment of the costs of winding up; and
3. For the adjustment of the rights of the contributories
amongst themselves (y).
Moreover, in making calls, the probability that some of the
contributories will fail to pay the full amount due from them
may be taken into consideration (z).
With respect to the time for making calls, and the amount
to be raised, the Companies act, 1862, gives the judge a wide
discretion (a); and he is, to a great extent, guided by the
liquidator’s view of what is required (b). Moreover, the court
of appeal is very reluctant to interfere with the discretion of
the judge upon such a question, as to whether the time has
arrived for making a call, or as to the amount for which it
should be made(c). A call can only be made upon persons
who are settled on the list of contributories (d); but it is not
necessary to wait until the list is completed (e); nor until
the assets of the company have been realised or have been
(c) The power of making calls on
the contributories is given by § 102
of the Companies act, 1862. These
calls must not be confounded with
calls made under a company’s articles
of association or deed of settlement.
See ante, p. 407.
(1) § 102. See, also, §§ 38, 196,
cl. 5, and § 200.
(2) § 102,
(a) Ib.
(b) See Helbert v. Banner, L. R. 5
H. L. 28 ; The Contract Corporation,
2 Ch. 95.
(c) Ibid.
(d) See the act § 102.
(e) Ibid., and see, as to past mem-
bers, Creykes’ case, 5 Ch. 66 ; and see
Helbert v. Banner, L. R. 5 H. L. 28.
See Underwood’s case, 5 De G. M.
& G. 677, where the list was in such
a state that it was held no call could
be made.
847
CALLS.
ascertained to be insufficient to discharge its liabilities (f) ; Bk- ee 1.
nor until the claims against the company have been estab-
lished (49).
Applications to the judge to make a call are made by sum- Practice as to
mons, stating the proposed amount of the call(h). The oe
‘summons must be served four clear days at least before the
-day appointed for making the call on every contributory pro-
posed to be included in it (i). Notice of the intended call
may, however, be given by advertisement if the judge so
‘directs (k). The application for a call must be supported
by affidavit, which in ordinary cases is made by the official
liquidator (2).
When an order for a call is made, a copy of it must be Order fora call,
‘served upon each of the contributories included in it, together
with a notice specifying the balance due from him in respect
‘of such call(m). If this notice states that interest will be
charged in case of non-payment on the day named, such inte-
rest will be payable (n). But provisions in a company’s
articles of association for the payment of interest on calls do
not apply to calls made in winding up (0). The order need
not be advertised unless the judge so directs(p). If default is Balance order.
made by any contributory in payment of the sum which he
has thus been required to pay, another and special order,
called a balance order, is made, requiring him to pay what is
due from him within four days after service (q).
(f) § 102. Helbert v. Banner,
L.R.5H. L. 28; Gay's case, 1 De
G. M. & G. 347; Greenwood’s case,
3 ib. 459.
(g) Contract Corporation, 2 Ch. 95,
noticed infra, p. 850.
(h) See rule 33.
(t) Ib.
(k) Ib. See the forms in the
Rules, schedule 3, Nos. 34-37.
(2) See ib. No. 33,
(m) See rule 34, and the forms in
the schedule, Nos. 36 and 37. As
to the mode of service, see § 63;
as to substituted service, see Ellis’s
ease, 3 De G. & S. 172. As to ser-
vice abroad, see ante, pp. 687, 688. In
Upon non-
Ex purte D Urban, 18 Jur. 781, notice
sent by post to a person abroad was
held good, though it reached him
after the day appointed for payment.
As to the affidavits of service, see
Natle Slate Co.. 7 W. R. 319; Re
Job, 27 Beay. 32.
(n) Barrow’s case, 3 Ch. 784; Ex
parte Lintott, 4 Eq. 184.
(0) Welsh Flannel and Tweed Co.,
20 Eq. 360, a case of voluntary
winding up.
(p) Rule 34,
(q Rule 35, and see the forms in
the schedule, Nos. 38 and 39. This
order ought not to be issued against
a bankrupt contributory, against
848
Bk. IV. Chap. 1.
Sect. 11.
Mode of en-
forcing balance
order.
WINDING UP BY THE COURT.
compliance with this order it may be enforced in the way in
- — which orders in the Chancery Division of the High Court are
usually enforced (r), t.e., by fi. fa., &c., or by sequestration (s).
A writ of ne exeat regno to prevent a contributory from ab-
sconding without paying a call made upon him will be granted
on motion ex parte (t).
Calls made in the winding up of a company are specialty
debts, binding heirs (wu); and provision is made for obtaining
payment out of the real as well as out of the personal estates of
deceased contributories (~); and the liability to a call is con-
sidered as commencing at the time when the shares in respect
of which they are made were taken (y); and executors as such
are liable to calls in respect of debts contracted by the com-
pany since their testator’s death (z). Calls may be proved
against the estate of bankrupt contributories (a).
An order for payment of a call might formerly have been
registered (b) ; and it may be made the foundation of a charging
order, under 1 & 2 Vict.c.110 (c). Buta balance order cannot
be sued upon (d); nor made the foundation of a bankruptcy
notice (e) ; nor if made against an executor does it prevent him
from retaining his own debt out of the testator’s assets (f).
whose estate the call can be proved.
Mitchell's case, 5 Ch. 400.
(r) See the act, § 120. As to en-
forcing orders in Scotland, see §
121.
(s) Ante, p. 697.
(t) Mawer’s case. 4 De G. & BS.
349. See Jackson v. Petrie, 10 Ves.
164,
(u) See the act, § 75. Re Mug-
geridge, 10 Eq. 443 ; Buck v. Robson,
ib. 629. It was otherwise under the
older acts. See Robinson’s Exors.
case, 6 De G. M. & G. 572.
(«) Ib., §§ 105 and 106, and see
§ 76, and ante, p. 813. As to en-
forcing payment of a call out of the
assets of a deceased Scotch share-
holder, see Wryghte v. Lindsay, 3
McQueen, 772.
(y) Ib. § 75. See on this section,
ix parte Hatcher. 12 Ch. D, 284;
Ex parte Mackenzie, 7 Eq. 240;
Hastie’s case, ib, 8, and 4 Ch. 274;
Martin’s Patent Anchor Co. v. Mor-
ton, L. R. 3 Q. B. 306; Ex parte
Canwell, 4 De G. J. & Sm. 539, and
the cases cited in note(u). Com-
pare Williams v. Harding, L. R. 1
H. L. 9.
(2) Batrd’s case, 5 Ch. 725; Blake-
ley’s case, 13 Beav. 133. and 3 Mac.
& G. 726.
(a) See, as to this, ante, pp. 555
et seq.
(b) Ex parte Thomas, 9 C. B. 740.
(c) Re Connell, 25 L. J. Ch. 649.
See R. S. C. Ord. xlvi., r. 1.
(d) Chalk, Webb & Oo. v. Tennent,
W. N. 1867, p. 159. ;
(¢e) Ex parte Grimwade, 17 Q. B. D.
357 ; Ex parte Whinney, 13 ib. 476.
(f) International Marine, cc., Co.
v. Hawes, 29 Ch. D. 934.
CALLS FOR DEBTS. 849
The proceeds of a call made to pay a creditor of the company Bk. a 1.
may be attached under the Common law procedure act, by his ~—~ -- :
judgment creditors (g).
An order for a call may be appealed from by any contribu- ne from
tory on whom it is made (hk), and he may on the appeal show,
if he can, that although his name is on the list of contributories,
it ought not, in truth, to be there (i). But he will not be
allowed to go into this matter if any considerable time has
elapsed since his name was settled on the list, or if he has
acquiesced in being made a contributory (A) ; nor will he be
allowed to dispute the validity of the winding-up order (i).
Where a person is settled on the list, and a call is made upon
him, and he resists payment on the ground that he is not a
contributory, he should apply to have his name removed from
the list, and to have the proceedings to enforce payment of the
call stayed ; he must, however, be prepared to pay the call into
Court (m).
The power of liquidators to effect compromises with contri-
butories has already been alluded to (n).
2. Calls for debts.
The proper mode of providing funds for the payment of a
debt due from a company which is being wound up is by
making a eall on its contributories, and not by ordering them
to pay the debt (0).
Under the acts of 1848 and 1849, a creditor of a company Right of creditor
was not entitled, as creditor, to require a call to be made for iE alee ae
(g) See Prichard’s claim, Ex parte
Turner and Smith, 2 DeG. F. & J.
(k) Underwood’s case, 5 De G. M.
& G. 677,
354. See R.8.C. Ord. xlv. ; Rapier
v. Wright, 14 Ch. D. 638.
(h) See ante, p. 697. Longworth’s
Executors’ case, Johns. 461.
(i) Londesborough’s case, 4 De G.
M. & G. 411. As to obtaining
back money already paid for calls,
see Ex parte Holroyd, 15 Jur. 696 ;
Ex parte Day, 3 Jur. N. S. 1016 ;
Alison’s case, 9 Ch. 2.
L.c.
()) Arthur Average Association, 3
Ch. D. 522 ; London Marine Insur-
ance Association, 8 Eq. 176. ,
(m) See Oakes’ case, and Peek’s
case, W. N. 1866, 361; London
Bank of Scotland, 2 ib. 114; Jopp’s
case, ib. 192.
(n) Ante, p. 709,
(0) See Ke Cameron Coalbrook, &c.,
Co., 30 Beay, 216,
31
850
-Bk. IV. Chap. 1. his payment.
Sect. 11.
For what debts
calls may be
made.
Contract Cor-
poration.
WINDING UP BY THE COURT.
His remedy, if he had a judgment already, was
to enforce it against those individuals who were liable to it,
and, if he had no judgment, then to obtain one against the
official manager, and enforce it as before(p). The persons
proceeded against could require a call to be made for their
own indemnity, but it was only in this manner that a creditor,
as such, could obtain payment under the acts of 1848 and
1849, if driven to his strict rights (q). If, however, the creditor
was himself a contributory, he was, even under the acts of 1848
and 1849, entitled to require a call to be made for his own
payment (r) ; and when creditors become parties to the winding
up under the act of 20 & 21 Vict. ¢. 78, and were thereby dis-
abled from proceeding at law, they were entitled as creditors
to require a call to be made for payment of their allowed
demands. Under the Companies act, 1862, a creditor who
has established his debt against the company is entitled to
have a call made for his payment on those contributories who
are liable to calls.
The only debts for the payment of which calls can be made,
are the debts proved against the company being wound up (s) ;
whether the debt is equitable or legal is unimportant (t) ; but
no call can be made for providing a fund which may or may
not be wanted (uw). Nevertheless it was decided in the case of
the Contract Corporation (x), that it is not necessary that dis-
puted debts shall be finally established against the company
before calls in respect of them are made.
Under the Winding-up acts of 1848-49 it was held, that
before a call could be made on any particular contributory
settled on the list, his liability to contribute (y) to the debt to
(p) See ante, p. 612.
(q) See Thompson v. Norris, 5 De
G. & S. 686 ; and Prichard’s case, 5
De G. M. & G. 484.
(r) Gleadow v. Hull Glass Co., 15
Beay. 200.
(s) See Wryghte’s case, 2 De G.
M. & G. 636; and see Marylebone
Bank, 18 Jur, 281.
(t) Terrell v. Hutton, 4 H. LC.
1091.
(u) Marylebone Bank, 18 Jur. 281,
and see ante, p. 731, as to providing
funds to answer possible claims by
landlords.
(x) 2 Ch. 95. See, also, Helbert v.
Banner, L. R. 5 H. L, 28, which
shows that the Court will act on the
estimates of the liquidator.
(y) Direct liability to creditors
was not the test of liability to calls
under the Winding-up acts of 184&-
49, Hopkinson’s and Underwood's
case, 7 De G. M. & G, 193.
CALLS FOR DEBTS.
pay which the call was made, must have been established (z) ;
for it by no means follows that every person settled on the list
is liable to all the calls which it may be necessary to make in
the course of winding up the company (a). Thus, if debts
had been incurred by the directors, and such debts were
provable against the company, but ought, as between the
directors and the shareholders, to be borne by the former, the
call for the payment of those debts must have been first made
on the directors exclusively. This was held where the directors
had expressly guaranteed the shareholders against all loss (b) ;
where the debts in question had been incurred by the directors
in excess of the authority reposed in them (c); and where they
had been contracted by the directors, who had fraudulently
obtained a covenant for their own indemnity (d).
In applying these decisions, however, to companies which are
wound up under the Companies act, 1862, it is necessary to bear
in mind not only the difference between the position of creditors
under that act and the older acts, but also the rule that calls on
past members form part of the general assets of the company,
and are not specifically applicable to any particular debt (e).
The proper mode of dealing with such cases as the above
under the act of 1862, is, if necessary (f), to make a call on all
the contributories, liable as present members, and to pay the
creditors, and afterwards adjust the rights of the contributories
inter se (g).
Calls for costs.—See infra, § 12.
(z) Upfill’s case, 1 Sim. N.S. 395;
Hunter’s case, ib. 435; Marylebone
parte Chippendale, 4 ib. 19, and
Ex parte Bignold, 22 Beav. 143.
Bank, 18 Jur. 281.
(a) See Ex parte Mansfield, 2 Mac.
& G. 67, per Lord Cottenham.
(b) Mowatt and Elliotts case, 3
De G. M. & G, 254, reversing Ex
parte Mowatt, 1 Drew. 247 ; Londes-
borough’s case, 4 De G. M. & G. 411.
(c) Ex parte Cropper, 1 De G.
M. & G. 147; Worcester Corn Ex-
change Co., 3 ib. 180. Compare Ex
(d) Carew’s case, 7 De G. M. &
G. 43; and see Walker’s case, 8 ib.
607.
(e) Webb v. Whifin, L. BR. 5 H.
L, 711.
(f) See under the next head.
(g) See the judgments in the Con-
tract Corporation, 2 Ch. 95, and
Helbert v. Banner, L. R. 5 H. L, 28.
851
Sect. 11.
Bk. IV. Chap. 1.
852
Bk. IV. Chap. 1.
Sect. 11.
Calls for adjust-
ment of rights
of the contribu-
tories inter se.
Paid-up and
unpaid-up
shares.
WINDING UP BY THE COURT.
3. Calls for the adjustment of the rights of the contributories.
It is the duty of the judge acting in the winding up, to
adjust and finally settle all cross claims between the contribu-
tories (kh); but this does not preclude him from making a call
on them all alike, and from afterwards adjusting such in-
equalities of payments as on taking the whole of the accounts
between them may be found to exist. If, for example, several
of the contributories have already paid to the company more
than others, who ought to have paid as much as they, a call
may nevertheless be made on all alike if it is necessary to
raise a fund at once for defraying some loss or expense to
which they are all liable; the temporary injustice produced by
such a call may be set right afterwards (i). At the same time,
such temporary injustice ought, if possible, to be avoided; and
a call ought not to be made on the general body of contribu-
tories if it appears that any of them are indebted to the com-
pany in sums which can readily be recovered, and which, if
recovered, would render the call unnecessary (k).
If in an unlimited company there are two classes of share-
holders, viz., holders of shares paid up, and holders of shares
not paid up, the latter ought to be called upon to pay up their
shares before any call is made on the former (J). Again, in
limited companies where some of the shares are paid up in full
but others are not, calls ought to be made on the holders of
the unpaid-up shares in favour of the holders of the paid-up
shares, in order to put all the shareholders on an equality (m) ;
(h) Le, qué contributories, Alex-
andra Palace Co., 23 Ch. D. 297,
See § 109 of the Companies act,
1862, and Marylebone Joint Stock
Bank Co., 25 L. J. Ch. 650 ; Lax parte
Perrier, 7 Iv, Ch. Rep. 256; Lx
parte Dayrell, and Ex parte Lowndes,
1 Jur. N.S. 1129.
(1) See Gay’s case,5 De G. & S.
122, and 1 De G. M. & G. 347;
Preece and Evans’ case,2 De G. M.
& G. 374,
(k) Gay's case, 1 De G. M. & G.
347 ; Underwood's case, 5 ib. 677.
See, too, The Marylebone Bank, 18
Jur. 271; and see above, notes (¢),
(), (9).
(1) See last note, and as to paid-
up shares, ante, p. 783.
(m) Anglesea Colliery Co., 2 Eq.
379, and 1 Ch. 555; Crookhaven
Mining Co., 3 Eq. 69 ; Scinde, Pun-
jaub, and Delhi Corp., 6 Ch. 53,
note ; Ex parte Maude, ib. 51; Gib-
son & Oo, 5 L. R. Ir. 189; New-
townards Gas Co. 15 L. R. Ir. 51.
LIABILITY TO CALLS. 853
unless the regulations of the company exclude the right to Bk. a ne 1.
such a call (x). oe
Again, in some insurance societies calls ought not to be
made on policy-holders who are members until calls have been
made on the shareholders (0).
In settling the cross claims of contributories, a call cannot Calls on a
it seems be made on a contributory otherwise than in respect re aka
of the shares standing against his name in the list of contribu- ph erect
tories (p). But, as already seen, orders can be made for pay-
ment of money owing to the company by its officers (q); and
in one case it was held that where directors were liable to
make good losses incurred by their own fraudulent conduct,
the shareholders have a right to have a call for the whole
amount made on those, or that one of the directors who was
able to pay (7).
4. Limit of liability to calls.
a) Present members,
The extent to which contributories are lable to calls de- Extent of lia-
¥ bility to calls,
pends, in the first place, on the nature of the company.
If the company is one, the liability of whose members is not 1. Where com-
limited by the Legislature or the Crown, or by registration as ae fea
a limited company, the amount of the calls which may be
made upon the contributories is limited only by the debts and
engagements of the company, and the costs of winding up, and
the sums, if any, which may be required for the adjustment of
the rights of the contributories amongst themselves (s).
(n) As in Eclipse Gold Mining Co.,
17 Eq. 490; Doncaster Permanent
Building Society, 4 Eq. 579, and
Holyford Mining Co., Ir, L. R., 3
Eq. 208.
(0) Albion Life Ass. Soc. 16 Ch.
D. 83.
(p) See Addison’s case, 20 Eq. 620,
where a call to enforce a contract of
indemnity was refused. But see the
next note but one.
(q) Ante, p. 851.
(r) See Ex parte Perrier, 7 Ir, Ch.
Rep. 256, where one contributory
had to pay the whole value of no-
minally paid-up shares which had
been fraudulently obtained by him
from the company, and had been
afterwards given by him to the di-
rectors who enabled him to commit
the fraud.
(s) See, as to mutual marine in-
surance societies, Andrews and Alea-
ander’s case, 8 Eq. 176; Lion In-
surance Association v. Tucker, 12
Q. B.D. 176; Arthur Average Asso-
ctation, 3 Ch. D. 522.
854
Bk. IV. Chap. 1.
Sect. 11.
2. Where com-
pany is limite.
By shares.
jy guarantee,
WINDING UP BY THE COURT.
In those cases in which, by the constitution of the company,
—— the liability of its shareholders as between themselves is
limited to the amount of their respective shares, a call may be
made upon them to the full amount of those shares riot already
paid up (t); and even beyond that amount, if, notwithstanding
the constitution of the company, the liability of the share-
holders to the creditors is unlimited (wu). But if the liability
of the shareholders is, as between them and the creditors of
the company, limited to the amount unpaid up of their re-
spective shares, then no calls for the payment of the debts
of the company can be made beyond the same amount (2);
although even then the liability for calls in respect of costs
will be unlimited (y).
Tf, on the other hand, the company is one, the liability of
whose members is limited by the Legislature, or the Crown, or
by registration as a limited company, the amount of calls which
may be made upon the contributories cannot exceed the limit
imposed by the Legislature or the Crown, or by the Companies
act, 1862, as the case may be.
With respect to companies formed and registered under the
last-mentioned act with limited liability, the act declares,
1. That in the case of a company limited by shares, no con-
tribution shall be required from any member exceeding the
amount, if any, unpaid on the shares, in respect of which he is
liable as a present or a past member (z); and
2. That in the case of a company limited by guarantee, no
contribution shall be required from any member exceeding the
amount of the undertaking entered into on his behalf by the
memorandum of association (a). With respect, however, to
(t) Talbot's case, 5 De G. & SB.
386.
(u) Greenwood’s case, 3 De G. M.
& G. 459, reversing 8. C., 2 Sm. &
G. 95. See Marylebone Joint Stock
Banking Oo., 25 L. J. Ch. 650.
547. .
(z) § 38, cl. 4. As to calls on the
holders of fully paid-up shares who
have received back part of the
capital or assets of the company,
compare Cardiff Coal Co., 2 N. R.
(2) Prince of Wales Life Assur.
Society, Johns. 80, affirmed 3 De
G. & J. 660. See, also, the Com-
panies act, 1862, § 38, cl. 6; and
ante, pp. 246 et seg.
(y) Lethbridge v. Adams, 13 Eq.
562, and 11 W. R. 1007, with Car-
diff, &c., Coal Co, v. Norton, 2 Eq. 558,
and 2 Ch. 405; and see Stringer’s
case, 4 Ch. 475; Rance’s case, 6 ib.
104,
(a) § 38, cl. 5.
LIABILITY TO CALLS. 855
companies limited by guarantee, and having capitals divided Bk. aes
into shares, it is also declared that any share of capital that
may not have been called up shall be deemed assets of the
company, and be a debt due to the company from each mem-
ber, to the extent of any sums unpaid on any shares held by
him, and shall be payable at such time as the Court may
appoint (0).
It must also be borne in mind that, even if a company is
limited, still, its articles may contain clauses obliging holders
of paid-up shares to contribute to some particular debt (c) ;
and if the company is a banking company issuing notes, the ae
liability of its contributories in respect of those notes is not
limited (d).
It has already been seen that a company formed before 3. Company
November, 1862, as an unlimited company, may be registered tied Pot
under the Companies act, 1862, as a limited company (e), and Mtrman’s
that a company originally registered as an unlimited company
may be re-registered as limited (f). But such registration
does not affect the obligation of the company or its share-
holders to discharge in full the debts and liabilities of the
company contracted whilst the company was unlimited (g) ;
and in a case of this description, it has been decided that calls
may be made on the shareholders in the unlimited company,
beyond the amount unpaid up on their shares in the limited
company (h).
b) Past members.
1. As regards companies formed and registered under the 1. Companies
Companies act, 1862, the extent of a contributory’s liability to eet
calls depends further on whether at the time of the presenta- wader the Act
(b) § 90.
(c) As in Maawell’s case, 20 Eq.
585, and McKewan’s case, 6 Ch. D.
447. And in a mutual marine in-
surance society limited by guarantee,
see Lion Insurance Association v.
Tucker, 12 Q. B. D. 176.
(d) See the Companies act, 1879,
§ 6. This act repealed § 182 of the
Companies act, 1862.
(e) Ante, pp. 116, 253.
(f) Companies act, 1879, § 4, and
ante, p. 335.
(g) Ib. The remedy of the credi-
tors is affected, but not their right to
payment. See ante, pp. 127,276 et seg.
(h) Garnet and Moseley Gold
Mining Co. v. Sutton, 3 Best & Sm,
321; Ha parte Stevenson, 32 L. J,
Ch. 97. Compare Fountain’s case,
856 WINDING UP BY THE COURT.
Bk. IV. Chap. 1. tion of the winding-up petition he was or was not a member of
eee the company. With respect to retired members the act in
substance declares,
1. That no past member shall be liable to contribute if he
has ceased to be a member for a year or more before the com-
mencement of the winding up (?).
2. That no past member shall be liable to contribute in
respect of any debt or liability of the company contracted after
he ceased to be a member (k).
8. That no past member shall be lable to contribute unless
the existing members are unable to pay their contributions (/).
In giving effect to these provisions, considerable difficulties
Such of them as affect the liability of past members to
be settled on the lst of contributories have been already
alluded to (m) ; but assuming a past member to be properly on
the list, the question still remains what calls can be made upon
him? He is not liable to any call in respect of any debt or
liability contracted after he ceased to be a member (x); but he
is liable in respect of all debts contracted before that time and
subsisting at the date of the winding-up order, even although
they were contracted before he became a member (0); and if
the assets of the company, including the contributions of the
present members, are not sufficient to discharge the whole of
the liabilities of the company, the past members become liable
to have a call made upon them in respect of those debts. But
the amount of the call cannot exceed the unpaid residue of the
debts in respect of which the past members are liable to be put
on the list: all payments made by the liquidator out of the
assets of the company in respect of those debts enure for the
benefit of the past members and diminish their lability (p).
arise.
11 Jur, N. S. 553, L. C., which
turned on the Industrial and Pro-
vident Societies act.
(4) § 38, cl. 1, and § 84.
(k) § 38, cl. 2.
(2) § 38, cl. 3. See as to past and
present members of insurance com-
panies, Hesketh’s case, 13 Ch. D. 693;
Bath's case, 8 Ch. D. 334. Bath’s
case, 11 Ch. D, 386, is overruled,
(m) Ante, pp. 816 et seg.
(n) § 38, cl. 2, and see § 133;
Andrew’s case, 4 Eq. 458, and 3 Ch.
161.
(0) Helbert’s case, 6 Eq. 509, and
L. RB. 5 H. L. 28, sub nom. Helbert v.
Banner ; Webb v. Whafin, L. R. 5
H. L. 711.
(p) Breti’s case and Morris’s case,
on the rehearing, 8 Ch. 800; and
SET-OFF AGAINST CALLS. 857
In limited companies the liability of each past member is Bk. aoe 1
further limited by the amount unpaid up of his shares. ieee
Again, the money raised by calls made on past members No marshalling
becomes part of the general assets of the company, applicable vanes
to the payment of all its debts and liabilities, without reference
to the time when they were contracted (q), and also to the costs
of winding up (r). There is no marshalling either of debts or
of assets for the benefit either of creditors or of members (s).
The consequences of this as regards costs will be seen here-
after (t).
2. As regards companies not formed under the Companies 2. Other
act, 1862, the liability of past members to calls depends on eee
sections 196 and 200 (w), which do not exonerate members who
have retired more than a year before the commencement of the
winding up from liability. Consequently, if there are debts to
which past members are still liable, and which present mem-
bers cannot pay («), calls must be made on the past members.
The amount of call must, it is apprehended, be decided on the
principles explained when considering the liability of these
persons to be on the list of contributories (y).
As has been already pointed out, past members are not in
the position of sureties, and are not discharged by compro-
mises made with present members before the past members
are settled on the list (z); nor by the forfeiture of their
shares (a).
5. Set-off against calls.
If the company is indebted to a contributory on whom a call Set-off against
is made, his right to set off the amount due to him from the
call upon him has to be considered. With reference to this
see the same cases on the first hear- case, 8 Ch. 800, on the rehearing.
ing, 7 Ch. 200, and 6 Ch. 800, (t) See infra, § 12.
(q) Webb v. Whifin, L. R. 5 (u) See, as to registered com-
H. L. 711, affirming Briton, dc., Life panies, § 196, cl. 5, and as to un-
Ass., 5 Ch, 428. registered companies, § 200.
{r) Ib. (x) See, as to this, ante, 749 and
(s) See Webb v. Whafin, L. BR. 5 817.
H. L. 711, correcting Brett’s case, (y) Ante, p. 818.
6 Ch. 800, and Morris’s case, 7 ib. (2) Ante, p. 821.
200, and Brett’s case and Morris's (a) Ante, p. 845,
858
Bk. IV. Chap. 1.
Sect. 11.
In limited
companies.
In unlimited
companies.
WINDING UP BY THE COURT.
subject, it is important to determine whether his claim against
the company arises simply from his being a member of the
company ; or whether it arises from some transaction with the
company which would give him a claim against it even if he
were not amember. If his claim is of the first description,
e.g., if it is a claim to dividends or profits, no set-off is allowed,
to the prejudice of the creditors of the company; but the
claim must be taken into account in finally adjusting the rights
of the contributories amongst themselves; and this rule applies
as well to unlimited as to limited companies (b). If, on the
other hand, his claim is of the second description, then the
ordinary doctrines of set-off apply in his favour if the company
is unlimited, but not if it is limited(c). In other words,
where the company is limited, no set-off is allowed, as against
the company, except to the extent of setting off a call made
and payable by a contributory against a dividend payable to
him in respect of his debt: whilst if the company is unlimited,
any debt owing by it to a contributory, otherwise than in
respect of his shares, may be set off against calls made upon
him (d).
In this respect the law as to unlimited companies is the
same as it was under the Winding-up acts of 1848-49. Under
them it was held that where the company was indebted toa
contributory otherwise than in respect to his shares (e), he
might set off the amount of that debt from calls made upon
him (f); and, if necessary, calls for his reimbursement were
made on the other contributories (g) ; and unless their liability,
as between him and them, was clearly limited to the amount
of their respective shares, it was no answer to a call on them
for his indemnity, that they had already paid up their shares.
in full (h).
(b) See § 38, cl. 7, and § 101. M. & G. 19.
(c) Ib. Black & Co.’s case, 8 Ch, (g) Marylebone Joint Stock Bank-
254. § 10 of the Judicature act, ing Oo., 25 L. J. Ch. 650, V.-C. K.
1875, has not changed the law, Gill’s See, too, Hx parte Dayrell, and Ex
case, 12 Ch. D. 755. parte Lowndes, 1 Jur. N. 8, 1129;
(d) See, on this subject, ante, pp. Ex parte Sedgwick, 2 Jur. N.S. 949.
7A] et seq. (h) Marylebone Joint Stock Bank-
(c) See 11 & 12 Viet. v.45, § 61. ing Co., 25 L. J. Ch, 650,
(f) Ex parte Chippendale, 4 De G.
COSTS. 859
and Bk. IV. Chap. 1.
Where an order is made to wind up a limited company, ies
the costs are ordered to be paid by the company to the peti- 5 care
. eb-OH AGAIDS'
tioner, he is entitled to receive these costs, although he may costs,
be a debtor to the company before they are paid (2).
SECTION XII.—COSTS.
The costs of winding up a company are usually so large, Costs of winding.
that the rules relating to their payment are of great practical "”
importance. In fact, it is by no means an uncommon circum-
stance for contributories to have heavier calls made upon them
for the payment of costs than for all other purposes put
together (7). In considering the question of costs, the first
point to determine is, what costs are payable by the company,
and the next is, how and by whom such costs are to be paid.
First, as to the costs payable by the company.
The costs of the petition for winding up a company have
been already alluded to (ante, p. 658).
The costs of the proceedings subsequent to the winding- Costs of
up (k) order may be divided into two classes, according as they eine
are or are not incurred in litigation. Costs of
: 3 proceeding
penses are borne by the company, unless otherwise directed by subsequent to
a ‘ Z Bo fe the winding-
the judge acting in the winding up (J).
up order.
The non-litigious ex-
But provision is made
against burdening the company with the costs of persons who,
for their own better protection, desire to attend the winding-
up proceedings ; they can only do so at their own expense,
(t) See The General Hauchange
Bank, 4 Eq. 188; and see ante, p.
winding up and subsequently dis-
missed by consent to be paid out of
715, as to costs and debts becoming
due from the company whilst in
liquidation.
(j) The power of the taxing-
master to disallow costs has been
much increased by the order ot May,
1889, LXV., r. 27 (38a).
(k) The Court cannot order the
costs of an action brought for the
benefit of the company before the
the company’s assets: Hull Central
Drapery Co., 15 Ch, D. 326.
(2) In Ex parte Hardinge, 1 N.
R. 40, it was held that the official
manager of a Company was not en-
titled to costs incurred under an
order made by a court having no
jurisdiction. Compare Arthur Aver-
age Association, 3 Ch. D, 522.
860
Bk. IV. Chap. 1.
Sect. 12.
General rules.
Ex parte Sichell,
WINDING UP BY THE COURT.
and if their attendance causes extra expense to the company,
such expense may be thrown upon them (m).
If the Court orders delinquent directors to be prosecuted, it
may order the costs to be borne by the company (n).
The litigious expenses (or costs in the usual sense of the
word) are in the discretion of the Judge (0). This discretion,
however, is not to be exercised arbitrarily ; and where there
are no reasons to the contrary, the costs incurred by any
particular litigation must be borne by the unsuccessful party.
This rule was expressly laid down in Ex parte Sichell (p), and
it has been held to apply to appeals (q). The rule, moreover,
applies as well in favour of as against the company, and not
only in cases of litigation between the company and its con-
tributories, but also in those between it and non-contributories,
or between different classes of contributories disagreeing
amongst themselves. For example, if a contributory applies
unsuccessfully to be removed from the list (r), or unsuccessfully
resists being put on it (s), or applies unsuccessfully to have
another person put on (¢), or appeals unsuccessfully against an
order making, or refusing to make, a call (uw), or if he moves
unsuccessfully to discharge the winding-up order (v), or to
disturb a compromise made with other contributories (x), or if
a person claiming to be a creditor appeals against a disallow-
ance of his debt, and he fails on the appeal (y) ; in all these
(n) See Rule 60.
(n) See § 167.
(0) See, as to costs in the Stannary
Courts, Ex parte Palmer, 7 Ch. 286.
(p) 1 Sim. N.S. 187. See, also,
Ex parte Barry’s representatives, 2 Dr.
&Sm. 321; Ex parte Oakes and Peek,
3 Eq. 633, 634.
(q) Ex parte Hall, 1 De G. M. &
G. 1. But see Stchell’s cuse, 3 Ch. 119.
(r) Examples of this are very
numerous. See, amongst others,
Ea parte Oakes and Peek, 3 Eq.
633, 634; Sichell’s case, 1 Sim.
N. 5. 187; Reaveley’s case, 1 De G.
& 8. 550; Bernard’s case, 5 ib. 283 ;
and as to appeals, Ex parte Mansfield,
2 Mac. & G.57; Lawes’s case, 1 De
G. M. & G. 421; Straffon’s Exe-
cutors’ case, ib, 576 ; Gibson’s case, 2
De G. & J. 275.
(s) Ex parte Barry's representatives,
2 Dr. & Sm. 321; Gower’s case, 6 Eq.
77.
(t) Bugg’s case, 2 Dr. & Sm. 452.
(wu) Ex parte Cropper, 1 De G. M.
& G. 147; Ex parte Chippendale, 4
ib. 19 ; Londesborough’s case, ib. 411 ;
Ex parte Woolmer, 2 ib. 665.
(v) Ex parte Woolmer, 5 De G. &
8.117, and 2 De G. M. & G. 665;
Clarke's case, 1 K. & J. 22.
(x) Lucy's case, 4De G. M. & G. 356.
(y) Ex parte Lioyd, 1 Sim. N. §.
248 ; Wryghtes case, 2 De G, M. &G.
636.
COSTS. 861
and similar cases the motion or the appeal will, as a rule, be Bk. aN a 1.
dismissed with costs.
So where the official liquidator, on the part of the company,
uusuccessfully appeals against an order excluding a person
from the list of contributories (z), or unsuccessfully resists an
appeal by a person put on the list, and seeking to have his
name removed from it (a), or an appeal against an order for a
call (b), or an appeal against the disallowance of a creditor’s
demand (c), or an appeal against an order excluding a contri-
butory from attendance before the Judge acting in the winding
up (d), or an appeal against an order for the delivery up of
documents (e); in these and similar cases the official liqui-
dator, as a rule, is either ordered to pay the costs, reimbursing
himself from the assets of the company (f/f); or to pay the
costs out of the assets (9).
However, where the case of one individual is selected to Representative
represent that of a class, the general rule is not to make him
pay the costs even if he fails; and sometimes the company
is ordered to pay them (h), but not as between solicitor and
client (2).
(z) As in Maudslay & Field’s case,
17 Sim. 157 ; Capper’s case, 1 Sim. N.
8.178 ; Conway's case, 5 De G. & 8.
150; Holme’s case, 4 ib. 312; and 2
De G. M.& G. 113 ; Ex parte Beard-
shaw, 1 Drew. 226 ; Ex parte Roberts,
ib. 204 ; Brockwell’s case, 4 ib. 205 ;
Nicol’s case, 3 De G. & J. 387.
(a) Asin Roberts’ case, 3 De G. &
S. 205, and 2 Mac. & G. 192;
Mathew’s case, 3 De G. & 8. 234;
Mainwaring’s case, 2 De G. M. & G.
66.
(b) As in Upfill’s case, 1 Sim. N.
S. 395; Hunter’s case, ib. 485;
Mowatt and Elliott’s case, 3 De G.
M. & G. 254.
(c) Croxton’s case, 5 De G. & S.
432.
(d) Ex parte Slatter’s executors, 5
De G. &S§. 34.
(e) Pell’s case, 3 De G. & 8. 170.
(f) Dominion of Canada Plumbago
Co., 27 Ch. D. 33 ; Campbell's case, 4
Ch. D. p. 475; Ferrao’s case, 9 Ch.
355 ; Sichell’s case, 3 Ch. p. 124;
and compare in bankruptcy, Ez
parte Angerstein, 9 Ch. 479; Pitts
v. La Fontaine, 6 App. Ca. 482.
(g) Smallpage’s case, 30 Ch. D. p.
604 ; Dronfield Silkstone Coal Co.,
23 Ch. D. 511; Home Investment
Soc., 14 Ch. D. 167; x parte
Bartley, 12 Ch. D. p. 857; and
compare in bankruptcy, Ex parte
Lewcestershire Banking Co., 14 Q. B.
D. 48; Ex parte Stapleton, 10 Ch. D.
586.
(h) See Walton v. Edge, 10 App.
Ca. p. 44; Tosh v. North British
Building Soc., 11 App. Ca. p. 508 ;
Ex parte Jeaffreson, 11 Eg. 116;
Walker's case, 2 Eq. 554. But see
contra, Ex parte Walton, and Ex
parte Hue, 3 Jur. N.S. 853,
(t) Grimwade v. Mutual Society,
862
Bk, IV. Chap. 1.
Sect. 12.
No order as to
costs.
Payment of
costs by official
liquidator,
WINDING UP BY THE COURT.
But although the general rule is as above stated, its appli-
cation is far from being universal. It frequently happens, that
no order whatever is made as to costs, except that those of the
official liquidator are to be borne by the company. It is very
difficult to lay down any general rules which can be relied upon
as guides, in cases where so much is left to the discretion of
the Judge; all that can be said is that there are cases in which
a person has not been made to pay costs, where he has unsuc-
cessfully resisted being made a contributory under circum-
stances of considerable hardship (k); where he has been
induced to take shares by misrepresentation or fraud (I) ;
where the law applicable to his case has been doubtful (m) ;
where he has been made a contributory on the authority of a
recent decision, followed with reluctance (n) ; where the Judge
acting in the winding up has at different times taken different
views of a contributory’s liability (0), or has decided in favour
of the contributory (p); where a director has succeeded in
getting himself struck off the list on which he would not have
been put, had it not been for his own ambiguous conduct (9) ;
in other hard or doubtful cases, and where one side has been
as much in fault as the other (r).
All costs properly incurred by the official liquidator, are
defrayed out of the assets of the company, and if necessary by
18 Ch. D. 580; but see contra,
Parts case, 10 Eq. p. 629. See
generally as to this, Andrews v.
Barnes, 39 Ch. D. 183.
(k) As in Crosfield’s case, 4 De G.
& S. 338, and 2 De GM. & G.
128; Chartre’s case, 1 De G. & S.
581; Richmond’s Executors’ case, 3
ib. 96; but see Hx parte Oakes and
Peek, 3 Eq. 633, 634.
(2) Dodgsows case, 3 De G. & S.
85 ; Parbury’s case, ib. 48. But see
Hitchcock's case, ib. 92, and Gibson’s
case, 2 De G. & J. 275; and Ex
parte Oakes and Peek, 3 Eq. 633,
634.
(m) As in Angas’s case, 1 De G. &
S. 560 ; Kluht’s case, 3 ib. 210.
(n) As in Hole’s case,3 De G. &
8. 241; Hx parte Brittain, 1 Sim.
N. 5.281. But see Lx parte Sichell,
ib. 187, and Markwell’s case, 5 De
G. & §. 528.
(0) As in Stanhope’s case, 3 De G.
& 8. 198.
(p) As in Bird’s case, 1 Sim. N.
8. 47; Holts case, ib. 389; Keene's
Executors’ case, 3 De G. M. & G.
272; Woollaston’s case, 5 Jur. N.S.
617, and 4 De G. & J. 487.
(gq) As in Cockburn’s case, 4 De G.
& 8.177; Sharp and James’s case, 1
De G. M. & G. 565.
(r) See Worcester Corn Exchange
Co.,3 De G. M. & G. 180; Talbot's
case, 5 De G. & S. 386; Preece and
Evans's case, 2 De G. M. & G. 374.
COSTS. 868
calls on its contributories (s). Even where the official liqui- Bk ate Sheet
dator is a party to some proceeding, the costs of which he is
ordered to pay personally, his right to be indemnified by the
‘company is not necessarily taken away by such order (¢). But
there can be no doubt of the power of the Court to order an
official liquidator to pay out of his own pocket, and without
recourse to the company, any costs, charges, or expenses, im-
properly incurred by him in winding up the company (uw); and
on more than one occasion, the official liquidator has been
made to bear his own costs (x). It has, however, been said
that the official liquidator cannot be ordered personally to pay
the costs incurred by his having improperly summoned a per-
son as a contributory (y). In those cases in which no costs are
given, or in which the costs of the official liquidator are not
otherwise provided for, his costs are borne by the company,
unless the contrary is ordered.
As regards appeals, an appeal will lie against an order Costs of appeals.
refusing to give the liquidator his costs out of the assets of the
company (z). If a liquidator unsuccessfully supports an order
appealed from, he gets his costs out of the assets of the com-
pany, but if he unsuccessfully appeals and is ordered :to pay
costs, the Court of Appeal usually leaves it to the Judge having
the conduct of the winding up to determine how those costs
are to be borne (a). It is not necessary for the liquidator to
obtain leave to appeal, but unless he does so, he incurs con-
siderable risk of losing his costs if he is unsuccessful (b).
(s) As to calls for remuneration
for work to be done, see the Mary-
lebone Bank, 18 Jur. 281. As to
taxation of liquidator’s costs, see Re
East Holyford Mining Co., Ir. Rep.
10 Eq. 361.
(t) Grand Trunk Rail. Co. v.
Brodie, 3 De G. M. & G. 146. See
ante, note (f).
(u) See Hx parte Roberts, 1 Drew.
204.
(x) Silver Valley Mines, 21 Ch. D.
381; Clefton’s case, 5 De G. M. & G.
743; Ex parte A’ Beckett, 2 Jur. N.S.
684, where the O. M. had not kept
proper books.
(y) Ex parte Marsh, 1 Mac. & G.
302.
(2) Stlver Valley Mines, 21 Ch. D.
381.
{a) See Silver Valley Mines, 21
Ch. D. 381; Robinson’s case, 4 Ch.
335 ; Stringer’s case, ib. 493. See
National Savings Bank Association,
1 Ch. 554. See, also, Westcomb’s
case, 9 Ch. 553, where the liquidator
was a respondent and was left to
apply to the judge for his costs,
(b) Silver Valley Mines, 21 Ch. D.
381. He will be allowed the costs of
an application for leave to appeal
unless the application is frivolous,
864
Bk. IV. Chap. 1.
Sect. 12.
Costs of credi-
tors’ represen-
tatives,
Calls for costs,
Costs paid in
full not proved.
WINDING UP BY THE COURT.
A creditors’ representative appointed under the Winding-up
— amendment act of 1857, was entitled to his costs out of the
assets of the company (c).
The office of creditors’ representative is abolished, but the
Court has power to appoint persons to represent either
creditors or contributories (d), and the costs of such persons
are usually paid by the company even when there is no
adverse interest between them and the official liquidator (e).
But other individuals who choose to appear upon ques-
tions not directly concerning them, must do so at their own
expense (f).
Secondly, as to the payment of the costs payable by the
company.
The costs which have to be borne by the company, or are
payable out of its estate, are discharged by the official liqui-
dator out of the assets of the company in his hands, if he has
sufficient for the purpose, and if not, then by calls on the con-
tributories (g).
In the event of the assets being insufficient to satisfy the
liabilities, the Court may make an order as to the payment out
of the estate of the company of the costs, charges, and expenses
incurred in winding it up, in such order of priority as the
Court thinks just (h).
Costs ordered to be paid by the company in the course of
the winding up are not like debts on which a dividend only
of the list of contributories, Mexican
and South American Mining Co., 26
Beav. 172; Alabaster’s case, 7 Eq.
ib. See, also, City and County In-
vestment Co., 18 Ch. D, 475.
(c) See Budd’s case, 3 De G. F. &
J. 297 ; Hatton’s case, 10 W.R.313; 285.
Ex parte Finlay & Co., 27 L. J. Ch. (d) Rule 61.
658 ; and see MclIver’s claim, 5 Ch. (e) See Ex parte Oakes and Peck,
427, As to his costs when he sup- 3 Eq. 634,
ported the official manager, see per (f) Ib.
V.-C. Wood, in Hatton’s case, 10
W.R. 313; Hoare’s case, ib. 381;
and Re Saxon Life Assurance
Society, 2 J. & H. 408; Burges and
Stock’s case,2 J. & H. 441. As to
his costs of attending the settlement
(g) See, as to calls for costs, The
Companies act, 1862, §§ 38, 102.
(h) Ib. § 110, And see Dominion
of Canada Plumbago Co., 23 Ch. D.
511,
COSTS. 865
can be paid if there is a deficiency in assets, but are payable Bk. oe 1
in full out of the assets if there are any (i); but the ordinary
costs of proving a debt in chambers are usually added to
it (k).
Where the assets are deficient, even for the payment of costs, Assets deficient.
the costs of the petition to wind up are entitled to priority
over the other costs, and even over those of the liquidator (I) :
next come the costs of any successful litigant which the liqui-
dator has been ordered to pay (m) ; next comes the liquidator’s
own costs (n); and then the other costs without priority inter
se(o). But this order of payment is only applicable to assets
not specifically charged ; assets which are mortgaged are not
liable as against the mortgagee to any costs not incurred for
his benefit (p): his principal and interest must be paid out of
the mortgaged property in priority even to costs incurred by
the liquidator in carrying on the company’s business with a
view to increase its assets, and thereby to benefit its creditors
generally (q); but the costs of realising the security are a first
charge on the fund produced by it (r).
A call for costs may, if necessary, be made before all the
assets are got in (s), and before the exact amount of the costs
payable has been ascertained by taxation (lt); and a call for
(1) Madrid Bank v. Pelly, 7 Eq.
442; Bailey and Leetham’s case, 8
Eq. 94. See, also, Ex parte Clark, 7
Eq. 550 ; Ex parte Smith, 3 Ch. 125 ;
National Building Land Co., 15 L.
R., Ir. 47.
(k) Ex parte Wright and Gumble,
8 Eq. 123.
(!) Audley Hall Cotton Spinning
Co., 6 Eq. 245.
(m) This is so whether the liqui-
dator was ordered to pay the costs
out of the company’s assets, Home
Investment Society, 14 Ch. D. 167, or
to pay them himself with liberty to
recoup himself out of the assets,
Dominion of Canada Plumbago Co.,
27 Ch. D. 33, overruling Dronfield
Silkstone Coal Co., 23 Ch. D. 511.
(n) Not his remuneration, Re
L.C.
Massey, 9 Eq. 367.
(0) Ex parte Percival, 6 Eq. 519.
(p) See Oriental Hotels Co., 12 Eq.
126.
(q) Ex parte Grissell, 3 Ch. D. 411,
and compare Marine Mansions Co.,
4 Eq. p. 611. Where part of the
assets have been severed from the
rest to meet a particular claim, see
Cook’s claim (2), 18 Eq. 655,
(r) See the cases in the last two
notes, and compare Batten v. Wedge-
wood Coal Co., 28 Ch. D. 317.
(8) Gay’s case, 1 De G. M. & G.
347, and 5 De G. & S. 122. See
ante, p. 850.
(t) Dale’s case, 1 De G.M.& G.
513; Ex parte Woolmer, 2 ib. 665.
Compare Marylebone Bank, 18 Jur.
281,
#3 K
866
Sect. 12.
On whom call
to be made.
Costs not pay-
able out of
funds of com-
pany to pre-
judice of
creditors,
Past members.
WINDING UP BY THE COURT.
Bk. IV. Chap. 1, costs is primd facie payable, by those liable to it, in proportion
to the number of shares held by them respectively (u).
The right to have a call made for payment of costs may be
lost by laches (x).
But a call for costs, like a call for debts, is only to be made
on those liable to pay it(y). ‘Therefore, where in winding up
an abortive company, costs had been incurred, for which a call
was made on all the contributories, before their liabilities to
the debts of the company had been ascertained, it was held
that this call was wrongly made (z). It is, therefore, the duty
of the judge in the winding up, to ascertain to what costs each
contributory or set of contributories is liable, and to make the
call for their liquidation accordingly. It is, however, to be
observed, that where costs have been incurred in proceedings,
taken for the benefit of all the contributories as a body, they
are all ratably chargeable with the costs of those proceedings,
although they may have been taken unsuccessfully, and —
although some of the contributories may have already paid
more than others towards the discharge of the company’s
debts (a). Any temporary injustice resulting from this last
circumstance must be set right afterwards (b).
In winding up Insurance companies, the policies of which
are payable out of the funds of the company, the costs of
realising those funds are not deducted from them, but are
treated like all the other costs of winding up; i.e., they must
be defrayed by calls on the contributories (c).
The liability of past members for calls in respect of costs,
turns, as regards companies formed and registered under the
Companies act, 1862, on the true construction of the early
part of § 38, taken in connection with the second and third
(u) Ex parte Woolmer, 2 De G. G.M. & G. 374; He pirte Woolmer,
M. & G. 665.
(2) See Ex parte A’ Beckett, 2 Jur.
N.S. 684.
(y) Hunter’s case, 1 Sim. N. 8.
435.
(2) Ib. See, too, Gay’s case, 5 De
G. & 8. 122; Marylebone Bank, 18
Jur. 281.
(a) Preece and Evans’ case, 2 De
ib. 665; Gay's case, 5 De G.& S.
122, and 1 De G. M. & G. 347.
(0) Ib.
(c) Professional Life Ass. Co. 3
Ch. 167; Agriculturist Cattle Ins.
Co., 10 Ch. 1. See, further, Acci-
dental Death Ins. Co, 7 Ch. D.
568.
DISTRIBUTION OF SURPLUS ASSETS. 867
clauses of the same section (d). The early part of § 88 ren- Bk. aye oe 1.
ders past members liable for costs; and the second and third —- - -———
clauses apparently do not exempt them therefrom. As regards
companies registered, but not formed under the act (¢), and as
regards unregistered companies (f), the provisions of the act
are very imperfect, and at present there are no decisions on
them.
As regards companies formed and registered under the Brett's case.
Companies act, 1862, it was settled in Brett’s case (gq), that if
there are no debts in respect of which a past member can be
made a contributory no calls can be made upon him for any
costs. But if there are any such debts a call for some costs
may be made on him; but only apparently for costs incurred
in settling the list of past members and of adjusting such
equities inter se as may require adjustment (hk). At the same
time whatever sum is raised by a call on a past member is
applicable to pay all debts and costs for which the company
liable.
SECTION XIII.—DISTRIBUTION OF SURPLUS ASSETS, AND FINAL
DISSOLUTION OF THE COMPANY.
After the debts, liabilities, and losses of the company have Distribution of
been paid, discharged, and made good, and provision has been ee
made to meet future contingent claims (i), and the cross claims
between the contributories have been settled, and the costs of
winding up have been paid or provided for, there remains but
to distribute the surplus assets of the company, if any there
be (%). The cases in which any surplus is left are rare, but
(d) See, also, §§ 75, 110, 196, cl. (t) Gooch v. London Banking As-
5, 200, and as to voluntary winding sociation, 32 Ch. D. 41 ; Lord Elphin-
up, § 144. stone v. Monkland Iron Co., 11 App.
(e) See § 196, cl. 5. Ca, 382.
(f) See § 200. (%) Companies act, 1862, § 109.
(g) 8 Ch. 800, and 6 ib. 800. See See as to a voluntary society not
ante, p. 856. governed by the Companies acts,
(h) See 8 Ch. 808 et seg, and Brown v. Dale, 9 Ch. D. 78.
Marsh’s case, 13 Eq. 388.
3x2
868
Bk. IV. Chap. 1.
Sect. 13.
Surplus may not
be profit.
Preference
shareholders.
Bridgewater
Navigation
Company.
WINDING UP BY THE COURT.
the possibility of there being a surplus, shows that a person
may be prejudiced by being excluded from the list of contribu-
tories, although, in point of fact, those who are so excluded
seldom have reason to complain. A person, however, upon
whom calls can be made, will not be allowed to remain on the
list so long as he thinks it will be for his benefit to continue
there, and then insist on his name being removed when he
begins to apprehend that it will be to his prejudice (i).
Although there may be surplus assets to be divided, it by no
means follows that the company has made any profit. If the
surplus is not sufficient to return to the shareholders the
amount of capital paid up by them, there has been a loss; and
the question to be decided in distributing the surplus is then
how that loss is to be borne. If on the other hand the surplus
is more than sufficient to return to each shareholder the capital
paid up by hin, there is a profit and the question then is how
the profits are to be shared.
If there has been a loss the holders of shares entitled to a
preference in respect of dividends payable out of profits are
not entitled to any preference in respect of the surplus
assets (m). If there has been a profit the question is more
difficult, and depends upon whether (according to the com-
pany’s act, charter, deed, or articles) the excess of the assets
over the capital paid up, though profit in one sense, constitutes
a fund divisible as profits amongst the holders of the preference
shares.
Thus in the Bridgewater Navigation Co., the articles of
association provided for the issue of preference shares, and
contained a clause that no dividends should be paid except out
of the profits of the company arising from the business of the
company as shown upon the balance sheet, which should from
time to time have been examined and passed by the auditors.
Shares were afterwards issued entitling the holders to a divi-
dend of 5 per cent. taking precedence of all dividends and
claims of the holders of ordinary shares. The company sub-
sequently sold its business for a sum greatly in excess of what
(2) See Underwood's case,5 De G. pany, 5 Eq. 519; Griffiths v. Paget,
M. & G. 700, per Turner, L. J. 6 Ch. D. 511.
(m) London India Rubber Com-
DISTRIBUTION OF SURPLUS ASSETS. 869
was needed to return the paid-up capital; the preference share- Bk. IV, Chap. 1,
holders claimed to receive out of this excess a preferential
dividend of 5 per cent. and to share the balance with the
ordinary shareholders, while the ordinary shareholders con-
tended that the preference shareholders were not entitled to
receive anything out of this excess beyond a dividend of 5 per
cent. It was held that under the articles of association the
holders of preference shares were only entitled to a dividend
of 5 per cent. and all other profits belonged to the ordinary
shareholders, but that the profit arising from the compulsory
sale was not profit in respect of which dividends might have
been declared, and that the clauses relating to dividends were
in no way applicable to the fund to be divided (x). The con-
stitution of the company may however be such as to confer on
some shareholders a preference as to capital, and not only as
to dividends, and where this is the case the surplus assets must
be applied accordingly (0).
Questions also arise as to the mode in which assets are to Paid-up share-
be divided when some shareholders have paid up more on their ps
shares than others. If there is a loss, the loss in the absence
of express agreement (p) is to be borne by all shareholders
equally, and the shareholders who have paid up less than others
will not be allowed to share in the surplus until those, who
have paid up more than they, have been put on an equality
with them. This may be done either by returning to share-
holders, who have paid up more than the others, the excess so
paid by them (q) or by making a call on the shareholders, who
have paid less than the others (7).
If there is a profit, and the dividends of the company whilst
it has been carrying on business have been paid upon the
(n) Bridgewater Navigation Co., 39
Ch. D. 1. See, too, the remarks of
North, J., pp. 12 & 13, as to the
possibility of some funds coming to
the liquidator’s hands being divisible
as profits.
(0) Bangor v. Port Madoc Slate
and Slab Co., 20 Eq. 59.
(p) As in Eclipse Gold Mining Co.,
17 Eq. 490. See, also, Holyford
Mining Co., Ir. L, R. 3 Eq. 208.
(q) As in Ex parte Maude, 6 Ch.
51; Semde, Punjaub, and Delhi Cor-
poration, 6 Ch. 53, note. See, also,
Newtownards Gas Co., 15 L. R., Ir.
51.
(r) Asin Anglesea Colliery Co., 1
Ch. 555, and 2 Eq. 379 ; Crookhaven
Mining Co., 3 Eq. 69.
870
Bk. IV. Chap. 1.
Termination of
winding up.
Order dissolving
company.
Books of com-
pany,
Sect. 13.
WINDING UP BY THE COURT.
amount of capital paid up, the surplus will in the absence of
any provision to the contrary be divided in the same manner (s).
If the company has treated the amount paid up by some share-
holders in excess of others, as an advance to it, upon which it
has been paying interest, these shareholders will be entitled to
a return of this advance with interest up to the date of repay-
ment before the other shareholders receive anything and
then the surplus will be divided between the two classes
equally (¢).
Upon the termination of the proceedings in chambers for
the winding up of a company, the official liquidator is required
to bring in a balance sheet and pass his final account (u).
Upon payment, as he may be directed, of the balance, if any,
in his hands, the recognisance of himself and his sureties may
be vacated (x), and a certificate that the affairs of the company
have been completely wound up is to be made by the chief
clerk (y).
When the affairs of the company have been completely
wound up, the Court is required to make an order (g) dissolving
the company as from the date of the order (a); and notice of
this order is forthwith to be given by the official liquidator to
the registrar of joint-stock companies, who is required to make
a minute in his books of the company’s dissolution (b).
The order dissolves the company (c).
The books of the company are to be disposed of as the
Court may direct (d). The documents relating to the winding
(s) Bridgewater Navigation Co., 39
Ch. D. 1; Sheppard v. Scinde, Pun-
jaub, and Delhi Rail. Co., 36 W. R.
1, since affirmed by the House of
Lords ; Somes v. Currie,1 K. & J.
605.
(t) Exchange Drapery Co., 38 Ch.
D.171. They could not claim in-
terest after the winding up against
creditors.
(w) Rule 65.
(x) Rule 65.
(y) Rule 66, and see the form in
schedule 3, No. 55,
(2) See the form in the 3rd sche-
dule to the rules, No. 56.
(a) § 111, and see rule 66,
(®) §§ 112 and 113.
(c) § 111. As to the jurisdiction
of the Court over dissolved com-
panies, see Crookhaven Mining Co.,
3 Eq. 69; Pinto Silver Mining Co.,
8 Ch. D. 273; London and Cale-
donian Marine Insurance Co., 11 Ch.
D. 140.
(d) § 155. As to the liability of
a liquidator to produce the books in
an action to which he is a party, see
London and Yorkshire Bank v. Cooper,
15 Q. B. D. 473.
SURPLUS ASSETS OF BUILDING SOCIETIES. 871
up, and the book containing the official liquidator’s account, Bk. ae 1
are to be deposited in the Record and Writ Clerk’s Office (e).§_ ———__
In addition to the usual method of dissolving a company on Defunct com-
the winding up by an order of court, power has been given to P®™!*
the registrar of joint-stock companies, after giving certain
prescribed notices, to strike the names of defunct companies
off the register (f), and by so doing to dissolve them. But
any company or member thereof who feels aggrieved by the
name being struck off may apply to the Court ; and the Court
if satisfied that the company was at the time of the striking off
carrying on business, or that it is just so to do, may order the
name of the company to be restored to the register (g), and
thereupon the company shall be deemed to have continued in
existence as if the name thereof had not been struck off.
Note on butlding societies. (See infra, p. 918.)
In the distribution of the surplus assets of benefit building and mutual Benefit Building
loan societies, the peculiar nature and constitution of the societies give rise Societies.
to questions of a different character from those already examined. The
members of these societies are divided into two classes : unadvanced members
who, by continuing in the society for a certain period of time and paying
regularly what becomes due from them according to the rules of the society,
are at the end of that period of time entitled to receive all they have paid
with a share of any profits the society may have made ; and advanced members,
whe receive at the beginning the sum which the unadvanced members
receive at the end, and execute a mortgage to the society to secure the
repayment of this sum with interest by fixed instalments, with a right of
redemption, when the amount of the instalments they have paid together
with any profits with which they may have been credited, is equal to the
principal sum advanced with the interest agreed upon. Further, the rules
of these societies usually allow members to withdraw either the whole or
part of the sums standing to their credit in the books of the society on
giving a notice of their desire so todo. When the surplus assets of such a
society are not sufficient to pay to the unadvanced members the whole sum
to which they are entitled, difficulties have arisen as to the terms on which
advanced members are entitled to redeem their mortgages, and as to the
manner in which the assets are to be divided between those members who
have given a notice of withdrawal, which has expired before the commence-
ment of the winding up, and members who have given no such notice.
The rights of the members are to be determined in each case by the con-
tract into which they have entered, and not by presumptions or inferences
(e) Rule 67. (g) See Outlay Assurance Soctety,
(f) 43 Vict. c. 19, § 7. 34 Ch. D. 479.
872. WINDING UP BY THE COURT.
Bk. IV. Chap. 1. from the law relating to companies of a different kind or to common law
Booty it partnerships (h). In these societies there is no presumption that all the
members are liable to contribute equally to the losses of the society so that
in the absence of anything in the rules as to the way in which such losses
are to be borne, advanced members are entitled, on the company going into
liquidation, to redeem their mortgages on payment of what remains due
from them after credit has been given for all instalments already paid and
for any profits which may have been allocated to them, and the society has
no right to make any deductions either from these instalments or from these
profits in order to throw the losses of the society eyually upon the advanced
and unadvanced members (¢).
Members who have given notice which has expired before the commence-
ment of the winding up, of their desire to withdraw the monies standing
to their credit, either out of the general funds of the society or out of a
special fund, as the case may be, are entitled to receive payment of these
monies before the other members who have claims against the same funds,
but who have given no such notice, receive anything, provided that on
the true construction of the rules the effect of the notice is to confer on the
members who have given it, an unconditional right to receive these monies,
though the society may not be bound to pay them immediately (hk); but if
the notice merely confers upon the members who give it a right to be paid
if there be a particular fund in existence and there is no such fund,
the members who have given notice have no priority over the other
members (/).
There is nothing in the acts relating to building societies or in the nature
of the societies themselves to prevent the issue of preference shares, and if
such shares are issued the preferences created by them must be observed.
Thus, in a case where the society had power to issue fully paid up or deposit
shares, which entitled the holders, called depositors, to withdraw their
deposits on giving the prescribed notice, in preference to other shares,
it was held that the depositors, whether they had or had not given notice of
withdrawal before the commencement of the winding up, were entitled to
be paid the amount of their deposits before the members who held other
shares received any portion of the surplus assets (m).
Position of
advanced and
unadvanced
members.
Withdrawing
members.
Preference shares
in building
societie
(h) See the cases in the next
note, and infra, p. 918.
(t) Brownlie v. Russell, 8 App. Ca.
235; Tosh v. North British Building
Society, 11 App. Ca. 489; Auld v.
Glasgow Working Men’s Building
Soc., 12 App. Ca. 197; and_ see
Doncaster Permanent Building Soc.,
3 lq. 158. The society cannot by
any subsequent resolution alter the
terms on which a member has a
right to redeem. Smvith’s case, 1 Ch.
D. 481.
(k) Walton v. Edye, 10 App. Ca.
33, and 24 Ch. D. 421, sub nom,
Blackburn Benefit Building Society ;
Mutual Aid Building Society, 29 Ch.
D. 182, ffirmed 30 Ch. D. 434;
Alliance Society, 28 Ch. D. 559.
(1) Mutual Society, 24 Ch. D. 426,
note, explained in the cases cited
in the last note. It is not competent
for the majority of the society to
alter the terms on which a member
is allowed to withdraw. Auld v.
Glasgow Working Men’s Building
Society, 12 App. Ca. 197.
(m) Guardian Building Soc, 23
SURPLUS ASSETS OF BUILDING SOCIETIES.
873
If, after the payment of all the shareholders who are entitled to priority, Bk. IV. Chap. 1.
there remains a surplus to be divided amongst the ordinary unadvanced
shareholders, and if these shareholders have joined the society at different
times, the surplus is divided amongst them in proportion to the time they
have been members of the society (n).
Ch. D. 440 & 453, affirmed 9 App.
Ca. 519, sub nom. Murray v.
Scott. The question here decided
was not whether the depositors who
had given notice of withdrawal be-
fore the commencement of the wind-
ing up were entitled to priority over
depositors who had given no notice,
but whether the depositors as a class
were entitled to priority over the
holders of other shares. For the
decision of this question it was im-
material whether notice had or had
not been given, for the winding up
is equivalent to the compulsory
withdrawal of all members. See
8 App. Ca. p. 254.
(n) Doncaster Permanent Building
Soctety, 4 Eq. 579. In this case
there was a rule to this effect, but it
is evident from the nature of the
society that the method of distribu-
tion is the fair one.
Sect. 13.
874
Bk. IV. Chap. 2.
Sect. 1.
Inconveniences
of compulsory
winding up.
Winding up
voluntarily and
subject to super-
vision,
Differences
between these
and compulsory
winding up.
WINDING UP VOLUNTARILY AND SUBJECT TO SUPERVISION.
CHAPTER II.
OF WINDING UP VOLUNTARILY, AND SUBJECT TO THE SUBERVISION
OF THE COURT.
SECTION I.—DIFFERENCES BETWEEN THE VARIOUS METHODS OF
WINDING UP.
WHEN a company is wound up by the Court, everything is
done under the immediate superintendence of the chief clerk
of the judge to whose court the winding up is attached. This
necessarily involves issuing summonses and obtaining appoint-
ments, and consequent delay and expense, even in matters of
routine. In addition to this, the power of adjourning every
question before the judge is frequently exercised for the mere
purpose of gaining time; and every such adjournment,
whether reasonable or not, increases the delay and expense of
winding up.
To avoid these inconveniences as far as practicable, the
Companies act, 1862 (following in this respect the acts of
1856—58) provides for two other methods of winding up, viz.,
Ist, purely voluntarily, that is, without the intervention of the
Court at all, and 2dly, voluntarily, but at the same time under
an order and subject to the supervision of the Court.
The practical differences between these two methods on the
one hand, and winding up by the Court on the other, are, that
when a company is wound up voluntarily, or subject to the
supervision of the Court, all the business is done by the liqui-
dator, without consulting the judge or his chief clerk, who are
only appealed to on matters of difficulty or for the purpose of
exercising powers which the liquidator does not possess (a).
(2) See the judgment of V.-C. Wood, in the Inns of Court Hotel Co.,
W. N. 1866, 348.
WINDING UP VOLUNTARILY. 875
This at once saves much delay and expense. On the other Bk. Ce eae
hand, the liquidator being able to act without the direction of oi
the judge or his chief clerk, is more likely to take steps which
have afterwards to be rectified, perhaps by litigation (b). More-
over, notwithstanding the power of invoking the aid of the
Court, creditors and contributories complain that, practically,
they have not the same facilities for ascertaining what is being
done by the liquidator under a voluntary winding up, or winding
up subject to supervision, as they have when a company is
wound up compulsorily.
The theoretical difference between winding up voluntarily Difference be-
and winding up subject to supervision appears to be that the 'ee™ Windins
up voluntarily
first is supposed to be carried on without any aid from the 84 subject to
supervision.
Court, except when that aid is invoked for some special and
limited purpose ; whilst when a company is wound up subject
to supervision, the extent to which the winding up shall be
carried on without consulting the judge or his chief clerk
depends upon the order which has been made (c). It is not
usual, however, to impose any restrictions, unless some necessity
for so doing is shown to exist(d); and consequently the
practical difference between the two methods of winding up
consists mainly, if not entirely, in the comparative facilities for
obtaining the assistance of the Court, and in the comparative
ease with which the liquidator can be controlled, and exe-
cutions against the company be prevented.
SECTION II.OF WINDING UP VOLUNTARILY.
All companies registered under the Companies act, 1862, se
and also all companies which, though not so registered, have ae Ros
been registered under the acts of 1856—1858 (e), and also all pe eran
industrial and provident societies registered under 25 & 26
(b) See the observations of L. J. (d) See the form of order in sche-
Turner, as to the expense of vo- dule 3 to the rules, No. 4.
luntary liquidations in National (e) Torquay Bath Co., 32 Beay.
Savings Bank Association, 1 Ch., 581; London India Rubber Co., 1
p. 558. Ch. 329.
(c) See § 147.
876
WINDING UP VOLUNTARILY.
Bk. IV. Chap. 2. Vict. c. 87, or under 39 & 40 Vict. c. 45, and building societies
Sect. 2.
Circumstances
under which a
company may
be wound up
voluntarily.
under 87 & 88 Vict. c. 42 (f), may be wound up voluntarily (9).
But no other company can(h). But although unregistered
companies cannot be wound up voluntarily under the act, there
is, thoretically, nothing to prevent the members of such com-
panies, if unincorporated, from dissolving the partnership which
subsists between them, and from applying their joint assets in
discharging their joint liabilities, and dividing the surplus
amongst themselves. It is seldom, however, that this can be
done (i); for the successful carrying out of such a scheme is
liable to be defeated not only by disagreement amongst the
shareholders, but also by the importunity of creditors. Practi-
cally, therefore, and excepting a few rare cases, unregistered
companies must be wound up by the Court.
A company capable of being wound up voluntarily under the
act may be so wound up,—
1. When the time, if any, fixed by the articles for the
duration or dissolution of the company has expired or arrived,
and the members have passed a resolution requiring the
company to be wound up voluntarily (4).
2. When the members have passed a special resolution
requiring the company to be so wound up (J).
3. When the members have passed an extraordinary resolu-
tion to the effect that it has been proved to their satisfaction
that the.company cannot, by reason of its liabilities, continue
its business, and that it is advisable to wind it up (m).
The resolution in this last case must be passed in the manner
required for a special resolution, but no confirmation of it is
necessary (1).
The resolution must, in the second and third of the above
cases, be advertised in the Gazette (0).
(f) § 32, sub-s. (4), and Sunder- 38 & 39 Vict. c. 60, § 25. As to the
land, &c., Building Socy., 21 Q. B. registration of such societies under
D. 349. the Companies acts, see ib. § 24.
(g) See §§ 129, 176, 177, and 196 (k) §§ 129 and 130.
of the Companies act, 1862 ; and, as (2) § 129.
to Industrial and Provident societies, (m) Ib.
Appendix. (n) Tb. and § 51,
(h) § 200, cl. 2. (0) § 132.
(2) See as to Friendly societies,
RESOLUTION TO WIND UP. 877
With respect to extraordinary resolutions, the following case Bk. LV. Chap. 2
is important :—In the case of the Bridport Old Brewery Com- ane
pany (p) notice was given that an extraordinary meeting would resolution.
be held to consider, and, if so determined, to pass a resolution Feet on :
to wind up the company voluntarily. The meeting passed a pony.
resolution that it had been proved that the company could not,
by reason of its liabilities, continue its business, and that it
was advisable to wind up the company. This resolution was
never confirmed, and could not, therefore, be supported as
a special resolution. It was held that it could not be sup-
ported as an extraordinary resolution, inasmuch as the notice
was so framed as to lead to the supposition that a special
resolution, requiring confirmation, was to be proposed, and did
not sufficiently disclose an intention to proceed by way of extra-
ordinary resolution.
A notice, however, may be good in part and bad in part;
and if it is good so far as it relates to the passing of a re-
solution to wind up, a resolution to that effect may be valid,
although the rest of the notice may relate to some proposed
resolution which is ultra vires, and such resolution may also be
passed (q).
The effect of a valid resolution to wind up voluntarily, when Fifect of resolu-
a compulsory winding-up order is sought to be obtained, has Sn
been considered already (r). It is only necessary here to add
that, although a company may be in course of winding up
voluntarily, any creditor who can satisfy the Court that his
rights are prejudiced, is entitled to have the company wound
up by the Court(s); but the Court may adopt all or any
of the proceedings taken in the course of the voluntary
winding up (é).
The time at which the winding up is deemed to commence Commencement
of winding up.
(p) 2 Ch. 191. See, also, Silk- (r) Ante, pp. 636, 640. In the
stone Fall Colltery Co., 1 Ch. D. 38 ;
National Savings Bank Assoc., 1 Ch.
p. 553; Inns of Court Co, W. N.
1866, 348.
(q) Cleve v. Financial Corporation,
16 Eg. 363; Stone v. City and
County Bank, 3 C. P. D. 282, at
pp. 307 and 313.
case of the Bridport Old Brewery Ov.,
supra, the Court made a compulsory
order on the petition of a creditor.
See, further, infra, p. 886.
(s) § 145. As to the right of con-
tributories in this respect, see Gold
Co., 11 Ch. D. 701, and ante, p. 640.
(é) § 146.
878
WINDING UP VOLUNTARILY.
Bk. IV. Chap. 2. is the time at which the resolution to wind up is passed (u) ;
Sect. 2.
Liquidators,
and this, when the resolution is special, means when the second
resolution confirming the first is passed(x). After the com-
mencement of the winding up the company must cease to
carry on business, except for the purpose of winding up its
affairs (y). The onus of proving that a contract entered into
by acompany, which is being wound up voluntarily, is not
required for the purposes of the winding up, lies on the party
disputing the validity of the contract (z).
The company retains its corporate character until its affairs
are wound up, and it has been actually dissolved, as mentioned
below (a). After the passing of the resolution to wind up, no
shares can be lawfully transferred, except to or with the
sanction of the liquidators (b) ; nor can the property of the
company be dealt with without their sanction (c).
The first thing to be done after a resolution to wind up is
passed is to appoint one or more liquidators, for the purpose
of carrying the resolution into effect (d). The appointment
lies with the members (¢) ; but they are empowered to delegate
the appointment to the creditors of the company, or to a com-
mittee of them(f). If there is no liquidator, the Court may
appoint one or more, on the application of a contributory (9).
The Court, moreover, may, on due cause shown, remove any
liquidator and appoint another (hk): and it is not essential to
(u) § 130. For the effect of a
subsequent order for a compulsory
winding up, see Taurine Co., 25 Ch.
D. 118; Thomas v. Patent Lionite
Co., 17 Ch. D. 250. See ante, p.
664.
(x) Emperor Life Assurance Co.,
31 Ch. D. 78, and ante, p. 664;
Dawes case, 6 Eq. 232; Ex parte
Colborne and Strawbridye, 11 Eq.
478 ; Weston’s case, 4 Ch. 20.
(y) § 181.
(2) Hire Purchase Co. v. Richens,
20 Q. B. D. 387.
(a) Ib. and § 143.
(b) § 131. See ante, pp. 832 et seq.
(c) See §§ 131, 133, and ante, p.
666.
(d) § 138, cl. 2, 4, 6 A liqui-
dator cannot be appointed except
when there is a valid resolution to
wind up. Indian Zoedone Co., 26
Ch. D. 70.
(e) § 183, cl. 3, and § 140.
(Ff) § 135.
(g) § 141.
(h) Ib. Sir John Moore Gold
Mining Co., 12 Ch. D. 325 ; British
Nation Life Ass, Assoc., 14 Eq. 492;
Marseilles Extension, dc., Co., 4 Eq.
692. And see Ex parte Charlesworth,
36 Ch. D. 299; and ante, p. 703.
a parte Pulbrook, 2 De G. J. & 8.
349.
LIQUIDATORS. 879
prove misconduct or unfitness on the part of a liquidator, in Bk. IV. Chap. 2.
order to induce the Court to remove him (i). eat
Liquidators may, it seems, be appointed at a meeting con- Resolutions
vened for the purpose of passing a resolution to wind up cee
voluntarily, although no notice has been given that their
appointment will be proposed at such meeting (k); but if the
resolution to wind up is aspecial resolution requiring confirma-
tion the resolution by which the liquidator was appointed must
also be confirmed (J). Whether acts done by liquidators im-
properly appointed are null and void, or whether they are valid
notwithstanding the defect in their appointment, is not so clear
as might be desired. It seems, however, that when their ap-
pointment is proved to have been invalid, acts done by them
are void(m). But it is conceived that it is by no means every
irregularity in the appointment which will vitiate it; in
many cases the maxim fiert non debuit, sed factum valet, may
apply (n).
Upon the appointment of liquidators, the powers of the
directors cease, except so far as their continuance may be
sanctioned by the members in general meeting, or by the
liquidators (0).
The duties of the liquidators are— Duties of
1. To apply the property of the company in satisfaction of dts.
its liabilities, pari passu (p).
2. To pay the debts of the company, and adjust the rights
of the contributories amongst themselves (q).
(i) Marseilles Extension, &c., Co.,
4 Eq. 692; British Nation Life Ass.
Assoc., 14 Eq. 492; and cases in last
note.
(k) Welsh Flannel Co., 20 Eq. 360,
and see Lord Chelmsford’s observa-
tions in L. R.2 H. L. 355. But see,
contra, Stearic Acid Co., 9 Jur. N.S.
1066 ; Anglo - Californian Co. v.
Lewis, 6 H. & N. 174. In that
case the invalidity of the appoint-
ment of the liquidators enabled a
shareholder to defeat an action for
calls made by them.
(2) Indian Zoedone Co., 26 Ch. D.
70.
(m) See note (k), and § 67 of
the act. In the case of the Brid-
port Old Brewery Co., 2 Ch. 191,
the effect of that section was dis-
cussed,
(n) See ante, p. 173.
(0) § 133, cl. 5. James v. May,
L. R. 6 H. L. 398. See infra, p.
881, note (Z).
(p) § 138, el. 1.
(q) § 133, cl. 10. Though the
words in this section differ from
those in § 109, which applies to
a winding up by the Court, their
880 WINDING UP VOLUNTARILY.
Bk. IV. Chap. 2.
Sect. 2.
8. To pay the costs of winding up (r).
4, As soon as the affairs of the company are fully wound up,
to make up an account showing the manner in which such
winding up has been conducted (s).
5. To call a meeting of the company (¢) for the purpose of
having this account laid before them, and hearing any ex-
planation that may be given by the liquidators (w).
6. To make a return to the registrar of joint-stock com-
panies of such meeting having been held (#).
If the winding up continues more than a year, the liqui-
dators must, at the end of the first and each succeeding year,
summon a general meeting of the company (y), and lay before
such meeting an account showing their acts and dealings, and
the manner in which the winding up has been conducted
during the preceding year (z).
In order to enable the liquidators to perform their duties,
they are authorised—
1. To exercise all powers given by the act to the official
liquidator (a).
2. To exercise the powers given to the Court of settling the
list of contributories (6) ;
8. To make calls upon all or any of the contributories
settled on the list to the extent of their liability (c) ;
4. To apply to the Court to determine any question arising
in the winding up, or to exercise any of the powers which the
meaning is the same: Bridgewater
Navigation Co., 39 Ch. D. pp. 21
and 26.
(r) Ib. cl. 9, and § 144.
(s) § 142.
(t) Qu. members or the contribu-
tories ?
(u) § 142.
(2) § 143.
(y) Qu. members or the contribu-
tories ?
(2) § 139.
(a) § 183, cl. 7. See ante, p.
708. It is apprehended that the
voluntary liquidators can, without
the sanction of the Court, do any
of those things which the official
liquidator can do under § 95, with
the sanction of the Court.
(6) § 188, cl. 8. See ante, pp.
745—750.
(c) § 133, cl. 9. See ante, p. 846.
A liquidator can also, by giving
notice, enforce calls made by the
directors before the commencement
of the winding up, although no
notice of the call had been given
by them: Stone v. City and County
Bank, 3 C. P. D. 282. As to orders
for the payment of calls, see ante,
p. 847,
LIQUIDATORS.
881
Court might exercise if the company were being wound up Bk IV. Chap. 2
by it (d).
Sect. 2.
5. To summon general meetings of the company (¢).
The liquidators are also empowered, with the sanction of
an extraordinary resolution of the company, to make arrange-
ments with creditors and contributories, and to compromise
all claims by or against the company(/f); and with the sanction
of a special resolution to sell the business of the company, in
consideration of shares, policies or other like interests, for the
purpose of distribution amongst the members (4).
Lastly, the liquidators are empowered, with the sanction of
the Court, to prosecute delinquent directors, managers, officers,
or members of the company (h).
Where there are more liquidators than one, the powers given Where there are
to them by the act may be exercised by such one or more of
more than one.
them as may be determined at the time of their appointment,
or, in default of such determination, by any number not less
than two (i).
than one (k).
There is no necessity, however, to appoint more
‘Where, however, there are more than one, and
one is not empowered by the company to act for all, the
liquidators cannot themselves delegate their powers to one of
their own body; and if they do, his acts will not bind the
company (I).
Moreover, if several liquidators are appointed
the survivor cannot act alone (m).
The exercise by the liquidators of the foregoing powers is Control of
members and
subject to be controlled by the company and its creditors ; for creditors over
the company is empowered by an extraordinary resolution to
(d) § 188, and rule 51. This en-
ables the Court to do in a voluntary
winding up whatever it can do in
a compulsory winding up. See
Rance’s case, 6 Ch. 104; Union
Bank of Kingston upon Hull, 13
Ch. D. 808 ; Hetron’s case, 15 Ch. D.
139; Gold Co., 12 Ch. D. 77.
(e) § 139.
(f) §§ 159 and 160. See ante, p.
709, as to compromises, and Wedg-
wood Coal and Iron Co., 6 Ch. D. 627.
(9) § 161. See infra, as to this.
LC.
liquidators.
(h) § 168. To obtain this sanc-
tion a petition must be presented.
See rule 51.
(i) § 138, cl. 6.
(k) § 133, el. 4.
(2) See the next note and Ez parte
Birminghum Bank, 3 Ch. 651; Bo-
lognesi’s case, 5 ib. 567; Ha parte
Agra and Masterman’s Bank, 6 ib.
206, where bills were accepted by
one out of four.
(m) Metropolitan Bank v. Jones, 2
Ch, D. 366.
*3 1
882
Bk. IV. Chap. 2.
Sect. 2.
Sale of assets.
Transfer of busi-
ness to another
company.
WINDING UP VOLUNTARILY.
enter into any arrangement, with three-fourths in number and
value of its creditors, with respect to the powers to be exercised
by the liquidators, and the manner in which they are to be
exercised (n). Moreover, any arrangement so made is binding
as well on the contributories as on the creditors, if not appealed
against within three weeks from the date of its completion (0).
Moreover, any contributory may apply to the Court to deter-
mine any question arising in the winding up ( p), or to stay the
winding up and all proceedings therein (g); and any creditor
can apply for a compulsory order to wind up under § 145, at
any time before the company is dissolved (7).
With respect to the sale of the assets of the company, the
liquidators apparently have power to sell them for money as
best they can; at the same time, if any particular sale is
opposed by any of the creditors or contributories, it may be
prudent to apply to the Court to sanction it (s).
One of the most important powers of the liquidators under a
voluntary winding up is that of selling the business and good-
will of the company being wound up to another company, in
consideration of shares, policies, or other like interests in the
purchasing company. This power is conferred by §§ 161
and 162 of the Companies act, 1862 (¢), from which it will
be seen—
1. That the power can only be exercised under the authority
of a special resolution of the company (w) being wound up ;
(n) §§ 185 and 136.
(0) § 137. The appeal may be by
petition or motion. See rule 51.
(p) § 188, by motion or petition,
see rule 51. See, for examples,
Anglesew Colliery Co., 2 Eq. 380;
Crookhaven Mining Co., 3 Eq. 69.
(q) Schanschieff Electric Battery
Syndicate, W. N. 1888, 165; and
see South Barrule Slate Quarry Co.,
8 Hq. 688.
(r) See § 148. London and Cale-
donian Marine Insurance Co., 11 Ch.
D. 140; Pinto Silver Mining Co.,
8 Ch. D. 273,
(s) This was done in the Scinde,
dc., Bank Corporation, W. N. 1867,
41, and the agreement for sale was
confirmed. As to compelling the
liquidators to accept the best of two
offers, see The Colonial and Gen. Gas
Co., ib. 42, where, however, the
company was being wound up sub-
ject to supervision.
(t) See also 31 & 32 Vict. c. 68,
which, however, only applies to
companies being wound up when
the act passed.
(u) Qu. members or contribu-
tories ?
LIQUIDATORS.
883
9. That if so sanctioned, the transfer can be made notwith- Bk. a , ae 2.
standing the opposition of the minority (x) ;
3. That any dissentient can require the liquidators, at their
option, to abstain from carrying the resolution into effect, or
to purchase the interest of the dissentient (y) ;
4. That this requisition must be made by leaving a notice in
writing, addressed to the liquidators, and left at the registered
office of the company not later than seven days after the
passing of the resolution (gz) ;
5. That in the event of the liquidators electing to purchase
the interest of a dissentient, the price, if not agreed upon, must
be ascertained by arbitration, as provided by 8 & 9 Vict. c. 16,
§$§ 128—134 (a).
The decisions on these sections and the mode of winding up
and reconstructing companies under them will be noticed in
the next Chapter (infra, p. 891).
. 2.
A purely voluntary winding up does not, per se, prevent a oe action,
creditor of the company from suing it, or issuing execution
against it; it is not, therefore, in any case necessary for
him to apply for leave so to do (b). But as already stated,
he may be restrained as well from issuing execution as from
suing (c).
A resolution to wind up voluntarily may disable a company Winding up a
company may be sued for a breach of them (d). But, generally
speaking, a winding-up order is not equivalent to a breach of
contract (é).
(a) Imp. Merc, Credit Ass.,12 Eq. As to costs, see Imp. Merc. Credit
504 ; Tunis Railways Co.,10 Ch, D. Assoc., 12 Eq. 504.
270, note ; affd. W. N. 1874, 165. (b) See §§ 85, 87, and 163, which
(y) Ex parte Fox, 6 Ch. 176, only apply to winding up by the
where a resolution depriving a Court, or subject to its supervision.
shareholder of this right was held (c) § 188. See ante, p. 678, and
void. as to appointing a receiver in a
(2) Union Bank of Kingston-wpon- creditor’s action, Boyle v. Bettws
Hull, 13 Ch. D. 808. Llantwit Coll. Co., 2 Ch. D. 726.
(a) The judge can appoint an (d) Inchbald v. Western Netlgherry
wnpire, if the arbitrators do not Coffee Co.,17 C. B. N.S. 733. See,
agree. See Re Lord, 24 L. J. Ch. also, as toa voluntary winding up
145. So can a judge of the Queen’s _ being equivalent to a dismissal of a
Bench Division. Re Anglo-Itahan servant, ante, pp. 729, 730.
Bank and De Rosaz, L. R.2Q. B. 452, (e) Ante, p. 728.
3L2
. . ba breach of ecn-
from performing its contracts; and if this is the case, the tract.
884
Bk. IV. Chap. 2.
Sect. 2.
Payment of
debts.
The list of con-
tributories,
Calls.
WINDING UP VOLUNTARILY.
The debts to be paid out of the assets of the company are
the same as those which would have to be paid under a com-
pulsory winding up (f). But in order to exclude creditors
who do not prove within a given time, such time must appar-
ently be fixed by the Court; the fixing of such time not being
one of those things which liquidators alone can do (g). The
rules as to set-off are the same as in a compulsory winding
up (h).
The contributories in a voluntary winding up are those
persons who would be contributories on a compulsory winding
up having the same date for its commencement. The liqui-
dators settle the list, and they have all the powers of the
Court for this purpose (i). But whether under these words
the liquidators have power to rectify the register of members
may well be doubted (k). The liquidators, however, have
power to sanction transfers of shares and alterations in the
status of members made after the commencement of the wind-
ing up (J). In exercising this power regard ought to be had
to the principles acted upon by the Court in like cases (m).
The liquidators are also empowered to make calls on the
contributories (7) ; and they have the same discretion both as
to when to make a call, and as to its amount, as the Court has
under a compulsory winding up (0). The liquidators, how-
ever, have no power to enforce payment without judicial assist-
ance. The methods of enforcing payment are either by an
action in the name of the company (7) ; or, if the contributory
is already settled on the list, by an application to the Chan-
cery Division of the High Court to order payment under the
(f) See ante, pp. 713 et seq. Dowling, ubi sup.
(g) See § 107.
(h) See §§ 38 and 101, and infra,
note (r).
(4) § 183, cl. 8. As to giving
notice of settling the list, see the
London Bank of Scotland, W. N.
1867, 114; Brighton Arcade Co. v.
Dowling, L. R. 3 C. P. pp. 175,
184.
(%) Compare § 133, cl. 8, with §§
38, 95, and 98 ; and see Gilbert’s case,
5 Ch. 559 ; Brighton Arcade Co. v.
(2) See § 131.
(m) See ante, pp. 8831—837.
(n) § 133, cl. 7.
(0) Compare § 133, cl. 7, with §
202. See ante, p. 849.
(p) See, for instance, Brighton
Arcade Co. v. Dowling, L. R. 3 C. P.
175, which shows that no notice of
being on the list of contributories is
necessary ; General Discount Co. v.
Stokes, 17 C. B. N. S. 765; Hull
Flax Co. v. Wellesley, 6 H. & N. 38;
DISSOLUTION OF COMPANY. 885
In Bk. IV. Chap. 2.
powers conferred upon it by the Companies act, 1862 (q). ec a
ech, Le
the event of death or bankruptcy payment can be obtained
wholly or in part, as the case may be, by administering the
estate of the deceased, or by proof against the bankrupt’s
estate. The same rules as to set-off against calls apply when
a company is being wound up voluntarily as when it is being
wound up compulsorily (r).
The costs of winding up are payable out of the assets of the Costs.
company in priority to all other claims (s); and the costs of
the liquidators incurred in prosecuting delinquent directors,
&c., are entitled to like priority (t).
In distributing the surplus assets care must be taken to put Surplus assets.
the contributories as far as practicable on an equality, regard
being had to the amounts paid up on their respective
shares (wu).
A company which has been wound up voluntarily is dis- Dissolution of
solved at the end of three months from the date of the regis- rok
tration of the return which the liquidators are required to
make as before mentioned (v). After the liquidator has made
his return the Court has sufficient jurisdiction to make calls
on the contributories for the payment of the debts of the
company or the adjustment of the rights of the contributories,
inter se, if an application be made before the three months
have expired (x). After the expiration of the three months
the Court has no jurisdiction to make any order unless the
dissolution of the company was obtained by fraud (y). A
company, moreover, will be restrained from dissolving without
Garnett and Moseley Gold Mining Co.
v. Sutton, 3 B. & Sm. 321.
(qg) See § 188. Rance’s case,6 Ch,
104,
(r) Brighton Arcade Co. v. Dow-
ling, L. R. 3 C. P. 175, is opposed to
this ; but this case is now overruled
by Black & Co.’s case, 8 Ch, 254;
and see also, ante, p. 744.
(s) § 144. See ante, pp. 859 et
seq.
(t) § 168. See ante, pp. 867 et
seq.
(u) See Eachange Drapery Co., 38
Ch. D.171; Ex parte Maude, 6 Ch.
51, and ante, pp. 852 and 869.
(v) § 143.
(a) See Crookhaven Mining Co., 3
Eq. 69.
(y) Pinto Silver Mining Co.,8 Ch.
D. 273; London and Caledonian
Marine Ins. Co., 11 Ch. D. 140,
where the Court refused to make an
order for the compulsory winding
up of the company. See, also,
Westbourne Grove Drapery Co., W.
N. 1878, 195.
886
WINDING UP SUBJECT TO SUPERVISION.
Bk. IV. Chap. 2. notice to those persons to whom it may in future become
Winding up sub-
ject to super-
vision of Court.
Winding up
subject to
supervision
preferred to
compulsory
winding up.
Sect. 3.
—— liable (2).
SECTION III.—OF WINDING UP SUBJECT TO THE SUPERVISION
OF THE COURT.
After a resolution has been passed for winding up a com-
pany voluntarily, the Court may make an order directing that
the voluntary winding up shall continue, but subject to such
supervision of the Court and with such liberty for creditors,
contributories, or others to apply to the Court, and generally
upon such terms and subject to such conditions as the Court
thinks just (a).
The application for such an order is made by a petition (b),
which must be advertised, verified, and served as required in
the case of a petition for winding up by the Court (c). It
must also be served on the liquidators if there are any (d).
In determining what ought to be done upon such a petition,
the Court may consult the wishes of the creditors and con-
tributories, and may summon meetings for the purpose of
ascertaining their wishes (e).
The circumstances which influence the Court in determining
what order to make on petitions to wind up have been already
noticed (f); and in addition to what has there been stated it
is only necessary to observe that the Court is reluctant to
interfere with a voluntary winding up, and will not at the
instance of a contributory convert a voluntary winding up into
(2) See Haytor Granite Co., 1 Ch.
77, a claim for rent, where the com-
pany being lessee had assigned ; and
see Gooch v. London Banking Asso-
ciation, 32 Ch. D. 41; Lord Elphin-
stone v. Monkland Iron Co., 11 App.
Oa. 382. As to the jurisdiction of
the Court to restrain the dissolution
of a company being wound up volun-
tarily under the acts of 1856-8, see
Lowndes v. Garnett & Moseley Gold
Mining Co., 2 J. & H. 282,
(a) § 147. See the form of the
order No. 4, in schedule 3 to the
tules, and as to who may petition,
Pen-y-Van Colliery Go. 6 Ch. D.
477, ante, p. 624.
(b) § 148. See infra, p. 888, note
(p).
(c) Rules 1-5, ante, p. 654.
(d) Rule 3. See ante, p. 656.
(e) § 149, and see rules 45 & 46.
(f) Ante, pp. 624, et seq.
WINDING UP SUBJECT TO SUPERVISION. 887
a compulsory winding up unless the resolution to wind up Bk. ae a 2,
voluntarily is impeachable or unless creditors support the peti- ——————-
tion (g); and will not convert a voluntary winding up into a
winding up subject to supervision unless there is misconduct
on the part of the liquidators or some other good reason for so
doing (hk). Where there is no proper resolution to wind up
voluntarily, the Court cannot make an order to wind up subject
to supervision; for such an order presupposes, and, in fact,
continues a pre-existing voluntary winding up. Where, there-
fore, there is no such winding up, all that the Court can do is
to make a compulsory order (i), or to dismiss the petition, or
to allow it to stand over in order to give the shareholders an
opportunity of passing a resolution to wind up voluntarily (4).
Where, however, the Court is satisfied that a proper resolution
to wind up has been passed, it will make an order to continue
the winding up subject to supervision in preference to a com-
pulsory order, unless a compulsory order is desired by a
majority of creditors or there is some other good reason for
making it.
A strong illustration of this is afforded by the case of the London and
London and Mediterranean Bank (l). That bank had been ili
amalgamated with the London and Bombay Bank. A reso-
lution to wind up the London and Mediterranean Bank volun-
tarily was passed, and liquidators were appointed; a petition
for an order to continue this winding up under the supervision
of the Court, and to continue the voluntary liquidators, was
afterwards presented by a contributory, and was supported by
the company: but was opposed by another contributory, on
the ground that a petition to wind up the London and Bombay
(g) Gold Co.,11 Ch. D. 701. The
Court will not make a compulsory
order against the consent of the
ante, p. 877, and The National
Savings Bank Association, 1 Ch. 547.
See, also, Patent Floor Cloth Co., 8
petitioner even if his petition asks
for it, Chepstow Bobbin Mulls Co., 36
Ch. D. 563.
(h) See Imperial Bank of China,
de., 1 Ch. 339 ; Beaujolais Wine Co.,
3 Ch. 15. As to applications by
creditors, see infra, notes (2) to (p).
(7) As in the case of the Bridport
Old Brewery Co. 2 Ch. 191, noticed
Eq. 664, where an order for winding
up subject to supervision was dis-
charged, and a compulsory order
made, As to building societies,
see 37 & 38 Vict. c. 42, § 32 (4).
(k) See the cases collected, ante,
pp. 644 e seq.
(1) W.N. 1866, 207 and 317,
888
Bk. IV. Chap. 2.
Sect. 3.
Conflicting
winding-up
orders.
Effect of order
to wind up
subject to
supervision.
WINDING UP SUBJECT TO SUPERVISION.
Bank was pending ; and that petition disclosed facts tending
to show that the continuance of the voluntary winding by the
voluntary liquidators was not for the interests of the contribu-
tories. The Court, nevertheless, made the order for continuing
the voluntary winding up, subject to supervision (m). Onasubse-
quent occasion another petition was presented by two creditors
and a contributory in the London and Mediterranean Bank,
praying for a compulsory winding-up order, on the ground that
the voluntary winding up was not being conducted properly.
The petition was supported by other creditors ; but the Court,
nevertheless, dismissed the petition (nm), on the ground that a
compulsory winding-up order would not be more advantageous
to the creditors, or contributories, than the order which already
existed; and that if sufficient grounds were shown, the
liquidators could be removed as easily under one order as the
other.
In this case it was objected that a compulsory order could
not be made until the former order for winding up, subject to
supervision, had been discharged on a rehearing or on appeal :
but this objection was overruled (0). Instances have also
occurred in which proceedings, under a compulsory winding-up
order, have been stayed, and an order to wind up, subject to
supervision, has been substituted for it(p). Where this is
done, care ought to be taken not to disturb the date of the
commencement of the winding up (q).
The general effect of an order to wind up, subject to super-
vision, is to continue the voluntary winding up with such
restrictions, if any, as the Court may impose(r). The pre-
sentation of the petition gives the Court the same jurisdiction
over actions as a petition for winding up compulsorily (s), and
has the same effect as such a petition on fraudulent convey-
(m) W. N. 1866, 207.
(n) W. N. 1866, 317.
(0) W. N. 1866, 317.
(p) This was done by Lord Ro-
milly, M. R., in the case of the
General Exchange Bank, May, 1867.
The application was made by sum-
mons, not by petition. See ante, p.
886, note (0).
(q) See, as to this, ante, p. 664.
(r) § 147, and see the form of the
order No. 4, in the 3rd schedule to
the rules. London Quays, de., Co., 3
Ch. 394.
(s) See §§ 148 and 85, ante, p.
672.
WINDING UP SUBJECT TO SUPERVISION. 889
ances by the company of its assets (t). Moreover, speaking Bk. ee 2.
generally, an order to wind up, subject to supervision, appears
to be equivalent to an order to wind up compulsorily, except
that the liquidators can, unless restricted by the Court,
exercise, without its sanction, all the powers of liquidators
acting in a winding up which is purely voluntary (u). The
liquidators should, however, apply to the Court for its sanction
before doing anything of unusual importance, or which is
opposed on grounds not obviously unreasonable. They have
power to sell the assets of the company under § 161, if such
sale is authorised by a special resolution (2).
When a company is ordered to be wound up, subject to ae
supervision, the commencement of the winding up dates from up.
the passing of the resolution on which it is founded (y) ; i.e.,
where there is a special resolution, from the passing of the con-
firming resolution (¢). This is so even where, as frequently
happens, the petiton on which the order is made precedes the
resolution (a): so where a provisional liquidator has been
appointed upon an earlier petition for a compulsory order (b).
If an order is made for winding up, subject to the super- Liquidators.
vision of the Court, the Court may appoint one or more liqui-
dators, in addition to or in the absence of any previously
appointed (c). The additional liquidators have the same
powers, are subject to the same obligations, and stand in the
same position as if they had been appointed by the com-
pany (d). This power of appointing additional liquidators is
sometimes exercised for the protection of creditors (e). An
appointment of an additional liquidator chosen by the creditors,
practically secures to them the same protection as the appoint-
(t) § 164. See ante, p. 667.
(u) § 151. Wrights case, 5 Ch.
437.
(x) Imp. Merc. Credit Assoc., 12
Eq. 504, and see unte, p. 882, and
infra, p. 849.
(y) See § 130. .
(2) Emperor Life Ass. Society, 3
Ch. D. 78; Ex parte Colborne and
Strawbridge, 11 Eq. 478; Weston’s
case, 4 Ch. 20; Dawes’ case, 6 Eq.
832.
(a) Weston’s case, 4 Ch. 20, see
further, ante, p. 664.
(b) Emperor Life Ass. Society, ubi
supra.
(c) § 150. See London Quays Co.,
3 Ch, 394.
(d) § 150.
(e) See an instance under the acts
of 1856-58. Llanfyrnach Silver
Lead Mining Co., 9 W. R. 500.
890
WINDING UP SUBJECT TO SUPERVISION.
Bk. IV. Chap.2.ment of an official liquidator under an order to wind up
Sect. 3.
compulsorily ; and by appointing such additional liquidator
the necessity of making a compulsory winding-up order is fre-
quently obviated. Not only can the Court appoint additional
liquidators to act with those appointed by the contributories,
but it can also remove any liquidator whom they have
appointed (f). This power, however, can only be exercised
on due cause shown; but to induce the Court to exercise
it, misconduct on the part of the liquidators need not be
proved (4).
If an order for winding up, subject to the supervision of the
Court, is superseded by an order for winding up by the Court,
the old liquidators, or any of them, may be appointed official
liquidators, either with or without other persons, and either
provisionally or permanently (h).
An order for winding up, subject to supervision, may be
stayed in a proper case to enable the company to resume
business (7).
(f) §§ 141 and 150, and next (h) § 152.
note. (2) South Barrule Slate Co., 8 Eq.
(g) Ex parte Charlesworth, 36 Ch. 688, where one contributory dis-
D. 299; Marseilles Extension, dc., senting was put to his election to
Co., 4 Eq. 692, and British Nation retire on payment of the valuc of
Life Ass. Ass., 14 Eq, 492, ante, p. his share.
878.
AMALGAMATION AND RECONSTRUCTION. 891
CHAPTER III.
AMALGAMATION AND RECONSTRUCTION OF COMPANIES (a).
AutTHoucH the word amalgamation is frequently used im Bk. IV. Chap. 3
connection with companies it does not seem to have acquired Meaning sitlin
any technical or well defined meaning (b). It is perhaps "OW amels™
generally understood to express or imply a transfer by one or
more companies of their assets and liabilities either to a new
company formed to take them, or to an already existing com-
pany, in consideration of shares in such company, which
are given or are at least offered to the members of the trans-
ferring companies.
A power to amalgamate would probably be held to authorise
a purchase of the assets and liabilities of another company (c) ;
or a transfer of assets and liabilities in consideration of shares
in a company to which such assets are transferred (d). But it
does not enable directors to compel their shareholders to
become members in a new company with wider objects, whereby
their liability may be increased, and probably not in any new
company (e).
How far, apart from statute, companies have or have not Power to amal-
powers enabling them to amalgamate depends upon the terms Se ree
of their charters, articles, or deeds of settlement (f). Unless
these contain distinct provisions for the purpose such powers
do not exist (g). A company incorporated by charter or
(a) Parts of this chapter will be G. J. & Sm. 29; Pulbrook v. New
found in other portions of the work ;
but it has been thought convenient
to bring the whole subject together
even at the expense of some repeti-
tion.
(b) Higg’s case, 2 H. & M. 666 ;
Ex parte Bagshaw, 4 Eq. 347. See,
as to the meaning in the Railway
Clauses act, 26 & 27 Vict. c. 92, § 37.
(c) Era Assurance Soc. 1 De
Cwwil Service Co-operation, 26 W. R.
11.
(d) Dougan’s case, 8 Ch. 545.
(e) See cases in note (6) above,
and Clinch v. Financial Corporation,
5 Eq. 450 ; Imperial Bank of China
v. Bank of Hindustan, 6 Eq. 91.
(f) See ante, pp. 183 and 207.
(9) Ernest v. Nicholls, 6 H. L. C.
401, and cases below, note (x).
892
AMALGAMATION AND RECONSTRUCTION.
Bk, IV. Chap. 8. special act of Parliament cannot delegate its powers (h), and
cannot therefore transfer its business, even for a time, to
another company (t); nor can the majority of the shareholders
of any company bind the minority by an agreement to transfer
its property and business (*), or to purchase the assets and
liabilities of another company (J). Whence it follows that
two companies cannot amalgamate with each other, unless
such a transaction is authorised by the constitutions of both
companies ().
Where there is power to amalgamate the terms of the
power must be observed (nm). Thus a power to amalgamate
with another company having the same objects will not autho-
rise an amalgamation with a company with wider or different
objects (0); and a power to amalgamate with the sanction
of an extraordinary meeting will not enable an amalgamation
to be effected without such sanction, although the amalgama-
tion may have been acted on (p). an
47 & 48 Vict. c. 43.
46 & 47 Vict.c. 30 The Companies (Colonial
Register) act.
25 & 26 vict. c. 89.—PRELIMINARY. 983
No. V.
THE COMPANIES ACTS, 1862—1886.
THE COMPANIES ACT, 1862.
25 & 26 Vict. Cap, 89.*
An act for the incorporation, regulation, and winding up of trading com-
panies and other associations. [7th August, 1862.]
WHEREAS it is expedient that the laws relating to the incorporation, Appznpix V.
regulation, and winding up of trading companies and other associations
should be consolidated and amended: be it therefore enacted by the
Queen’s most excellent Majesty, by and with the advice and consent of
the lords spiritual and temporal, and commons, in this present parliament
assembled, and by the authority of the same, as follows :
Preliminary.
1. This act may be cited for all purposes, as ‘‘ The Companies act, Short title.
1862.”
2, This act, with the exception of such temporary enactment as is Commencement
hereinafter declared to come into operation immediately (a), shall not °f act.
come into operation until the second day of November, one thousand eight
hundred and sixty-two ; and the time at which it so comes into operation
is hereinafter referred to as the commencement of this act.
3. For the purposes of this act, a company that carries on the business Definition of
of insurance in common with any other business or businesses shall be insurance com-
deemed to be an insurance company (b). pany.
4, No company, association, or partnership consisting of more than ten Prohibition of
persons shall be formed, after the commencement of this act, for the ed alate os
purpose of carrying on the business of banking (c), unless it is registered i ee sa
as a company under this act, or is formed in pursuance of some other act [20 Vict. c. 47
of Parliament or of letters patent ; and no company, association, or partner- § 4, and 21 Vict.
ship consisting of more than twenty persons shall be formed, after,the c. 14, § 3, and
commencement of this act, for the purpose of carrying on any other © 49, §13.]
business that has for its object the acquisition of gain (d) by the company,
* The references in the margins of the sections are to the corresponding sections
of the repealed Acts. The sections referred to have seldom been incorporated without
some alteration of more or less importance.
(a) See § 209. W. R. 188. See ante, pp. 114, 135.
(b) See ante, p. 114. (d) See 10 Ch. 546, 7. See ante,
(c) See District Savings Bank, 10 p. 114.
9384 THE COMPANIES ACT, 1862.
ApPENDIx V. association, or partnership, or by the individual members thereof, unless
~~~" it is registered as a company under this act, or is formed in pursuance of
some other act of Parliament, or of letters patent, or is a company engaged
in working mines within and subject to the jurisdiction of the Stan-
naries (e).
Division of act. 5. This act is divided into nine parts, relating to the following subject
matters :
The first part.—To the constitution and incorporation of companies
and associations under this act :
The second part.—To the distribution of the capital and liability of
members of companies and associations under this act :
The third part.—To the management and administration of com-
panies and associations under this act :
The fourth part.—To the winding up of companies and associations
under this act :
The fifth part.—To the registration office :
The sixth part.—To application of this act to companies registered
under the Joint-stock companies acts ;
The seventh part.—To companies authorised to register under this
act :
The eighth part.—To application of this act to unregistered com-
panies :
The ninth part. To repeal of acts and temporary provisions.
PART I.
CONSTITUTION AND INCORPORATION OF COMPANIES AND ASSOCIATIONS
UNDER THIS ACT.
Memorandum of association (f ).
Mode of forming 6, Any seven or more persons associated for any lawful purpose may,
companys by subscribing their names to a memorandum of association, and other-
[25 Vict. c. 47, wise complying with the requisitions of this act in respect of registration,
§ 8. form an incorporated company, with or without limited liability (g).
Mode of limiting 7, The liability of the members of a company formed under this act
meenr eit may, according to the memorandum of association, be limited either to the
cee amount, if any, unpaid on the shares respectively held by them, or to such
amount as the members may respectively undertake by the memorandum
of association to contribute to the assets of the company in the event of
its being wound up.
Memorandum of | 8. Where a company is formed on the principle of having the liability
association of a of its members limited to the amount wnpaid on their shares, hereinafter
ae referred to as a company limited by shares, the memorandum of associa-
[20 Viet, c. 47 tion shall contain the following things ; (that is to say,) (h). a
65] °° (1.) The name of the proposed company, with the addition of the
word “ Limited” as the last word in such name (7) :
(e) See p. 114. ante, p. 117.
(f) For Forms, see Sched. 2. See (A) See § 179, cl. 1.
ante, p. 117. (i) See ante, p. 116,
(g) See Form A. in Sched. 2. See
25 & 26 vict. cap. 89.—PART I. CONSTITUTION, ETC. 935
(2.) The part of the United Kingdom, whether England, Scotland, Aprenpix V.
or Ireland, in which the registered office of the company is
proposed to be situate :
(3.) The objects for which the proposed company is to be estab-
lished :
(4.) A declaration that the liability of the members is limited :
(5.) The amount of capital with which the company proposes to be
registered divided into shares of a certain fixed amount:
Subject to the following regulations :
(1.) That no subscriber shall take less than one share :
(2.) That each subscriber of the memorandum of association shall
write opposite to his name the number of shares he takes.
9. Where a company is formed on the principle of having the liability Memorandum of
-of its members limited to such amount as the members respectively under- association of a
‘take to contribute to the assets of the company in the event of the same ea a
being wound up, hereinafter referred to asa company limited by guarantee, ue ie
ithe memorandum of association shall contain the following things (&) ; (that
ds to say,)
(1.) The name of the proposed company, with the addition of the
word ‘‘ Limited” as the last word in such name (J) :
(2.) The part of the United Kingdom, whether England, Scotland,
or Ireland, in which the registered office of the company is
proposed to be situate :
(3.) The objects for which the proposed company is to be established :
(4.) A declaration that each member undertakes to contribute to the
assets of the company in the event of the same being wound up,
during the time that he is a member, or within one year after-
wards, for payment of the debts and liabilities of the company
contracted before the time at which he ceases to be a member,
and of the costs, charges, and expenses of winding up the com-
pany, and for the adjustment of the rights of the contributories
amongst themselves, such amount as may be required, not
exceeding a specified amount.
10. Where a company is formed on the principle of having no limit Memorandum of
‘placed on the liability of its members, hereinafter referred to as an un- association of an
‘limited company, the memorandum of association shall contain the Buena eo
‘following things (m) ; (that is to say,) ae ooh
(1.) The name of the proposed company : § 10.) . & 47,
(2.) The part of the United Kingdom, whether England, Scotland,
or Ireland, in which the registered office of the company is
proposed to be situate :
(3.) The objects for which the proposed company is to be established. Stamp, signa-
11. The memorandum of association shall bear the same stamp as if it oe and effect
“were a deed, and shall be signed by each subscriber (n) in the presence of a i aan
.and be attested by, one witness at the least, and that attestation shall be [20 Vict. ¢ e
a sufficient attestation in Scotland as well as in England and Ireland : it gg 7 and 11.] ,
:shall, when registered, bind the company and the members thereof to the
(k) See Forms B. and C. Sched. 2; (m) Form D, in Sched. 2; and see, as
and as to the capital, see § 14. to capital, § 14.
(2) See, as to associations not having (n) Signature by an agent is sufficient,
gain for their object, 30 & 31 Vict. Whitley Partners, Limited, 32 Ch. D.
c. 181, § 28; and ante, p. 114. 337.
936
APPENDIX VY.
Power of certain
companies to
alter memoran-
dum of associa-
tion.
[20 Vict. c. 47,
§§ 13 and 37.]
Power of com-
panies to change
name.
Regulations to
be prescribed by
articles of asso-
ciation.
[20 Vict. «. 47,
§ 9.]
THE COMPANIES Act, 1862.
same extent as if each member had subscribed his name and affixed
his seal thereto, and there were in the memorandum contained, on the
part of himself, his heirs, executors, and administrators, a covenant to
observe all the conditions of such memorandum, subject to the provisions
of this act (see § 16).
12. Any company limited by shares may so far modify the conditions
contained in its memorandum of association, if authorised to do so by its
regulations as originally framed, or as altered by special resolution in
manner hereinafter mentioned (0), as to increase its capital, by the issue
of new shares of such amount as it thinks expedient, or to consolidate and
divide its capital into shares of larger amount than its existing shares, or
to convert its paid-up shares into stock ; but, save as aforesaid, and save as
is hereinafter provided in the case of a change of name (7), no alteration
shall be made by any company in the conditions contained in its memo-
randum of association (¢q).
13. Any company under this act, with the sanction of a special resolu-
tion of the company passed in manner hereinafter mentioned (r), and with
the approval of the Board of Trade, testified in writing under the hand
of one of its secretaries or assistant secretaries, may change its name (s) ;
and upon such change being made the registrar shall enter the new name
on the register in the place of the former name, and shall issue a certifi-
cate of incorporation altered to meet the circumstances of the case; but
no such alteration of name shall affect any rights or obligations of the
company, or render defective any legal proceedings instituted or to be
instituted by or against the company ; and any legal proceedings may
be continued or commenced against the company by its new name that
might have been continued or commenced against the company by its
former name.
Articles of association.
14. The memorandum of association may, in the case of a company
limited by shares, and shall, in the case of a company limited by guarantee
or unlimited, be accompanied, when registered, by articles of association (t)
signed by the subscribers to the memorandum of association, and prescrib-
ing such regulations for the company as the subscribers to the memorandum
of association deem expedient ; the articles shall be expressed in separate
paragraphs numbered arithmetically : they may adopt all or any of the
provisions contained in the Table marked A. in the first schedule hereto :
they shall, in the case of a company, whether limited by guarantee or
unlimited, that has a capital divided into shares, state the amount of
capital with which the company proposes to be registered (uv), and in the
(0) See §§ 50 and 51.
(p) See §§ 13 and 20.
(qg) The memorandum of association
may be altered in some other respects,
see ante, pp. 334 and 348; and 28 & 29
Vict. c. 78, § 3, as to mortgage deben-
tures; 30 & 31 Vict. c. 131, § 9 e
seg., and 40 & 41 Vict. c. 26, 43 Vict.
c. 19, and ante, p. 402, as to reduction
of capital, and 30 & 81 Vict. v. 181,
§§ 21 and 22 as to subdivision of shares,
and ante, p. 405. See as to altering the
regulations of the company, §§ 50, 176,
and 196 ; and see ante, pp. 324, 343.
(r) See § 51.
(s) See, further, as to changing name,
§ 20, and ante, p. 112.
(t) See Forms B. and C. in Sched. 2.
See ante, p. 118.
(u) The capital of companies limited
by shares appears in the memorandum of
association. See § 8.
25 & 26 vict. cap, 89.—PART I, CONSTITUTION, ETC. 937
case of a company, whether limited by guarantee or unlimited, that has Appenprx V.
not a capital divided into shares, state the number of members with which ~~
the company proposes to be registered, for the purpose of enabling the
registrar to determine the fees payable on registration: in a company
limited by guarantee or unlimited, and having a capital divided into
shares, each subscriber shall take one share at the least, and shall write
opposite to his name in the memorandum of association the number of
shares he takes.
"15. In the case of a company limited by shares, if the memorandum of Application of
association is not accompanied by articles of association, or in so far as Table A.
the articles do not exclude or modify the regulations contained in the [20 Vict. v. 47,.
Table marked A. in the first schedule hereto, the last-mentioned regula- § 9-1
tions shall, so far as the same are applicable, be deemed to be the regula-
tions of the company in the same manner and to the same extent as if
they had been inserted in articles of association, and the articles had been
duly registered.
16. The articles of association shall be printed ; they shall bear the same Stamp, signa-
stamp as if they were contained in a deed, and shall be signed by each ture, and effect.
subscriber in the presence of, and be attested by, one witness at the least, ee
and such attestation shall be a sufficient attestation in Scotland as well as Fe
in England and Ireland; when registered, they shall bind the company tet
and the members thereof to the same extent as if each member had sub- :
scribed his name and affixed his seal thereto, and there were in such
articles contained a covenant on the part of- himself, his heirs, executors,
and administrators to conform to all the regulations contained in such
articles, subject to the provisions of this act (x); and all moneys payable
by any member to the company, in pursuance of the conditions and regu-
lations of the company, or any of such conditions or regulations, shall be
deemed to be a debt due from such member to the company, and in
England and Ireland to be in the nature of a specialty debt (y).
General provisions.
17. The memorandum of association (z) and the articles of association, if Registration of
any, shall be delivered to the registrar of joint-stock companies hereinafter eee
mentioned, who shall retain and register the same: there shall be paid to articles of asso-
the registrar by a company having a capital divided into shares, in respect ciation, with
of the several matters mentioned in the Table marked B. in the first fees as in
schedule hereto, the several fees therein specified, or such smaller fees as tebe BOF
; as 2 able C.
the Board of Trade may from time to time direct ; and by a company not :
having a capital divided into shares, in respect of the several matters men- ret edd
tioned in the Table marked C. in the first schedule hereto the several fees“ “*
therein specified, or such smaller fees as the Board of Trade may from
time to time direct ; all fees paid to the said registrar in pursuance of this
act shall be paid into the receipt of her Majesty’s exchequer, and be
carried to the account of the consolidated fund of the United Kingdom of
Great Britain and Ireland.
(x) See as to the nature of the contract
entered into by becoming a member,
Eley v. Positive, dc., Ass. Co. 1 Ex. D.
88; Browne v. La Trinidad, 37 Ch. D. 1;
Wheal Buller Consols, 38 Ch. D. 42;
Boston Deep Sea Fishing Co. v. Ansell,
39 Ch. D. 889 ; ante, pp. 147, 8.
(y) See § 75.
(z) 51 Vict. c. 8, § 11, requires a
statement of the nominal capital to be
sent to the registrar, and imposes an ad
valorem stamp duty of 2s. per £100.
9388
APPENDIX V.
Effect of regis-
tration.
{20 Vict. ¢. 47,
§ 13, and 21
Vict. c. 14, § 4.]
Copies of memo-
randum and
articles to be
given to mem-
ders.
{20 Vict. c. 47,
§ 27, and 21
Vict. c. 14,
§10.]
Prohibition
against identity
of names in
-companies,
[20 Vict. c. 47,
§6.]
Probibition
-against certain
-companies hold-
ing land.
[20 Vict. «. 47,
§ 38.]
THE COMPANIES AcT, 1862.
18. Upon the registration of the memorandum of association, and of the
articles of association in cases where articles of association are required
by this act or by the desire of the parties to be registered, the registrar
shall certify under his hand that the company is incorporated, and in the
case of a limited company that the company is limited : the subscribers
of the memorandum of association, together with such other persons as
may from time to time become members of the company, shall thereupon
be a body corporate by the name contained in the memorandum of asso-
ciation, capable forthwith of exercising all the functions of an incorpo-
rated company, and having perpetual succession and a common seal with
power to hold lands (a), but with such liability on the part of the members
to contribute to the assets of the company in the event of the same being
wound up as is hereinafter mentioned : a certificate of the incorporation
of any company given by the registrar shall be conclusive evidence that
all the requisitions of this act in respect of registration have been complied
with (0).
19. A copy of the memorandum of association, having annexed thereto
the articles of association, if any, shall be forwarded to every member, at
his request, on payment of the sum of one shilling or such less sum as
may be prescribed by the company for each copy ; and if any company
makes default in forwarding a copy of the memorandum of association
and articles of association, if any, to a member, in pursuance of this sec-
tion, the company so making default shall for each offence incur a penalty
not exceeding one pound.
20. No company shall be registered under a name identical with that by
which a subsisting company is already registered, or so nearly resembling
the same as to be calculated to deceive, except in a case where such sub-
sisting company is in the course of being dissolved and testifies its consent
in such manner as the registrar requires ; and if any company, through
inadvertence or otherwise, is, without such consent as aforesaid, registered
by a name identical with that by which a subsisting company is registered,
or so nearly resembling the same as to be calculated to deceive, such first-
mentioned company may, with the sanction of the registrar, change its
name ; and upon such change being made the registrar shall enter the new
name on the register in the place of the former name, and shall issue a
certificate of incorporation altered to meet the circumstances of the case ;
but no such alteration of name shall affect any rights or obligations of
the company, or render defective any legal proceedings instituted or to
be instituted by or against the company ; and any legal proceedings may
be continued or commenced against the company by its new name that
might have been continued or commenced against the company by its
former name (c).
21. No company formed for the purpose of promoting art, science,
religion, charity, or any other like object, not involving the acquisition of
gain by the company or by the individual members thereof, shali, without
the sanction of the Board of Trade, hold more than two acres of land ;
but the Board of Trade may, by licence (¢), under the hand of one of their
(a) As to companies not having gain $13; and see ante, pp. 112, 118, and
for their object, see § 21, and ante, p.114. Rk. +. Registrar of Friendly Societies,
(6) See, as to this, p. 111; see, also, L. R.7 Q.:B. 741.
§ 192. (d) See Form F. in Sched. 2.
(c) See, further, as to changing name,
25 & 26 vicr. cap. 89.—PART II. DISTRIBUTION, ETC. 939
principal secretaries, or assistant secretaries, empower any such company Appmnprx V.
to hold lands in such quantity and subject to such conditions as they ~~
think fit.
PART II.
DISTRIBUTION OF CAPITAL AND LIABILITY OF MEMBERS OF COMPANIES
AND ASSOCIATIONS UNDER THIS ACT.
Distribution of capital.
22. The shares or other interest of any member in a company under Nature of inte-
this act shall be personal estate (e), capable of being transferred in rest in company.
manner provided by the regulations of the company (f), and shall not be [20 Vict. v. 47,
of the nature of real estate ; and each share shall, in the case of a company § 15.]
having a capital divided into shares, be distinguished by its appropriate
number (g).
23. The subscribers of the memorandum of association of any company Defnition of
under this act shall be deemed to have agreed to become members of the ‘‘ member.”
company whose memorandum they have subscribed, and upon the regis- [20 Vict. c. 47,
tration of the company shall be entered as members on the register of §§ 8 and 19.]
members hereinafter mentioned ; and every other person who has agreed
to become a member of the company under this act, and whose name is
entered on the register of members, shall be deemed to be a member of
the company (h).
24, Any transfer of the share or other interest of a deceased member Transfer by
of a company under this act, made by his personal representative, shall, personal repre-
notwithstanding such personal representative may not himself be a member, S™tative.
be of the same validity as if he had been a member at the time of the
execution of the instrument of transfer (7).
25. Every company under this act shall cause to be kept in one or more Register of
books a register of its members (k) ; and there shall be entered therein the members.
following particulars :— [20 Vict. c. 47,
(1.) The names and addresses, and the occupations, if any, of the S$ 16 and 18.]
members of the company, with the addition, in the case of a
company having a capital divided into shares, of a statement of
the shares held by each member, distinguishing each share by
its number, and of the amount paid or agreed to be considered
as paid on the shares of each member :
(2.) The date at which the name of any person was entered in the
register as a member :
(3.) The date at which any person ceased to be a member :
And any company acting in contravention of this section shall incur a
(e) See pp. 449 ef seg. () As to inspection of the register,
(f) See Table A. Nos. 8-16, and 30 see § 32; and as to its rectification, see
& 31 Vict. c. 181, § 26 et seg., andasto §§35 and 98. When shares have been
transfers of shares, ante, p. 464 et seq. converted into stock, see § 29. When
(g) See ante, p. 50. share warrants have been issued, see 30
(2) See § 18, and ante, pp. 48, 119. & 31 Vict. c, 131, § 31.
(2) See Table A. Nos. 12-16, and ante, As to registers generally, see ante,
pp. 468, 538. pp. 57 et seq.
940 THE COMPANIES ACT, 1862.
Appenbix V. penalty not exceeding five pounds for every day during which its default
——~" in complying with the provisions of this section continues; and every
director or manager of the company who shall knowingly and wilfully
authorise or permit such contravention shall incur the like penalty.
Annual list of 26. Every company under this act, and having a capital divided into
members. shares (1), shall make, once at least in every year, a list (m) of all persons
[20 Vict. c. 47, who, on the fourteenth day succeeding the day on which the ordinary
§17.] general meeting, or if there is more than one ordinary meeting in each
year, the first of such ordinary general meetings is held, are members of
the company ; and such list shall state the names, addresses, and occupa-
tions of all the members therein mentioned, and the number of shares
held by each of them, and shall contain a summary specifying the following
particulars (1) :
(1.) The amount of the capital of the company, and the number of
shares into which it is divided :
(2.) The number of shares taken from the commencement of the
company up to the date of the summary :
(3.) The amount of calls made on each share :
(4.) The total amount of calls received :
(5.) The total amount of calls unpaid :
(6.) The total amount of shares forfeited :
(7.) The names, addresses, and occupations of the persons who have
ceased to be members since the last list was made, and the
number of shares held by each of them.
The above list and summary shall be contained in a separate part of the
register, and shall be completed within seven days after such fourteenth
day as is mentioned in this section, and a copy shall forthwith be for-
warded to the registrar of joint stock companies (0).
Penalty on com- 27. If any company under this act, and having a capital divided into
pany, &c., not shares, makes default in complying with the provisions of this act with
forwarding list of yesnect. to forwarding such list of members or summary as is hereinbefore
members, &c.,
to registrar. mentioned to the registrar, such company shall incur a penalty not
[20 Viet. c. 47 exceeding five pounds for every day during which such default continues ;
§18.] 7% “and every director and manager (p) of the company who shall knowingly
_ and wilfully authorise or permit such default shall incur the like penalty.
Company to give 98, Every company under this act, having a capital divided into shares,
ee pee na that has consolidated and divided its capital into shares of larger amount
Versione capital than its existing shares, or converted any portion of its capital into stock (4),
into stock. shall give notice to the registrar of joint-stock companies of such consolida-
[21 Vict. v. 14, tion, division, or conversion, specifying the shares so consolidated, divided,
§ 6.] or converted (r).
Effect of conver. 29. Where any company under this act, and having a capital divided
sion of shares into shares, has converted any portion of its capital into stock, and given
into stock.
(1) As to other companies, see §§ 45 (0) As to their inspection, see §§ 32
and 46, and 174 (5).
(m) See the Form E, in Sched. 2. (p) Ie., manager de facto. See Gib-
(n) See, further, when shares have son v. Barton, L. R. 10 Q. B. 329, and
been converted into stock, § 29; when Briton Medicaland General Life Assoc.,
share warrants have been issued, 30 & 39 Ch. D. 61.
31 Vict. c. 131, § 32 ; when capital has (q) Under § 12.
been reduced by a return of paid-up (r) See § 34.
capital, see 43 Vict. c. 19, § 6.
25 & 26 vict. cap. 89.—PART II, DISTRIBUTION, ETC. 941
notice of such conversion to the registrar, all the provisions of this act AppENpix V.
which are applicable to shares only shall cease as to so much of the capital [21 Viet. c. 14,
as is converted into stock (s) ; and the register of members hereby required §§ 5-7. 7 erty
to be kept by the company, and the list of members to be forwarded to
the registrar, shall show the amount of stock held by each member in the
list instead of the amount of shares and the particulars relating to shares
hereinbefore required.
30. No notice of any trust, expressed, implied, or constructive, shall be No entry of trusts
entered on the register, or be receivable by the registrar, in the case of on register.
companies under this act and registered in England or Ireland (é). [20 Vict. u. 47,
31. A certificate under the common seal of the company, specifying any § 19.]
share or shares or stock held by any member of a company, shall be primd Certificate of
facie evidence of the title of the member to the share or shares or stock shares oratiock:,
therein specified (1). a ty
32. The register of members, commencing from the date of the registra- ianaaienae
tion of the company, shall be kept at the registered office of the company a :
hereinafter mentioned : except when closed as hereinafter mentioned, it [20 Viet. v 47
shall during business hours, but subject to such reasonable restrictions as g 23,] ;
the company in general meeting may impose, so that not less than two hours
in each day be appointed for inspection, be open to the inspection of any
member gratis, and to the inspection of any other person on the payment
of one shilling, or such less sum as the company may prescribe, for each
inspection ; and every such member or other person may require a copy
of such register, or of any part thereof, or of such list or summary of
members as is hereinbefore mentioned, on payment of sixpence for every
hundred words required to be copied: if such inspection or copy is
refused, the company shall incur for each refusal a penalty not exceeding
two pounds, and a further penalty not exceeding two pounds for every
day during which such refusal continues ; and every director and manager
of the company who shall knowingly authorise or permit such refusal
shall incur the like penalty ; and in addition to the above penalty, as
respects companies registered in England or Ireland, any judge sitting in
chambers, or the vice-warden of the Stannaries, in the case of companies
subject to his jurisdiction, may by order compel an immediate inspection
of the register (2).
33. Any company under this act may, upon giving notice by advertise- Power to close
ment in some newspaper circulating in the district in which the registered register.
office of the company is situated, close the register of members for any [20 Vict. c. 47,
time or times not exceeding in the whole thirty days in each year.
34. Where a company has a capital divided into shares, whether such Notice of in-
shares may or may not have been converted into stock, notice of any crease of capital
increase in such capital beyond the registered capital, and where a com- 424 of members
pany has not a capital divided into shares, notice of any increase in the e ea i
number of members beyond the registered number, shall be given to the 130 Vict. . 47
registrar in the case of an increase of capital, within fifteen days from the § 37.] one
date of the passing of the resolution by which such increase has been
(8) See Table A. Nos, 23-25. tion with transfers in blank, ante,
(t) See Bradford Banking Co. v. pp. 471 et seq. ; and forged certificates,
Briggs, 12 App. Ca. 29, ante, pp. 459 ante, p. 484,
and 477. (a) As to mandamus, see ante, p. 440;
(u) As to the right to require this, see and the right to take copies, ante,
Table A. Nos. 2 and 3. See asto these op, 314.
certificates, ante, p. 64; and in connec-
942
APPENDIX Y.
Remedy for im-
THE COMPANIES ACT, 1862.
authorised, and in the case of an increase of members, within fifteen days
from the time at which such increase of members has been resolved on or
has taken place ; and the registrar shall forthwith record the amount of
such increase of capital or members; if such notice is not given within
the period aforesaid, the company in default shall incur a penalty not
exceeding five pounds for every day during which such neglect to give
notice continues ; and every director and manager of the company who
shall knowingly and wilfully authorise or permit such default shall incur
the like penalty.
35. If the name of any person is, without sufficient cause, entered in or
proper entry or omitted from the register of members of any company under this act, or if
omission of entry
in register.
[20 Vict. c. 47,
§ 25, and
21 Vict. c. 14,
§§ 8-9.]
Notice to regis-
trar of rectifica-
tion of register.
Register to be
evidence.
[20 Vict. v. 47,
§ 26.]
Liability of pre-
sent and past
default is made or unnecessary delay takes place in entering on the register
the fact of any person having ceased to be a member of the company,
the person or member aggrieved, or any member of the company, or the
company itself, may, as respects companies registered in England or
Ireland, by motion in any of her Majesty’s superior courts of law or
equity, or by application to a judge sitting in chambers, or to the vice-
warden of the Stannaries in the case of companies subject to his juris-
diction, and as respects companies registered in Scotland by summary
petition to the Court of Session, or in such other manner as the said
courts may direct, apply for an order of the Court that the register may
be rectified ; and the Court may either refuse such application, with or
without costs to be paid by the applicant, or it may, if satisfied of the
justice of the case, make an order for the rectification of the register, and
may direct the company to pay all the costs of such motion, application, or
petition, and any damages the party aggrieved may have sustained: The
Court may, in any proceeding under this section, decide on any question
relating to the title of any person who is a party to such proceeding to
have his name entered in or omitted from the register, whether such
question arises between two or more members or alleged members, or
between any members or alleged members and the company ; and generally
the Court may in any such proceeding decide any question that it may be
necessary or expedient to decide for the rectification of the register ; pro-
vided that the Court [if a court of common law] may direct an issue to be
tried, in which any question of law may be raised, [and a writ of error or
appeal, in the manner directed by “‘ The common law procedure act, 1854,”
shall lie] (y).
36. Whenever any order has been made rectifying the register, in the
case of a company hereby required to send a list of its members to the
registrar, the Court shall, by its order, direct that due notice of such recti-
fication be given to the registrar.
37. The register of members shall be primd facie evidence of any matters
by this act directed or authorised to be inserted therein.
Liability of members (z).
38. In the event of a company formed under this act being wound up,
every present and past member of such company shall be liable to con-
(y) See, also, infra, §98; and as to 755. The words in brackets are re-
rectifying registers generally, ante, p. pealed by 44 & 45 Vict. c. 59.
61 ; and as to this section more particu- (z) See, further, as to the liability of
larly, pp. 120 e¢ seq., and pp. 747, 748, | members, §§ 42, 48, 180, 182, 195 and
25
& 26 vicr. cap. 89.—PART II. DISTRIBUTION, ETC.
945
tribute to the assets of the company to an amount sufficient for payment Aprsnvix V.
of the debts and liabilities of the company, and the costs, charges, and
expenses of the winding up, and for the payment of such sums as may be
required for the adjustment of the rights of the contributories amongst
themselves, with the qualifications following ; (that is to say,)
(1.)
(2.)
(3.)
(4.)
(5.)
(6.)
(7.)
No past member shall be liable to contribute to the assets of the
company if he has ceased to be a member for a period of one
year or upwards prior to the commencement of the winding
up (a):
No past member shall be liable to contribute in respect of any
debt or liability of the company contracted after the time at
which he ceased to be a member :
No past member shall be liable to contribute to the assets of the
company unless it appears to the Court that the existing members
are unable to satisfy the contributions required to be made by
them in pursuance of this act:
In the case of a company limited by shares, no contribution shall
be required from any member exceeding the amount, if any, un-
paid on the shares in respect of which he is liable as a present or
past member :
In the case of a company limited by guarantee, no contribution
shall be required from any member exceeding the amount of the
undertaking entered into on his behalf by the memorandum of
association (0) :
Nothing in this act contained shall invalidate any provision con-
tained in any policy of insurance or other contract whereby the
liability of individual members upon any such policy or contract
is restricted, or whereby the funds of the company are alone
made liable in respect of such policy or contract (c) :
No sum due to any member of a company, in his character of a
member, by way of dividends, protits, or otherwise, shall be
deemed to be a debt of the company, payable to such member
in a case of competition between himself and any other creditor
not being a member of the company (d) ; but any such sum
may be taken into account for the purposes of the final adjust-
ment of the rights of the contributories amongst themselves (e).
196, cl. 5, and § 200; and see § 102
respecting calls in winding up. As to
directors, where their liability is un-
limited, see 30 & 31 Vict. v. 181, $5.
See ante, pp. 252, 253.
(a) See §§ 84 and 130, and as to past
members generally, ante, p. 750 and
816 et eeg., and 855. See, also, Taurine
Co., 25 Ch. D. 118.
(b) See §§ 90 and 134, and Lion
Mutual Ins. Assoc. v. Tucker, 12 Q, B.
D. 176.
(c) See ante, p. 246 et sey.
(d) This applies to guaranteed divi-
dends, Stuart’s trust, 4 Ch. D. 213,
and ante, p. 436.
(e) See § 101, and ante, pp. 741 et
seq., and 857.
members of
company.
[20 Vict.:c.. 47,-
§$, 61-63. |,
[22 Vict. c. 60,
§17.]
944 THE COMPANIES AcT, 1862.
APPENDIx V,
PART III.
MANAGEMENT AND ADMINISTRATION OF COMPANIES AND ASSOCIATIONS
UNDER THIS ACT.
Provisions for protection of creditors.
Registered office | 39. Every company under this act shall have a registered office to which
of company. all communications and notices may be addressed ; if any corapany under
[20 Vict. v. 47, this act carries on business without having such an office, it shall incur a
§ 28.] penalty not exceeding five pounds for every day during which business is
so carried on.
Notice of situa- 40. Notice of the situation of such registered office, and of any change
tion of registered therein, shall be given to the registrar, and recorded by him: until such
offing, notice is given the company shall not be deemed to have complied with the
or e 47, provisions of this act with respect to having a registered office.
‘ 41. Every limited company under this act, whether limited by shares
PURUGRHOREEE ca by guarantee, shall paint or affix, and shall keep painted or affixed its
name by a
limited com- | Dame on the outside of every office or place in which the business of the
pany. company is carried on, in a conspicuous position, in letters easily legible,
[20 Vict. v. 47, and shall have its name engraven in legible characters on its seal, and
§ 30.] shall have its name mentioned in legible characters in all notices, adver-
tisements, and other official publications of such company, and in all bills
of exchange, promissory notes, endorsements, cheques, and orders for
money or goods purporting to be signed by or on behalf of such company,
and in all bills of parcels, invoices, receipts, and letters of credit of the
company (f ).
Penalties on 42, If any limited company under this act does not paint or affix, and
non-publication keep painted or affixed, its name in manner directed by this act, it shall
of name. be liable to a penalty not exceeding five pounds for not so painting or
[20 Vict. v. 47, affixing its name, and for every day during which such name is not so
§ 31] kept painted or affixed ; and every director or manager of the company
who shall knowingly and wilfully authorise or permit such default shall
be liable to the like penalty ; and if any director, manager, or officer of
such company, or any person on its behalf, uses or authorises the use of
any seal purporting to be a seal of the company whereon its name is not
so engraven as aforesaid, or issues or authorises the issue of any notice,
advertisement, or other official publication of such company, or signs or
authorises to be signed on behalf of such company, any bill of exchange,
promissory note, endorsement, cheque, order for money or goods, or issues
or authorises to be issued any bill of parcels, invoice, receipt, or letter
of credit of the company, wherein its name is not mentioned in manner
aforesaid, he shall be liable to a penalty of fifty pounds, and shall further
be personally liable to the holder of any such bill of exchange, promissory
note, cheque, or order for money or goods, for the amount thereof, unless
the same is duly paid by the company (9).
Register of 43. Every limited company under this act shall keep a register of all
mortgages (1). mortgages and charges specifically affecting property of the company, and
shall enter in such register in respect of each mortgage or charge a short
(f) Neither this nor the next section, § 23.
apply to companies licensed to omit the (g) See ante, p. 253.
word limited under 30 & 31 Vict. v. 181, (h) See ante, pp. 175, 203.
25 & 26 vict. cap. 89.—PART III. MANAGEMENT, ETC.
description of the property mortgaged or charged, the amount of charge
created, and the names of the mortgagees or persons entitled to such
charge (7): if any property of the company is mortgaged or charged with-
out such entry as aforesaid being made, every director, manager, or other
officer of the company who knowingly and wilfully authorises or permits
the omission of such entry shall incur a penalty not exceeding fifty
945
Apprnprx V,
pounds : the register of mortgages required by this section shall be open [Inspection of
to inspection by any creditor or member of the company at all reasonable resister. ]
times; and if such inspection is refused, any officer of the company
refusing the same, and every director and manager of the company autho-
rising or knowingly and wilfully permitting such refusal, shall incur a
penalty not exceeding five pounds, and a further penalty not exceeding two
pounds for every day during which such refusal continues ; and in addition
to the above penalty, as respects companies registered in England and
Treland, any judge sitting in chambers, or the vice-warden of the Stannaries
in the case of companies subject to his jurisdiction, may by order compel
an immediate inspection of the register.
44, Every limited banking company and every insurance company, and Certain com-
deposit, provident, or benefit society under this act shall, before it com-
mences business, and also on the first Monday in February and the first
panies to pub-
lish statement
in form D. in
Monday in August in every year during which it carries on business, schedule.
make a statement in the Form marked D. in the 1st Schedule hereto, or yo viet. e. 11,
as near thereto as circumstances will admit; and a copy of such statement § 4.]
shall be put up in a conspicuous place in the registered office of the com-
pany, and in every branch office or place where the business of the com-
pany is carried on ; and if default is made in compliance with the provisions
of this section the company shall be liable to a penalty not exceeding five
pounds for every day during which such default continues, and every
director and manager of the company who shall knowingly and wilfully
authorise or permit such default shall incur the like penalty.
Every member and every creditor of any company mentioned in this
section shall be entitled to a copy of the above-mentioned statement on
payment of a sum not exceeding sixpence.
45, Every company under this act, and not having a capital divided List of directors
into shares (k), shall keep at its registered office a register containing the
names and addresses and the occupations of its directors or managers, and
shall send to the registrar of joint-stock companies a copy of such register,
and shall from time to time notify to the registrar any change that takes
place in such directors or managers.
to be kept and
sent to registrar.
46. If any company under this act, and not having a capital divided Penalty on com-
into shares, makes default in keeping a register of its directors or managers,
or in sending a copy of such register to the registrar in compliance with
the foregoing rules, or in notifying to the registrar any change that takes
place in such directors or managers, such delinquent company shall incur
a penalty not exceeding five pounds for every day during which such
default continues ; and every director and manager of the company who
shall knowingly and wilfully authorise or permit such default shall incur
the like penalty.
(7) In the case of debentures passing other cases, Dublin Drapery Co., 13
by delivery registration in the names of UL. R. Ir. 174.
the original holders is sufficient, and (k) As to other companies, see § 26,
there is no necessity to register the As to the inspection of this register,
transfers, semble this rule applies to see §§ 32 and 174 (5).
L.c. *3P
pany not keeping
or sending regis-
ter of directors,
&e.
946 THE COMPANIES AcT, 1862.
APPENDIX V. 47, A promissory note or bill of exchange shall be deemed to have been
~ made, accepted, or endorsed on behalf of any company under this act, if
ee ie made, accepted, or indorsed in the name of the company by any person
of exchange. acting under the authority of the company, or if made, accepted, or indorsed
[20 Vict. c. 47, by or on behalf or on account of the company, by any person acting under
§ 43.] the authority of the company (().
Prohibition 48. If any company under this act carries on business when the number
against carrying Of its members is less than seven for a period of six months after the
on business with number has been so reduced, every person who is a member of such
i ose seven company during the time that it so carries on business after such period of
ee six months, and is cognizant of the fact that it is so carrying on business
La ° 47, with fewer than seven members, shall be severally liable for the payment
of the whole debts of the company contracted during such time, and may
be sued for the same, without the joinder in the action or suit of any other
member (i).
Provisions for protection of members.
General meeting 49. A general meeting of every company under this act shall be held
of company. once at the least in every year (n).
[20 Vict. u. 47, 50. Subject to the provisions of this act, and to the conditions contained
§ 32.] in the memorandum of association, any company formed under this act may
Power to alter in general meeting from time to time, by passing a special resolution in
regulations by manner hereinafter mentioned, alter all or any of the regulations of the com-
special resolu-
tiga pany contained in the articles of association or in the Table marked A. in
[20 Vict. c. 47 the first schedule, where such table is applicable to the company, or make
§ 33.] “new regulations to the exclusion of or in addition to all or any of the regu-
lations of the company (0) ; and any regulations so made by special resolu-
tion shall be deemed to be regulations of the company of the same validity
as if they had been originally contained in the articles of association, and
shall be subject in like manner to be altered or inodified by any subsequent
special resolution.
Definition of 51. A resolution passed by a company under this act shall be deemed
special resolu- to be special whenever a resolution has been passed by a majority of not
tion, less than three-fourths of such members of the company for the time being
[20 Vict. v. 47, entitled according to the regulations of the company to vote as may be
§ 34.] present, in person or by proxy (in cases where by the regulations of the
company proxies are allowed), at any general meeting of which notice
specifying the intention to propose such resolution has been duly given,
and such resolution has been confirmed by a majority of such members for
the time being entitled, according to the regulations of the company, to
vote, as may be present, in person or by proxy, at a subsequent general
meeting, of which notice has been duly given, and held at an interval of
(2) See ante, pp. 230 et seq. cl. 8, 4 and 6.
(m) See § 79. See, further, as to what can be done
(n) See 80 & 31 Vict. c. 131, § 39. by special resolution, §§ 60, 79, 129, and
The year begins on the Ist Jan. See ‘Table A., Nos. 25, 26, and ante, pp. 333
Gibson v. Barton, L. R. 10 Q. B. 329. and 343 et seg. The company cannot
(o) As to altering the conditions in deprive itself of the power to alter its
the memorandum of association, see§12; articles, Trevor vy. Whitworth, 12 App.
and as to companies existing before the Ca, 409.
passing of this act, see §§ 176 and 196;
25 & 26 vict. cap. 89.—PART III. MANAGEMENT, ETC.
947
not less than fourteen days (p), nor more than one month, from the date of AprENprx V.
the meeting at which such resolution was first passed: At any mecting
mentioned in this section, unless a poll is demanded by at least five
members, a declaration of the chairman that the resolution has been
carried shall be deemed conclusive evidence of the fact, without proof of
the number or proportion of the votes recorded in favour of or against the
same: Notice of any meeting shall, for the purposes of this section, he
deemed to be duly given and the meeting to be duly held, whenever such
notice is given and meeting held in manner prescribed by the regulations
of the company: In computing the majority under this section, when a
poll is demanded, reference shall be had to the number of votes to which
each member is entitled by the regulations of the company.
52. In default of any regulations (q) as to voting every member shall Provision where
have one (r) vote ; and in default of any regulations as to summoning general no regulations
meetings a meeting shall be held to be duly summoned of which seven 2% t° meetings.
days’ notice in writing has been served on every member in manner
in which notices are required to be served by the Table marked A. in the
first schedule hereto (s); and in default of any regulations as to the
persons to summon meetings, five members shall be competent to summon
the same (t) ; and in default of any regulations as to who is to be chairman
of such meeting, it shall be competent for any person elected by the .
members present to preside (1).
53. A copy of any special resolution that is passed by any company Registration of
under this act shall be printed and forwarded to the registrar of joint- special reso-
stock companies, and be recorded by him: Ifsuch copy is not so forwarded !utions.
within fifteen days from the date of the confirmation of the resolution, the ea e. 47,
company shall incur a penalty not exceeding two pounds for every day
after the expiration of such fifteen days during which such copy is
omitted to be forwarded ; and every director and manager of the company
who shall knowingly and wilfully authorise or permit such default shall
incur the like penalty.
54. Where articles of association have been registered, a copy of every Copies of special
special resolution for the time being in force shall be annexed to or em- T¢selutions.
bodied in every copy of the articles of association that may be issued after [20 Vict. «. 47,
the passing of such resolution: Where no articles of association have
been registered, a copy of any special resolution shall be forwarded in
print to any member requesting the same on payment of one shilling, or
such less sum as the company may direct: And if any company makes
default in complying with the provisions of this section, it shall incur a
penalty not exceeding one pound for each copy in respect of which such
default is made ; and every director and manager of the company who
shall knowingly and wilfully authorise or permit such default shall incur
the like penalty.
55. Any company under this act may, by instrument in writing under Execution of
its common seal, empower any person, either generally or in respect of deeds abroad.
any specified matters, as its attorney, to execute deeds on its behalf in [20 Vict. c. 47,
any place not situate in the United Kingdom ; and every deed signed by ° “~
(p) As to computation of time, see (r) See Table A., No. 44,
ante, pp. 305 and 306. (s) See Table A., Nos. 35 and 95-7.
(q) See as to the meaning of these (t) See Table A., No. 34.
words, Brick and Stone Co, W. N. (u) See Table A., Nos, 39, 40.
1878, p, 140,
Br 2
948
Apprnpix V.
Examination of
affairs of com-
pany by inspec-
tors.
[20 Vict, c. 47,
§ 48.]
Application for
inspection to be
supported by
evidence.
Inspection of
books and ex-
amination of
officers.
(20 Vict. ¢. 47,
§ 49.]
Report of result
of examination,
&e.
(20 Vict. e. 47,
§ 50.]
Power of com-
pany to appoint
inspectors.
[20 Vict. v. 47,
§ 51.)
THE COMPANIES AcT, 1862.
such attorney, on behalf of the company, and under his seal, shall be
binding on the company, and have the same effect as if it were under the
common seal of the company (r).
56. The Board of Trade may appoint one or more competent inspectors
to examine into the affairs of any company under this act, and to report
thereon, in such manner as the Board may direct, upon the applications
following ; (that is to say,)
(1.) In the case of a banking company that has a capital divided
into shares, upon the application of members holding not less
than one-third part of the whole shares of the company for the
time being issued :
(2.) In the case of any other company that has a capital divided into
shares, upon the application of members holding not less than
one-fifth part of the whole shares of the company for the time
being issued :
(3.) In the case of any company not having a capital divided into
shares, upon the application of members being in number not
less than one-fifth of the whole number of persons for the time
being entered on the register of the company as members.
57. The application shall be supported by such evidence as the Board
of Trade may require for the purpose of showing that the applicants have
good reason for requiring such investigation to be made, and that they
are not actuated by malicious motives in instituting the same: The
Board of Trade may also require the applicants to give security for
payment of the costs of the inquiry before appointing any inspector or
inspectors.
58. It shall be the duty of all officers and agents of the company to
produce for the examination of the inspectors all books and documents in
their custody or power: Any inspector may examine upon oath the
officers and agents of the company in relation to its business, and may
administer such oath accordingly: If any officer or agent refuses to
produce any book or document hereby directed to be produced, or to
answer any question relating to the affairs of the company, he shall incur
a penalty not exceeding five pounds in respect of each offence.
59. Upon the conclusion of the examination, the inspectors shall report
their opinion to the Board of Trade: Such report shall be written or
printed, as the Board of Trade directs: A copy shall be forwarded by
the Board of Trade to the registered office of the company, and a further
copy shall, at the request of the members upon whose application the
inspection was made, be delivered to them or to any one or more of them:
All expenses of and incidental to any such examination as aforesaid shall
be defrayed by the members upon whose application the inspectors were
appointed, unless the Board of Trade shall direct the same to be paid out
of the assets of the company, which it is hereby authorised to do.
60. Any company under this act may, by special resolution (s), appoint:
inspectors for the purpose of examining into the affairs of the company.
The inspectors so appointed shall have the same powers and perform the
same duties as inspectors appointed by the Board of Trade, with this
exception, that, instead of making their report to the Board of Trade,
they shall make the same in such manner and to such persons as the
(r) See also 27 & 28 Vict. c. 19, and (s) See § 51.
30 & 31 Viet. c. 131, § 37.
25 & 26 vict. cap, 89.—PrART III. MANAGEMENT, ETC. 919
company in general meeting directs; and the officers and agents of the Apvrnprx V.
company shall incur the same penalties in case of any refusal to produce
any book or document hereby required to be produced to such inspectors,
or to answer any question, as they would have incurred if such inspector
had been appointed by the Board of Trade.
61. A copy of the report of any inspectors appointed under this act, Report of in-
authenticated by the seal of the company into whose affairs they have specters to be
made inspection, shall be admissible in any legal proceeding, as evidence Suntonees
of the opinion of the inspectors in relation to any matter contained in aa w 47,
such report. ;
Notices.
62. Any summons, notice, order, or other document required to be Service ofnotices,
served upon the company may be served by leaving the same, or sending &c., on company.
it through the post in a prepaid letter addressed to the company at their ei vw 47,
registered office (t). .
63. Any document to be served by post on the company shall be Services of no-
posted in such time as to admit of its being delivered in the due course of tices, &c., by
delivery within the period (if any) prescribed for the service thereof ; as Vict ay
and, in proving service of such document, it shall be sufficient to prove § 5 4) eet
that such document was properly directed, and that it was put as a pre-
paid letter into the post office (1).
64. Any summons, notice, order, or proceeding requiring authentica- Authentication
tion by the company, may be signed by any director, secretary, or other of notices .
authorised officer of the company, and need not be under the common [20 Viet o a
seal of the company; and the same may be in writing or in print, or g 55.) — ee
partly in writing and partly in print (2).
Legal Proceedings.
65. All offences under this act made punishable by any penalty may Recovery of
be prosecuted summarily before two or more justices, as to England, in Penalties.
manner directed by an act passed in the session holden in the eleventh [20 Vict. v. 47,
and twelfth years of the reign of Her Majesty Queen Victoria, chapter 5 86:] y
forty-three, intituled “‘ An act to facilitate the performance of the duties UE fe 1 athe
of justices of the peace out of sessions within England and Wales with ~~’
respect to summary convictions and orders,” or any act amending the
same; and as to Scotland, before two or more justices or the sheriff of
the county, in manner directed by the act passed in the session of Parlia-
ment holden in the seventeenth and eighteenth years of the reign of her 17 & 18 Vict.
Majesty Queen Victoria, chapter one hundred and four, intituled “An % 104.
act to amend and consolidate the acts relating to Merchant shipping ;”
or any act amending the same, as regards offences in Scotland against that
act, not being offences by that act described as felonies or misdemeanors ;
and as to Ireland, in manner directed by the act passed in the session
holden in the fourteenth and fifteenth years of the reign of her Majesty 14 & 15 Vict.
Queen Victoria, chapter ninety-three, intituled ‘“‘ An act to consolidate v. 93.
and amend the acts regulating the proceedings of petty sessions and the
(é) See Rules 63 and 64, and R. S.C. ruptcy, The Bankruptcy act, 1883,
Order ix., r. 8. § 148, which seems to require the seal of
(w) See Rules 63 and 64. the company.
(x) See, as to proceedings in bank-
950
APPENDIX V.
Application of
penalties.
[20 Vict. v. 47,
§ 57]
Evidence of
proceedings at
meetings, &c.
[20 Vict. v. 47,
§ 40.]
Jurisdiction of
Court of vice-
warden of Stan-
naries.
THE COMPANIES AcT, 1862.
duties of justices of the peace out of quarter sessions in Ireland,” or any
act amending the same.
66. The justices or sheriff imposing any penalty under this act may
direct the whole or any part thereof to be applied in or towards payment
of the costs of the proceedings, or in or towards the rewarding the person
upon whose information or at whose suit such penalty has been recovered ;
and, subject to such direction, all penalties shall be paid into the receipt
of her Majesty’s exchequer in such manner as the Treasury may direct,
and shall be carried to and form part of the Consolidated Fund of the
United Kingdom.
67. Every company under this act shall cause minutes of all resolutions
and proceedings of general meetings of the company, and of the directors
or managers of the company in cases where there are directors or managers,
to be duly entered in books to be from time to time provided for the pur-
pose; and any such minute as aforesaid, if purporting to be signed by the
chairman of the meeting at which such resolutions were passed or pro-
ceedings had, or by the chairman of the next succeeding meeting, shall
be received as evidence in all legal proceedings ; and until the contrary is
proved, every general meeting of the company or meeting of directors or
managers in respect of the proceedings of which minutes have been so
made shall be deemed to have been duly held and convened, and all
resolutions passed thereat, or proceedings had, to have been duly passed
and had ; and all appointments of directors, managers, or liquidators shall
be deemed to be valid, and all acts done by such directors, managers, or
liquidators shall be valid, notwithstanding any defect that may afterwards
be discovered in their appointments or qualifications (1).
68. In the case of companies under this act, and engaged in working
mines within and subject to the jurisdiction of the Stannaries, the court
of the vice-warden of the Stannaries shall have and exercise the like
jurisdiction and powers, as well on the common law as on the equity side
thereof, which it now possesses by custom, usage, or statute in the case of
unincorporated companies, but only so far as such jurisdiction or powers
are consistent with the provisions of this act and with the constitution of
companies as prescribed or required by this act ; and for the purpose of
giving fuller effect to such jurisdiction in all actions, suits, or legal pro-
ceedings instituted in the said Court, in causes or matters whereof the
Court has cognizance, all process issuing out of the same, and all orders,
rules, demands, notices, warrants, and summonses required or authorised
ly the practice of the Court to be served on any company, whether regis-
tered or not registered, or any member or contributory thereof, or any
officer, agent, director, manager, or servant thereof, may he served in any
part of England without any special order of the vice-warden for that
purpose, or by such special order may be served in any part of the United
Kingdom of Great Britain and Ireland, or in the adjacent islands, parcel
of the dominions of the Crown, on such terms and conditions as the Court
shall think fit; and all decrees, orders and judgments of the said Court
made or pronounced in such causes or matters may be enforced in the same
manner in which decrees, orders, and judgments of the Court may now by
law be enforced, whether within or beyond the local limits of the Stan-
(y) Sce, as to meetings andthe minutes last part of this section, ante, pp. 309
of their proceedings, ante, pp. 304 et seg., and 879.
and Table A., Nos 29-48, and as to the
25 & 26 vict. cap. 89.—PART III. MANAGEMENT, ETC. 951
naries ; and the seal of the said Court, and the signature of the registrar Aprenprx V.
thereof, shall be judicially noticed by all other courts and judges in7
England, and shall require no other proof than the production thereof :
the registrar of the said Court, or the assistant-registrar, in making sales
under any decree or order of the Court shall be entitled to the same
privilege of selling by auction or competition without a licence, and with-
out being liable to duty, as a judge of the Court of Chancery is entitled to
in pursuance of the acts in that behalf.
69. Where a limited company is plaintiff or pursuer in any action, Power to order
suit, or other legal proceeding, any judge having jurisdiction in the matter, security for
‘p ‘ . . ee . costs in actions
may, if it appears by any credible testimony that there is reason to believe brougnboy
that if the defendant be successful in his defence, the assets of the com- jimited com-
pany will be insufficient to pay his costs, require sufficient security to be panies.
given for such costs, and may stay all proceedings until such security 1s [21 Vict. ¢. 14,
given (2). § 24]
70. In any action or suit brought by the company against any member Allegations in
to recover any call or other monies due from such member in his @tions against
character of member, it shall not be necessary to set forth the special members.
matter, but it shall be sufficient to allege that the defendant is a member
of the company, and is indebted to the company in respect of a call made
or other monies due wheteby an action or suit hath accrued to the
company ().
Alteration of forms.
71. The forms set forth in the second schedule hereto, or forms as near Forms in second
thereto as circumstances admit, shall be used in all matters to which such schedule to be
forms refer; the Board of Trade may from time to time make such ™¢4-
alterations in the tables and forms contained in the first schedule hereto, Board of Trade
so that it does not increase the amount of fees pavable to the registrar in ae ae forms
z 3 : n schedule.
the said schedule mentioned, and in the forms in the second schedule, or [20 Viet. ©. 47
make such additions to the last-mentioned forms, as it deems requisite: y 5g. andl.
any such table or form, when altered, shall be published in the “ London Vict. ¢. 14,
Gazette,” and upon such publication being made, such table or form shall § 22.]
have the same force as if it were included in the schedule to this act ; but
no alteration made by the Board of Trade in the table marked A. con-
tained in the first schedule, shall affect any company registered prior to
the date of such alteration, or repeal, as respects such company, any
portion of such table.
Arbitrations.
72. Any company under this act may from time to time, by writing Power for com-
under its common seal, agree to refer and may refer to arbitration, in panies to refer
accordance with “ The Railway companies arbitration act, 1859” (b), any panting = ns
existing or future difference, question, or other matter whatsoever in dis- cordance with
pute between itself and any other company or person ; and the companies 22 & 23 Vict.
parties to the arbitration may delegate to the person or persons to whom ¢ 59.
the reference is made power to settle any terms or to det2rmine any
matter capable of being lawfully settled or determined by the companies
themselves, or by the directors or other managing body of such companies.
(z) See ante, pp. 263 and 661. (b) 22 & 28 Vict. c,. 59,
(a) See ante, p. 427.
952
APPENDIX VY.
Provisions of
22 & 23 Vict.
c. 59, to apply.
Meaning of con-
tributory.
[20 Vict. c. 47,
§ 65.]
Nature of lia-
bility of contri-
butory.
[21 Vict. c. 14.
§ 13.]
Contributories in
case of death.
[20 Vict. c. 47,
§ 65.]
Contributories in
case of bank-
ruptcy.
THE COMPANIES ACT, 1862.
73. All the provisions of “The Railway companies arbitration act,
1859,” shall be deemed to apply to arbitrations between companies andl
persons in pursuance uf this act: and in the construction of such provi-
sions “ the companies ” shall be deemed to include companies authorised
by this act to refer disputes to arbitration,
PART IV.
WINDING UP OF COMPANIES AND ASSOCIATIONS UNDER THIS ACT (¢).
Preliminary.
74. The term ‘contributory ” shall mean every person liable to con-
tribute to the assets of a company under this act, in the event of the same
being wound up (d) : it shall also, in all proceedings for determining the
persons who are to be deemed contributories, and in all proceedings prior
to the final determination of such persons, include any person alleged to
be a contributory (¢).
75, The liability of any person to contribute to the assets of a company
under this act in the event of the same being wound up, shall be deemed
to create a debt (in England and Ireland of the nature of a specialty)
accruing due from such person at the tine when his liability commenced,
but payable at the time or respective times when calls are made as herein-
after mentioned for enforcing such liability ; and it shall be lawful in
the case of the bankruptcy of any contributory to prove against his estate
the estimated value of his liability to future calls, as well as calls already
made (f).
76. If any contributory dies either before or after he has been placed
on the list of contributories hereinafter mentioned, his personal representa-
tives, heirs, and devisees shall be liable in a due course of administration
to contribute to the assets of the company in discharge of the liability of
such deceased contributory ; and such personal representatives, heirs, and
devisees shall be deemed to be contributories accordingly (9).
77. If any contributory becomes bankrupt, either before or after he has
been placed on the list of contributories, his assignees shall be deemed to
represent such bankrupt for all the purposes of the winding-up, and shall
be deemed to be contributories accordingly, and may be called upon to
admit to proof against the estate of such bankrupt, or otherwise to allow
to be paid out “of his assets in due course of law, any monies due from
such bankrupt in respect of his liability to contribute to the assets of the
company being wound up (h); and for the purposes of this section any
person who may have taken the benefit of any act for the relief of insol-
(c) See,” as to companies registered
under the acts of 1856-8, infra, $$ 176,
177; and as to companies registered
under this act, but not formed under it
or the last mentioned acts, infra, §§ 196
-198 ; and as to companies not regis-
tered at all, infra, §§ 199-204.
(d) See §§ 38 and 76-78, and ante,
pp. 750, 751 et seq.
(ce) See Rules 58 and 60 to 62, and
ante, p. 625.
(f) See ante, p. 556.
(g) See, also, § 105; and as to putting
them on the list, see § 99, and ante,
p. 812,
(h) See § 75 and ante, p. 556, and as
to putting bankrupts, &c., on the list,
p. 815.
25 & 26 vict. car. S$9.—PART IV. WINDING UP. 953
vent debtors (i) before the eleventh day of October one thousand cight Appynprx V.
hundred and sixty-one shall be deemed to have become bankrupt. amr
78. If any female contributory marries, either before or after she has Gontributories in
been placed on the list of contributories, her husband shall during the case of marriage.
continuance of the marriage be liable to contribute to the assets of the
company the same sum as she would have been liable to contribute if she
had not married; and he shall be deemed to be a contributory accord-
ingly (A).
Winding wp by court,
79. A company under this act (!) may be wound up by the Court as Circumstances
hereinafter defined, under the following circumstances ; (that is to say,) wader which b
(1.) Whenever the company has passed a special resolution requiring Soni ue ,
the company to be wound up by the Court : court,
(2.) Whenever the company does not commence its business within [9 Vict. v. 47,
a year from its incorporation, or suspends its business for the § 67.]
space of a whole year :
(3.) Whenever the members are reduced in number to less than
seven (m) :
(4.) Whenever the company is unable to pay its debts :
(5.) Whenever the Court is of opinion that it is just and equitable
that the company should be wound up (7).
80. A company under this act (0) shall be deemed to be unable to pay Company when to
its debts, be deemed unable
(1.) Whenever a creditor by assignment or otherwise, to whom the Wo poy thealebis,
company is indebted, at law or in equity, in a sum exceeding [20 Vict. v. 47,
fifty pounds then due, has served on the company, by leaving Om
the same at their registered office, a demand under his hand
requiring the company to pay the sum so due, and the company
has for the space of three weeks succeeding the service of such
demand neglected to pay such sum, or to secure or compound
for the same to the reasonable satisfaction of the creditor :
Whenever, in England and Ireland, execution or other process
issued on a judgment, decree, or order obtained in any court in
favour of any creditor, at law or in equity, in any proceeding
instituted by such creditor against the company, is returned
unsatisfied in whole or in part :
(3.) Whenever, in Scotland, the inducie of a charge for payment on
an extract decree, or an extract registered bond, or an extract
registered protest, have expired without payment being made:
(4.) Whenever it is proved to the satisfaction of the Court that the
company is unable to pay its debts (p) :
81, The expression “the Court,” as used in this part of this act, shall Definition of
mean the following authorities ; (that is to say,) (q) “the court,”
(@) Viz., 1 & 2 Vict. c. 110; 5&6
Vict. c. 116 ; 7 & 8 Vict. c. 96, all re-
pealed by 24 & 25 Vict. c. 134.
(k) Ante, p. 42.
(1) Ante, p. 617. See § 199 (3), as
to unregistered companies,
(m) See § 48.
(n) See as to the circumstances under
which a company will be ordered to be
wound up, pp. 628 et seq., and as to
just and equitable, p. 631.
(0) See, as to unregistered companies,
§ 199 (4).
(p) See ante, pp. 631 and 634,
(q) See ante, p. 615, and as to In-
dustrial and Provident Societies and
Benefit Building Societies, see App.
IL, p. 916, and IIL, p. 922.
954
APPENDIX V.
[20 Vict. ¢. 47,
§§ 60 and 74,
and 20 & 21
Vict. c. 78,
§ 12.)
Application for
winding up to
be made hy
petition.
[20 Vict. c. 47,
§ 69.]
Power of court.
THE COMPANIES AcT, 1862.
In the case of a company engaged in (r) working any mine within and
subject to the jurisdiction of the Stannaries,—the court of the vice-
warden of the Stannaries, unless the vice-warden certifies that in his
opinion the company would be more advantageously wound up in
the High Court of Chancery, in which case ‘the court ” shall mean
the High Court of Chancery :
In the case of a company registered in England that is not engaged in
working any such mine as aforesaid,—the High Court of Chancery :
In the case of a company registered in Ireland, the Court of Chancery
in Ireland :
In all cases of companies registered in Scotland, the Court of Session in
either division thereof: (rr)
Provided that where the Court of Chancery in England or Ireland makes
an order for winding up a company under this act, it may, if it thinks
fit, direct all subsequent proceedings for winding up the same to be had
in the Court of Bankruptcy having jurisdiction in the place in which
the registered office of the company is situate ; and thereupon such last-
mentioned Court of Bankruptcy shall, for the purposes of winding up the
company, be deemed to be ‘‘ the court” within the meaning of the act, and
shall have for the purposes of such winding up all the powers of the High
Court of Chancery, 6r the Court of Chancery in Ireland, as the case may
require (s).
82. Any application to the Court for the winding up of a company
under this act shall be by petition (¢); it may be presented by the com-
pany, or by any one or more creditor or creditors, contributory or con-
tributories of the company, or by all or any of the above parties, together
or separately (w) ; and every order which may be made on any such peti-
tion shall operate in favour of all the creditors and all the contributories
of the company in the same manner as if it had been made upon the joint
petition of a creditor and a contributory (a).
83. Any judge of the High Court of Chancery may do in chambers any
act which the Court is hereby authorised to do; and the vice-warden of
the Stannaries may diréct that a petition for winding up a company be
heard by him at such time and at such place within the jurisdiction of
the Stannaries, or within or near to the place where the registered office
of the company is situated, as he may deem to be convenient to the parties
concerned, or (with the consent of the parties concerned) at any place in
England ; and all orders made thereupon shall have the same force and
effect as if they had been made by the vice-warden sitting at Truro or
elsewhere within the jurisdiction of the Court, and all parties and persons
summoned to attend at the hearing of any such petition shall be compel-
lable to give their attendance before the vice-warden by like process and in
like manner as at the hearing of any cause or matter at the usual sitting of
the said Court ; and the registrar of the Court may, subject to exception,
(r) See Silver Valley Mines, 18 Ch.
D. 472, and 50 & 51 Vict. c, 53, § 28
(The Stannaries act, 1887),
(rr) See further as to Scotch windings
up, 49 Vict. ¢. 28.
(s) As to remitting to the County
Court, see 80 & 31 Vict. c. 131, § 41 et seq.
(t) As to the petition, see ante, p.
654, and Rules 1 to 5, and Forms 1 and
2, in the 8rd Schedule thereto. As to
the order to wind up, see Rules 6 and 7,
and Forms 8—5, in the 3rd Schedule
thereto.
(u) See ante, p. 624, and 30 & 31
Vict. c. 131, § 40.
(x) Ante, pp. 663 and 664.
25 & 26 vict. car, 89.—PART IV. WINDING UP. 955
or appeal to the vice-warden as heretofore used, do and exercise such and Avpenprx V.
the like acts and powers in the matter of winding up as he is now used to =
do and exercise in a suit on the equity side of the said Court (x2).
84, A winding up of a company by the Court shall be deemed to com- Commencement
mence at the time of the presentation of the petition for the winding up (y). of winding up
85. The Court may, at any time after the presentation of a petition for by aban
winding up a company under this act, and before making an order for Ve oe ia
winding up the company, upon the application of the company, or of any Caicanr erie
creditor or contributory of the company, restrain further proceedings in injunction. 7
any action, suit, or proceeding (z) against the company, upon such terms as [20 Vict. c. 47,
the Court thinks fit («) ; the Court may also at any time after the presen- § 84.]
tation of such petition, and before the first appointment of liquidators,
appoint provisionaily an official liquidator of the estate and effects of the
company (0).
86. Upon hearing the petition the Court may dismiss the same with or Hearing petition.
without costs, may adjourn the hearing conditionally or unconditionally, [20 Vict. c. 47,
and may make any interim order, or any other order that it deems just (c), 8§ 70—72-]
87. When an order has been made for winding up a company under Actions and suits
this act, no suit, action, or other proceeding shall be proceeded with or to be shaved.
commenced against the company except with the leave of the Court, and Ee Viet. v. 60,
subject to such terms as the Court may impose (d). § 6.J
88. When an order has been made for winding up a company under ae ded
: ‘ e forwarded to
this act, a copy of such order shall forthwith be forwarded by the com- registrar.
pany to the registrar of joint-stock companies, who shall make a minute [20 Vict. o 47,
‘thereof in his books relating to the company. § 73.]
89. The Court may at any time after an order has been made for Power of court
winding up a company, upon the application by motion of any creditor or to stay proceed-
contributory of the company, and upon proof to the satisfaction of the imgs._
Court that all proceedings in relation to such winding up ought to be [2° Vict. ¢. 47,
stayed, make an order staying the same, either altogether or for a limited ;
time, on such terms and subject to such conditions as it deems fit (e).
90. When an order has been made for winding up a company limited Effect of order on
by guarantee and having a capital divided into shares, any share capital ®2@T° epee “
that may not have been called up shall be deemed to be assets of the ry ;
company, and to be a debt (in England and Ireland of the nature of a
specialty) due to the company from each member to the extent of any
sums that may be unpaid on any shares held by him and payable at such
time as may be appointed by the Court (f).
91. The Court may, as to all matters relating to the winding up, have Court may hare
regard to the wishes of the creditors or contributories, as proved to it by regard to wishes
any sufficient evidence, and may, if it thinks it expedient, direct meetings ssi ned
of the creditors or cuntributories to be summoned, held, and conducted in 3
such manner as the Court directs, for the purpose of ascertaining their
Copy of order.to
(xx) Amended as to the Stannaries by
82 & 33 Vict. c. 19, § 38.
(y) See ante, p. 664, §§ 114, 153,
163, 164.
(z) E.g., for penalties, Briton Medical
Ass. Ass., 82 Ch. D. 503.
(a) See ante, pp. 672 et seg., and
§ 197; andas to unregistered companies,
§§ 201 and 204,
(b) See, as to provisional liquidators,
ante, p. 700, and Rules 15 and 59.
(c) See § 91, and ante, pp. 630 et seq.,
and as to costs, p. 658.
(d) Ante, pp. 672 et seg. See, also,
§§ 163, 198; and ag to unregistered
companies, § 202.
(e) See ante, p. 663.
(f) See, also, § 134.
956 THE COMPANIES ACT, 1862.
Arrenprx V, wishes, and may appoint a person to act as chairman of any such meeting,
~~~ and. to report the result of such meeting to the Court: in the case of
creditors, regard is to be had to the value of the debts due to each creditor,
and in the case of contributories to the number of votes conferred on each
contributory by the regulations of the company (,/).
Official liquidators (h).
Appointment of 92. For the purpose of conducting the proceedings in winding up a
official liquida- company, and assisting the Court therein, there may he appointed a person
tor. or persons to be called an official liquidator or official liquidators ; and the
[20 Vict. «. 47, Court having jurisdiction may appoint such person or persons, either pro-
ee visionally or otherwise, as it thinks fit, to the office of official liquidator or
official liquidators ; in all cases, if more persons than one are appointed to
the office of official liquidator, the Court shall declare whether any act
hereby required or authorised to be done by the official liquidator is to be
done by all or any one or more of such persons. The Court may also
determine whether any and what security is to be given by any official
liquidator on his appointment ; if no official liquidator is appointed, or
during any vacancy in such appointment, all the property of the company
shall be deemed to be in the custody of the Court (7).
Resignations, re- 93. Any official liquidator may resign or be removed by the Court on
ee en due cause shown ; and any vacancy in the office of an official liquidator
compensation. appointed by the Court shall be filled by the Court (k) : there shall be paid
[20 Vict. ¢. 47, to the official liquidator such salary or remuneration, by way of percentage
§ 92.] or otherwise, as the Court may direct (1) ; and if more liquidators than one
are appointed such remuneration shall be distributed amongst them in
such proportions as the Court directs.
Style and duties 94. The official liquidator or liquidators shal] be described by the style
of official liqui- of the official liquidator or official liquidators of the particular company in
dator. ‘ : : ; fen a
[20 Viet. . 47 respect of which he is or they are appointed, and not by his or their in-
§ 89.] ? dividual name or names (m): he or they shall take into his or their
custody, or under his or their control, all the property, effects, and things
in actions to which the company is or appears to be entitled, and shall
perform such duties in reference to the winding up of the company as
may be imposed by the Court (n).
Powers of official 95. The official liquidator shall have power, with the sanction of the
liquidator. Court (0), to do the following things (p) :
bay Waive: Bi (1.) To bring or defend any action, suit, or prosecution, or other
580 legal proceeding, civil or criminal, in the name and on behalf
of the company (q) :
(2.) To carry on the business of the company, so far as may be
necessary for the beneficial winding up of the same :
(3.) To sell the real and personal and heritable and movable
property, effects, and things in action (r) of the company by
(g) See, also, § 149 and Rules 45—47. (0) See Rules 48—50.
(h) See ante, pp. 701 e€ seq. (p) See ante, pp. 707 et seq.
(t) See, also, Rules 8—19. (q) See ante, p. 707 and § 203 as to
(k) See Rule 16. unregistered companies.
(1) See Rule 18. (r) Including claims against the direc-
(m) See ante, pp. 706 ef seq. tors for misfeasance, Park G'ate Waggon
(n) See § 203 as to unregistered com- o., 17 Ch. D. 284.
panies,
25 & 26 vicr. cap. 89.—PART Iv. WINDING UP. 957
public auction or private contract, with power to transfer the Aprenpix V.
whole thereof to any person or company, or ae sell the same in ~~
parcels (s) :
(4.) To do all acts and to execute, in the name and on behalf of the
company, all deeds, receipts, and other documents, and for that
purpose to use, when necessary, the company’s seal :
(5.) To prove, rank, claim, and draw a dividend, in the matter of
the bankruptcy or insolvency or sequestration of any contribu-
tory, for any balance against the estate of such contributory,
and to take and receive dividends in respect of such balance, in
the matter of bankruptcy or insolvency, or sequestration, as a
separate debt due from such bankrupt or insolvent, and rateably
with the other separate creditors :
(6.) To draw, accept, make, and endorse any bill of exchange or [12 & 18 Vict.
promissory note in the name and on behalf of the company, ¢. 108, § 8.]
also to raise upon the security of the assets of the company
from time to time any requisite sum or sums of money ; and
the drawing, accepting, making, or endorsing of every such bill
of exchange or promissory note as aforesaid on behalf of the
company shall have the same effect with respect to the liability
of such company as if such bill or note had been drawn,
accepted, made, or endorsed by or on behalf of such company
in the course of carrying on the business thereof :
(7.) To take out, if necessary in his official name, letters of adminis-
tration to any deceased contributory, aud to do in his official
name any other act that may be necessary for obtaining pay-
ment of any monies due from a contributory or from his estate
and which act cannot be conveniently done in the name of the
company ; and in all cases where he takes out letters of ad-
ministration, or otherwise uses his official name for obtaining
payment of any monies due from a contributory, such monies
shall, for the purpose of enabling him to take out such letters
or recover such monies, be deemed to be due to the official
liquidator himself :
(8.) To do and execute all such other things as may be necessary
for winding up the affairs of the company and distributing its
assets (t).
96. The Court may provide by any order that the official liquidator Discretion of
may exercise any of the above powers without the sanction or interven- official liqui-
tion of the Court, and where an official liquidator is provisionally ap- “tor-,
pointed may limit and restrict his powers by the order appointing him. BA ict 2°60,
97. The official liquidator may, with the sanction of the Court, appoint
a solicitor or law agent to assist him in the performance of his duties (u). Appuintinent A
liquidator.
20 Vict. c. 4
Ordinary powers of Court (x). : 91.] 4
98. As soon as may be after making an order for winding up the com- Collection and
pany, the Court shall settle a list ee contributories (y), with power to on of
ssets,
\
20 Vict, c.
(s) See, as to sales, Rule 32, and ante, (x) See ante, pp. 684 et seq. 5, 1 ooh
pp. 711, 712. (y) See Rules 29—31, and the Forms
(t) See, further, §§ 159—162. 24 to 32 in the 3rd Sched. to the rules;
(u) See Rule 68, ante, p. 703. and see ante, pp. 745 et seq,
958
APPENDIX V,
Provision as to
representative
contributories.
Power of court to
require delivery
of property
to official
liquidator.
(11 & 12 Vict.
e. 45, § 66.]
Power of court
to order payment
of debts by con-
tributory.
[11 & 12 Vict.
c. 45, § 66; 21
& 22 Vict. c. 60,
§17.]
Power of court
to make calls.
[20 Vict. ¢. 47,
§ 82.]
THE COMPANIES ACT, 1862.
rectify the register of members in all cases where such rectification is
required in pursuance of this act (z), and shall cause the assets of the
company to be collected and applied in discharge of its liabilities.
99. In settling the list of contributories the Court shall distinguish be-
tween persons who are contributories in their own right and persons who
are contributories as being representatives of or being liable to the debts
of others; it shall not be necessary, where the personal representative of
any deceased contributory is placed on the list, to add the heirs or devisees
of such contributory ; nevertheless such heirs or devisees may be added as
and when the Court thinks fit (a).
100. The Court may, at any time after making an order for winding
up a company, require any contributory for the time being settled on the
list of contributories, trustee, receiver, banker, or ayent, or officer of the
company, to pay, deliver, convey, surrender, or transfer forthwith, or
within such time as the Court directs, to or into the hands of the official
liquidator (6), any sum or balance, books, papers, estate or effects which
happen to be in his hands for the time being, and to which the company
is primd facie entitled (c).
101. The Court may, at any time after making an order for winding
up the company, make an order on any contributory for the time being
settled on the list of contributories, directing payment to be made, in
manner in the said order mentioned, of any monies due from him or from
the estate of the person whom he represents to the company, exclusive of
any monies which he or the estate of the person whom he represents may
be liable to contribute by virtue of any call made or to be made by the
Court in pursuance of this part of this act (d) ; and it may, in making
such order, when the company is not limited, allow to such contributory
by way of set-off any monies due to him or the estate which he represents
from the company on any independent dealing or contract with the com-
pany, but not any monies due to him as a member of the company in
respect of any dividend or profit (¢) :
Provided that when all the creditors of any company, whether limited
or unlimited, are paid in full, any monies due on any account whatever
to any contributory from the company may be allowed to him by way of
set-off against any subsequent call or calls (f).
102, The Court may, at any time after making an order for winding
up a company, and either before or after it has ascertained the sufficiency
of the assets of the company, make calls on and order payment thereof by
all or any of the contributories for the time being settled on the list of
contributories, to the extent of their liability, for paymeut of all or any
sums it deems necessary to satisfy the debts and liabilities of the com-
pany, and the costs, charges, and expenses of winding it up, and for the
adjustment of the rights of the contributories amongst themselves ; and it
may, in making a call, take into consideration the probability that some
(z) See § 35, and ante, p. 121 et scq.
(a) See § 76, and rules 29—81; and
see ante, p. 813,
(b) See § 103 and §§ 115, 165.
(ec) See Form 13 in the 8rd Sched. to
the rules. See, also, § 165, and ante,
pp. 695 et seq.
(d) See, also, § 165, and Rule 35, and
Form 39 in the 8rd. Sched. to the rules.
(e) See as to directors with unlimited
liability, 30 & 31 Vict. c. 131, § 6.
(f) See, further, as to set-off, § 38,
cl. 7, and 30 & 31 Vict. c, 181, § 6, and
ante, pp. 741 et seq.
25 & 26 vicr. car. 89.—PART IV. WINDING UP. 959
of the contributories upon whom the same is made may partly or wholly Avpenvrx V.
fail to pay their respective portions of the same (y). eee
103. The Court may order any contributory, purchaser, or other person Power of court
from whom money is due to the company to pay the same into the Bank to order payment
of England or any branch thereof to the account of the official liquidator '™* bank.
instead of to the official liquidator ; and such order may be enforced in the [20 Viet. c. 47,
same manner as if it had directed payment to the official liquidator (/).
104, All monies, bills, notes, and other securities paid and delivered Regulation of
into the Bank of England or any branch thereof in the event of a company account with
being wound up by the Court, shall be subject to such order and regula- CUT
tion for the keeping of the account of such monies and other effects, and
for the payment and delivery in or investment and payment and delivery
out of the same, as the Court may direct (7).
105. If any person made a contributory as personal representative of a Proceedings in
deceased contributory makes default in paying any sum ordered to be paid case of represen-
by him, proceedings may be taken for administering the personal and real tative con-
estates of such deceased contributory, or either of such estates, and of com- oe es
pelling payment thereout of the monies due (i). See. ad
106. Any order made by the Court in pursuance of this act upon any Order conclusive
contributory shall, subject to the provisions herein contained for appealing evidence.
against such order (§ 124), be conclusive evidence that the monies, if [11 & 12 Vict.
any, thereby appearing to be due or ordered to be paid are due; and all & 49, § 89.]
other pertinent matters stated in such order are to be taken to be truly
stated as against all persons, and in all proceedings whatsoever, with the
exception of proceedings taken against the real estate of any deceased
contributory, in which case such order shall only be primdé facie evidence
for the purpose of charging his real estate, unless his heirs or devisees were
on the list of contributories at the time of the order being made.
107. The Court may fix a certain day or certain days on or within Court may fix
which creditors of the company are to prove their debts or claims, or to a time for credi-
be excluded from the benefit of any distribution made before such delsts tors to prove.
are proved (1). [20 Viet. c. 47,
108. If in the course of proving the debts and claims of creditors in the sen]
Court of the vice-warden of the Stannaries any debt or claim is disputed oe in
by the official liquidator or by any creditor or contributory, or appears to eects i
the Court to be open to question, the Court shall have power, subject to the Stannaries
appeal as hereinafter provided, to adjudicate upon it; and for that purpose on proof of
the said Court shall have and exercise all needful powers of inquiry debts.
touching the same by affidavit or by oral examination of witnesses or of
parties, whether voluntarily offering themselves for examination or stm-
moned to attend by compulsory process of the Court, or to produce docu-
ments before the Court ; and the Court shall also have power, incidentally,
to decide on the validity and extent of any lien or charge claimed by any
creditor on any property of the company in respect of such debt, and to
make declarations of right, binding on all persons interested ; and for the
more satisfactory determination of any question of fact, or mixed question
of law and fact arising on such inquiry, the vice-warden shall have power,
if he thinks fit, to direct and settle any action or issue to be tried either on
(y) See, further, as to calls, Rules 33, (2) See Rules 11, 32, and 36—44,
35, and ante, pp. 846 et seg. (&) See § 76.
(kh) See Rules 11, 32, and 36—41, (2) See Rules 20—28, and ante, pp,
and ante, p. 693. 718 et seg.
960 THE COMPANIES ACT, 1862.
AppEenpix Y. the common law side of his Court, or by a common or special jury, before
~~ the justices of assize in and for the counties of Cornwall or Devon, or at
any sitting of one of the superior courts in London or Middlesex, which
action or issue shall accordingly be tried in due course of law, and without
other or further consent of parties; and the finding of the jury in such
action or issues shall be conclusive of the facts found, unless the judge
who tried it makes known to the vice-warden that he was not satisfied
with the finding, or unless it appears to the vice-warden that, in conse-
quence of miscarriage, accident, or the subsequent discovery of fresh
material evidence, such finding ought not to be conclusive.
109. The Court shall adjust the rights of the contributories amongst
Court toadjust themselves, and distribute any surplus that may remain amongst the parties
rights of contri- entitled thereto (m).
butories. 110. The Court may, in the event of the assets being insufficient to
[20 Vict. ¢. 47, satisfy the liabilities, make an order as to the payment out of the estate of
§ 86.) the company of the costs, charges, and expenses incurred in winding up
Court to order any company in such order of priority as the Court thinks just (n).
ae 47 111. When the affairs of the company have been completely wound up,
$37.) the Court shall make an ordet that the company be dissolved from the
Dissolution of ‘tate of such order, and the company shall be dissolved accordingly (0).
company. 112. Any order so made shall be reported by the official liquidator to
[20 Vict, c. 47, the registrar, who shall make a minute accordingly in his books of the
§ 93.] dissolution of such company.
Registrar to 113. If the official liquidator makes default in reporting to the registrar,
make minute of jn the case of a company being wound up by the Court, the order that the
dissolution of company be dissolved, he shall be liable to a penalty not exceeding five
[20 Viet, ¢, 47, pounds for every day during which he is so in default.
§ 94.] par [114. Any petition for winding up a company by the Court under this
Penalty on not ct shall constitute a lis pendens within the terms of the act passed in the
reporting dissolu- session holden in the second and third years of the reign of her present
tion of company. Majesty, chapter eleven, and intituled, ‘‘ An act for the better protection
[21 Vict. c. 14, of purchasers against judgments, crown debts, lis pendens, and fiats in
§ 20.) bankruptcy,” provided the same is duly registered in manner required by
Petition tobe — such act concerning suits in equit ;
lis pendens. 5 quity (p).]
[11 & 12 Viet.
c. 45, § 125.]
Extraordinary powers of Court (q).
Paweiof court 115. The Court may, after it has made an order for winding up the
to summon be- company, summon (r) before it any officer of the company or person known
fore it persons or suspected to have in his possession any of the estate or effects of the
oe fy company, or supposed to be indebted to the company, or any person whom
See. the Court may deem capable of giving information concerning the trade,
of company, &c. : ‘i
[20 Vict, c, 47, ‘lealings, estate, or effects of the company; and the Court may require
§77.]
(m) See, also, § 165, and ante, pp. 870.
852, 867. Compare § 133 (10), though (p) This section is repealed by 30 &
the words are different the meaningisthe 31 Vict. c. 47.
same. See Bridgewater Navigation Co., (q) See, also, §§ 117, 127, 165—168,
39 Ch. D, p. 21, and ante, pp. 689 et seq.
(n) See, as to costs of winding up, (v) See Form 54 in the 3rd Schedule
ante, pp. 859 et seq. to the rules. See also § 165, and ante,
(0) See Rules 65—-67, and ante, p. pp. 689 et seg.
25 & 26 vict. cap. 89.—PART IV. WINDING UP. 961
any such officer or person to produce any books, papers, deeds, writings, ApPEnpix V.
or other documents in his custody or power relating to the company; and —~S™
if any person so summoned, after being tendered a reasonable sum for his
expenses, refuses to come before the Court at the time appointed, having
no lawful impediment (made known to the Court at the time of its sitting,
and allowed by it), the Court may cause such person to be apprehended,
and brought before the Court for examination ; nevertheless in cases
where any person claims any lien on papers, deeds, or writings or docu-
ments produced by him, such production shall be without prejudice to
such lien, and the Court shall have jurisdiction in the winding up to
determine all questions relating to such lien.
116. If, after an order for winding up in the Court of the vice-warden Special provi-
of the Stannaries, it appears that any person claims property in, or any Sions as to court
lien, legal or equitable, upon any of the machinery, materials, ores, or i at an
effects on the mine or on premises occupied by the company in connection Nee eee
with the mine, or to which the company was, at the time of the order,
prima facie entitled, it shall be lawful for the vice-warden or the registrar
to adjudicate upon such claim on interpleader in the manner provided by
section eleven of the act passed in the eighteenth year of the reign of her [18 & 19 Vict.
present Majesty, chapter thirty-two ; and any action or issue directed upon ¢. 32, § 11.]
such interpleader may, if the vice-warden think fit, be tried in his court,
or at the assizes or the sittings in London or Middlesex, before a judge
of one of the superior courts, in the manner and on the terms and con-
ditions hereinbefore provided in the case of disputed debts and claims of
creditors.
117. The Court may examine upon oath, either by word of mouth or Examination of
upon written interrogatories, any person appearing or brought before them Parties by court.
in manner aforesaid concerning the affairs, dealings, estate, or effects of the L20 Vict. v. 47,
company, and may reduce into writing the answers of every such person,
and require him to subscribe the same (s).
118. The Court may, at any time before or after it has made an order Power to arrest
for winding up a company, upon proof being given that there is probable contributory
cause for believing that any contributory (¢) to such company is about to eles
quit the United Kingdom, or otherwise abscond, or to remove or conceal gonceal any of
any of his goods or chattels, for the purpose of evading payment of calls, his property.
or for avoiding examination in respect of the affairs of the company, (21 Vict. c 14
cause such contributory to be arrested, and his books, papers, monies, § 11.]
securities for monies, goods, and chattels to be seized, and him and them
to be safely kept until such time as the Court may order (1).
119. Any powers by this act conferred on the Court shall be deemed to Powers of court
be in addition to and not in restriction of any other powers subsisting C™mulative.
either at law or in equity, of instituting proceedings against any contri-
butory, or the estate of any contributory, or against any debtor of the
company for the recovery of any call or other sums due from such con-
tributory, or debtor, or his estate ; and such proceedings may be instituted
accordingly.
Enforcement of and appeal from orders.
120. All orders made by the Court of Chancery in England or Ireland Power to enforce
under this act may be enforced in the same manner in which orders of orders.
[20 Vict. ©. 47,
§
60.
(s) See ante, pp. 689 et seq. (u) See ante, p. 692, ]
(t) Or alleged contributory. See § 74.
L.C. *3 Q
962
AppENDIx V.
Power to order
contributories in
Scotland to pay
calls.
[22 Vict. v. 60,
§5.]
Order made in
England to be
enforced in Scot-
land and Ire-
land (y).
[22 Vict. c. 60,
§ 12.]
Mode of dealing
with orders to
be enforced by
other courts.
[22 Vict. c. 60,
$ 13,]
THE COMPANIES AcT, 1862.
such Court of Chancery made in any suit pending therein may be enforced ;
and for the purposes of this part of this act the Court of the vice-
warden of the Stannaries shall, in addition to its ordinary powers, have
the same power of enforcing any orders made by it as the Court of
Chancery in England has in relation to matters within the jurisdiction of
such Court; and for the last-mentioned purposes the jurisdiction of the
vice-warden of the Stannaries shall be deemed to be co-extensive in local
limits with the jurisdiction of the Court of Chancery in England (z).
121. Where an order, interlocutor, or decree has been made in Scot-
land for winding up a company by the Court, it shall be competent to the
Court in Scotland during session, and to the lord ordinary on the bills
during vacation, on production by the liquidators of a list certified by
them of the names of the contributories liable in payment of any calls
which they may wish to enforce, and of the amount due by each con-
tributory respectively and of the date when the same became due, to
pronounce forthwith a decree against such contributories for payment of
the sums so certified to be due by each of them respectively, with interest
from the said date till payment, at the rate of five pounds per centum per
annum, in the same way and to the same effect as if they had severally
consented to registration for execution, on a charge of six days, of a legal
obligation to pay such calls and interest ; and such decree may be extracted
immediately, and no suspension thereof shall be competent, except on
caution or consignation, unless with special leave of the Court or lord
ordinary.
122. Any order made by the Court in England for or in the course of
the winding up of a company under this act shall be enforced in Scotland
and Ireland in the Courts that would respectively have had jurisdiction in
respect of such company if the registered office of the company had been
situate in Scotland or Ireland, and in the same manner in all respects as
if such order had been made by the Courts that are hereby required to
enforce the same; and in like manner orders, interlocutors, and decrees,
made by the Court in Scotland (z) for or in the course of the winding up
of a company, shall be enforced in England and Ireland, and orders made
by the Court in Ireland for or in the course of winding up a company
shall be enforced in England and Scotland by the Courts which would
respectively have had jurisdiction in the matter of such company if the
registered office of the company were situate in the division of the United
Kingdom where the order is required to be enforced, and in the same
manner in all respects as if such order had been made by the Court
required to enforce the same in the case of a company within its own
jurisdiction.
123, Where any order, interlocutor, or decree made by one Court is re-
quired to be enforced by another Court, as hereinbefore provided, an office
copy of the order, interlocutor, or decree so made shall be produced to the
proper officer of the Court required to enforce the same, and the production
of such office copy shall be sufficient evidence of such order, interlocutor,
or decree having been made; and thereupon such last-mentioned Court
shall take such steps in the matter as may be requisite for enforcing such
order, interlocutor, or decree in the same manner as if it were the order,
interlocutor, or decree of the Court enforcing the same.
(x) See ante, p. 697. (z) See City of Glasgow Bank, 14 Ch.
(y) See International Pulp und Paper D. 628.
Co., 3 Ch. D. 594.
25 & 26 vicr. cap. 89.—paRT IV. WINDING UP. 963
124. Rehearings of (a) and appeals from any order or decision made or Apprnprx V.
given in the matter of the winding up of a company by any Court having
jurisdiction under this act, may be had in the same manner and subject orders
to the same conditions in and subject to which appeals may be had from ole,
any order or decision of the same Court in cases within its ordinary juris- ie a ae
diction ; subject to this restriction, that no such rehearing or appeal shall 109, 12% 13
be heard unless notice of the same is given within three weeks after any Vict. e. 108,
order complained of has been made in manner in which notices of appeal § 33-]
are ordinarily given according to the practice of the Court appealed from,
unless such time is extended by the Court of Appeal (b) : provided that it
shall be lawful for the lord warden of the Stannaries, by a special or
general order, to remit at once any appeal allowed and regularly lodged
with him against any order or decision of the vice-warden made in the
matter of a winding up to the Court of Appeal in Chancery ; which Court
shall thereupon hear and determine such appeal, and have power to re-
quire all such certificates of the vice-warden, records of proceedings below,
documents, and papers as the lord warden would or might have required
upon the hearing of such appeal, and to exercise all other the jurisdiction
and powers of the lord warden specified in the act of Parliament passed in
the eighteenth year of the reign of her present Majesty, chapter thirty-two ; [18 & 19 Vict.
and any order so made by the Court of Appeal in Chancery shall he final, ¢. 32.]
without any further appeal.
125. In all proceedings under this part of this act, all Courts, judges, Judicial notice
and persons judicially acting, and all other officers, judicial or ministerial, pclae a
of any Court, or employed in enforcing the process of any Court, shall eee
take judicial notice of the signature of any officer of the Courts of Chancery W& 1 Vict.
or Bankruptcy in England or in Treland, or of the Court of Session im ¢ 45° § 111.]
Scotland, or of the registrar of the Court of the vice-warden of the Stan-
naries, and also of the official seal or stamp of the several offices of the
Courts of Chancery or Bankruptcy in England or Ireland, or of the Court
of Session in Scotland, or of the Court of the vice-warden of the Stan-
naries, when such seal or stamp is appended to or impressed on any docu-
ment made, issued, or signed under the provisions of this part of the act,
or any official copy thereof.
126. [The commissioners of the Court of Bankruptcy (c) and] the judges Special commis-
of the county courts in England who sit at places more than twenty miles *ioners for taking
from the General Post Office, and the commissioners of bankrupt and the evidence,
assistant barristers and recorders in Ireland, and the sheriffs of counties [20 a o 4,
in Scotland, shall be commissioners for the purpose of taking evidence
under this act in cases where any company is wound up in any part of the
United Kingdom ; and it shall be lawful for the Court to refer the whole
or any part of the examination of any witnesses under this act to any
person hereby appointed commissioner, although such commissioner is out
of the jurisdiction of the Court that made the order or decree for winding
up the company ; and every such commissioner shall, in addition to any
power of summoning and examining witnesses, and requiring the produc-
tion or delivery of documents, and certifying or punishing defaults by
witnesses, which he might lawfully exercise as a [commissioner of the
Court of Bankruptcy] (c), judge of a county court, commissioner of bank-
Appeals from
(a) As to rehearings, see ante, p. 715, and 748.
699. (c) These words repealed by 38 & 39
(b) See ante, pp. 662, 697 et sez7., Vict. c. 66.
3Q 2
964
APPENDIX Y.
Court may order
the examination
of persons in
Scotland.
[12 & 13 Vict.
c. 108, § 21.]
Affidavits
may be sworn,
&c., before
any competent
court or person,
(12 & 13 Vict.
ec. 108, § 24.)
THE COMPANIES AcT, 1862.
rupt, assistant barrister, or recorder, or as a sheriff of a county, have in the
matter so referred to him all the same powers of summoning and examin-
ing witnesses, and requiring the production or delivery of documents, and
punishing defaults by witnesses, and allowing costs and charges and ex-
penses to witnesses, as the Court which made the order for winding up
the company has; and the examination so taken shall be returned or
reported to such last-mentioned Court in such manner as it directs.
127. The Court may direct the examination in Scotland of any person
for the time being in Scotland, whether a contributory of the company or
not, in regard to the estate, dealings, or affairs of any company in the
course of being wound up, or in regard to the estate, dealings, or affairs of
any person being a contributory of the company, so far as the company
may be interested therein by reason of his being such contributory ; and
the order or commission to take such examination shal] be directed to the
sheriff of the county in which the person to be examined is residing or
happens to be for the time ; and the sheriff shall summon such person to
appear before him at a time and place to be specified in the summons for
examination upon oath as a witness or as a haver, and to produce any
books, papers, deeds, or documents called for which may be in his posses-
sion or power ; and the sheriff may take such examination either orally or
upon written interrogatories and shall report the same in writing in the
usual form to the Court and shall transmit with such report the books,
papers, deeds, or documents produced, if the originals thereof are required
and specified by the order, or otherwise such copies thereof or extracts
therefrom, authenticated by the sheriff, as may be necessary ; and in case
any person so summoned fails to appear at the time and place specified, or
appearing refuses to be examined, or to make the production required, the
sheriff shall proceed against such person as a witness or haver duly cited,
and failing to appear or refusing to give evidence or make production may
be proceeded against by the law of Scotland: and the sheriff shall be
entitled to such and the like fees, and the witness shall be entitled to such
and the like allowances as sheriffs when acting as commissioners under
appointment from the Court of Session, and as witnesses and havers are
entitled to in the like cases according to the law and practice of Scotland ;.
if any objection is stated to the sheriff by the witness, either on the ground
of his incompetency as a witness, or as to the production required to be
made, or on any other ground whatever, the sheriff may, if he thinks fit,
report such objection to the Court, and suspend the examination of such
witness until such objection has been disposed of by the Court.
128. Any affidavit, affirmation, or declaration required to be sworn or
made, under the provisions or for the purposes of this part of this act, may
be lawfully sworn or made in Great Britain or Ireland, or in any colony,
island, plantation, or place under the dominion of her Majesty in foreign
parts, before any court, judge, or person lawfully authorised to take and
receive affidavits, affirmations, or declarations, or before any of her
Majesty’s consuls or vice-consuls, in any foreign parts out of her Majesty’s
dominions ; and all courts, judges, justices, commissioners, and persons
acting judicially shall take judicial notice of the seal or stamp or signature
(as the case may be) of any such court, judge, person, consul, or vice-consul
attached, appended, or subscribed to any such affidavit, affirmation, or
declaration, or to any other document to be used for the purposes of this
part of this act.
25 & 26 vict. cap. 89.—pranT Iv. WINDING UP. 965
Voluntary winding up of company (a). AppEnpix V.
129. A company under this act may be wound up voluntarily, Circumstances
(1.) Whenever the period, if any, fixed for the duration of the com- under which
pany by the articles of association expires, or whenever the event, heres may be
if any occurs, upon the occurrence of which it is provided by voluntarily;
the articles of association that the company is to be dissolved, [20 Vict, ¢. 47
and the company in general meeting has passed a resolution g 392]
requiring the company to be wound up voluntarily :
(2.) Whenever the company has passed a special resolution requiring
the company to be wound up voluntarily (e) :
(8.) Whenever the company has passed an extraordinary resolution to
the effect that it has been proved to their satisfaction that the
company cannot, by reason of its liabilities, continue its busi-
ness, and that it is advisable to wind up the same (f):
For the purposes of this act, any resolution shall be deemed to be extra-
ordinary which is passed in such manner as would, if it had been confirmed
by a subsequent meeting, have constituted a special resolution, as herein-
before defined (g).
130. A voluntary winding up shall be deemed to commence at the time Commencement
of the passing of the resolution authorising such winding up (h). of voluntary
131. Whenever a company is wound up voluntarily, the company shall, Saincliag Us
from the date of the commencement of such winding up, cease to carry on c a tee
its business, except in so far as may be required for the beneficial winding Ee j
‘ < ect of volun-
up thereof, and all transfers of shares, except transfers made to or with tary winding up
the sanction of the liquidators, or alteration in the status of the members on status of
of the company taking place after the commencement of such winding up, company.
shall be void (7), but its corporate state and all its corporate powers shall, [20 Vict. v. 47,
notwithstanding it is otherwise provided by its regulations, continue until § 104.)
the affairs of the company are wound up (i).
132. Notice of any special resolution or extraordinary resolution passed Notice of resolu-
for winding up a company voluntarily shall be given by advertisement as oes . eg up
respects companies registered in England in the “ London Gazette,” as "°U™
respects companies registered in Scotland in the “ Edinburgh Gazette,” and Eee ee
as respects companies registered in Ireland in the ‘‘ Dublin Gazette.” ,
133. The following consequences shall ensue upon the voluntary winding Consequences of
up of a company : voluntary wind-
(1.) The property of the company shall be applied in satisfaction of '"8 "P
its liabilities pari passu (1), and, subject thereto, shall, unless it [20 Vict. v. 47,
be otherwise provided by the regulations of the company, be nel
distributed amongst the members, according to their rights and
interests in the company :
(2.) Liquidators shall be appointed for the purpose of winding up the
affairs of the company and distributing the property :
(3.) The company in general meeting shall appoint such persons or
person as it thinks fit to be liquidators or a liquidator, and may
fix the remuneration to be paid to them or him (m) :
(d) See ante, pp. 874 et seq. (i) See § 153, and ante, pp. 667,
(e) See §§ 51, 53, and 132. 673.
(f) Seo ante, p. 877, and as to (£) See §§ 142, 143, and ante, p. 885.
advertisement of the resolution, § 132. (J) See § 159, and ante, p, 884.
(g) See § 51. (m) See §§ 135 and 140, 141, and
(A) See ante, pp. 664, 877. ante, pp. 878, et seq.
966
APPENDIX Y.
Effect of winding
up on sbare
capital of com-
pany limited
by guarantee.
Power of com-
pany to delegate
authority to
appoint liqui-
dators, &ec.
Arrangement
when binding
company and
on creditors.
THE COMPANIES ACT, 1862.
(4.) If one person only is appointed, all the provisions herein con-
tained in reference to several liquidators shall apply to him :
(5.) Upon the appointment of liquidators, all the power of the
directors shall cease, except in so far as the company in general
meeting or the liquidators may sanction the continuance of such
powers :
(6.) When several liquidators are appointed, every power hereby
given may be exercised by such one or more of them, as may be
determined at the time of their appointment, or in default of
such determination by any number not less than two :
(7.) The liquidators may, without the sanction of the Court, exercise
all powers by this act given to the official liquidator (n) :
(8.) The liquidators may exercise the powers hereinbefore given to
the Court of settling the list of contributories of the company ;
and any list so settled shall be primd facie evidence of the
liability of the persons named therein to be contributories (0) :
(9.) The liquidators may at any time after the passing of the resolu-
tion for winding up the company, and before they have ascer-
tained the sufficiency of the assets of the company, call on all
or any of the contributories for the time being settled on the
list of contributories to the extent of their liability to pay all or
any sums they deem necessary to satisfy the debts and liabilities
of the company, and the costs, charges, and expenses of winding
it up, and for the adjustment of the rights of the contributories
amongst themselves ; and the liquidators may in making a call
take into consideration the probability that some of the contri-
butories upon whom the same is made may partly or wholly
fail to pay their respective portions of the same (p) :
(10.) The liquidators shall pay the debts of the company, and adjust
the right of the contributories amongst themselves (q).
134. Where a company limited by guarantee, and having a capital
divided into shares, is being wound up voluntarily, any share capital that
may not have been called up shall be deemed to be assets of the com-
pany, and to be a specialty debt due from each member to the company
to the extent of any sums that may be unpaid on any shares held by him,
and payable at such time as may be appointed by the liquidators (7).
135. A company about to be wound up voluntarily, or in the course
of being wound up voluntarily, may, by an extraordinary resolution (s),
delegate to its creditors, or to any committee of its creditors, the power of
appointing liquidators or any of them, and supplying any vacancies in
the appointment of liquidators, or may by a like resolution enter into any
arrangement with respect to the powers to be exercised by the liquidators,
and the manner in which they are to be exercised ; and any act done by
the creditors in pursuance of such delegated powers shall have the same
effect as if it had been done by the company.
136. Any arrangement entered into between a company about to be
wound up voluntarily, or in the course of being wound up voluntarily,
(n) See §§ 95, 138, 139, 159, 160, are different but the meaning the same.
and ante, pp. 708 et seq. See Bridgewater Navigation Co., 39 Ch.
(0) See §§ 98, 99, and ante, p. 745. D.p. 21. |
(p) See, also, § 102, and ante, p. 884. (r) See, also, § 90.
(g) Compare § 109, where the words (s) § 129.
25 & 26 vict. cap. 89.—PART Iv. WINDING UP. 967
and its creditors, shall be binding on the company if sanctioned by an AppEnprx V.
extraordinary resolution (s), and on the creditors if acceded to by three SS”
fourths in number and value of the creditors, subject to such right of
appeal as is hereinafter mentioned.
137. Any creditor or contributory of a company that has in manner Ppowerof creditor
aforesaid entered into any arrangement with its creditors may, within or contributory
three weeks from the date of the completion of such arrangement, appeal to appeal.
to the Court against such arrangement, and the Court may thereupon, as
it thinks just, amend, vary, or confirm the same (t).
138, Where a company is being wound up voluntarily, the liquidators power for liqui-
or any contributory of the company may apply to the Court (w) in Eng- dators or contri-
land, Ireland, or Scotland, or to the Lord Ordinary on the bills in Scotland butories in vo-
in time of vacation, to determine any question arising in the matter of such ee ied ee
winding up, or to exercise, as respects the enforcing of calls, or in respect ree ia
of any other matter, all or any of the powers which the Court might exer- [22 Vict. «. 60,
cise if the company were being wound up by the Court; and the Court § 14.]
or Lord Ordinary in the case aforesaid, if satisfied that the determina-
tion of such question, or the required exercise of power, will be just and
beneficial (x) may accede, wholly or partially, to such application, on such
terms and subject to such conditions as the Court thinks fit, or it may
make such other order, interlocutor, or decree on such application as the
Court thinks just.
139. Where a company is being wound up voluntarily the liquidators Power of liqui-
may, from time to time, during the continuance of such winding up, dators to call
summon general meetings of the company for the purpose of obtaining gener! meetings.
the sanction of the company by special resolution or extraordinary resolu- [21 Vict. ¢. 14,
tion, or for any other purposes they think fit; and in the event of the
winding up continuing for more than one year, the liquidators shall
summon a general meeting of the company at the end of the first year,
and of each succeeding year from the commencement of the winding up, or
as soon thereafter as may be convenient, and shall lay before such meeting
an account showing their acts and dealings, and the manner in which the
winding up has been conducted during the preceding year.
140. If any vacancy occurs in the office of liquidators appointed by the Power to fill
company, by death, resignation, or otherwise, the company in general up vacancy in
meeting may, subject to any arrangement they may have entered into liquidators.
with their creditors, fill up such vacancy ; and a general meeting for the [22 Vict. c. 60,
purpose of filling up such vacancy may be convened by the continuing § 15.]
liquidators, if any, or by any contributory of the company, and shall be
deemed to have been duly held if held in manner prescribed by the regu-
lations of the company, or in such other manner as may, on application
by the continuing liquidator, if any, or by any contributory of the com-
pany, be determined by the Court.
141. If from any cause whatever there is no liquidator acting in the Power of court
case of a voluntary winding up, the Court may, on the application of a to appoint
contributory, appoint a liquidator or liquidators; the Court may also, on /uidators.
due cause shown, remove any liquidator, and appoint another liquidator
to act in the matter of a voluntary winding up (y).
(s) § 129. (x) See Gold Co., 12 Ch. D. 77, and
(é) See Rule 51. Heiron’s case, 15 Ch. D, 189.
(u) See Rule 51. See ante, p. 615, (y) See Rule 51, and § 150, and ante,
and as to staying actions, &., pp. 673 pp. 703, 878.
et seg., and p. 883.
968 THE COMPANIES ACT, 1862.
AppENDIXx V. 142. As soon as the affairs of the company are fully wound up, the
viautabarston. liquidators shall make up an account showing the manner in which such
Pia B winding up has been conducted, and the property of the company disposed
winding up to of; and thereupon they shall call a general meeting of the company for
make anac- the purpose of having the account laid before them and hearing any
count and ae explanation that may be given by the liquidators ; the meeting shall be
eee a called by advertisement, specifying the time, place, and object of such
[20 Viet. e. 47, meeting ; and such advertisement shall be published one month at least
§ 104.] previously to the meeting, as respects companies registered in England in
the ‘‘ London Gazette,” and as respects companies registered in Scotland
in the “ Edinburgh Gazette,” and as respects companies registered in
Treland in the “ Dublin Gazette.”
Liquidators to 143. The liquidators shall make a return to the registrar of such
report meeting meeting having been held, and of the date at which the same was held ;
to registrar. and on the expiration of three months from the date of the registration of
[2¢ Vict. c. £7, such return the company shall be deemed to be dissolved: if the liquida-
$104.) tors make default in making such return to the registrar they shall incur
a penalty not exceeding five pounds for every day during which such
default continues.
Costs of volun- 144, All costs, charges, and expenses properly incurred in the voluntary
tary liquidation. winding up of a company, including the remuneration of the liquidators,
[20 Vict. v. 47, shall be payable out of the assets of the company in priority to all other
§ 104.] claims.
Creditor may 145. The voluntary winding up of a company shall not be a bar to the
insist on winding right of any creditor of such company to have the same wound up by the
up by Court. Court, if the Court is of opinion that the rights of such creditor will be
DOLL e 47, prejudiced by a voluntary winding up (2).
Power offeourt 146. Where a company is in cowrse of being wound up voluntarily,
to adopt proceed- 2nd proceedings are taken for the purpose of having the same wound up
ings of voluntary by the Court, the Court may, if it thinks fit, notwithstanding that it
winding up. makes an order directing the company to be wound up by the Court, pro-
(21 Vict. cv. 14, vide in such order or in any other order for the adoption of all or any of
§19.] the proceedings taken in the course of the voluntary winding up (a).
Winding up subject to the supervision of the Court (b).
Power of court 147. When a resolution has been passed by a company to wind up
to direct volun- yoluntarily, the Court may make an order directing that the voluntary
ee winding up should continue, but subject to such supervision of the Court,
ject to super- 2nd with such liberty for creditors, contributories, or others, to apply to
vision of Court. the Court, and generally upon such terms and subject to such conditions
[21 Vict. c. 14, as the Court thinks just (c).
19. 148. A petition, praying wholly or in part that a voluntary winding up
Effect of petition should continue, but subject to the supervision of the Court, and which
for continuance +1 7s . . ae =
of matt ap winding wp is hereinafter referred to as a winding up subject to the super
subject to vision of the Court, shall, for the purpose of giving jurisdiction to the
supervision.
[22 Vict. c. 60, (2) Ante, p. 636. As to how far a (b) See ante, p. 886.
$2] compulsory order supersedes a voluntary (c) For form of order, see form No. 4,
winding up, see Thomas v. Patent Lionite in the 3rd Sched. to the Rules, As to
Co., 17 Ch. D. 250. who may petition, and as to ‘‘ or others ee
(a) See Taurine Co., 25 Ch. D.118, see Pen y Van Colliery Co., 6 Ch. D.
p. 139. 477.
25 & 26 vicr. cap. 89.—PraRT IV. WINDING UP. 969
Court over suits and actions, be deemed to be a petition for winding up Arprnvrx V.
the company by the Court (). Pas SES ant AEE
149. The Court may, in determining whether a company is to be Court may have
wound up altogether by the Court, or subject to the supervision of the regard to wishes
Court in the appointment of liquidator or liquidators, and in all other ef creditors.
matters relating to the winding up subject to supervision, have regard to [22 Vict. ¢. 60,
the wishes of the creditors or contributories as proved to it by any 88? &3]
sufficient evidence, and may direct meetings of the creditors or contribu-
tories to be summoned, held, and regulated in such manner as the Court
directs for the purpose of ascertaining their wishes, and may appoint a
person to act as chairman of any such meeting, and to report the result of
such meeting to the Court: in the case of creditors regard shall be had to
the value of the debts due to each creditor, and in the case of contribu-
tories to the number of votes conferred on each contributory by the regu-
lations of the company (e).
150. Where any order is made by the Court for a winding up subject Power to court
to the supervision of the Court, the Court may, in such order or in any te appoint addi.
. Pee cy [Baas . : tional liquidators
subsequent order, appoint any additional liquidator or liquidators ; and je ingen
any liquidators so appointed by the Court shall have the same powers, be gubject to super-
subject to the same obligations, and in all respects stand in the same vision.
position as if they had been appointed by the company ; the Court may [22 Vict. v. 60,
from time to time remove any liquidators so appointed by the Court, § 3.]
and fill up any vacancy occasioned by such removal, or by death or
resignation ( f).
151, Where an order is made for winding up, subject to the supervision Effect of order
of the Court, the liquidators appointed to conduct such winding up may, of court for
subject to any restrictions imposed by the Court, exercise all their powers, ee
without the sanction or intervention of the Court, in the same manner as SUT
if the company were being wound up altogether voluntarily ; but, SAVE AS [99 Vict, c. 60,
aforesaid, any order inade by the Court for a winding up, subject to the § 4.]
supervision of the Court, shall for all purposes, including the staying of
actions, suits, and other proceedings, be deemed to be an order of the
Court for winding up the company by the Court, and shall confer full
authority on the Court to make calls, or to enforce calls made by the
liquidators, and to exercise all other powers which it might have exercised
if an order had been made for winding up the company altogether by the
Court ; and in the construction of the provisions whereby the Court is em-
powered to direct any act or thing to be done to or in favour of the official
liquidators, the expression official liquidators shall be deemed to mean the
liquidators conducting the winding up subject to the supervision of the
Court (9).
152. Where an order has been made for the winding up of a company Appointment in
subject to the supervision of the Court, and such order is afterwards super- °ettain cases of
seded (h) by an order directing the company to be wound up compulsorily, be seg ‘a
official liqui-
(d) See § 85; and as to the petition, ing actions, &c., p. 674; as to dealings aa c. 60,
see Rules 1—5, and see ante, pp. 654 with property, p. 666; as to transfers §8
et seq., and p. 673. of shares, pp. 831 et seg. ; as to com-
(e) See, also, § 91, and Rules 45—47. promises, &c., §§ 159 and 160.
(f) See, also, § 141. (2) As to how far a compulsory order
(g) See, as to this section, ante, p. supersedes a voluntary winding up, seo
888; as to the commencement of the Thomas v. Patent Lionite Co., 17 Ch.
winding up, pp. 664 and 889 ; asto stay- D. 250.
970 THE COMPANIES ACT, 1862.
Avpenpix V. the Court may in sueh last-mentioned order, or in any subsequent order,
appoint the voluntary liquidators or any of them, either provisionally or
permanently, and either with or without the addition of any other
persons, to be official liquidators.
Supplemental provisions.
Dispositions of 153. Where any company is being wound up by the Court or subject
property, &., to the supervision of the Court, all dispositions of the property, effects,
after the com- and things in action of the company, and every transfer of shares, or
mencement of the os ,
winding up to be alteration in the status of the members of the company made between the
void. commencement of the winding up (7) and the order for winding up, shall,
[20 Vict. c. 47, unless the Court otherwise orders, be void (x).
§ 73.] 154. Where any company is being wound up, all books, accounts, and
The books of the documents of the company and of the liquidators shall, as between the
company tobe — eontributories of the company (1), be primd facie evidence of the truth of
evidence. P :
[20 Viet. c. 47 all matters purporting to be therein recorded (m). ;
§ 81.] ; 155. Where any company has been wound up under this act and is
Disposal of about to be dissolved, the books, accounts, and documents of the company
posal o Seas : 5 :
books, accounts, and of the liquidators may be disposed of in the following way ; that is
and documents to say, where the company has been wound up by or subject to the super-
of the company. vision of the Court, in such way as the Court directs, and where the com-
pany has been wound up voluntarily, in such way as the company by an
extraordinary resolution directs ; but after the lapse of five years from the
date of such dissolution, no responsibility shall rest on the company, or
the liquidators, or any one to whom the custody of such books, accounts,
and documents has been committed, by reason that the same, or any of
them, cannot be made forthcoming to any party or parties claiming to be
interested therein (m).
Inspection of 156. Where an order has been made for winding up a company by the
books, Court, or subject to the supervision of the Court, the Court may make
[22 Vict. c, 60, Such order for the inspection by the creditors and contributories of the
: company of its books and papers as the Court thinks just ; and any books
and papers in the possession of the company may be inspected by creditors
or contributories, in conformity with the order of the Court, but not
further or otherwise (0).
Power ofassignee 157. Any person to whom any thing in action belonging to the com-
tosueand be pany is assigned, in pursuance of this act, may bring or defend any action
sued, or suit relating to such thing in action in his own name.
Debts and claims 158. In the event of any company being wound up under this act, all
of alldescriptions debts payable on a contingency, and all claims against the company,
to be proved. present: or future, certain or contingent, ascertained or sounding only
in damages, shall be admissible to proof against the company, a just
estimate being made, so far as is possible, of the value of all such debts
or claims, as may be subject to any contingency or sound only in
damages, or for some other reason do not bear a certain value (p).
(ad) See § 84. (n) As to right of litigants to compel
(&) See, also, §§ 131, 163, 164, and the production of these books by the
ante, pp. 666 et seq. liquidator, see London and Yorkshire
(t) And alleged contributories, see Bank v. Cooper, 15 Q. B. D. 473.
74. (0) See Rule 58, and ante, p. 704.
(m) See ante, p. 705. (p) See Rules 20—28, and ante, pp.
25 & 26 vict. cap. 89.—PART Iv. WINDING UP. 971
159. The liquidators may, with the sanction of the Court (gq), where AppEnpix V.
the company is being wound up by the Court or subject to the supervision Power te take:
of the Court, and with the sanction of an extraordinary resolution (1) of compromises,icc.,
the company, where the company is being wound up altogether volun- with creditors.
tarily, pay any classes of creditors in full, or make such compromise or [22 Vict, c, 60,
other arrangement as the liquidators may deem expedient with creditors § 10.]
or persons claiming to be creditors, or persons having or alleging them-
selves to have any claim, present or future, certain or contingent,
ascertained or sounding only in damages against the company, or whereby
the company may be rendered liable (s).
160. The liquidators may, with the sanction of the Court (t) where the Power to make
company is being wound up by the Court or subject to the supervision compromises
of the Court, and with the sanction of an extraordinary resolution (u) of oe
the company where the company is being wound up altogether voluntarily, [22 Viet. . 60
compromise all calls and liabilities to calls, debts, and liabilities capable g 19.] Stiga
of resulting in debts, and all claims, whether present or future, certain or
contingent, ascertained or sounding only in damages, subsisting or sup-
posed to subsist between the company and any contributory or alleged
contributory, or other debtor or person apprehending liability to the com-
pany, and all questions in any way relating to or affecting the assets of
the company or the winding up of the company, upon the receipt of such
sums, payable at such times, and gencrally upon such terms as may be
agreed upon, with power for the liquidators to take any security for the
discharge of such debts or liabilities, and to give complete discharges in
respect of all or any such calls, debts, or liabilities (x),
161. Where any company is proposed to be or is in the course of being Power for liqui-
wound up altogether voluntarily, and the whole or a portion of its business dators to accept
or property is proposed to be transferred or sold to another company, eee
the liquidators of the first-mentioned company may, with the sanction of saj9 of property
a special resolution (y) of the company by whom they were appointed, to another
conferring either a general authority on the liquidators, or an authority company.
in respect of any particular arrangement, receive in compensation or part [21 Vict. c. 14,
compensation for such transfer or sale, shares, policies, or other like in- $17.)
terests in such other company, for the purpose of distribution amongst the
members of the company being wound up, or may enter into any other
arrangement whereby the members of the company being wound up may,
in lieu of receiving cash, shares, policies, or other like interests, or in
addition thereto, participate in the profits of or receive any other benefit
from the purchasing company ; and any sale made or arrangement entered
into by the liquidators in pursuance of this section shall be binding on
the members of the company being wound up; subject to this proviso, that
if any member of the company being wound up, who has not voted in
favour of the special resolution passed by the company of which he is
a member at either of the meetings held for passing the same, expresses his
dissent from any such special resolution in writing addressed to the liqui-
dators or one of them, and left at the registered office of the company not
716 et seg.; and as to annuities and (t) See Rules 50, 60—62.
policies, 35 & 36 Vict. c. 41, ante, p. (u) See § 129.
732. (x) See §§ 136, 187; 33 & 34 Vict.
(q) See rules 49, 60—62. c. 104, § 2, ante, pp. 709 et seq.
(r) See § 129. (y) See § 51.
(s) See ante, pp. 709, 711. z
972
APPENDIX V.
Mode of deter-
mining price.
Certain attach-
ments, &c., to
be void.
[20 Vict. c. 47,
§ 80.]
Fraudulent pre-
ference.
[20 Vict. c. 47,
§ 76.]
Power of court
to adjudicate
THE COMPANIES ACT, 1862.
later than seven days after the date of the meeting at which such special
resolution was passed (z), such dissentient member may require the liqui-
dators to do one of the following things as the liquidators may prefer; that
is to say, either to abstain from carrying such resolution into effect, or to
purchase the interest held by such dissentient member at a price to be
determined in manner hereinafter mentioned, such purchase-money to be
paid before the company is dissolved, and to be raised by the liquidators
in such manner as may be determined by special resolution ; no special
resolution shall be deemed invalid for the purposes of this section by reason
that it is passed antecedently to or concurrently with any resolution for
winding up the company, or for appointing liquidators ; but if an order be
made within a year for winding up the company by or subject to the super-
vision of the Court, such resolution shall not be of any validity unless it
is sanctioned by the Court («).
162. The price to be paid for the purchase of the interest of any dis-
sentient member may be determined by agreement ; but if the parties
dispute about the same, such dispute shall be settled by arbitration, and
for the purposes of such arbitration the provisions of “The companies
clauses consolidation act, 1845,” with respect to the settlement of disputes
by arbitration (b), shall be incorporated with this act; and in the con-
struction of such provisions this act shall be deemed to be the special act,
and the “ company ” shall mean the company that is being wound np, and
any appointment by the said incorporated provisions directed to be made
under the hand of the secretary, or any two of the directors, may be made
under the hand of the liquidator, if only one, or any two or more of the
liquidators if more than one.
163. Where any company is being wound up by the Cowt or subject
to the supervision of the Court, any attachment, sequestration, distress, or
execution put in force against the estate or effects of the company after the
commencement of the winding up shall be void to all intents (c).
164, Any such conveyance, mortyage, delivery of goods, payment, execu-
tion, or other act relating to property as would, if made or done by or
against any individual trader, be deemed in the event of his bankruptcy to
have been made or done by way of undue or fraudulent preference of the
creditors of such trader, shall, if made or done by or against any company,
be deemed, in the event of such company being wound up under this
act, to have been made or done by way of undue or fraudulent preference
of the creditors of such company, and shall be invalid accordingly (d) ; and
for the purposes of this section the presentation of a petition for winding
up a company shall in the case of a company being wound up by the Court
or subject to the supervision of the Court, and a resolution for winding up
the company shall in the case of a voluntary winding up, be deemed to
correspond with the act of bankruptcy in the case of an individual trader :
and any conveyance or assignment made by any company formed under
this act of all its estate and effects to trustees for the benefit of all its
creditors shall he void to all intents.
165. Where, in the course of the winding up of any company under
(2) Union Bank of Kingston-upcn- (b) 8 & 9 Vict. v. 16, §§ 128—134.
Hull, 13 Ch. D. 808. (c) See, also, §§ 84, 85, 87, 197, 198,
(a) See, as to transfers of business 201, 202, and see ante, pp. 671 et seq.
under §§ 161 and 162, ante, pp. 711, (d) See ante, p. 668.
882, and 894,
25 & 26 vict. cap. 89.—PART IV. WINDING UP. 973
this act, it appears that any past or present director, manager, official, or APPENDIX V.
other liquidator, or any officer of such company, has misapplied or re- ae hea ae
tained in his own hands or become liable or accountable for any monies quent directors
of the company, or been guilty of any misfeasance or breavh of trust in and officers.
relation to the company, the Court may, on the application of any liqui-
dator, or of any creditor or contributory of the company, notwithstanding
that the offence is one for which the offender ix criminally responsible,
examine into the conduct of such director, manager, or other officer, and
compel him to repay any monies so misapplied or retained, or for which
he has become liable or accountable, together with interest after such rate
as the Court thinks just, or to contribute such sums of money to the
assets of the company by way of compensation in respect of such misap-
plication, retainer, misfeasance, or breach of trust, as the Court thinks
just (e).
166. If any director, officer, or contributory of any company wound up Penalty on
under this act destroys, mutilates, alters, or falsifies any books, papers, ee of
writings, or securities, or makes or is privy to the making of any false or baie
fraudulent entry in any register, book of account, or other document be- te aa,
longing to the company with intent to defraud or deceive any person, :
every person so offending shall be deemed to be guilty of a misdemeanor,
and upon being convicted shall be liable to imprisonment for any term not
exceeding two years, with or without hard labour (f).
167. Where any order is made for winding up a company by the Court Prosecution of
or subject to the supervision of the Court, if it appear in the course of delinquent di-
* ye . rectors, etc., In
such winding up that any past or present director, manager, officer, OF iho case of wind-
member of such company has been guilty of any offence in relation to the jing up by court.
company for which he is criminally responsible (g), the Court may, on the [22 Vict. v. 60,
application of any person interested in such winding up (A), or of its own § 20.]
notion, direct the official liquidators, or the liquidators (as the case may
be), to institute and conduct a prosecution or prosecutions for such offence,
and may order the costs and expenses to be paid out of the assets of the
company.
168. Where a company is being wound up altogether voluntarily, if it Prosecution of
appear to the liquidators conducting such winding up that any past or pre- (elinquent di-
sent director, manager, officer, or member of such company has been guilty one ae
of any offence in relation to the company for which he is criminally winding up.
responsible, it shall be lawful for the liquidators, with the previous sanction [22 Vict. v. 60
of the Court (7), to prosecute such offender; and all expenses properly § 21.] ,
incurred by them in such prosecution shall be payable out of the assets of
the company in priority to all other liabilities.
169. If any person, upon any examination upon oath or affirmation Penalty on
authorised under this act, or in any affidavit, deposition, or solemn Pe‘JUtY-
affirmation in or about the winding up of any company under this act, or [11 & 12 Vict.
otherwise in or about any matter arising under this act, wilfully and “ 45, § 118.)
corruptly give false evidence, he shall, upon conviction, be liable to the
penalties of wilful perjury.
(e) See ante, pp. 693 et seq. seq., ante, pp. 446, 697.
(f ) See, also, 24 & 25 Vict. c. 96, (h) See Rule 51.
§ 83, ante, pp. 446 et seq. (i) See Rule 51, and ante, p. 881.
(g) See 24 & 25 Vict. c. 96, §§ 82, e
974
APPENDIX V.
Power of Lord
Chancellor of
Great Britain to
make rules.
[20 Vict. c. 47,
§ 95, and 22
Vict. c. 60,
§11.]
Power of Court
of Session in
Scotland to
make rules.
[20 Vict. v. 47,
§ 97.]
.Power to make
rules in Stan-
naries Court.
[20 Vict. c. 47,
§ 98.]
Power of Lord
Chancellor of
Ireland to make
rules.
[20 Vict. c. 47,
§ 96.]
THE COMPANIES ACT, 1862.
Power of courts to make rules.
[170 authorised the Lord Chancellor to make rules concerning the
mode of proceeding to be had for winding up a company in the Court of
Chancery, and enacted that until such rules were made the general practice
of the Court of Chancery, including the practice hitherto in use in
winding up companies, should, so far as the same was applicable and not
inconsistent with this act, apply to all proceedings for winding up a
company (k).]
171. In Scotland, the Court of Session may make such rules concem-
ing the mode of winding up as may be necessary by act of sederunt ; but,
until such rules are made, the general practice of the Court of Session in
suits pending in such Court shall, so far as the same is applicable and not
inconsistent with this act, apply to all proceedings for winding up a
company, and official liquidators shall in all respects be considered as
possessing the same powers as any trustee on a bankrupt estate.
172. The vice-warden of the Stannaries may, from time to time, with the
consent provided for by section twenty-three of the act of eighteenth of
Victoria, chapter thirty-two, make rules for carrying into effect the powers
conferred by this act upon the Court of the vice-warden ; but, subject to
such rules, the general practice of the said Court, and of the registrar’s
office in the said Court, including the present practice of the said Court in
winding up companies, may be applied to all proceedings under this act.
The said vice-warden may likewise, with the same consent, make from time
to time rules for specifying the fees to be taken in his said Court in pro-
ceedings under this act ; and any rules so made shall be of the same force
as if they had been enacted in the body of this act ; and the fees paid in
respect of proceedings taken under this act, including fees taken under
“The joint stock companies act, 1856,” in the matter of winding up com-
panies, shall be applied exclusively towards payment of such additional
officers, or such increase of the salaries of existing officers, or pensions to
retired officers, or such other needful expenses of the Court, as the lord
warden of the Stannaries shall, from time to time, on the application of the
vice-warden or otherwise, think fit to direct, sanction, or assign, and mean-
while shall be kept as a separate fund, apart from the ordinary fees of the
Court arising from other business, to await such direction and order of the
lord warden herein, and to accumulate by investment in government
securities until the whole shall have been so appropriated (1).
173. In Ireland the Lord Chancellor of Ireland may, as respects the
winding up of companies in Ireland, with the advice and consent of the
Master of the Rolls in Ireland, exercise the same power of making rules as
is by this act hereinbefore given to the Lord Chancellor of Great Britain ;
but, until such rules are made, the general practice of the Court of Chan-
cery in Ireland, including the practice hitherto in use in Iveland in
(k) See 30 & 31 Vict. c. 131, § 20,
and ante, p. 685. Under the above
section rules have been promulgated.
See infra, Appendix No. vi. ; and as to
the general practice of the Court of
Chancery, see Rules 74 and 75. The
section has been repealed by 44 & 45
Vict. c. 59; but the rules in the Ap-
pendix are still in force.
(2) Rules have been issued under this
section, but they are not printed in the
present work, They are published by
Stevens and Sons. And see 30 & 31
Vict. c. 181, § 20.
25 & 26 vict. cap. 89.—-PART V. REGISTRATION, ETC. 975
winding up companies, shall, so far as the same is applicable and not AppENprx V.
inconsistent with this act, apply to all proceedings for winding up a
company.
PART V.
REGISTRATION OFFICE.
174. The registration of companies under this act shall be conducted as Constitution of
follows (that is to say) :— registration
(1.) The Board of Trade may, from time to time, appoint such regis- office.
trars, assistant registrars, clerks, and servants as they may think [20 Vict. c. 47,
necessary for the registration of companies under this act, and neil
remove them at pleasure :
(2.) The Board of Trade may make such regulations as they think fit
with respect to the duties to be performed by any such registrars,
assistant registrars, clerks, and servants as aforesaid :
(3.) The Board of Trade may, from time to time, determine the
places at which offices for the registration of companies are to be
established, so that there be at all times maintained in each of
the three parts of the United Kingdom at least one such
office (m), and that no company shall be registered except at an
office within that part of the United Kingdom in which, by the
memorandum of association, the registered office of the company
is declared to be established, and the board may require that the
registrar’s office of the court of the vice-warden of the Stannaries
shall be one of the offices fur the registration of companies
formed for working mines within the jurisdiction of the Court :
(4.) The Board of Trade may, from time to time, direct a seal or
seals to be prepared for the authentication of any documents
required for or connected with the registration of companies :
(5.) Every person may inspect the documents kept by the registrar of
joint stock companies ; and there shall be paid for such inspec-
tion such fees as may be appointed by the Board of Trade, not
exceeding one shilling for each inspection ; and any person may
require a certificate of the incorporation of any company, or a
copy or extract of any other document or any part of any other
document, to be certified by the registrar: and there shall be
paid for such certificate of incorporation, certified copy, or extract
such fees as the Board of Trade may appoint, not exceeding five
shillings for the certificate of incorporation, and not exceeding
sixpence for each folio of such copy or extract, or, in Scotland,
for each sheet of two hundred words :
(6.) The existing registrar, assistant registrars, clerks, and other
officers and servants in the office for the registration of joint
stock companies shall, during the pleasure of the Board of Trade,
hold the offices and receive the salaries hitherto held and received
(m) The Board of Trade has, by an Stannaries to be registered in the Court
order dated the 14th Feb. 1863, directed of the vice-warden.
companies for working mines within the
976
APPENDIX V.
Definition of
Joint-stock com-
panies acts.
Application of
act to companies
formed under
joint-stock com-
panies acts.
THE COMPANIES ACT, 1862.
by them, but they shall in the execution of their duties conform
to any regulations that may be issued by the Board of Trade :
There shall be paid to any registrar, assistant registrar, clerk, or
servant that may hereafter be employed in the registration of
joint-stock companies, such salary as the Buard of Trade may,
with the sanction of the commissioners of the Treasury, direct :
(8.) Whenever any act is herein directed to be done to or by the
registrar of joint-stock companies, such act shall, until the
Board of Trade otherwise directs, be done in England to or by
the existing registrar of joint-stock companies, or in his absence
to or by such person as the Board of Trade may for the time
being authorise, in Scotland to or by the existing registrar of
, joint-stock companies in Scotland, and in Ireland to or by the
existing assistant registrar of joint-stock companies for Ireland,
or by such person as the Board of Trade may for the time being
authorise in Scotland or Ireland in the absence of the registrar ;
but in the event of the Board of Trade altering the constitution
of the existing registry office, such act shall be done to or by
such officer or officers and at such place or places with reference
to the local situation of the registered offices of the companies to
be registered as the Board of Trade may appoint.
w
(7.
PART VI.
APPLICATION OF ACT TO COMPANIES REGISTERED UNDER THE JOINT-STOCK
COMPANIES ACT.
175. The expression “‘ Joint-stock companies acts” as used in this act
shall mean ‘“ The joint-stock companies act, 1856,” “ The joint-stock com-
panies act, 1856, 1857,” “The joint-stock banking companies act, 1857,”
and “The act to enable joint-stock banking companies to be formed on the
principle of limited liability,” or any one or more of such acts, as the case
may require ; but shall not include the act passed in the eighth year of the
reign of Her present Majesty, chapter one hundred and ten, and intituled
“ An act for the registration, incorporation, and regulation of joint-stock
companies.”
176. Subject as hereinafter mentioned, this act, with the exception of
table A. in the first schedule, shall apply to companies formed and regis-
tered under the said Joint-stock companies acts, or any of them, in the
same manner in the case of a limited company as if such company had
been formed and registered under this act as a company limited by shares,
and in the case of a company other than a limited company as if such
company had been formed and registered as an unlimited company under
this act, with this qualification, that wherever reference is made expressly
or impliedly to the date of registration, such date shall be deemed to refer
to the date at which such companies were respectively registered under the
said Joint-stock companies acts, or any of them, and the power of altering
regulations by special resolution given by this act (n) shall, in the case
of any company formed and registered under the said Joint-stock com-
panies acts, or any of them, extend to altering any provisions contained in
(n) See §§ 50 and 196, ante, p. 119.
25 & 26 vicr. cap. 89.—PART VII. REGISTRATION, ETO. 977
the table marked B. annexed to ‘The Joint-stock companies act, 1856,” ArpEnprx V.
and shall also in the case of an unlimited company formed and registered == SSCS™S
as last aforesaid extend to altering any regulations relating to the amount
of capital or its distribution into shares, notwithstanding such regulations
are contained in the memorandum of association (0).
177. This act shall apply to companies registered but not formed under Application of
the said Joint-stock companies acts or any of them in the same manner as act to companies
it is hereinafter declared (p) to apply to companies registered but not oo cee ane
: ‘ . : . Joint-stock com-
formed under this act, with this qualification, that wherever reference is panies acts.
made expressly or impliedly to the date of registration, such date shall be
deemed to refer to the date at which such companies were respectively
registered under the said Joint-stock companies acts, or any of them (q).
178. Any company registered under the said Joint-stock companies acts, Mode of trans-
or any of them, may cause its shares to be transferred in manner hitherto ferring shares.
in use, or in such other manner as the company may direct.
PART VII.
COMPANIES AUTHORISED TO REGISTER UNDER THIS ACT.
179. The following regulations shall be observed with respect to the Regulations as
registration of companies under this part of this act ; (that is to say,) to registration
(1.) No company having the liability of its members limited by act aon
of Parliament or letters patent, and not being a joint-stock com- ea
pany as hereinafter defined (r), shall register under this act in
pursuance of this part thereof :
(2.) No company having the liability of its members limited by act
of Parliament, or by letters patent, shall register under this act
in pursuance of this part thereof as an unlimited company, or as
a company limited by guarantee :
(3.) No company that is not « joint-stock company, as hereinafter
defined (r), shall in pursuance of this part of this act register
under this act as a company limited by shares :
(4.) No company shall register under this act in pursuance of this
part thereof, unless an assent to its so registering is given by a
majority of such of its members as may be present, personally
or by proxy, in cases where proxies are allowed by the regula-
tions of the company, at some general meeting summoned for
the purpose :
(5.) Where a company not having the liability of its members limited
by act of Parliament or letters patent, is about to register as a
limited company, the majority required to assent as aforesaid
shall consist of not less than three-fourths of the members
present, personally or by proxy, at such last-mentioned general
meeting :
(6.) Where a company is about to register as a company limited
by guarantee, the assent to its being so registered shall be accom-
panied by a resolution declaring that each member undertakes
to contribute to the assets of the company, in the event of the
(0) See ante, p. 115. (q) See ante, p, 115.
(p) See Part VII. (r) § 181. See ante, pp, 115, 116.
Lc. *3R
978
APPENDIX Y.
Companies capa-
ble of being
registered.
[21 Vict. e. 14,
§ 29.]
Definition of
joint-stock
company.
Proviso as to
banking com-
pany.
[22 Vict. c. 91,
§1.]
Requisitions for
registration by
companies.
THE COMPANIES ACT, 1862.
same being wound up, during the time that he is a member or
within one year afterwards, for payment of the debts and liabili-
ties of the company contracted before the time at which he ceased
to be a member, and of the costs, charges, and expenses of
winding up the company, and for the adjustment of the rights
of the contributories amongst themselves, such amount as may
be required, not exceeding a specified amount :
In computing any majority under this section, when a poll is demanded,
regard shall be had to the number of votes to which each member is
entitled according to the regulations of the company of which he is a
member.
180. With the above exceptions, and subject to the foregoing regula-
tions (s), every company existing at the time of the commencement of
this act, including any company registered under the said Joint-stock
companies acts (é), consisting of seven or more members, and any company
hereafter formed in pursuance of any act of Parliament other than this
act, or of letters patent, or being a company engaged in working mines
within and subject to the jurisdiction of the Stannaries, or being otherwise
duly constituted by law, and consisting of seven or more members, may at
any time hereafter register itself under this act as an unlimited company,
or a company limited by shares, or a company limited by guarantee ; and
no such registration shall be invalid by reason that it has taken place with
a view to the company being wound up.
181. For the purposes of this part of this act, so far as the same relates
to the description of companies empowered to register as companies
limited by shares, a joint-stock company shall be deemed to be a company
having a permanent paid-up or nominal capital of fixed amount, divided
into shares, also of fixed amount, or held and transferable as stock, or
divided and held partly in one way and partly in the other, and formed
on the principle of having for its members the holders of shares in such
capital, or the holders of such stock, and no other persons; and such
company when registered with limited liability under this act shall be
deemed to be a company limited by shares (wu).
[182. No banking company claiming to issue notes in the United
Kingdom shall be entitled to limited liability in respect of such issue, but
shall continue subject to unlimited liability in respect thereof ; and, if neces-
sary, the assets shall be marshalled for the benefit of the general creditors, and
the members shall be liable for the whole amount of the issue, in addition to
the sum for which they would be liable as members of a limited company («).]
183. Previously to the registration, in pursuance of this part of this
act of any joint-stock company (y), there shall be delivered to the registrar
the following documents (that is to say,) :—
(1.) A list showing the names, addresses, and occupations of all per-
sons who on a day named in such list, and not being more
than six clear days before the day of registration, were members
of such company, with the addition of the shares held by such
(s) See, also, §§ 182—184, and 188. (x) This section was repealed by 42 &
(t) The act applies to them, even 43 Vict. c. 76, § 6, See, also, § 188,
though they do not register. See §§ and for the corresponding section now in
176, 177, and ante, pp. 113,116, and force, 42 & 43 Vict. w 76, § 6.
617. (y) § 181.
(u) See ante, p. 116,
25 & 26 vict. car. 89.—PART VII. REGISTRATION, ETC. 979
persons respectively, distinguishing, in cases where such shares APPENDIX V.
are numbered, each share by its number :
(2.) A copy of any act of Parliament, royal charter, letters patent,
deed of settlement, contract of co-partnery, cost-book regula-
tions, or other instrument constituting or regulating the com-
pany (z) :
(3.) If any such joint-stock company is intended to be registered as
a limited company, the above list and copy shall be accompanied
by a statement specifying the following purticulars ; that is to
Bay,
The nominal capital of the company and the number of shares
into which it is divided ;
The number of shares taken and the amount paid on each
share ; .
The name of the company, with the addition of the word
“limited” as the last word thereof (a) ;
With the addition, in the case of a company intended to be
registered as a company limited by guarantee, of the reso-
lution declaring the amount of the guarantee.
184. Previously to the registration in pursuance of this part of this act Requisitions for
of any company not being a joint-stock company (b), there shall be ae by
‘ ‘ : : isting company
delivered to the registrar a list showing the names, addresses, and pot being a
occupations of the directors or other managers (if any) of the company, joint-stock
also a copy of any act of Parliament, letters patent, deed of settlement, company.
contract of co-partnery, cost-book regulations, or other instrument consti-
tuting or regulating the company, with the addition, in the case of a com-
pany intended to be registered as a company limited by guarantee, of the
resolution declaring the amount of guarantee.
185. Where a joint-stock company (c) authorised to register under this Power for
act, has had the whole or any portion of its capital converted into stock, company to
such company shall, as to the capital so converted, instead of delivering to econ’ eae
the registrar a statement of shares, deliver to the registrar a statement of of shares,
the amount of stock belonging to the company, and the names of the per- [21 Vict ¢. 14,
sons who were holders of such stock, on some day to be named in the § 30.]
statement, not more than six clear days before the day of registration. :
186. The lists of members and directors, and any other particulars Authentication
relating to the company hereby required to be delivered to the registrar, of statements.
shall be verified by a declaration of the directors of the company delivering
the same, or any two of them, or of any two other principal officers of the [20 Vict. ¢. 47,
company, made in pursuance of the act passed in the sixth year of the § 112.]
reign of his late Majesty King William the Fourth chapter sixty-two. :
187. The registrar may require such evidence as he thinks necessary Registrar may
for the purpose of satisfying himself whether an existing company is or.not is maou
a joint-stock company as hereinbefore defined (d). company,
188. Every banking company existing at the date of the passing of 9, registration
this act which registers itself as a limited company shall, at least thirty of banking
days previous to obtaining a certificate of registration with limited liability, company with
3 2 eee . ; limited liability.
give notice that it is intended so to register the same to every person auiceuaca
(z) See § 209, as to insurance com- (6) § 181.
panies already registered under 7 & 8 (c) § 181.
Vict. c. 110. (d) § 181.
(a) See § 190.
3R 2
980
ApPENDIX V.
given to cus-
tomers.
[22 Vict. vw 91,
§ 3.)
Exemption of
certain com-
panies from pay-
ment of fees.
[21 Vict. c. 14,
§ 32.]
Power to com-
pany to change
name.
(20 Vict. c. 47,
§ 114.]
Certificate of re-
gistration and
incorporation of
companies.
[20 Vict. ¢. 47,
§ 113.]
Certificate to be
evidence of com-
pliance with
act,
[20 Vict. c. 47,
§ 115.)
Vesting of pro-
perty in com-
pany.
Registration
not to affect ob-
ligations incurred
previously
thereto.
[20 Vict. ¢. 47,
§ 116, and 21
Vict. c. 49,
§ 8.]
; THE COMPANIES act, 1862.
and partnership firm who have a banking account with the company ;
and such notice shall be given either by delivering the same to such
person or firm, or leaving the same or putting the same into the post
addressed to him or them at such address as shall have been last com-
municated or otherwise become known as his or their address to or
by the company: and, in case the company omits to give any such
notice as is hereinbefore required to be given, then as between the com-
pany and the person or persons only who are for the time being in-
terested in the account in respect of which such notice ought to have
been given, and so far as respects such account and all variations thereof
down to the time at which such notice shall be given, but not further
or otherwise, the certificate of registration with limited liability shall
have no operation (e).
189. No fees shall be charged in‘ respect of the registration in pur-
suance of this part of this act of any company in cases where such com-
pany is not registered as a limited company, or where previously to its
being registered as a limited company the liability of the shareholders was
limited by some other act of Parliament or by letters patent.
190. Any company authorised by this part of this act to register with
limited liability shall, for the purpose of obtaining registration with limited
liability, change its name, by adding thereto the word “limited.”
191. Upon compliance with the requisitions in this part of this act
contained with respect to registration, and upon payment of such fees, if
any, as are payable under the tables marked B. and C. in the first sche-
dule hereto, the registrar shall certify under his hand that the company
so applying for registration is incorporated as a company under this act,
and, in the case of a limited company, that it is limited ; and thereupon
such company shall be incorporated, and shall have perpetual succession
and a common seal, with power to hold lands ; and any banking company
in Scotland so incorporated shall be deemed and taken to be a bank incor-
porated, constituted, or established by or under act of Parliament (/).
192. A certificate of incorporation given at any time to any company
registered in pursuance of this part of this act shall be conclusive evidence
that all the requisitions herein contained in respect of registration under
this act have been complied with, and that the company is authorised to
be registered under this act as a limited or unlimited company (g), as the
case may be ; and the date of incorporation mentioned in such certificate
shall be deemed to be the date at which the company is incorporated
under this act (h).
193. All such property, real and personal, including all interests and
rights in, to, and out of property, real and personal, and including obliga-
tions, and things in action, as may belong to or be vested in the company
at the date of its registration under this act, shall on registration pass to
and vest in the company as incorporated under this act for all the estate
and interest of the company therein (2).
194. The registration in pursuance of this part of this act of any com-
pany shall not affect or prejudice the liability of such company to have
enforced against it, or its right to enforce, any debt or obligation incurred,
(e) § 182. See, also, 42 & 43 Vict.c. Ir. 94, and ante, p. 112, note (J).
76, § 6. (k) Compare § 188; and see as to the
(f) See § 18, ante, p. 111. certificate, ante, p. 111.
(g) These words are not in § 18. See (i) See ante, p. 263, note (c).
Ennis v. West Clare Rail. Co., 3 L. R.
25 & 26 vict. cap. 89.—PART VII, REGISTRATION, ETC. 981
or any contract entered into, by, to, with, or on behalf of such company _ APPENDIX Vv.
previously to such registration (/). ea
195. All such actions, suits, and other legal proceedings as may at the Continuation of
time of the registration of any company registered i in pursuance of tliis existing actions
part of this act have been commenced by or against such company, or the 84 suits.
public officer or any member thereof, may "be continued in the same [20 Vict. e. 47,
manner as if such registration had not taken place ; nevertheless execu- ca oe ue
tion shall not issue against the effects of any individual member of such g 10,]
company upon any judgment, decree, or order obtained in any action,
suit, or proceeding so commenced as aforesaid ; but in the event of the
property and effects of the company being insuflicient to satisfy such
judgment, decree, or order, an order may be obtained for winding up the
company (1).
196. When a company is registered under this act in pursuance of this Effect of regis-
part thereof, all provisions contained in any act of Parliament, deed of tation.
settlement, contract of co-partnery, cost-book regulations, letters patent, [21 Vict. c. 14,
or other instrument constituting or regulating the company, including, 33.]
in the case of a company registered as a company limited by guarantee,
the resolution declaring the amount of the guarantee, shall be deemed to
be conditions and regulations of the company, in the same manner and
with the same incidents as if they were contained in a registered memo-
randum of association and articles of association ; and all the provisions
of this act shall apply to such company and the members, contributories,
and creditors thereof, in the same manner in all respects as if it had been
formed under this act, subject to the provisions following; (that is to
say),
(1.) That table A. in the first schedule to this act shall not, unless
adopted by special resolution, apply to any company registered
under this act in pursuance of this part thereof :
(2.) That the provisions of this act relating to the numbering of
shares (m) shall not apply to any joint-stock company whose
shares are not numbered :
(3.) That no company shall have power to alter any provision con-
tained in any act of Parliament relating to the company :
(4.) That no company shall have power, without the sanction of the
Board of Trade, to alter any provision contained in any letters
patent relating to the company :
(5.) That in the event of the company being wound up, every person
shall be a contributory, in respect of the debts and liabilities of
the company contracted prior to registration, who is liable, at
law or in equity, to pay or contribute to the payment of any
debt or liability of the company contracted prior to registration,
or to pay or contribute to the payment of any sum, for the
adjustment of the rights of the members amongst themselves in
respect of any such debt or liahility ; or to pay or contribute to
the payment of the costs, charges, and expenses of winding up
the company, so far as relates to such debts or liabilities as
aforesaid ; and every such contributory shall be liable to con-
tribute to the assets of the company, in the course of the winding
up, all sums due from him in respect of any such liability as
aforesaid ; and in the event of the death, bankruptcy, or insol-
() See ante, p. 127. (m) § 22,
(2) See ante, pp, 262, 263.
982
AppEnpDix V.
Power of court
to restrain fur-
ther proceedings.
[20 Vict. c. 47,
§ 84.]
Order for wind-
ing up company.
[20 Vict. v. 47,
§ 73.]
Winding up of
unregistered
companies,
11 & 12 Vict.
ec. 45, §§ 1—3.]
THE COMPANIES ACT, 1862.
vency of any such contributory as last aforesaid, or marriage of
any such contributory being a female, the provisions herein-
before contained with respect to the representatives, heirs, and
devisees of deceased contributories, and with reference to the
assignees of bankrupt or insolvent contributories, and to the
husbands of married contributories, shall apply (n) :
(6.) That nothing herein contained shall authorise any company to
alter any such provisions contained in any deed of settlement,
contract of co-partnery, cost-book regulations, letters patent, or
other instrument constituting or regulating the company, as
would, if such company had been originally formed under this
act, have been contained in the memorandum of association, and
are not authorised to be altered by this act :
But nothing herein contained shall derogate from any power of altering its
constitution or regulations which may be vested in any company register-
ing under this act in pursuance of this part thereof by virtue of any act of
Parliament, deed of settlement, contract of co-partnery, letters patent, or
other instrument constituting or regulating the company (0).
197. The Court may, at any time after the presentation of a petition
for winding up a company registered in pursuance of this part of this act,
and before making an order for winding up the company, upon the appli-
cation by motion of any creditor of the company, restrain further proceed-
ings in any action, suit, or legal proceeding against any contributory of
the company as well as against the company as hereinbefore provided,
upon such terms as the Court thinks fit ().
198. Where an order has been made for winding up a company regis-
tered in pursuance of this part of the act, in addition to the provisions
hereinbefore contained (q); it is hereby further provided that no suit,
action, or other legal proceeding shall be commenced or proceeded with
against any contributory of the company in respect of any debt of the
company except with the leave of the Court, and subject to such terms as
the Court may impose (r).
PART VIII.
APPLICATION OF ACT TO UNREGISTERED COMPANIES.
199. Subject as hereinafter mentioned, any partnership, association, or
company, except railway companies incorporated by act of Parliament (s),
consisting of more than seven members, and not registered under this act,
and hereinafter included under the term unregistered company (t), may be
(n) See §§ 74—78, 105, 106, 200, and ation, see §§ 50 and 176.
ante, pp. 751 et seg.; pp. 846 et seg., (p) See §§ 85, 195, 196, and also
and 859 ; and as to Industrial and Pro- § 201, ante, pp. 672 et seg., and 819.
vident Societies, ante, p. 916. (g) See §§ 87 and 196.
(0) As to the power of a company re- (r) See §§ 195 and 202 ; and see ante,
gistered under this act to alter its memo- pp. 682, 683.
randum of association, see § 12; and as (3) See ante, p. 617.
to its power to alter its articles of associ- (t) This definition includes companies
95 & 26 vict. cap. 89.—PART VIII. UNREGISTERED COMPANIES. 983
wound up iinder this act ; and all the provisions of this act with respect to APPENDIX V.
winding up shall apply to such company, with the following exceptions” ——~SCS
and additions (w).
(1.) An unregistered company shall, for the purpose of determining
the Court having jurisdiction in the matter of the winding-up,
be deemed to be registered in that part of the United Kingdom
where its principal place of business is situate ; or, if it has a
principal place of business situate in more than one part of the
United Kingdom, then in each part of the United Kingdom
where it has a principal place of business ; moreover the prin-
cipal place of business of an unregistered company, or (where it
has a principal place of business situate in more than one part
of the United Kingdom) such one of its principal places of
business as is situate in that part of the United Kingdom in
which proceedings are being instituted, shall for all the purposes
of the winding up of such company be deemed to be the regis-
tered office of the company :
(2.) No unregistered company shall be wound up under this act
voluntarily or subject to the supervision of the Court (<) :
(3.) The circumstances under which an unregistered company may
be wound up are as follows (y) : {that is to say,)
(a.) Whenever the company is dissolved, or has ceased to
carry on business, or is carrying on business only for the
purpose of winding up its affairs ;
(b.) Whenever the company is unable to pay its debts ;
(c.) Whenever the Court is of opinion that it is just and
equitable that the company should be wound up:
(4.) An unregistered company shall, for the purposes of this act, be Me Vict. c. 47,
deemed to be unable to pay its debts (2), s 5 88, ot ie
(a.) Whenever a creditor to whom the company is indebted, § 51 =
at law or in equity, by assignment or otherwise, in a
sum exceeding fifty pounds then due, has served on the
company, by leaving the same at the principal place of
business of the company, or by delivering to the secre-
tary or some director or principal officer of the company,
or by otherwise serving the same in such manner as the
Court may approve or direct, a demand under his hand
requiring the company to pay the sum so due, and the
company has for the space of three weeks succeeding the
service of such demand neglected to pay such sum, or to
secure or compound for the same to the satisfaction of
the creditor :
(b.) Whenever any action, suit, or other proceeding has been
instituted against any member of the company for any
debt or demand due, or claimed to be due, from the
company, or from him in his character of member of
the company, and notice in writing of the institution of
registered under the acts of 1856—1858 ; Societies, wnte, pp. 916 ct seq.
but see as to such companies, supra, §§ (y) See ante, pp. 628 et seg.
176, 177, and ante, p. 617. (z) See, as to registered companies, $$
(wu) See ante, p. 617. 79, 80, and ante, p. 628.
(x) See, as to Industrial and Provident
984
Apprnpix V.
Who to be
deemed con-
tributories in the
event of company
being wound up.
[11 & 12 Vict.
e. 45, §3.]
Power of court
to restrain
THE COMPANIES ACT, 1862.
such action, suit, or other legal proceeding having been
served upon the company by leaving the same at the
principal place of business of the company, or by de-
livering it to the secretary, or some director, manager,
or principal officer of the company, or by otherwise
serving the same in such manner as the Court may
approve or direct, the company has not within ten days
after service of such notice paid, secured, or compounded
for such debt or demand, or procured such action, suit,
or other legal proceeding to be stayed, or indemnified
the defendant to his reasonable satisfaction against such
action, suit, or other legal proceeding, and against all
costs, darmages, and expenses to be incurred by him by
reason of the same:
(c.) Whenever, in England or Ireland, execution or other pro-
cess issued on a judgment, decree, or order obtained in
any court in favour of any creditor in any proceeding at
law or in equity, instituted by such creditor against the
company, or any member thereof as such, or against any
person authorised to be sued as nominal defendant on
behalf of the company, is returned unsatisfied :
(d.) Whenever, in the case of an unregistered company engaged
in working mines within and subject to the jurisdiction
of the Stannaries, a customary decree or order absolute
for the sale of the machinery, materials, and effects of
such mine has been made in a creditor’s suit in the court
of the vice-warden :
(e.) Whenever, in Scotland, the inducie of a charge for pay-
ment on an extract decree, or an extract registered bond
or an extract registered protest, have expired without
payment being made:
(f.) Whenever it is otherwise proved to the satisfaction of
the Court that the company is unable to pay its debts.
200. In the event of an unregistered company being wound up every
person shall be deemed to be a contributory who is liable, at law or in
equity, to pay or contribute to the payment of any debt or liability of the
company, or to pay or contribute to the payment of any sum for the ad-
justment of the rights of the members amongst themselves, or to pay or
contribute to the payment of the costs, charges, and expenses of winding
up the company ; and every such contributory shall be liable to contribute
to the assets of the company in the course of the winding up all sums due
from him in respect of any such liability as aforesaid ; but in the event
of the death, bankruptcy, or insolvency of any contributory, or marriage
of any female contributory, the provisions hereinbefore contained with
respect to the personal representatives, heirs, and devisees of a deceased
contributory, and to the assignees of a bankrupt or insolvent contributory,
and to the husband of married contributories, shall apply (a).
201. The Court may, at any time after the presentation of a petition
for winding up an unregistered company, and before making an order for
winding up the company, upon the application of any creditor of the com-
(a) See §§ 74—78, and 105, 106, 857; and as to Industrial and Provident
§ 196, cl. 5, and ante, pp. 752, 819, Societies, ante, p. 916.
25 & 26 vicr. cap. 89.—PART VIII. UNREGISTERED COMPANIES. 985
pany, restrain further proceedings in any action, suit, or proceeding against Apprnpix V.
any contributory of the company, or against the company as hereinbefore fasthen*vvo.
provided (6), upon such terms as the Court thinks fit. ceainad
202. Where an order has been made for winding up an unregistered [20 Vict. v. 47
company, in addition to the provisions hereinbefore contained in the case g 84.] ,
of companies formed under this act (c), it is hereby further provided that pect of order
no suit, action, or other legal proceeding shall be commenced or proceeded for winding up
with against any contributory of the company in respect of any debt of company.
the company, except with the leave of the Court, and subject to such [20 Vict. c. 47,
terms as the Court may impose. § 73.]
203. If any unregistered company has no power to sue and be sued in Property may be
a common name, or if for any reason it appears expedient, the Court may vested in official
by the order made for winding up such company, or by any subsequent liquidators, &e.
order, direct that all such property, real, and personal, including all
interest, claims, and rights into and out of property, real and personal,
and including things in action, as may belong to or be vested in the com-
pany, or to or in any person or persons on trust for or on behalf of the
company, or any part of such property, is to vest in the official liquidator
or official liquidators (d) by his or their official name or names ; and there-
upon the same or such part thereof as may be specified in the order shall
vest accordingly ; and the official liquidator or official liquidators may, in
his or their official name or names, or in such name or names and after
giving such indemnity as the Court directs, bring or defend any actions,
suits, or other legal proceeding relating to any property vested in him or
them, or any actions, suits, or other legal proceedings necessary to be
brought or defended for the purpose, of effectually winding up the company
and recovering the property thereof (e).
204, The provisions made by this part of the act with respect to un- Provisions in
registered companies shall be deemed to be made in addition to and not in this part of act
restriction of any provisions hereinbefore contained with respect to winding cumulative.
up companies by the Court ; and the Court or official liquidator may, in
addition to anything contained in this part of the act, exercise any powers
or do any act in the case of unregistered companies which might be exer-
cised or done by it or him in winding up companies formed under this
act; but an unregistered company shall not, except in the event of its
being wound up, be deemed to be a company under this act, and then
only to the extent provided by this part of this act (f).
[11 & 12 Vict.
c. 45, § 29.]
(b) See, also, §§ 85, 197, 199, 204; Q.B. D. 683.
and ante, p. 682. (e) See ante, pp. 705 et seg., &c.
(c) See §§ 87, 199, 204; and ante, p. (f) As to the scope of this section,
682. see Rudow v. Great Britain Mutual
(d) This does not render the liquidators Life Ass. Society, 17 Ch. D. 600.
personally liable, Graham v. Edge, 20
986
Repeal of acts.
Saving clause as
to repeal.
Saving of exist-
ing proceedings
for winding up.
Saving of convey-
ances, &e.
Compulsory re-
gistration of
certain com-
panies.
APPENDIX V.
THE COMPANIES AcT, 1862.
PART IX.
REPEAL OF ACTS, AND TEMPORARY PROVISIONS,
205. After the commencement of this act there shall be repealed the
several acts specified in the first part of the third schedule hereto, with this
qualification, that so much of the said acts as is set forth in the second
part of the said third schedule shall be hereby re-enacted and continue in
force as if unrepealed (q).
206. No repeal hereby enacted shall affect ()),
(1.) Anything duly done under any acts hereby repealed :
(2.) The incorporation of any company registered under any act
hereby repealed :
(3.) Any right or privilege acquired or liability incurred under any
act hereby repealed :
[(4.) Any penalty, forfeiture, or other punishment incurred in respect
of any offence against any act hereby repealed : (¢)]
Table B. in the schedule annexed to the Joint-stock companies
act, 1856, or any part thereof, so far as the same applies to any
company existing at the time of the commencement of this
act (k).
[207. Related to the winding up of companies under an order made or
a resolution passed before the act came into operation (J).]
208. Where previously to the commencement of this act any convey-
ance, mortgage, or other deed has been made in pursuance of any act
hereby repealed, such deed shall be of the same force as if this act had not
passed, and for the purposes of such deed such repealed act shall be deemed
to remain in full force.
209. Every insurance company completely (m) registered under the act
passed in the eighth year of the reign of her present Majesty, chapter one
hundred and ten, intituled “ An act for the registration, incorporation,
and regulation of joint-stock companies,” shall on or before the second day
of November, one thousand eight hundred and sixty-two, and every other
company required by any act hereby repealed to register under the said
joint-stock companies acts, or one of such acts, and which has not so
registered, shall, on or before the expiration of the thirty-first day from
the commencement of this act, register itself as a company under this
act, in manner and subject to the regulations hereinbefore contained (rn),
with this exception, that no company completely registered under the said
act of the eighth year of the reign of her present Majesty shall be required
to deliver to the registrar a copy of its deed of settlement ; and for the
(5.)
(g) See §§ 170—173.
(h) See ante, p. 129.
visionally registered under § 4, nor
simply registered under § 58. See ante,
(i) Sub-section 4 is repealed by 38 &
39 Vict. c. 66.
(k) See § 176.
(1) See West Silver Bank Mining Co.,
32 Beay. 226 ; Fire Annthilator Co., ib.
568. This section is repealed by 38 & 39
Vict. c. 66.
(m) Ie., under § 7, et seg. ; not pro-
p. 114.
(n) See § 208. § 180 enables these
companies to register with limited lia-
bility. See ante, pp. 114, 127. § 38
applies to companies registered under
this section; Ramsay’s case, 3 Ch. D.
388.
25 & 26 vict. cap. 89.—PART IX. REPEAL OF ACTS, BTC. 987
purpose of enabling such insurance companies as are mentioned in this APPENDIX Vv.
section to register under this act, this act shall be deemed tocome into ~
operation immediately on the passing thereof ; nevertheless the registration
of such companies shall not have any effect until the time of the commence-
ment of this act. No fees shall be charged in respect of the registration
of any company required to register by this section.
210. If any company required by the last section to register under this Penalty on com-
act makes default in complying with the provisions thereof, then, from pany not regis-
and after the day upon which such company is required to register under *™!8-
this act, until the day on which such company is registered under this act [21 Vict. v. 14,
{which it is empowered to do at any time), the following consequences
shall ensue ; (that is to say,)
(1.) The company shall be incapable of suing either at law or in
equity, but shall not be incapable of being made a defendant to
a suit either at law or in equity (0) :
(2.) No dividend shall be payable to any shareholder in such
company :
(8.) Each director or manager of the company shall, for each day
during which the company so being in default carries on busi-
ness incur a penalty not exceeding five pounds, and such penalty
may be recovered by any person, whether a shareholder or not
in the company, and be applied by him to his own use:
Nevertheless, such default shall not render the company so being in default
illegal, nor subject it to any penalty or disability, other than as specified
in this section ; and registration under this act shall cancel any penalty
or forfeiture, and put an end to any disability which any company may
have incurred under any act hereby repealed by reason of its not having
registered under the Joint-stock companies acts, 1856, 1857, or one of
them.
[211 and 212. Conferred power on the Board of Trade to change the Temporary power
registered office of any company from any one part of the United Kingdom Be ras ened
of Great Britain and Ireland, to any other part thereof, upon application office,
made within one year from the passing of the act (p).]
(0) See ante, p. 127.
(p) §§ 211 and 212 are repealed by 38 & 39 Vict. v. 66.
988
APPENDIX Y.
First Schedule.
Table A.
THE COMPANIES AcT, 1862.
FIRST SCHEDULE.
TABLE A. (see §§ 14, 15) (q).
REGULATIONS FOR MANAGEMENT OF A COMPANY LIMITED BY SHARES (r).
Shares (s).
(1.) If several persons are registered as joint holders of any share,
any one of such persons may give effectual receipts for any
dividend payable in respect of such share,
(2.) Every member shall, on payment of one shilling, or such less
sum as the company in general meeting may prescribe, be
entitled to a certificate, under the common seal of the company,
specifying the share or shares held by him, and the amount paid
up thereon (i).
(8.) If such certificate is worn out or lost, it may be renewed, on
payment of one shilling, or such less sum as the company im
general meeting may prescribe.
Calls on Shares (u).
(4.) The directors may from time to time make such calls upon the
members in respect of all monies unpaid on their shares as they
think fit, provided that twenty-one days’ notice at least is given
of each call (a) ; and each member shall be liable to pay the
amount of calls so made to the persons and at the times and
places appointed by the directors (y).
(5.) A call shall be deemed to have been made at the time when the
resolution of the directors authorising such call was passed.
(6.) If the call payable in respect of any share is not paid before or
on the day appointed for payment thereof, the holder for the
time being of such share shall be liable to pay interest for the
same at the rate of five pounds per cent. per annum from the
day appointed for the payment thereof to the time of the actual
payment,
(q) This table corresponds to table B.
in the act of 1856. The two are sub-
stantially alike in most respects. The
regulations in the above table apply to
companies formed under this act, and
limited by shares, unless specially ex-
cluded. (See § 15.) But they do not,
unless specially adopted, apply to com-
panies existing before the passing of the
act, and registered under it: § 196: see
also § 176.
The Board of Trade has power to alter
these regulations (see § 71); and every
company to which they apply can alter
them by a special resolution. See § 50.
(vr) As to the construction of com-
panies’ regulations, see ante, pp. 172 et
seq.
(s) Shares are personal estate, and
must be numbered. See § 22 of the act.
See ante, p. 451.
(t) See § 31 of the act.
(u) See, on this subject, ante, pp. 407,
et seq.
(a) See, as to giving notices, Nos. 95
—97; and see ante, pp. 407, et seg.
(y) § 16 makes calls specialty debts.
25 & 26 vict. cap. 89.—scHEDULE I. 989
(7.) The directors may, if they think fit, receive from any member Apprnpix V.
willing to advance the same all or any part of the moniesdue™ 47,4
upon the shares held by him beyond the sums actually called
for; and upon the monies so paid in advance, or so much
thereof as from time to time exceeds the amount of the calls
then made upon the shares in respect of which such advance
bas been made, the company may pay interest at such rate as
the member paying such sum in advance and the directors agree
upon (2).
Table A.
Transfers of shares (a).
(8.) The instrument of transfer of any share in the company shall be
executed both by the transferor and transferee; and the transferor
shall be deemed to remain a holder of such share until the
name of the transferee is entered in the register book in respect
thereof.
(9.) Shares in the company shall be transferred in the following
form:—I A. B. of , in consideration of the sum of
pounds paid to me by C. D. of , do hereby
transfer to the said C. D. the share [or shares], numbered ;
standing in my name in the books of the company, to
hold unto the said C. D., his executors, administrators, and
assigns, subject to the several conditions on which I held the
same at the time of the execution hereof ; and IJ, the said C. D.,
do hereby agree to take the said share [or shares] subject to
the same conditions. As witness our hands, the day
of F
(10.) The company may decline to register any transfer of shares
made by a member who is indebted to them (6).
(11.) The transfer books shall be closed during the fourteen days
immediately preceding the ordinary general meeting in each
year.
Transmission of shares.
(12.) The executors or administrators of a deceased member shall be
the only persons recognised by the company as having any title
to his share.
(13.) Any person becoming entitled to a share in consequence of the
death, bankruptcy, or insolvency of any member, or in conse-
quence of the marriage of any female member, may be regis-
tered as a member upon such evidence being produced as may
from time to time be required by the company.
(14.) Any person who has become entitled to a share in consequence
of the death, bankruptcy, or insolvency of any member, or in con-
sequence of the marriage of any female member, may, instead of
(2) Interest is payable though no profits shares, see ante, pp. 464 et seq., and as
have been earned, Dale v. Martin, 11 to sales, see pp. 487 ef seg.
L. R., Ir. 371, affirming 9 ib. 498. (6) See ante, pp. 465, 468, 470 and
(a) See § 22. As to the transfer of pp. 883 et seq.
990
APPENDIX V.
Table A.
THE COMPANIES Act, 1862.
being registered himself, elect to have some person to be named
by him registered as a transferee of such share (c).
(15.) The person so becoming entitled shall testify such election by
executing to his nominee an instrument of transfer of such
share.
(16.) The instrument of transfer shall be presented to the company,
accompanied with such evidence as the directors may require to
prove the title of the transferor ; and thereupon the company
shall register the transferee as a member.
Forfeiture of shares (d).
(17.) If any member fails to pay any call on the day appointed for
payment thereof, the directors may, at any time thereafter,
during such time as the call remains unpaid,-serve a notice on
him (e), requiring him to pay such call, together with interest
and any expenses that may have accrued by reason of such non-
payment.
(18.) The notice shall name a further day, on or before which such
call, and all interest and expenses that have accrued by reason
of such non-payment, are to be paid. It shall also name the
place where payment is to be made (the place so named being
either the registered office of the company or some other place
at which calls of the company are usually made payable). The
notice shall also state that, in the event of non-payment at or
before the time and at the place appointed, the shares in respect
of which such call was made will be liable to be forfeited.
(19.) If the requisitions of any such notice as aforesaid are not
complied with, any share in respect of which such notice has
been given may, at any time thereafter, before payment of all
calls, interest, and expenses due in respect thereof has been
made, be forfeited by a resolution of the directors to that effect.
(20.) Any share s0 forfeited shall be deemed to he the property of
the company, and may be disposed of in such manner as the
company in general meeting thinks fit (f ).
(21.) Any member whose shares have been forfeited shall notwith-
standing be liable to pay to the company all calls owing upon
such shares at the time of the forfeiture (9).
(22.) A statutory declaration in writing, that the call in respect of a
share was made and notice thereof given, and that default in
payment of the call was made, and that the forfeiture of the
share was made by a resolution of the directors to that effect,
shall be sufficient evidence of the facts therein stated, as against
all persons entitled to such share ; and such declaration and the
receipt of the company for the price of such share shall constitute
a good title to such share ; and a certificate of proprietorship
(c) See, also, as to executors and ad- (e) The service may be personal, or by
ministrators, § 24 of the act, ante, pp. post. See Nos. 95—97.
536 et seg., and as to trustees in bank- (f) The disposal of forfeited shares is
ruptcy, pp. 551 et seg. special business. See Nos. 35, 36,
(d) See on this subject, ante, pp. 580 (9) See ante, p. 425.
et seg., and pp. 842 et seq.
25 & 26 vict. cap. 89.—scHEDULE I. 991
shall be delivered to a purchaser, and thereupon he shall be Apprxnprx V.
deemed the holder of such share discharged from all calls due Table Ae
prior to such purchase ; and he shall not be bound to see to the
‘application of the purchase money, nor shall his title to such
share be affected by any irregularity in the proceedings in
reference to such sale.
Conversion of shares into stock.
(23.) The directors may, with the sanction of the company previously
given in general meeting, convert any paid-up shares into
stock (h).
(24.) When any shares have been converted into stock, the several
holders of such stock may thenceforth transfer their respective
interests therein, or any part of such interests, in the same manner
and subject to the same regulations as and subject to which any
shares in the capital of the company may be transferred, or as
near thereto as circumstances admit (7).
(25.) The several holders of stock shall be entitled to participate in
the dividends and profits of the company according to the
amount of their respective interests in such stock ; and such
interest shall, in proportion to the amount thereof, confer on the
holders thereof respectively the same privileges and advantages
for the purpose of voting at meetings of the company, and for
other purposes, as would have been conferred by shares of equal
amount in the capital of the company ; but so that none of such
privileges or advantages, except the participation in the divi-
dends and profits of the company, shall be conferred by any such
aliquot part of consolidated stock as would not, if existing in
shares, have conferred such privileges or advantages (k).
Inerease in capital (1).
(26.) The directors may, with the sanction of a special resolution of
the company previously given in general meeting, increase its
capital by the issue of new shares ; such aggregate increase to be
of such amount, and to be divided into shares of such respective
amounts, as the company in general meeting directs, or, if no
direction is given, as the directors think expedient.
(27.) Subject to any direction to the contrary that may be given by
the meeting that sanctions the increase of capital, all new shares
shall be offered to the members in proportion to the existing
shares held by them ; and such offer shall be made by notice
specifying the number of shares to which the member is entitled,
and limiting a time within which the offer, if not accepted, will
be deemed to be declined ; and after the expiration of such time,
or on the receipt of an intimation from the member to whom such
notice is given that he declines to accept the shares offered, the
(h) See the act, §§ 12, 28, 34, and 405.
ante, p. 405. (2) See. § 12 of the act, and ante, pp.
(i) See the act, § 29. 897 &c., 401.
(k) See § 29 of the act, and ante, p
992
APPENDIX V.
Table A.
THE COMPANIES AcT, 1862.
directors may dispose of the same in such manner as they think
most beneficial to the company.
(28.) Any capital raised by the creation of new shares shall be con-
sidered as part of the original capital, and shall be subject to the
same provisions with reference to the payment of calls, and the
forfeiture of shares on non-payment of calls, or otherwise, as if it
had been part of the original capital.
General meetings (m).
(29.) The first general meeting shall be held at such time, not being
more than six months after the registration of the company, and
at such place, as the directors may determine (n).
(30.) Subsequent general meetings shall be held at such time and
place as may be prescribed by the company in general meeting ;
and if no other time or place is prescribed, a general meeting
shall be held on the first Monday in February in every year, at
such place as may be determined by the directors.
(31.) The above-mentioned general meetings shall be called ordinary
meetings: all other general meetings shall be called extra-
ordinary (0).
(32.) The directors may, whenever they think fit, and they shall upon
a requisition made in writing by not less than one-fifth in number
of the members of the company, convene an extraordinary general
meeting.
(33.) Any requisition made by the members shall express the object
of the meeting proposed to be called, and shall be left at the
registered office of the company.
(34.) Upon the receipt of such requisition the directors shall forthwith
proceed to convene an extraordinary general meeting. If they
do not proceed to convene the same within twenty-one days from
the date of the requisition, the requisitionists, or any other
members amounting to the required number, may themselves
convene an extraordinary general meeting ( p).
Proceedings at general meetings (q).
(35.) Seven days’ notice at the least (7), specifying the place, the day,
and the hour of meeting, and in case of special business (s) the
general nature of such business, shall be given to the members in
manner hereinafter mentioned (é), or in such other manner, if
any, as may be prescribed by the company in general meeting ;
but the non-receipt of such notice by any member shall not invali-
date the proceedings at any general meeting (wu).
(36.) All business shall be deemed special that is transacted at an
extraordinary meeting, and all that is transacted at an ordinary
meeting, with the exception of sanctioning a dividend and the
(m) See § 49 of the act, and as to (q) See ante, pp. 304 et seg., 340.
meetings and the proceedings at them, (r) See § 52 of the act, and ante, pp.
ante, pp. 304 et seg., 340. 305, 306.
(n) Sec The Companies act, 1867, § 39. (s) See No. 36.
(0) See ante, p. 307. (t) See Nos. 95, 97.
(p) See § 52 of the act. (u) See ante, p. 304.
25 & 26 vict. cap. 89.—scHEDULE 1,
998
consideration of the accounts, balance-sheets, and the ordinary Appmnprx V.
report of the directors,
(37.) No business shall be transacted at any general meeting, except
the declaration of a dividend, unless a quorum of members is
present at the time when the meeting proceeds to business, and
such quorum shall be ascertained as follows; that is to say, if
the persons who have taken shares in the company (a) at the
time of the meeting do not exceed ten in number, the quorum
shall be five; if they exceed ten there shall be added to the
above quorum one for every five additional members up to fifty,
and one for every ten additional members after fifty, with this
limitation, that no quorum shall in any case exceed twenty (y).
(38.) If within one hour from the time appointed for the meeting a
quorum is not present, the meeting, if convened upon the requi-
sition of members, shall be dissolved: in any other case, it shall
stand adjourned to the same day in the next week, at the same
time and place; and if at such adjourned meeting a quorum is
not present, it shall be adjourned sine die.
(39.) The chairman (if any) of the board of directors shall preside as
chairman at every general meeting of the company (2).
(40.) If there is no such chairman, or if at any meeting he is not
present within fifteen minutes after the time appointed for
holding the meeting, the members present shall choose some one
of their number to be chairman (a).
(41.) The chairman may, with the consent of the meeting, adjourn
any meeting from time to time and from place to place, but no
business shall be transacted at any adjourned meeting other than
the business left unfinished at the meeting from which the
adjournment took place (0).
(42.) At any general meeting, unless a poll is demanded by at least
five members, a declaration hy the chairman that a resolution
has been carried, and an entry to that effect in the book of pro-
ceedings of the company (c), shall be sufficient evidence of the
fact, without proof of the number or proportion of the votes
recorded in favour of or against such resolution.
(48.) If a poll is demanded by five or more members it shall be taken
in such manner as the chairman directs, and the result of such
poll shall be deemed to be the resolution of the company in
general meeting. In the case of an equality of votes at any
general meeting the chairman shall be entitled to a second or
casting vote.
Votes of members (a).
(44.) Every member shall have one vote for every share up to ten :
he shall have an additional vote for every five shares beyond the
first ten shares up to one hundred, and an additional vote for
every ten shares beyond the first hundred shares (¢).
(x) This expression should apparently (a) See § 52 of the act.
be, ‘if the members of the company.” (b) See ante, p. 341.
(y) See, as to quorums, ante, pp. 155, (c) See, as to this, § 67 of the act.
299. (d) See ante, pp. 309 et seq.
(z) See § 52 of the act. (e) See § 52 of the act.
L.c. *3 8
Table A.
994 THE COMPANIES AcT, 1862.
APPENDIX V. (45.) If any member is a lunatic or idiot, he may vote by his com-
Table A. mittee, curator bonis, or other legal curator.
, (46.) If one or more persons are jointly entitled to a share or shares,
the member whose name stands first on the register of members
as one of the holders of such share or shares, and no other, shall
be entitled to vote in respect of the same. ,
(47.) No member shall be entitled to vote at any general meeting
unless all calls due from him have been paid, and no member
shall be entitled to vote in respect of any share that he has
acquired by transfer at any meeting held after the expiration of
three months from the registration of the company, unless he has
been possessed of the share in respect of which he claims to vote
for at least three months previously to the time of holding the
meeting at which he proposes to vote.
(48.) Votes may be given either personally or by proxy (f).
(49.) The instrument appointing a proxy shall be in writing, under
the hand of the appointor, or if such appointor is a corporation,
under their common seal, and shall be attested by one or more
witness or witnesses: no person shall be appointed a proxy who
is not a member of the company.
(50.) The instrument appointing a proxy shall be deposited at the
registered office of the company not less than seventy-two hours
before the time for holding the meeting at which the person named
in such instrument proposes to vote; but no instrument ap-
pointing a proxy shall be valid after the expiration of twelve
months from the date of its execution.
(51.) Any instrument appointing a proxy shall be in the following
form (g) :—
Company limited.
I of in the county of being a member of
the Company limited, and entitled to vote or
votes, hereby appoint of as my
proxy, to vote for me and on my behalf at the [ordinary or
extraordinary, as the case may be] general meeting of the com-
pany to be held on the day of , and at any
adjournment thereof [or at any meeting of the company that
may be held in the year :
As witness my hand, this day of
Signed by the said in the presence of
Directors (h).
(52.) The number of the directors, and the names of the first directors,
shall be determined by the subscribers of the memorandum of
association.
(53.) Until directors are appointed, the subscribers of the memoran-
dum of association shall be deemed to be directors (2).
(54.) The future remuneration of the directors, and their remunera-
tion for services performed previously to the first general meet-
ing, shall be determined by the company in general meeting.
(f) See ante, p. 309. (h) See ante, pp. 298, 336.
(g) This must be stamped. See ante, (t) See ante, p. 336.
p. 310.
25 & 26 vicr. car. 89.—scHEDULE 1. 995
Powers of directors (k). Appmnprx V.
(55.) The business of the company shall be managed by the Tales
directors, who may pay all expenses incurred in getting up
and registering the company, and may exercise all such powers
of the company as are not by the foregoing act, or by these
articles, required to be exercised by the company in general
meeting, subject nevertheless to any regulations of these
articles, to the provisions of the foregoing act, and to such
regulations, being not inconsistent with the aforesaid regula-
tions or provisions, as may be prescribed by the company
in general meeting ; but no regulation made by the company
in general meeting shall invalidate any prior act of the directors
which would have been valid if such regulation had not been
made (1). :
(56.) The continuing directors may act notwithstanding any vacancy
in their body. :
Disqualification of directors (m).
(57.) The office of director shall be vacated—
If he holds any other office or place of profit under the
company ;
If he becomes bankrupt or insolvent ;
If he is concerned in or participates in the profits of any
contract with the company ;
But the above rules shall be subject to the following excep-
tions : That no director shall vacate his office by reason of his
being a member of any company which has entered into con-
tracts with or done any work for the company of which he
is director ; nevertheless he shall not vote in respect of such
contract or work ; and if he does so vote his vote shall not be
counted,
Rotation of directors (ante, p. 337).
(58.) At the first ordinary meeting after the registration of the com-
pany the whole of the directors shall retire from office; and at
the first ordinary meeting in every subsequent year one-third of
the directors for the time being, or if their number is not a
multiple of three, then the number nearest to one-third, shall
retire from office.
(59.) The one-third or other nearest number to retire during the
first and second years ensuing the first ordinary meeting of the
company shall, unless the directors agree among themselves, be
determined by ballot: in every subsequent year the one-third
or other nearest number who have been longest in office shall
retire.
(60.) A retiring director shall be re-eligible.
(61.) The company at the general meeting at which any directors
retire in manner aforesaid shall fill up the vacated offices by
electing a like number of persons.
(k) See ante, pp. 155 et seg., 298 et (1) See infra, No. 71.
seq., pp. 377 et seg., and p. 596, &e. (m) See ante, pp. 300, 337.
3862
996
APPENDIX V.
Table A.
THE COMPANIES AcT, 1862.
(62.) If at any meeting at which an election of directors ought to
take place the places of the vacating directors are not filled up,
the meeting shall stand adjourned till the same day in the next
week, at the same time and place ; and if at such adjourned
meeting the places of the vacating directors are not filled up,
the vacating directors, or such of them as have not had their
places filled up, shall continue in office until the ordinary meet-
ing in the next year, and so on from time to time until their
places are filled up.
(63.) The company may from time to time, in general meeting, in-
crease or reduce the number of directors, and may also deter-
mine in what rotation such increased or reduced number is to
go out of office.
(64.) Any casual vacancy (m) occurring in the board of directors may
be filled up by the directors, but any person so chosen shall
retain his office so long only as the vacating director would
have retained the same if no vacancy had occurred.
(65.) The company, in general meeting, may, by a special resolu-
tion (0), remove any director before the expiration of his period
of office, and may by an ordinary resolution appoint another
person in his stead ; the person so appointed shall hold office
during such time only as the director in whose place he is
appointed would have held the same if he had not been re-
moved ().
Proceedings of directors (q).
(66.) The directors may meet together for the despatch of business,
adjourn, and otherwise regulate their meetings as they think fit,
and determine the quorum necessary for the transaction of busi-
ness: questions arising at any meeting shall be decided by a
majority of votes: in case of equality of votes the chairman
shall have a second or casting vote: a director may at any time
summon a meeting of the directors.
(67.) The directors may elect a chairman at their meetings, and
determine the period for which he is to hold office ; but if no
such chairman is elected, or if at any meeting the chairman is
not present at the time appointed for holding the same, the
directors present shall choose some one of their number to be
chairman of such meeting.
(68.) The directors may delegate any of their powers to committees
consisting of such member or members of their body as they
think fit : any committee so formed shall, in the exercise of the
powers so delegated, conform to any regulations that may be
imposed on them by the directors (r).
(69.) A committee may elect a chairman of their meetings: if no
such chairman is elected, or if he is not present at the time
(n) As to the meaning of the word (q) See ante, pp. 298 et seq., and as
“casual,” see York Tramways Co. v. to boards and quorums, ante, pp. 155,
Willows, 8 Q. B. D. p. 694; Munster 299, 828-9.
v. Cammell Co., 21 Ch. D. p. 187. (r) See ante, p. 338, and the refer-
(0) See the act, § 51. ences in the last note.
(p) Ante, pp. 302, 337.
25 & 26 vict. cap. 89.—scHEDULE I. 997
appointed for holding the same, the members present shall APPENDIX V.
choose one of their number to be chairman of such meeting. Table A.
(70.) A committee may meet and adjourn as they think proper:
questions arising at any meeting shall be determined by a
majority of votes of the members present ; and in case of an
equality of votes the chairman shall have a second or casting
vote.
(71.) All acts done by any meeting of the directors or of a committee
of directors, or by any person acting as a director, shall, not-
withstanding that it be afterwards discovered that there was
some defect in the appointment of any such directors or persons
acting as aforesaid, or that they or any of them were disqualified,
be as valid as if every such person had been duly appointed and
was qualified to be a director (s).
Dividends (t).
(72.) The directors may, with the sanction of the company in
general meeting, declare a dividend to be paid to the members
in proportion to their shares.
(73.) No dividend shall be payable except out of the profits arising
from the business of the company.
(74.) The directors may, before recommending any dividend, set
aside out of the profits of the company such sum as they think
proper as a reserved fund to meet contingencies, or for equalis-
ing dividends, or for repairing or maintaining the works con-
nected with the business of the company, or any part thereof ;
and the directors may invest the sum so set apart as a reserved
fund upon such securities as they may select.
(75.) The directors may deduct from the dividends payable to any
member all such sums of money as may be due from him to the
company on account of calls or otherwise.
(76.) Notice of any dividend that may have been declared shall be
given to each member in manner hereinafter mentioned (wv) ; and
all dividends unclaimed for three years after having been
declared may be forfeited by the directors for the benefit of
the company.
(77.) No dividend shall bear interest as against the company.
Accounts (x).
(78.) The directors shall cause true accounts to be kept,—
Of the stock in trade of the company ;
Of the sums of money received and expended by the company,
and the matter in respect of which such receipt and expen-
diture takes place ; and
Of the credits and liabilities of the company :
The books of account shall be kept at the registered office of
(s) See § 67 of the act, and ante, p. (a) See ante, pp. 489 et seg., and as
300. to accounts of banking companies, see
(t) See ante, pp. 429 et seq. 42 & 43 Vict. c. 76, § 7.
(uw) See Nos. 95—97.
998 THE COMPANIES ACT, 1862.
AppEnpix V. the company, and, subject to any reasonable restrictions as to
oa the time and manner of inspecting the same that may-be im-
posed by the company in general meeting, shall be open to the
inspection of the members during the hours of business (y).
(79.) Once at the least in every year the directors shall lay before
the company in general meeting a statement of the income and
expenditure for the past year, made up to a date not more than
three months before such meeting.
(80.) The statement so made shall show, arranged under the most
convenient heads, the amount of gross income, distinguishing
the several sources from which it has been derived, and the
amount of gross expenditure, distinguishing the expense of the
establishment, salaries, and other like matters; every item of
expenditure fairly chargeable against the year’s income shall be
brought into account, so that a just balance of profit and loss
may be laid before the meeting ; and in cases where any item of
expenditure which may in fairness be distributed over several
years has been incurred in any one year, the whole amount of
such item shall be stated, with the addition of the reasons why
only a portion of such expenditure is charged against the income
of the year.
(81,.) A balance-sheet shall be made out in every year, and laid
before the company in general meeting ; and such balance-
sheet shall contain a summary of the property and liabilities
of the company arranged under the heads appearing in the
form annexed to this table, or as near thereto as circumstances
admit (2).
(82.) A printed copy of such balance-sheet shall, seven days
previously to such meeting, be served on every member in
the manner in which notices are hereinafter directed to be
served (a).
Table A.
Audit (b).
(83.) Once at the least in every year the accounts of the company
shall be examined, and the correctness of the balance-sheet
ascertained, by one or more auditor or auditors.
(84.) The first auditors shall be appointed by the directors : subse-
quent auditors shall be appointed by the company in general
meeting.
(85.) If one auditor only is appointed, all the provisions herein con-
tained relating to auditors shall apply to him.
(86.) The auditors may be members of the company ; but no person
is eligible as an auditor who is interested otherwise than as a
member in any transaction of the company ; and no director or
other officer of the company is eligible during his continuance
in office. ;
(87.) The election of auditors shall be made by the company at their
ordinary meeting in each year.
(y) See ante, pp. 489 et seq. (a) See No. 95.
(z) See form at end of this table, (b) See ante, pp. 448, 4.
nfra, p. 1000.
25 & 26 vicr. cap. 89.—sScHEDULE I. 999
(88.) The remuneration of the first auditors shall be fixed by the Aprsnprx V.
directors ; that of subsequent auditors shall be fixed by the alee
company in general meeting. coe ie
(89.) Any auditor shall be re-eligible on his quitting office.
(90.) If any casual vacancy occurs in the office of any auditor ap-
pointed by the company, the directors shall forthwith call an
extraordinary general meeting for the purpose of supplying the
same.
(91.) If no election of auditors is made in manner aforesaid, the Board
of Trade may, on the application of not less than five members
of the company, appoint an auditor for the current year, and
fix the remuneration to be paid to him by the company for his
services.
(92.) Every auditor shall be supplied with a copy of the balance-
sheet, and it shall be his duty to examine the same, with the
accounts and vouchers relating thereto.
(93.) Every auditor shall have a list delivered to him of all books
kept by the company, and shall at all reasonable times have
access to the books and accounts of the company: he may, at
the expense of the company, employ accountants or other persons
to assist him in investigating such accounts, and he may in rela-
tion to such accounts examine the directors or any other officer
of the company.
(94.) The auditors shall make a report to the members upon the
balance-sheet and accounts ; and in every such report they shall
state whether, in their opinion, the balance-sheet is a full and
fair balance-sheet, containing the particulars required by these
regulations, and properly drawn up so as to exhibit a true and
correct view of the state of the company’s affairs, and, in case they
have called for explanations or information from the directors,
whether such explanations or information have been given by
the directors, and whether they have been satisfactory ; and
such report shall be read, together with the report of the
directors, at the ordinary meeting.
Notices (c).
(95.) A notice may be served by the company upon any member
either personally, or by sending it through the post in a pre-
paid letter addressed to such member at his registered place of
abode.
(96.) All notices directed to be given to the members shall, with
respect to any share to which persons are jointly entitled, be
given to whichever of such persons is named first-in the register
of members ; and notice so given shall be sufficient notice to all
the holders of such share.
(97.) Any notice, if served by post, shall be deemed to have been
served at the time when the letter containing the same would
be delivered in the ordinary course of the post ; and in proving
such service it shall be sufficient to prove that the letter con-
taining the notices was properly addressed and put into the
post-office.
(c) These clauses only apply to notices business, see London and Staffordshire
in the ordinary course of a company’s ire Ins. Co., 24 Ch. D. 149.
THE COMPANIES ACT, 1862.
1000
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25 & 26 vicr. cap. 89.—scHEDULE 1. 100%
Apprnpix V..
TABLE B. (See § 17.)
Table By
TABLE OF FEES TO BE PAID TO THE REGISTRAR OF JOINT-STOCK COM-
PANIES BY A COMPANY HAVING A CAPITAL DIVIDED INTO SHARES.
£8. ad.
For registration of a company whose nominal capital does not
exceed 2,000/., a fee of . ‘ 4 2 0 0
For registration of a company whose nominal capital exceeds
2,000/., the above fee of 2/., with the following additional
fees, regntated according to the amount of nominal capital ;
(that is to say,) £s d.
For every 1,000/. of nominal capital, or part
of 1,0001., after the first 2,0001., = to
5 0001, : 1 0 0
For every 1,000. of nominal capital, or part
of 1 ,0002., after the first 5,0001., ie to
100, 0002. . : 0 5 0
For every 1,0001. of nominal capital, or part
of 1 ,0001., after the first 100,0000. - O 1 0
For registration of any increase of capital made after the first
registration of the company, the same fees per 1,0002., or part
of 1,0001., as would have been payable if such increased
capital had formed part of the original capital at the time of
registration.
Provided that no company shall be liable to pay in respect of
nominal capital on registration, or afterwards, any greater
amount of fees than 50/., taking into account in the case of
fees payable on an increase of capital after registration the
fees paid on registration.
For registration of any existing company, except such companies
as are by this act exempted from payment of fees in respect
of registration under this act (¢), the same fee as is charged
for registering a new company.
For registering any document hereby required or authorised to
be registered, other than the memorandum of association . 0 5 O
For making a record of any fact hereby authorised or required
to be recorded by the registrar of companies, a fee of . . 0 5 0
TABLE C. (See § 17.)
TABLE OF FEES TO BE PAID TO THE REGISTRAR OF JOINT-STOCK COM- Table C..
, PANIES BY A COMPANY NOT HAVING A CAPITAL DIVIDED INTO SHARES.
£s ad.
For registration of a company whose number of members as
stated in the articles of association does not exceed 20 » 2 0 0
For registration of a company whose number of members, as
stated in the articles of association, exceeds 20, but does not
exceed 100 . ‘ . : : é ; ; - 56 0 0
(e) See §§ 189 and 209. 51 Vict. c. 8, _ trar, and imposes a stamp duty of 2s
§ 11, requires a statement of the amount _per 100/. of capital.
of nominal capital to be sent to the regis-
1002 THE COMPANIES act, 1862.
Appenprx V. For registration of a company whose number of members,as £ 8s d,
“PableC. stated in the articles of association, exceeds 100, but is not
; stated to be unlimited, the above fee of 5/., with an addi-
tional 5s. for every 50 members or less number than 50
members after the first 100.
For registration of a company in which the number of members
is stated in the articles of association to be unlimited, a fee
of . ; ‘ . ; : : : 3 . 20 0 0
For registration of any increase on the number of members
made after the registration of the company in respect of
every 50 members, or less than 50 members, of such in-
crease . , : . 3 : : ; : ;
Provided that no one company shall be liable to pay on the
whole a greater fee than 20/. in respect of its number of
members, taking into account the fee paid on the first regis-
tration of the company.
For registration of any existing company, except such com-
panies as are by this act exempted from payment of fees in
respect of registration under this act (f), the same fee as is
charged for registering a new company.
For registering any document hereby required or authorised to
be registered, other than the memorandum of association . 0 5 0
For making a record of any fact hereby authorised or required
to he recorded by the registrar of companies, a fee of . - 0 5 0
FORM D.
Form D. FoRM OF STATEMENT REFERRED TO IN Part JII. oF THE act.
(See § 44.)
* The capital of the company is , divided into shares
of each.
The number of shares issued is
Calls to the amount of pounds per share have been made, under
which the sum of pounds has been received.
The liabilities of the company on the first day of January (or July)
were,—
Debts owing to sundry persons by the company :
On judgment, £
On specialty, £
On notes or bills, £
On simple contracts, £
On estimated liabilities, £
The assets of the company on that day were,—-
Government securities [stating them], £
Bills of exchange and promissory notes, £
Cash at the bankers, £
Other securities, £
(f) See § 189.
* If the company has no capital divided into shares, the portion of the statement
relating to capital and shares must be omitted.
25 & 26 vict. cap. 89.—scHEDULE II. 1003
APPENDIX V.
ss Je ee ee
SECOND SCHEDULE (9). amd,
FORM A. (See § 8.)
MEMORANDUM OF ASSOCIATION OF A COMPANY LIMITED BY SHARES.
Ist. The name of the company is ‘The Eastern Steam Packet Com-
pany, Limited.”
2nd. The registered office of the company will be situate in England.
3rd. The objects for which the company is established are, “the con-
veyance of passengers and goods in ships or boats between such places as
the company may from time to time determine, and the doing all such
other things as are incidental or conducive to the attainment of the above
object.”
4th. The liability of the members is limited.-
- 5th. The capital of the company is two hundred thousand pounds,
divided into one thousand shares of two hundred pounds each.
We, the several persons whose names and addresses are subscribed, are
desirous of being formed into a company, in pursuance of this memo-
randum of association ; and we respectively agree to take the number
of shares in the capital of the company set opposite our respective
names.
Number
of Shares
Names, Addresses, and Descriptions of Subscribers. taken by
each Sub-
scriber.
“1, John Jones of in the county of Merchant 200
“9. John Smith of in the county of : ; 25
“3. Thomas Green of in the county of ae 30
4, John Thompson of in the county of : : 40
“5. Caleb White of in the county of : ee 15
“6. Andrew Brown of in the county of ‘ : 5
“7, Cesar White of in the county of i Bye 10
Total shares taken . : : ‘ 325
Dated the 22nd day of November 1861.
Witness to the above signatures,
A. B., No. 13, Hute Street, Clerkenwell, Middlesex.
FORM B. (See §§ 9, 14.)
MEMORANDUM AND ARTICLES OF ASSOCIATION OF A COMPANY LIMITED Form B,
BY GUARANTEE, AND NOT HAVING A CAPITAL DIVIDED INTO SHARES.
Memorandum of association.
Ist. The name of the company is “‘ The Mutual London Marine Asso-
ciation, Limited.”
{g) The forms in this schedule are cases to which they apply will be found
given as examples, to be followed as in the sections referred to at the head of
closely as possible. (See § 71.) The each form.
1004
APPENDIX V.
Form B.
THE COMPANIES ACT, 1862.
2nd. The registered office of the company will be situate in England.
3rd, The objects for which the company is established are, ‘‘ the mutual
insurance of ships belonging to members of the company, and the doing
all such other things as are incidental or conducive to the attainment of
the above objects.”
4th. Every member of the company undertakes to contribute to the
assets of the company, in the event of the same being wound up during
the time that he is a member, or within one year afterwards, for payment
of the debts and liabilities of the company contracted before the time at
which he ceases to be a member, and the costs, charges, and expenses of
winding up the same, and for the adjustment of the rights of the contri-
hutories amongst themselves, such amount as may be required not exceed-
ing ten pounds.
We, the several persons whose names and addresses are subscribed, are
desirous of being formed into a company, in pursuance of this memo-
randum of association.
Names, Addresses, and Descriptions of Subscribers.
“1. John Jones of in the county of Merchant.
“2. John Smith of in the county of
‘3, Thomas Green of in the county of
“4, John Thompson of in the county of
“5, Caleb White of in the county of
“6, Andrew Brown of in the county of
“7, Caesar White of in the county of
Dated the 22nd day of November 1861,
Witness to the above signatures,
A. B., No. 13, Hute Street, Clerkenwell, Middlesex.
ARTICLES OF ASSOCIATION TO ACCOMPANY PRECEDING MEMORANDUM OF
ASSOCIATION. (See § 14.)
(1.) The company, for the purpose of registration, is declared to
consist of five hundred members.
(2.) The directors hereinafter mentioned may, whenever the busi-
ness of the association requires it, register an increase of
members.
Definition of members.
(3.) Every person shall be deemed to have agreed to become a
member of the company who insures any ship or share in a
ship in pursuance of the regulations hereinafter contained.
General meetings.
(4.) The first general meeting shall be held at such time, not being
more than three months after the incorporation of the company,
and at such place, as the directors may determine.
(5.) Subsequent general meetings shall be held at such time and
place as may he prescribed by the company in general meeting ;
and if no other time or place is prescribed, a general meeting
25 & 26 vict. cap. 89.—scHEDULE II.
1005
shall be held on the first Monday in February in every year, at Appunpix V.
such place as may be determined by the directors,
(6.) The above-mentioned general meetings shall be called ordinary
meetings ; all other general meetings shall be called extra-
ordinary.
(7.) The directors may, whenever they think fit, and they shall, upon
a requisition made in writing by any five or more members,
convene an extraordinary general meeting.
(8.) Any requisition made by the members shall express the object
of the meeting proposed to be called, and shall be left at the
registered office of the company.
(9.) Upon the receipt of such requisition the directors shall forth-
with proceed to convene a general meeting; if they do not
proceed to convene the same within twenty-one days from the
date of the requisition, the requisitionists, or any other five
members, may themselves convene a meeting.
Proceedings at general meetings.
(10.) Seven days’ notice at the least, specifying the place, the day,
and the hour of meeting, and in case of special business the
general nature of such business, shall be given to the members
in manner hereinafter mentioned, or in such other manner, if
any, as may be prescribed by the company in general meeting ;
but the non-receipt of such notice by any member shall not
invalidate the proceedings at any general meeting.
(11.) All business shall be deemed special that is transacted at an
extraordinary meeting, and all that is transacted at an ordinary
meeting, with the exception of the consideration of the
accounts, balance-sheets, and the ordinary report of the
directors.
(12.) No business shall be transacted at any meeting except the
declaration of a dividend, unless a quorum of members is pre-
sent at the commencement of such business; and such quorum
shall be ascertained as follows ; that is to say, if the members
of the company at the time of the meeting do not exceed ten in
number, the quorum shall be five ; if they exceed ten, there
shall be added to the above quorum one for every five additional
members up to fifty, and one for every ten additional members
after fifty, with this limitation, that no quorum shall in any
case exceed thirty.
(13.) If within one hour from the time appointed for the meeting a
quorum of members is not present, the meeting, if convened
upon the requisition of the members, shall be dissolved : in any
other case it shall stand adjourned to the same day in the fol-
lowing week at the same time and place; and if at such
adjourned meeting a quorum of members is not present, it
shall be adjourned sine die.
(14.) The chairman (if any) of the directors shall preside as chair-
man at every general meeting of the company.
(15.) If there is no such chairman, or if at any meeting he is not
present at the time of holding the same, the members present
shall choose some one of their number to be chairman of such
meeting.
Form B.
1006
APPENDIX V.
Form B.
THE COMPANIES act, 1862.
(16.) The chairman may, with the consent of the meeting, adjourn
any meeting from time to time and from place to place; but no
business shall be transacted at any adjourned meeting other
than the business left unfinished at the meeting from which the
adjournment took place.
(17.) At any general meeting, unless a poll is demanded by at least
five members, a declaration by the chairman that a resolution
has been carried, and an entry to that effect in the book of pro-
ceedings of the company, shall be sufficient evidence of the fact,
without proof of the number or proportion of the votes recorded
in favour of or against such resolution.
(18.) Ifa poll is demanded in manner aforesaid, the same shall be
taken in such manner as the chairman directs, and the result of
such poll shall be deemed to be the resolution of the company
in general meeting.
Votes of members.
(19.) Every member shall have one vote and no more.
(20.) If any member is a lunatic or idiot, he may vote by his com-
mittee, curator bonis, or other legal curator.
(21.) No member shall be entitled to vote at any meeting unless all
monies due from him to the company have been paid.
(22.) Votes may be given either personally or by proxies : a proxy
shall be appointed in writing under the hand of the appointor,
or, if such appointor is a corporation, under its common seal,
(23.) No person shall be appointed a proxy who is not a member ;
and the instrument appointing him shall be deposited at the
registered office of the company not less than forty-eight hours
before the time of holding the meeting at which he proposes to
vote.
(24.) Any instrument appointing a proxy shall be in the following
form :—
Company Limited.
I of in the county of being a member of
the company limited, hereby appoint of
as my proxy, to vote for me and on my behalf at the [ordinary
or extraordinary, as the case may be] general meeting of the
company to be held on the day of , and at any
adjournment thereof to be held on the day of
next [or, at any meeting of the company that may be held in
the year 4
As witness my hand, this day of
Signed by the said in the presence of
Directors.
(25.) The number of the directors, and the names of the first
directors, shall be determined by the subscribers of the memo-
randum of association.
(26.) Until directors are appointed, the subscribers of the memo-
randum of association shall for all the purposes of this act be
deemed to be directors,
25 & 26 vict. cap. 89.—SCHEDULE II.
Powers of directors.
(27.) The business of the company shall be managed by the directors,
who may exercise all such powers of the company as are not
hereby required to be exercised by the company in general
meeting ; but no regulation made by the company in general
meeting shall invalidate any prior act of the directors which
would have been valid if such regulation had not been made.
Election of directors.
(28.) The directors shall be elected annually by the company in
general meeting.
Business of company.
[Here insert rules as to mode in which business of insurance is to be
conducted. |
Accounts.
(29.) The accounts of the company shall be audited by a committee
of five members, to be called the audit committee.
(30.) The first audit committee shall be nominated by the directors
out of the body of members.
(31.) Subsequent audit committees shall be nominated by the mem-
bers at the ordinary general meeting in each year.
(32.) The audit committee shall be supplied with a copy of the
balance-sheet, and it shall be their duty to examine the same
with the accounts and vouchers relating thereto.
(33.) The audit committee shall have a list delivered to them of all
books kept by the company, and they shall at all reasonable
times have access to the books and accounts of the company :
they may, at the expense of the company, employ accountants
or other persons to assist them in investigating such accounts,
and they may in relation to such accounts examine the directors
or any other officer of the company.
(34.) The audit committee shall make a report to the members upon
the balance-sheet and accounts ; and in every such report they
shall state whether in their opinion the balance-sheet is a full
and fair balance-sheet, containing the particulars required by
these regulations of the company, and properly drawn up so
as to exhibit a true and correct view of the state of the com-
pany’s affairs, and, in case they have called for explanation or
information from the directors, whether such explanations or
information have been given by the directors, and whether they
have been satisfactory ; and such report shall be read, together
with the report of the directors, at the ordinary meeting.
Notices.
(35.) A notice may be served by the company upon any member
either personally, or by sending it through the post in a pre-
paid letter addressed to such member at his registered place of
abode.
(36). Any notice, if served by post, shall be deemed to have been
1007
Apprnpix V.
Form B.
1008
Apprnpix V.
Form B,
Form C.
THE COMPANIES ACT, 1862.
served at the time when the letter containing the same would
be delivered in the ordinary course of the post ; and in proving
such service it shall be sufficient to prove that the letter con-
taining the notice was properly addressed, and put into the
post office.
Winding up.
(37). The company shall be wound up voluntarily whenever an
extraordinary resolution, as defined by the Companies act,
1862, is passed, requiring the company to be wound up volun-
tarily.
Names, Addresses, and Descriptions of Subscribers.
*©1, John Jones of in the county of Merchant.
“2, John Smith of in the county of
“3. Thomas Green of in the county of
4, John Thompson of in the county of
“5, Caleb White of in the county of
“6. Andrew Brown of in the county of
“7, Ceesar White of in the county of
Dated the 22nd day of November 1861.
Witness to the above signatures,
A. B., No. 13, Hute Street, Clerkenwell, Middlesex.
FORM C. (See §§ 9 & 14.)
MEMORANDUM AND ARTICLES OF ASSOCIATION OF A COMPANY LIMITED
BY GUARANTEE, AND HAVING A CAPITAL DIVIDED INTO SHARES.
Memorandum of association.
lst. The name of the company is, “The Highland Hotel Company,
Limited.”
2nd. The registered office of the company will be situate in Scotland.
3rd. The objects for which the company is established are “the facili-
tating travelling in the Highlands of Scotland, by providing hotels and
conveyances by sea and by land for the accommodation of travellers, and
the doing all such other things as are incidental or conducive to the attain-
ment of the above object.”
4th. Every member of the company undertakes to contribute to the
assets of the company in the event of the same being wound up during
the time that he is a member, or within one year afterwards, for pay-
ment of the debts and liabilities of the company contracted before the time
at which he ceases to be a member, and the costs, charges, and expenses of
winding up the same, and for the adjustment of the rights of the contri-
butories amongst themselves, such amount as may be required not ex-
ceeding twenty pounds.
We, the several persons whose names and addresses are subscribed, are
desirous of being formed into a company, in pursuance of this memo-
randum of association.
25 & 26 vict. car. 89.—scHEDULE IL. 1009
Names, Addresses, and Descriptions of Subscribers. Appunpix Y,
“1, John Jones of in the county of Merchant. Porm ty
“2. John Smith of in the county of
“3. Thomas Green of in the county of
“4, John Thompson of in the county of
“5. Caleb White of in the county of
“6, Andrew Brown of in the county of
“7. Casar White of in the county of
Dated the 22nd day of November 1861.
Witness to the above signatures,
A. B., No. 13, Hute Street, Clerkenwell, Middlesex.
Articles of association to accompany preceding memorandum of association.
(See § 14.)
1. The capital of the company shall consist of five hundred thousand
pounds, divided into five thousand shares of one hundred pounds each.
2. The directors may, with the sanction of the company in general
meeting, reduce the amount of shares.
3. The directors may, with the sanction of the company in general
meeting, cancel any shares belonging to the company.
4. All the articles of Table A. shall be deemed to be incorporated with
these articles, and to apply to the company.
We, the several persons whose names and addresses are subscribed, agree
to take the number of shares in the capital of the company set opposite
our respective names.
Number
of Shares
Names, Addresses, and Descriptions of Subscribers, taken by
each Sub-
scriber.
“1, John Jones of in the county of Merchant 200
“2, John Smith of in the county of ‘ ; 25
“3. Thomas Green of in the county of oe 30
“4, John Thompson of in the county of : ; 40
“5, Caleb White of in the county of ty Os 15
“6, Andrew Brown of in the county of ‘ ‘ 5
“7, Caesar White of in the county of ans _ 10
Total shares taken ; 4 é 325
Dated the 22nd day of November 1861.
Witness to the above signatures,
A. B., No. 13, Hute Street, Clerkenwell, Middlesex.
FORM D. (See §§ 10, 14.)
MEMORANDUM AND ARTICLES OF ASSOCIATION OF AN UNLIMITED COM- Form D
PANY, HAVING A CAPITAL DIVIDED INTO SHARES.
Memorandam of association.
Ist, The name of the company is “The Patent Stereotype Company.”
2nd. The registered office of the company will be situate in England.
L.c. *3°T
1010
APPENDIX V.
Form D.
THE COMPANIES ACT, 1862.
method John Smith, of London, is the sole patentee.”
3rd. The objects for which the company is established are ‘ the working
of a patent method of founding and casting stereotype plates, of which
Ws, the several persons whose names are subscribed, are desirous of being
formed into a company, in pursuance of this memorandum of asso-
ciation.
Names, Addresses, and Descriptions of Subscribers.
wi,
“9,
ae
cc 4,
“cc 5,
ce 6.
cc 7,
John Jones of
John Smith of
Thomas Green of
John Thompson of
Caleb White of
Andrew Brown of
Abel Brown of
in the county of
in the county of
in the county of
in the county of
in the county of
in the county of
in the county of
Dated 22nd day of November 1861.
Witness to the above signatures,
A. B., No, 20, Bond Street, Middlesex.
Merchant.
Articles of association to accompany the preceding memorandum of
association.
(See § 14.)
Capital of the company.
The capital of the company is two thousand pounds, divided into twenty
shares of one hundred pounds each.
Application of Table A.
All the articles of Table A. shall be deemed to he incorporated with
these articles, and to apply to the company.
Ws, the several persons whose names and addresses are subscribed, agree
to take the number of shares in the capital of the company set
opposite our respective names.
| Number
of Shares
Names, Addresses, and Descriptions of Subscribers. taken by
Sub-
scribers.
“1, John Jones of in the county of Merchant 1
“9, John Smith of in the county of : ‘ 5
“ 3. Thomas Green of in the county of 2
“4, John Thompson of in the county of 2
“5, Caleb White of in the county of 3
“6, Andrew Brown of in the county of ‘ 4
“7, Abel Brown of in the county of 1
Total shares taken . , ' 18
Dated the 22nd day of November 1861.
Witness to the above signatures,
A. B., No, 20, Bond Street, Middlesex.
1011
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25 & 26 vicr. car. 89.—scHEDULE II.
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1012
Form F,
Acts repealed.
AYPENDIX V.
THE COMPANIES AcT, 1862.
FORM F. (See § 21.)
LicENCE TO HOLD LANDS.
The lords of the committee of privy council appointed for the considera-
tion of matters relating to trade and foreign plantations hereby license
the Association, Limited, to hold the lands hereunder
described [insert description of lands]. The conditions of this licence are
[insert conditions, if any].
THIRD SCHEDULE. (See § 205.)
FIRST PART.
Date and ;
Chapter of Act. Title of Act.
21 & 22 Geo. 3,c. 46 .| An Act to promote Trade and Manufactures by
(Parliament of Ireland)| regulating and encouraging partnerships.
7&8 Vict.c. 110 . .|An Act for the Registration, Incorporation, and
Regulation of Joint-Stock Companies,
7&8 Vict.c. 111 . .{An Act for facilitating the winding up the Affairs
of Joint-Stock Companies unable to meet their
pecuniary Engagements.
7&8 Vict.c.113 . .| An Act to Regulate Joint-Stock Banks in England.
8&9 Vict.c.98 . .| An Act for facilitating the winding up the Affairs
of Joint-Stock Companies in Ireland unable to
meet their pecuniary Engagements.
9 & 10 Vict. c.28 . .}An Act to facilitate the Dissolution of certain
Railway Companies.
9& 10 Vict.c.75 . .| An Actto Regulate Joint-Stock Banks in Scotland
and Ireland.
10 & 11 Vict. c.78 . .|An Act to amend an Act for the Registration,
Incorporation, and Regulation of Joint-Stock
Companies.
11 & 12 Vict.c. 45 . .| An Act to amend the Acts for facilitating the
winding up the Affairs of Joint Stock Com-
panies unable to meet their pecuniary Engage-
ments, and also to facilitate the Dissolution
and winding up of Joint-Stock Companies and
other Partnerships.
12 & 13 Vict.c.108 .|An Act to amend the Joint-Stock Companies
Winding-up Act, 1848.
19 & 20 Vict. c. 47 . .} An Act for the Incorporation-.and Regulation of
Joint-Stock Companies and other Associations.
20 & 21 Vict.c.14 . .| An Act to amend the Joint-Stock Companies
Act, 1856.
20 & 21 Vict. c. 49 . .| An Act to amend the Law relating to Banking
Companies. ‘
20 & 21 Vict.c. 78 . .| An Act to amend the Act Seven and Eight Vic-
toria, Chapter One hundred and eleven, for
facilitating the winding up the affairs of Joint-
Stock Companies unable to meet their pecuniary
Engagements, and also the Joint-Stock Com-
. panies Winding-up Acts, 1848 and 1849.
20 & 21 Vict. c. 80 . .| An Act to amend the Joint-Stock Companies Act,
1856.
21 & 22 Vict. c. 60 . .| An Act toamend the Joint Stock Companies Acts,
1856 and 1857, and the Joint-Stock Banking
; Companies Act, 1857. s
21 & 22 Vict.c. 91 . .| An Act to enable Joint-Stock Banking Companies
to be formed on the Principle of Limited
Liability.
25 & 26 vicr. car. 89.—scHEDULE IL.
SECOND PART (i).
7 & 8 Vicor. c. 118, 8. 47.
10138
Avpenpix V.
Every company of more than six persons established on the sixth day Existing com-
of May one thousand eight hundred and forty-four, for the purpose of panies to have
carrying on the trade or business of bankers within the distance of sixty-
five miles from London, and not within the provisions of the act passed
(t) The explanation of the Second
Part of the Third Schedule to the fore-
going statute, is as follows :—
The 39 & 40 Geo. 3, c. 28, rendered
all banking companies of more than six
persons illegal, the Bank of England
alone being excepted.
The 7 Geo. 4, c. 46, rendered banking
companies of more than six persons
legal, provided they did not carry on
business within 65 miles of London.
The same act also empowered the bank-
ing companies thus legalised to sue and
be sued by public officers, upon certain
conditions.
The 3 & 4 Will. 4, c. 98, enabled
banking companies of more than six
persons to carry on business within 65
miles of London, subject to certain re-
strictions ; but neither this act nor any
other, prior to the 7 & 8 Vict., extended
to these companies the privilege of suing
and being sued by public officers, and
which privilege was enjoyed under 7
Geo. 4, c. 46, by banking companies
carrying on business more than 65 miles
from London.
The 7 & 8 Vict. c. 113, § 47, which is
above preserved from repeal, conferred
the privilege in question upon banking
companies of more than six members
carrying on business within 65 miles of
London, and established before the 6th
of May, 1844.
The same act (7 & 8 Vict. c. 113)
prohibited the formation after the 6th of
May,, 1844, of banking companies of
more than six persons, save under its
provisions (§1). This act also authorised
banking companies of more than six
persons formed before the 6th of May,
1844, to obtain charters of incorpora-
tion, and so bring themselves within the
provisions of the act (§ 45). Once
the powers of
suing and being
sued.
within its provisions by incorporation, Note on banking
the privilege of suing and being sued by companies.
public officers would, of course, be un- [See also ante,
necessary ; and this accounts for the Pp. 136—138.]
occurrence in the 47th section of 7 &
8 Vict. c. 118, of the words ‘‘and not
within the provisions of this Act.”
With respect to the 20 & 21 Vict.
ce, 49, it must be borne in mind that
when it passed, there were three kinds of
banking partnerships and companies in
existence, viz.:—1. Ordinary banking
firms of not more than six members ; 2.
Banking companies of more than six
members formed before the 6th of May,
1844, but not incorporated ; and 3. Bank-
ing companies of more than six members,
which, whether formed before or after the
6th of May, 1844, were incorporated under
the provisions of 7 & 8 Vict. v. 113. It
must also be borne in mind that prior to
the passing of the 20 & 21 Vict. c. 49,
the privileges of banking partnerships
and companies to issue notes, &c., de-
pended partly upon whether they con-
sisted of more than six members or not,
and partly upon the distance from London
at which they carried on their business.
(See ante, p. 136 n.) Such was the state
of the law when the Joint-stock banking
companies act, 1857, passed. That act
(20 & 21 Vict. c. 49) did four things,
viz. :—i. It imperatively required all
banking companies formed under 7 &
8 Vict. c. 118, to register (§ 4). 2. It
repealed that act, not only with respect to
banking companies formed after the 17th
of August, 1857, but also with respect to
all companies formed before that time
under 7 & 8 Vict. c. 118, as soon as they
should have registered as required. (See
§12.) 38. It prohibited the formation
of banking companies of more than ten
members, save under its own provisions
1014
THE COMPANIES AcT, 1862.
Apprenpix V. in the session holden in the seventh and eighth years of the reign of Her
~~ present Majesty, chapter one hundred and thirteen, shall have the same
powers and privileges of suing and being sued in the name of any one of
the public officers of such copartnership as the nominal plaintiff, peti-
tioner, or defendant on behalf of such co-partnership, and all judgments,
decrees, and orders made and obtained in any such suit may be enforced,
in like manner as is provided with respect to such companies carrying on
Note on banking
companies.
(§ 13). 4. It conferred upon banking
companies of not more than ten members
the privileges previously enjoyed by
‘banking firms of not more than six
members (§ 12). This last enactment it
is which is preserved from repeal by the
act of 1862.
The above observations will, it is hoped,
enable the reader to understand without
difficulty the object of saving from repeal
the clauses in the second part of the 3rd
schedule to the Companies act, 1862.
A few additional remarks, however,
are necessary to explain the varieties of
banking companies which may be met
with after that act has come into opera-
tion.
Until 1857 banking companies could
not be formed by registration, and until
the following year they could not be
formed with limited liability, except by
virtue of some special act of Parliament
or royal charter. In 1857, however,
an act was passed, authorising banking
companies of more than six members to
register (20 & 21 Vict. c. 49); and in
1858 another act was passed, authorising
them to register with limited liability
(21 & 22 Vict.c. 91). Companies actually
registered under these acts are made sub-
ject to the provisions of the act of 1862
(see §§ 176, 177), which also authorises
the formation of new banking companies
of more than six members, with limited
or unlimited liability (§ 6). Adding
registered banking companies therefore
to those which existed before 1857, the
result will be as follows :—
1. There may be ordinary banking
partnerships of not more than ten
members.
2. There may be companies of more
than six members formed before the
6th May, 1844, and empowered to sue
and be sued by public officers, but not
registered.
3. There may be registered companies
of more than six members. Companies
of this class may be limited or not, and
may have been originally formed before
or after May, 1844, and if after, then
either under 7 & 8 Vict. c. 113, or
under the Joint-stock companies acts of
1857—1858, or under the new act of
1862. As to the power of a bank regis-
tered as unlimited to re-register as limi-
ted, see 42 & 48 Vict. c. 76.
4, There may, perhaps, be yet another
class, viz., companies formed before the
6th of May, 1844, and subsequently in-
corporated by royal charter under 7 & 8
Vict. c. 113, § 46, but not registered
under any of the later acts. Such a
company might possibly be considered as
not having been formed under 7 & 8
Vict. vc. 118, within the meaning of 20
& 21 Vict. c. 49, § 4; and, if so, regis-
tration under this last act would not be
compulsory, and if not compulsory under
that act, it is not compulsory under the
act of 1862. (See § 209.) If, however,
the incorporation of the company by char-
ter be considered as the formation of the
company within the meaning of 20 & 21
Vict. v. 49, § 4, then the registration of
the company is imperative, and the class
under consideration cannot legally exist.
The latter view the writer conceives to be
correct.
In addition to the above four classes
there, of course, may be banking com-
panies formed under special acts or
charters of their own.
With reference to Irish banks, and as
to how far the Irish act, 33 Geo. 2, ¢. 14,
is repealed by the imperial act, 6 Geo. 4,
cg. 42, see O'Flaherty v. McDowell, 6
H. L. C. 142, and Copland v. Davis,
L. R. 5 H. L. 358.
27 viot. cap. 19.
the said trade or business at any place in England exceeding the distance
of sixty-five miles from London, under the provisions of an act passed in
the seventh year of the reign of King George the fourth, chapter forty-
six, intituled, “‘ An act for the better regulating copartnerships of certain
bankers in England, and for amending so much of an act of the thirty-
ninth and fortieth years of the reign of His late Majesty King George the
third, intituled ‘ An act for establishing an agreement with the governor
and company of the Bank of England for advancing the sum of three
millions towards the supply for the service of the year one thousand
eight hundred,’ as relates to the same”; provided, that such first-men-
tioned company shall make out and deliver from time to time to the
commissioners of stamps and taxes the several accounts or returns required
by the last-mentioned act ; and all the provisions of the last-recited act as
to such accounts or returns shall be taken to apply to the accounts or
returns so made out and delivered by such first-mentioned companies
as if they had been originally included in the provisions of the last-recited
act.
20 & 21 Vict. c 49, part of section 12.
Notwithstanding anything contained in any act passed in the session
holden in the seventh and eighth years of the reign of Her present
Majesty, chapter one hundred and thirteen, and intituled ‘‘An act to
regulate Joint-Stock Banks in England,” or in any other act, it shall be
lawful for any number of persons, not exceeding ten, to carry on in partner-
ship the business of banking, in the same manner and upon the same
conditions in all respects as any company of not more than six persons
could before the passing of this act have carried on such business.
THE COMPANIES SEALS ACT, 1864.
27 Vict. Car. 19.
An act to enable joint stock companies carrying on business in foreign
countries to have official seals to be used in such countries (k).
[13th May, 1864.]
WHEREAS there have been and may be established in the United
Kingdom companies whose business is to be carried on in countries not
situate in the United Kingdom, and it is convenient and desirable that
investments may be made, and mortgages, conveyances, and leases taken,
and contracts and engagements entered into, on behalf of the Company, in
such countries, in the name of the company: be it therefore enacted by
the Queen’s most excellent Majesty, by and with the advice and consent of
the lords spiritual and temporal, and commons, in this present Parliament
assembled, and by the authority of the same, as follows:
1. This act may be cited for all purposes as “the Companies seals
act, 1864.”
(k) See ante, p. 229.
1015
Apprnpix V.
Power to form
banking part-
nerships of ten
persons.
Short Title,
1016 THE COMPANIES SEALS ACT, 1864.
APPENDIX V. 2. Any company, under “The Companies act, 1862,” whose objects
Powerto __-reduire or comprise the transaction of business, as hereinbefore mentioned,
companies to in foreign countries, may cause to be prepared an official seal for and to
have an be used in any place, district, or territory situate out of the United
official seal. Kingdom in which the business of the company shall be carried on, and
every such official seal may and shall be a fac-simile of or as nearly as
practicable a fac-simile of the common seal of the company, with the
exception that on the face thereof shall be inscribed the name of each
and every place, district, or territory in and for which it is to be used:
provided that it shall be lawful for any such company as aforesaid from
time to time to break up and renew any official seal or seals, and to vary
the limits within which it is intended to be used.
Power to com- 3. Every company having or using any such official seal as is authorised
panies to appoint by this act may from time to time, by any instrument or instruments in
agents abroad to writing under the common seal of the company, empower any agent or
affix seals. : .
agents specially appointed for the purpose, or any local agent, board,
committee, manager, or commissioner appointed under the provisions of
the articles of association of such company, in any place, district, or
territory situate out of the United Kingdom where the business of the
company shall for the time being be carried on, to affix such official seal
to any deed, contract, or other instrument to which the company is or
shall be made a party in such place, district, or territory, and no other
order of the company or the board of directors thereof shall be necessary
to authorize any such seal to be affixed to any deed, contract, or other
instrument.
As to the 4, Every power granted under the last preceding section shall, as
duration of between the company, their successors and assigns, on the one hand, and
ee the person or persons dealing with the agent or agents, board, committee,
this act. manager, or commissioner named in the instrument conferring the power,
and all parties claiming through or under such person or persons, on the
other hand, continue in force during the period, if any, mentioned in the
instrument conferring the power, or if no power be there mentioned then
until notice of the revocation or determination of the power shall have
been given to such person or persons as aforesaid.
Person affixing 5. Whenever any such official seal as aforesaid shall be affixed to any
ee ect document, the person affixing the same shall, by writing under his hand
date aE so @nd written on the document to which the seal may have been affixed,
affixed. certify the date when and the place where the same was affixed ; and any
document to which any such seal shall have been duly affixed within the
district or territory or place the name whereof is inscribed on such seal
shall bind the company in the same way and to the same extent and have
the same force and effect as if it had been duly sealed with the common
seal of the company.
Companies not 6. The powers given by this act shall be exercised by such companies
to exercise only as are or shall be expressly authorised to exercise the same by their
ee ad articles of association, or a special resolution passed according to the
vizea. provisions of ‘‘ The Companies act, 1862,” and shall be exercised by such
companies subject to any directions or restrictions in their articles of
association or the special resolutions contained.
Section 55 of 7. Nothing in this act contained shall operate to repeal the provisions
a ane of the fifty-fifth section of ‘‘ The Companies act, 1862,” but such section
Tepealé a. shall continue in force, and all acts done or to be done thereunder shall
be as valid and effectual as if this act had not been passed.
30 & 81 vict. cap, 181. 1017
APPENDIX V.
“THE COMPANIES ACT, 1867.”
30 & 31 Vict. Cap. 131.
An Act toamend “ The Companies act, 1862.”
[20th August, 1867.]
BE it enacted by the Queen’s most excellent Majesty, by and with the
advice and consent of the Lords spiritual and temporal, and Commons, in
this present Parliament assembled, and by the authority of the same, as
follows :
Preliminary.
1. This act may be cited for all purposes as ‘The Companies act, Short title.
1867.”
2. The Companies act, 1862, is hereinafter referred to as “the prin- Act to be con-
cipal act ;” and the principal act and this act are hereinafter distinguished strued as one
as and may be cited for all: purposes as ‘‘ The Companies Acts, 1862 and a oe
1867 ;” and this act shall, so far as is consistent with the tenor thereof, ie
be construed as one with the principal act; and the expression “this act”
in the principal act, and any expression referring to the principal act
which occurs in any act or other document, shall be construed to mean
the principal act as amended by this act.
3. This act shall come into force on the first day of September one Commencement
thousand eight hundred and sixty-seven, which date is hereinafter referred of act.
to as the commencement of this act.
Unlimited liability of directors.
4, Where after the commencement of this act a company is formed as a Company may
limited company under the principal act, the liability of the directors or have directors
managers of such company, or the managing director, may, if so provided reo
by the memorandum of association, be unlimited. es
5. The following modifications shall be made in the thirty-eighth sec- Liability of
tion of the principal act with respect to the contributions to be required directors, past
in the event of the winding up of a limited company under the principal 2nd present,
act, from any director or manager whose liability is, in pursuance of this eee
act, unlimited : ;
(1.) Subject to the provisions hereinafter contained, any such director
or manager, whether past or present, shall,’in addition to his
liability (if any) to contribute as an ordinary member, be liable
to contribute as if he were at the date of the commencement of
such winding up a member of an unlimited company :
(2.) No contribution required from any past director or manager who
has ceased to hold such office for a period of one year or up-
wards prior to the commencement of the winding up shall
exceed the amount (if any) which he is liable to contribute as
an ordinary member of the company :
(3.) No contribution required from any past director or manager in
respect of any debt or liability of the company contracted after
the time at which he ceased to hold such office shall exceed the
1018 THE COMPANIES ACT, 1867.
AppEenpix V. amount (if any) which he is liable to contribute as an ordinary
=< member of the company :
(4.) Subject to the provisions contained in the regulations of the
company, no contribution required from any director or manager
shall exceed the amount (if any) which he is liable to contribute
as an ordinary member, unless the Court deems it necessary to
require such contribution in order to satisfy the debts and lia-
bilities of the company, and the costs, charges, and expenses of
the winding up.
Director with 6. In the event of the winding up of any limited company, the Court,
unlimited lia- if it think fit, may make to any director or manager of such company
ee whose liability is unlimited the same allowance by way of set-off as under
sect. 101, of the one hundred and first section of the principal act it may make toa
25 & 26 Vict. contributory where the company is not limited.
v. 89. 7. In any limited company in which, in pursuance of this act, the
Notice to be liability of a director or manager is unlimited, the directors or managers
given to director of the company (if any), and the member who proposes any person for
th his election lection or appointment to such office, shall add to such proposal a state-
at his liability cn ace ‘ 48
willbe unlimited, ment that the liability of the person holding such office will be unlimited ;
and the promoters, directors, managers, and secretary (if any) of such
company, or one of them, shall, before such person accepts such office or
acts therein, give him notice in writing that his liability will be un-
limited.
Penalty for If any director, manager, or proposer make default in adding such state-
neglect to give ment, or if any promoter, director, manager, or secretary make default in
notice. giving such notice, he shall be liable to a penalty not exceeding one
ca ied hundred pounds, and shall also be liable for any damage which the person
neglect. so elected or appointed may sustain from such default ; but the liability of
the person elected or appointed shall not be affected by such default.
Existing limited 8. Any limited company under the principal act, whether formed
companies may, before or after the commencement of this act, may, by a special resolu-
ok er gaa tion, if authorised so to do by its regulations, as originally framed or as
‘ions,
Mabilitrot altered by special resolution, from time to time modify the conditions con-
directors tained in its memorandum of association so far as to render unlimited the
unlimited. liability of its directors or managers, or of the managing director; and
such special resolution shall be of the same validity as if it had been
originally contained in the memorandum of association, and a copy thereof
shall be embodied in or annexed to every copy of the memorandum of
association which is issued after the passing of the resolution ; and any
default in this respect shall be deemed to be a default in complying with
the provisions of the fifty-fourth section of the principal act, and shall be
punished accordingly (2).
Reduction of capital and shares (m).
nee 9. Any company limited by shares may, by special resolution, so far
seanee nag al modify the conditions cuntained in its memorandum of association, if
by special reso. authorised so to do by its regulations, as originally framed or as altered by
lution and order special resolution, as to reduce its capital; but no such resolution for
of Court
oe by (2) See, as to special resolutions, act (m) See Ord. of 1868, rules 2 et seg. 5
FEBInurars of 1862, § 51, and as to altering the and 40 & 41 Vict. c. 26, §§ 2 to 5, infra ;
memorandum, ib. § 12. and 43 Vict. c. 19; and ante, p. 402.
80 & 81 vict. cap. 181. 1019
reducing the capital of any company shall come into operation until an Appunpix V.
order of the Court is registered by the registrar of joint-stock companies, ~~ SCS
as is hereinafter mentioned.
10. The company shall after the date of the passing of any special Company to
resolution for reducing its capital add to its name, until such date as the add ‘and re-
Court may fix, the words “and reduced,” as the last words in its name ; (ced f tO 10s
and those words shall, until such date, be deemed to be part of the name Teanited peribd
of the company within the meaning of the principal act.
11. A company which has passed a special resolution for reducing its Company to
capital may apply to the Court by petition for an order confirming the apply to the
reduction ; and on the hearing of the petition the Court, if satisfied that Court for an _
: ‘ ie order confirming
with respect to every creditor of the company who under the provisions of reduction, which
this act is entitled to object to the reduction, either his consent to the may be made as
reduction has been obtained, or his debt or claim has been discharged or herein provided.
has determined, or has been secured as hereinafter provided, may make an
order confirming the reduction on such terms and subject to such condi-
tions as it deems fit.
12. The expression “the Court” shall in this act mean the Court pegnition of the
which has jurisdiction to make an order for winding up the petitioning Court.
company ; and the eighty-first and eighty-third sections of the principal act
shall be construed as if the term “‘ winding up ” in those sections included
proceedings under this act; and the Court may in any proceedings under [Costs. ]
this act make such order as to costs as it deems fit.
13. Where a company proposes to reduce its capital, every creditor of Gre gitors en-
the company who at the date fixed by the Court is entitled to any debt or titled to prove
claim which, if that date were the commencement of the winding up of in winding up
the company, would be admissible in proof against the company, shall be MY object to
entitled to object to the proposed reduction, and to be entered in the list reduction,
of creditors who are so entitled to object.
The Court shall settle a list of such creditors, and for that purpose shall List of objecting
ascertain as far as possible without requiring an application from any creditors to be
creditor the names of such creditors and the nature and amount of their Settled by the
debts or claims, and may publish notices fixing a certain day or days onnt
within which creditors of the company who are not entered on the list
are to claim to be so entered or to be excluded from the right of objecting
to the proposed reduction.
14. Where a creditor whose name is entered on the list of creditors, and Court may dis-
whose debt or claim is not discharged or determined, does not consent to pense with con-
the proposed reduction, the Court may (if it think fit) dispense with such Pale riot ¢
consent on the company securing the payment of the debt or claim of given for his
such creditor by setting apart and appropriating, in such manner as the debt.
Court may direct, a sum of such amount as is hereinafter mentioned ;
(that is to say,)
(1.) If the full amount of the debt or claim of the creditor is admitted
by the company, or, though not admitted, is such as the company
are willing to set apart and appropriate, then the full amount of
the debt or claim shall be set apart and appropriated.
(2.) If the full amount of the debt or claim of the creditor is not
admitted by the company, and is not such as the company are
willing to set apart and appropriate, or if the amount is con-
tingent or not ascertained, then the Court may, if it think fit,
inquire into and adjudicate upon the validity of such debt or
claim, and the amount for which the company may be liable in
respect thereof, in the same manner as if the company were
1020 THE COMPANIES ACT, 1867.
APPENDIX V, being wound up by the Court, and the amount fixed by the
pepecte had Court on such inquiry and adjudication shall be set apart and
appropriated.
Order confirm- 15. The registrar of joint stock companies, upon the production to him of
ing reduction an order of the Court confirming the reduction of the capital of a com-
and minute pany, and the delivery to him of a copy of the order, and of a minute
os (approved by the Court), showing with respect to the capital of the com-
capital as altered Pany, as altered by the order, the amount of such capital, the number of
to be registered. shares in which it is to be divided, and the amount of each share, shall
register the order and minute, and on the registration the special resolution
confirmed by the order so registered shall take effect.
Notice of such registration shall be published in such manner as the
Court may direct.
The registrar shall certify under his hand the registration of the order
and minute, and his certificate shall be conclusive evidence that all the
requisitions of this act with respect to the reduction of capital have been
complied with, and that the capital of the company is such as is stated in
the minute.
Minute to form 16. The minute when registered shall be deemed to be substituted for
nen Pee ak the corresponding part of the memorandum of association of the company,
ciation and mein- and shall be of the same validity and subject to the same alterations as if
bers to be liable it had been originally contained in the memorandum of association ; and,
only for dif- subject as in this act mentioned, no member of the company, whether past
aa or present, shall be liable in respect of any share to any call or contribu-
shares and tion exceeding in amount the difference (if any) between the amount which
amountsofshares has been paid on such share and the amount of the share as fixed by the
as fixed by minute.
mutes 17. If any creditor who is entitled in respect of any debt or claim to
Saving of rights Ghject to the reduction of the capital of a company under this act, is in
of creditors who se é 5 ie 5
are ignorant of Consequence of his ignorance of the proceedings taken with a view to such
proceedings. reduction, or of their nature and effect with respect to his claim, not
entered on the list of creditors, and after such reduction the company is
wnable, within the meaning of the eightieth section of the principal act, to
Liability of pay to the creditor the amount of such debt or claim, every person who
members to con- was a member of the company at the date of the registration of the order
a and minute relating to the reduction of the capital of the company shall
such creditors, be liable to contribute for the payment of such debt or claim an amount
not exceeding the amount which he would have been liable to contribute
if the company had commenced to be wound up on the day prior to such
registration ; and on the company being wound up, the Court, on the appli-
cation of such creditor, and on proof that he was ignorant of the proceed-
ings taken with a view to the reduction, or of their nature and effect with
respect to his claim, may, if it think fit, settle a list of such contributories
accordingly, and make and enforce calls and orders on the contributories
settled on such list in the same manner in all respects as if they were
ordinary contributories in a winding up; but the provisions of this section
shall not affect the rights of the contributories of the company among
. themselves.
ou Bele Sa 18. A minute when registered shall be embodied in every copy of the
be embodied in Memorandum of association issued after its registration ; and if any com-
every memoran- pany makes default in complying with the provisions of this section it
dum of associa-_ shall incur a penalty not exceeding one pound for each copy in respect of
oes which such default is made, and every director and manager of the company
80 & 81 vict. cap. 181. 1021
who shall knowingly and wilfully authorise or permit such default shall Apprnprx Y.
incur the like penalty. pes a
19. If any director, manager, or officer of the company wilfully conceals Penalty for con-
the name of any creditor of the company who is entitled to object to the cealmentof name
proposed reduction, or wilfully misrepresents the nature or amount of the of creditor or
debt or claim of any creditor of the company, or if any director or manager a Bea
of the company aids or abets in or is privy to any such concealment or mis- go, :
representation as aforesaid, every such director, manager, or officer shall be
guilty of a misdemeanor.
20. The powers of making rules concerning winding up conferred by the Power to make
one hundred and seventieth, one hundred and seventy-first, one hundred rules extended
and seventy-second, and one hundred and seventy-third sections of the peat rules
principal act shall respectively extend to making rules concerning matters potters - which
in which jurisdiction is by this act given to the Court which has the power jurisdiction is
of making an order to wind up a company, and until such rules are made given by this act.
the practice of the Court in matters of the same nature shall, so far as the
same is applicable, be followed.
Subdivision of shares (0).
21. Any company limited by shares may by special resolution so far ghares may be
modify the conditions contained in its memorandum of association, if divided into
authorised so to do by its regulations as originally framed or as altered by Shares of smaller
special resolution, as by subdivision of its existing shares, or any of them, ee:
to divide its capital, or any part thereof, into shares of smaller amount
than is fixed by its memorandum of association.
Provided, that in the subdivision of the existing shares the proportion Proportion
between the amount which is paid and the amount (if any) which is unpaid between amounts
on each share of reduced amount shall be the same as it was in the case of a ae
the existing share or shares from which the share of reduced amount is pieaerva ie
derived.
22. The statement of the number and amount of the shares into which Statement of
the capital of the company is divided contained in every copy of the memo- number and
randum of association issued after the passing of any such special reso- sea pe rg
lution, shall be in accordance with such resolution; and any company embodied in re
which makes default in complying with the provisions of this section shall every memo-
incur a penalty not exceeding one pound for each copy in respect of which randum of
such default is made; and every director and manager of the company who 28S°¢iation sub-
knowingly or wilfully authorises or permits such default shall incur the oe nee
like penalty.
Associations not for profit.
23. Where any association is about to be formed under the principal act Special pro-
as a limited company, if it proves to the Board of Trade that it is formed visions as to
for the purpose of promoting commerce, art, science, religion, charity, or oe
any other useful object, and that it is the intention of such association to ee
apply the profits, if any, or other income of the association in promoting of gain,
its objects, and to prohibit the’ payment of any dividend to the members of
the association, the Board of Trade may by licence, under the hand of one
of the secretaries or assistant secretaries, direct such association to be regis-
tered with limited liability, without the addition of the word limited to its
(0) Ante, p. 405.
1022 THE COMPANIES ACT, 1867.
Arrenpix V, name; and such association may be registered accordingly, and upon regis-
tration shall enjoy all the privileges and be subject to the obligations
by this act imposed on limited companies, with the exceptions that none
of the provisions of this act that require a limited company to use the word
limited as any part of its name, or to publish its name, or to send a list of
its members, directors, or managers to the registrar, shall apply to an
association so registered.
The licence by the Board of Trade may be granted upon such conditions
and subject to such regulations as the board think fit to impose ; and such
conditions and regulations shall be binding on the association, and may, at
the option of the said board, be inserted in the memorandum and articles
of association, or in both.or one of such documents.
Calls upon shares.
Company may 24. Nothing contained in th e principal act ( P) shall be deemed to prevent
have some any company under that act, if authorised by its regulations as originally
shares fully paid framed or as altered by special resolution, from doing any one or more of
and others not. the following things; namely,—
(1.) Making arrangements on the issue of shares for a difference
between the holders of such shares in the amount of calls to be
paid, and in the time of payment of such calls :
(2.) Accepting from any member of the company who assents thereto
the whole or a part of the amount remaining unpaid on any share
or shares held by him, either in discharge of the amount of a
call payable in respect of any other share or shares held by him
or without any call having been made:
(3.) Paying dividend in proportion to the amount paid up on each
share in cases where a larger amount is paid up on some shares
than on others (¢).
Shares to he 25. Every share in any company shall be deemed and taken to have
issued andheld been issued and to be held subject to the payment of the whole amount
subject to pay- thereof in cash, unless the same shall have been otherwise determined by a
Hzne OF he contract duly made in writing, and filed with the registrar of joint-stock
whole amount in i .
cash, unless if Companies at or before the issue of such shares (7).
be otherwise
determined by a
contract regis- Transfer of shares.
tered at or before
the issue. 26. A company shall on the application of the transferor of any share or
Transfer may be interest in the company enter in its register of members the name of the
registered at transferee of such share or interest, in the same manner and subject to the
eve same conditions as if the application for such entry were made by the
transferor.
Cr transferee (s).
(p) See ante, pp. 348 and 455. (s) See act of 1862, §§ 22 and 35, and
(q) Oakbank Oil Co. v. Crum, 8 App. as to the person to procure the registra-
Ca. 65, and ante, p. 455. tion of the transfer, see ante, p. 491,
(r) See ante, pp. 395 and 783, and and for remedy if registrar refuses to
further as to the meaning of issue, 1 Ex. register a transfer on the ground that it
D. 242; 9 Ch. 554. See, also, British is improperly stamped, see Queen v.
Farmers’, &c., Co.,7 Ch. D. 5383, as to Registrar of Joint-Stock Cos., 21 Q. B.
companies being estopped by their certifi- D. 131.
cates from denying that shares are paid up.
30 & 81 vicr. cap. 181. 1023
AppENDIXx V.
Share warrants to bearer.
27. In the case of a company limited by shares the company, if autho- warrants for
rised so to do by its regulations as originally framed or as altered by fully paid up
special resolution, and subject to the provisions of such regulations, may, shares or stock
with respect to any share which is fully paid up, or with respect to stock, ™*Y is me
issue under their common seal a warrant stating that the are ike
warrant is entitled to the share or shares or stock therein specified, and
may provide, by coupons or otherwise, for the payment of the future
dividends on the share or shares or stock included in such warrant, herein-
after referred to as a share warrant.
28, A share warrant shall entitle the bearer of such warrant to the shares pect of share
or stock specified in it, and such shares or stock may be transferred by the warrants.
delivery of the share warrant. Transfer of
29, The bearer of a share warrant shall, subject to the regulations of the an es by
company, be entitled, on surrendering such warrant for cancellation, to haps
have his name entered as a member in the register of members, and the eee
company shall be responsible for any loss incurred by any person by reason may be entered
of the company entering in its register of members the name of any bearer in the register of
of a share warrant in respect of the shares or stock specified therein without members on
the share warrant being surrendered and cancelled. ee abe
30. The bearer of a share warrant may, if the regulations of the company gancellation.
so provide, be deemed to be a member of the company within the meaning Regulations
of the principal act, either to the full extent or for such purposes as may of the company
be prescribed by the regulations : may make the
Provided, that the bearer of a share warrant shall not be qualified in bearer of a
. . fi ‘ share warrant a
respect of the shares or stock specified in such warrant for being a director membar: butendé
or manager of the company in cases where such a qualification is prescribed so as to qualify
by the regulations of the company. him as a director
31. On the issue of a share warrant in respect of any share or stock the i Tespect of
company shall strike out of its register of members the name of the member eas
then entered therein as holding such share or stock as if he had ceased to Hobties ee
: 3 2 i gister where
be a member, and shall enter in the register the following particulars : share warrant
(1.) The fact of the issue of the warrant : issued.
(2.) A statement of the shares or stock included in the warrant, dis-
tinguishing each share by its number :
(3.) The date of the issue of the warrant :
And until the warrant is surrendered the above particulars shall be deemed
to be the particulars which are required by the twenty-fifth section of the
principal act to be entered in the register of members of a company; and
on the surrender of a warrant the date of such surrender shall be entered
as if it were the date at which a person ceased to be a member.
32. After the issue by the company of a share warrant the annual Particulars as to
summary required by the twenty-sixth section of the principal act shall share warrants
contain the following particulars,—the total amount of shares or stock for + becontained in
which share warrants are outstanding at the date of the summary, and the OL niEL Stem ey:
total amount of share warrants which have been issued and surrendered
respectively since the last summary was made, and the number of shares or
amount of stock comprised in each warrant.
33. There shall be charged on every share warranta stamp duty of an Stamps on share
amount equal to three times the amount of the ad valorem stamp duty warrants.
which would be chargeable on a deed transferring the share or shares or
1024 THE COMPANIES ACT, 1867.
AppenvIx V. stock specified in the warrant, if the consideration for the transfer were
the nominal value of such share or shares or stock (t).
Penalties on 34. Whosoever forges or alters, or offers, utters, disposes of, or puts off,
persons © knowing the same to be forged or altered, any share warrant or coupon, or
ae any document purporting to be a share warrant or coupon, issued in pur-
Tae hs suance of this act, or demands or endeavours to obtain or receive any share
or interest of or in any company under the principal act, or to receive any
warrants or
coupons, or dividend or money payable in respect thereof, by virtue of any such forged
attempting to oy altered share warrant, coupon, or document, purporting as aforesaid,
debeanel Dy knowing the same to be forged or altered, with intent in any of the cases
means of forged
warrants, &c, aforesaid to defraud, shall be guilty of felony, and being convicted thereof
shall be liable, at the discretion of the Court, to be kept in penal servitude
for life or for any term not less than five years, or to be imprisoned for any
term not exceeding two years, with or withuut hard labour, and with or
without solitary confinement.
Penalties on 35. Whosoever falsely and deceitfully personates any owner of any share
persons falsely or interest of or in any company, or of any share warrant or coupon issued
personating in pursuance of this act, and thereby obtains or endeavours to obtain any
el shares such share or interest, or share warrant or coupon, or receives or endeavours
warrants to receive any money due to any such owner, as if such offender were the
true and lawful owner, shall be guilty of felony, and being convicted
thereof shall be liable, at the discretion of the Court, to be kept in penal
servitude for life or for any term not less than five years, or to be im-
prisoned for any term not exceeding two years, with or without hard
labour, and with or without solitary confinement.
Penalties on 36. Whosoever, without lawful authority or excuse, the proof whereof
persons engrav- shall be on the party accused, engraves or makes upon any plate, wood,
ing plates, &c. stone, or other material any share warrant or coupon purporting to be a
share warrant or coupon issued or made by any particular company under
and in pursuance of this act, or to be a blank share warrant or coupon issued
or made as aforesaid, or to be a part of such a share warrant or coupon, or
uses any such plate, wood, stone, or other material for the making or print-
ing any such share warrant or coupon, or any such blank share warrant or
coupon, or any part thereof respectively, or knowingly has in his custody
or possession any such plate, wood, stone, or other material, shall be guilty
of felony, and being convicted thereof shall be liable, at the discretion of
the Court, to be kept in penal servitude for any term not exceeding fourteen
years and not less than five years, or to be imprisoned for any term not
exceeding two years, with or without hard labour, and with or without
solitary confinement.
Contracts (u).
Contracts on 37. Contracts on behalf of any company under the principal act may be
behalf of com- made as follows ; (that is to say,)
panies, how to (1.) Any contract which if made between private persons would be by
pe mene: law required to be in writing, and if made according to English
law to be under seal, may be made on behalf of the company in
writing under the common seal of the company, and such contract
may be in the same manner varied or discharged :
(t) A penalty of 502. is imposed upon tion is not observed by 33 & 34 Vict. «
the company, and its managing director, 97, § 127.
secretary or principal officer, if this sec- (u) Ante, pp. 220—229.
30 & 81 vict. car. 181. 1025
(2.) Any contract which if made between private persons would be Avpunprx V.
by law required to be in writing, and signed by the parties to”
be charged therewith, may be made on behalf of the company
in writing signed by any person acting under the express or
implied authority of the company, and such contract may in
the same manner be varied or discharged :
(3.) Any contract which if made between private persons would by
law be valid although made by parol only, and not reduced into
writing, may be made by parol on behalf of the company by any
person acting under the express or implied authority of the com-
pany, and such contract may in the same way be varied or dis-
charged :
And all contracts made according to the provisions herein contained shall
be effectual in law, and shall be binding upon the company and their
successors, and all other parties thereto, their heirs, executors, or adminis-
trators, as the case may be.
38. Every prospectus of a company, and every notice inviting persons Prospectus, &c.
to subscribe for shares in any joint stock company, shall specify the dates to specify dates
and the names of the parties to any contract entered into by the company, cea
or the promoters, directors, or trustees thereof, before the issue of such contract made
prospectus or notice, whether subject to adoption by the directors or the prior to issue of
company, or otherwise ; and any prospectus or notice not specifying the such prospectus,
same shall be deemed fraudulent on the part of the promoters, directors, ae oes
and officers of the company knowingly issuing the same, as regards any (leemed fraudu-
person taking shares in the company on the faith of such prospectus, unless lent on part of
he shall have had notice of such contract (v). persons issuing
as against
persons taking
: shares on faith
Meetings. thereof.
39. Every company formed under the principal act after the commence- ear ie ts
ment of this act shall hold a general meeting within four months after its pve 0S ty a”
memorandum of association is registered ; and if such meeting is not held after registra
the company shall be liable to a penalty not exceeding five pounds a day tion.
for every day after the expiration of such four months until the mecting is
held ; and every director or manager of the company, and every subscriber
of the memorandum of association, who knowingly authorises or permits
such default, shall be liable to the same penalty.
Winding up.
40. No contributory of a company under the principal act (~) shall be ey
capable of presenting a petition for winding up such company unless the Tae és
members of the company are reduced in number to less than seven, OF present winding
unless the shares in respect of which he is a contributory, or some of them, up petition.
either were originally allotted to him or have been held (y) by him, and
registered in his name, for a period of at least six months during the
eighteen months previously to the commencement of the winding up, or
have devolved upon him through the death of a former holder :
Provided that where a share has during the whole or any part of the
six months been held by or registered in the name of the wife of a contri-
(v) See ante, pp. 91, 92. (y) See Wala Wynaad, &e., Co, 21
(x) See act of 1862, § 82. Ch. D. 849.
L.c. 3 ou
‘
1026 THE COMPANIES ACT, 1867.
Appenpix V. butory either before or after her marriage, or by or in the name of any
trustee or trustees for such wife or for the contributory, such share shall
for the purposes of this section he deemed to have been held by and regis-
tered in the name of the contributory.
Winding up in 41. Where the High Court of Chancery in England makes an order
England may —fop winding up a company under the principal act, it may, if it thinks fit,
be referred #0 direct all subsequent lings to be had i ty court held under
dointy Eoart, irect all subsequent proceedings to be had in a county court held under
an act of the session of the ninth and tenth years of the reign of her
present Majesty, chapter ninety-five, and the acts amending the same (z);
and thereupon such county court shall, for the purpose of winding up the
company, be deemed to be ‘‘the Court ” within the meaning of the prin-
cipal act, and shall have, for the purposes of such winding up, all the
jurisdiction and powers. of the High Court of Chancery (a).
Transfer of 42, If during the progress of a winding up it is made to appear to the
ee oe High Court of Chancery that the same could be more conveniently pro-
to another. secuted in any other county court, it shall be competent for the High
Court of Chancery to transfer the same to such other county court, and
thereupon the winding up shall proceed in such other county court.
Parties aggrieved 43. If any party in a winding up under this act is dissatisfied with the
ae determination or direction of a judge of a county court on any matter in
judge in winding such winding up, such party may appeal from the same to the Vice-
up may appeal, Chancellor named for that purpose by the Lord Chancellor by general
order: Provided that such party shall, within thirty days after such deter-
mination or direction, give notice of such appeal to the other party or
his attorney, and also deposit with the registrar of the county cout the
sum of ten pounds as security for the costs of the appeal ; and the said
Court of Appeal may make such final or other decree or order as it thinks
fit, and may also make such order'with respect to the costs of the said
appeal as such Court may think proper, and such orders shall be final (6).
Powers to frame “44, The county court judges appointed or to be appointed by the Lord
rules and orders Cyancellor from. time to time to frame rules and orders for regulating the
under sect. 32 : ‘ : “ n
of 19 & 20 Viet, practice of the courts, and forms and proceedings therein, under the thirty-
v. 108. second section of an act passed in the nineteenth and twentieth years of
the reign of her present. Majesty, chapter one hundred and eight, shall
frame the rules and orders for regulating the practice of the county courts
under this act, and forms of proceedings therein, and from time to time
may amend such rules, orders, and forms; and such rules, orders, and
forms, or amended rules, orders, and forms, certified under the hands of
such judges or of any three or more of them, shall be submitted to the
Lord Chancellor, who may allow or disallow or alter the same, and so
from time to time; and the rules, orders, and forms, or amended rules,
orders, and forms, so allowed or altered, shall from a day to be named by
the Lord Chancellor be in force in every county court (¢).
ae to 45, The county court judges mentioned in the last section shall be
the judges. empowered to frame a scale of costs and charges to be paid to counsel and
attorneys with respect to ull proceedings in a winding up under this act,
(z) The act now in force is 51 & 52 c. 43, §§ 120-132.
Vict. c. 43 ; the County Courts act, 1888, (c) Under this section an order has
(a) See act of 1862, § 81. been made, adopting the orders and forms
(2) The appeal is now tothe Divisional of the Chancery Division so far as the
Court, see Judicature act, 1873, 36 & 37 same are applicable. See County Court
Viet. c, 66, § 45 ; see also 51 & 52 Vict. Rules, 1886, Order XLII.
THE JOINT STOCK COMPANIES ARRANGEMENT AcT, 1870. 1027
and from time to time to amend sich scale; and such scale or amended Apprnprx V.
scale, certified under the hands of such judges or any three or more of
them, shall be submitted to the Lord Chancellor, who from.time to time
may allow or disallow or alter the same ; and the scale or amended scale so
allowed or altered ‘shall, from a day to be named by the Lord Chancellor,
be in foree in every county court.
46. The registrars and high bailiffs of the county courts shall be remu- Remuneration of
nerated for the duties to be performed by them under this act, by receiving registrars and
for their own use such fees as may be from time to time authorised to be bigh bailiffs for
taken by any orders to be made by the commissioners of the Treasury, ote we
: this act, by fees,
with the consent of the Lord Chancellor; and the commissioners of the or by allowances.
- Treasury are hereby authorised and empowered, with such consent as
aforesaid, from time to time to make such orders: Provided, that it shall
be lawful for the said commissioners, with the like consent as aforesaid,
by an order to direct that after the date named in the order any registrar
or high bailiff shall, in lieu of receiving such fees, be paid such fixed or
fluctuating allowance as may in each case be thought just; and after such
date the said fees shall be accounted for and paid over by such registrar
or high bailiff in such manner as may he directed in the order.
Saving.
47. Nothing in this act contained shall exempt any company from the Companies not
second or third (d) provisions of the one hundred and ninety-sixth section aie au
of the principal act restraining the alteration of any provision in any act provieions-of 25
of Parliament or charter. & 26 Vict. c. 89,
. sect. 196,
THE JOINT STOCK COMPANIES ARRANGEMENT ACT, 1870.
33 & 34 Vict. Cap. 104.
An Act to facilitate compromises and arrangements between creditors and
shareholders of joint stock and other companies in liquidation (e).
[10th August, 1870.]
WHEREAS it is expedient to amend the law relating to the liquidation
of joint stock and other companies :
Be it enacted by the Queen’s most excellent Majesty, by and with the
advice and conseut vf the Lords spiritual and temporal, and Commons,
in this present Parliament assembled, and by the authority of the same,
as follows :
1. This act may be cited as “The Joint Stock Companies Arrangement Short title.
Act, 1870.”
2. Where any compromise or arrangement shall be proposed between a Where eles
company which is, at the time of the passing of this act or afterwards, in fe sf Chaney
the course of being wound up, either voluntarily or by or under the super- may order a
vision of the Court, under the Companies acts, 1862 and 1867, or.cither meeting of
of them, and the creditors of such company, or any class of such creditors, creditors, &c. to
decide as to such
compromise,
(d) Queere, third and fourth, see Buck- (e) See ante, pp. 710, 711. P
ley, ed. 5, p. 549.
3u 2
1028
Apprnpix V.
Interpretation.
Act and Com-
panies act to be
read together.
[30 & 81 Vict.
ce. 181.]
Short title.
Construction
of act.
[25 & 26 Vict.
c. 89, and 30
and 31 Vict.
c. 131.]
Construction of
‘“ capital ”’ and
powers to reduce
capital con-
tained in 30
& 31 Vict.
«131.
Application of
provisions of
30 & 381 Vict.
ce. 131,
THE COMPANIES ACT, 1877.
it shall be lawful for the Court, in addition to any other of its powers, on
the application in a summary way of any creditor or the liquidator, to
order that a’meeting of such creditors or class of creditors shall be sum-
moned in such manner as the Court shall direct, and if a majority in
number representing three-fourths in value of such creditors or class of
creditors present either in person or by proxy at such meeting shall agree
to any arrangement or compromise, such arrangement or compromise shall,
if sanctioned by an order of the Court, be binding on all such creditors or
class of creditors, as the case may be, and also on the liquidator and con-
tributories of the said company.
3. The word “ company ” in this act shall mean any company liable to
be wound up under “The Companies act, 1862.”
4, This act shall be read and construed as part of “The Companies
act, 1862.”
“THE COMPANIES ACT, 1877.”
40 & 41 Vict. Cap, 26.
An Act to amend the Companies acts of 1862 and 1867.
[23rd July, 1877.
WHEREAS doubts have been entertained whether the power given by the
Companies act, 1867, to a company of reducing its capital extends to
paid-up capital, and it is expedient to remove such doubts:
Be it enacted, &c. :
1. This act may be cited for all purposes as the Companies act, 1877.
2, This act shall, so far as is consistent with the tenor thereof, be con-
strued as one with the Companies acts, 1862 and 1867, and the said acts
and this act may be referred to as “‘ The Companies acts, 1862, 1867,
and 1877.”
3. The word “capital” as used in the Companies act, 1867, shall
include paid-wp capital: and the power to reduce capital conferred by
that act shall include a power to cancel any lost capital, or any capital
unrepresented by available assets, or to pay off any capital which may be
in excess of the wants of the company; and paid-up capital may be
reduced either with or without extinguishing or reducing the liability (if
any) remaining on the shares of the company, and to the extent to which
such liability is not extinguished or reduced it shall be deemed to be
preserved, notwithstanding anything contained in the Companies act,
1867 (f).
4. The provisions of the Companies act, 1867, as amended by this act,
shall apply to any company reducing its capital in pursuance of this act
and of the Companies act, 1867, as amended by this act :
Provided, that where the reduction of the capital of a company does not
involve either the diminution of any liability in respect of unpaid capital
or the payment to any shareholder of any paid-up capital,—
(1.) The creditors of the company shall not, unless the court other-
(Ff) See ante, pp. 402 et seg., and 42 Vict. c. 19,
40 & 41 vier. car. 26. 1029,
wise direct, be entitled to object or required to consent to the Aprenpix Y..
reduction ; and ; =
(2.) Itshall not be necessary before the presentation of the petition
for confirming the reduction to add, and the Court may, if it
thinks it expedient so to do, dispense altogether with the addi-
tion of the words “ and reduced,” as moatianed.4 in the Companies [36 & 31 Vict.
Act, 1867. 131]
In any case that the Court thinks fit so to do, it may require the com-
pany to publish in such manner as it thinks fit the reasons for the reduc-
tion of its capital or such other information in regard to the reduction of
its capital as the Court may think expedient with a view to give proper
information to the public in relation to the reduction of its capital by a
company, and, if the Court thinks fit, the causes which led to such
reduction.
The minute required to be registered in the case of reduction of capital
shall show, in addition to the other particulars required by law, the amount
(if any) at the date of the registration of the minute proposed to be deemed
to have been paid up on each share (9).
5. Any company limited by shares may so far modify the conditions Power to reduce
contained in its memorandum of association if authorised so to do by its capital by the
regulations as originally framed or as altered by special resolution, as to ebay
reduce its capital by cancelling any shares which, at the date of the passing
of such resolution, have not been taken or agreed to be taken by any
person: and the provisions of ‘‘The Companies act, 1867,” shall not
apply to any reduction of capital made in pursuance of this section.
6. And whereas it is expedient to make provision for the reception as Reception of
legal evidence of certificates of incorporation other than the original certifi- certified copies
cates, and of certified copies of or extracts from any documenis filed and °f ee
registered under the Companies acts, 1862 to 1877: Be it enacted, that ee ou
any certificate of the incorporation of any company given by the registrar
[25 & 26 Vict.
or by any assistant registrar for the time being shall be received in ¢. 89, 30 & 31
evidence as if it were the: original certificate ; and any copy or extract from Vict. "131, and
any of the documents or part of the documents kept and registered at any 40 & 41 Viet.
of the offices for the registration of joint-stock companies in England, 20)
Scotland, or Ireland, if duly certified to be a true copy under the hand
of the registrar or one of the assistant registrars for the time being, and
whom it shall not be necessary to prove to be the registrar or assistant
registrar, shall, in all legal proceedings, civil or criminal, and in all cases
whatsoever, be received in evidence as of equal validity with the original
document.
(g) For the form of the minute, see op. 54, and Britannia Mills Co., 7b. p.
West Cumberland, dc., Co., W.N. 1888, 103.
1080 THE COMPANIES ACT, 1879.
Apprnpix V.
THE COMPANIES ACT, 1879.
42 & 43 Vicr. Car. 76.
An act to amend the law with respect to the liability of members of banking
and other joint stock companies : and for other purposes.
[15th August, 1879.]
Be it enacted by the Queen’s most excellent Majesty, by and with the:
advice and consent of the Lords spiritual and temporal, and Commons in
this present Parliament assembled, and by the authority of the same, as
Short title sollws ¢ : 5
; 1. This act may be cited as the Companies act, 1879.
ae apPly 9. ‘This act shall not apply to the Bank of England.
England. 3. This act shall, so far as is consistent with the tenor thereof, be con-
Act to be con. strued as one with the Companies acts, 1862, 1867, and 1877, and those
strued with 25 & acts together with this act may be referred to as the Companies acts, 1862
26 Vict. c. 89, to 1879.
30 & 31 Vict. 4. Subject as in this act mentioned, any company registered before or
ae vem after the passing of this act as an unlimited company may register under
c. 26. the Companies acts, 1862 to 1879, as a limited company, or any company
Registration already registered as a limited company may re-register under the
anew of company. provisions of this act.
25 & 26 Vict. The registration of an unlimited company as a limited company in pursu-
c. 89. ance of this act shall not affect or prejudice any debts, liabilities, obliga-
30 a a Vict. tions, or contracts incurred or entered into by, to, with, or on behalf of
ia & 41 Vict, uch company prior to registration, and such debts, liabilities, contracts,
c. 26. and obligations may be enforced in manner provided by Part VII. of the
42 & 43 Vict. Companies act, 1862, in the case of a company registering in pursuance
c. 76. of that part.
(25 & 26 Vict. 5. An unlimited company may, by the resolution passed by the
c. 88. : members when asseuting to registration as a limited company under the
ae Sie Companies acts, 1862 to 1879, and for the purpose of such registration.
provi a a. Ys or otherwise, increase the nominal amount of its capital by increasing the
25 & 26 Vict, nominal amount of each of its shares.
c. 89. Provided always, that no part of such increased capital shall be capable
30& 31 Vict. of being called up, except in the event of and for the purposes of the
ce. 131. company being wound up.
aes Viet. And, in cases where no such increase of nominal capital may be
42 & 43 Vict, Vesolved upon, an unlimited company may, by such resolution as aforesaid,
ce. 76, provide that a portion of its uncalled eapital shall not be capable of being
called up, except in the event of and for the purposes of the company
being wound up.
A limited company may by a special resolution declare that any portion
of its capital which has not been already called up shall not be capable of
being called up, except in the event of and for the purpose of the company
being wound up; and thereupon such portion of capital shall not be
capable of being called up, except in the event of and for the purposes of
the company being wound up (h). .
(h) See ante, p, 413.
42 & 48 vicr. cap. 76. 10381
6. Section one hundred and eighty-two of the Companies act, 1862, is Appunprx V.
hereby repealed, and in place thereof it is enacted as follows :—A bank of 25 & 26 Vict.
issue registered as a limited company, either before or after the passing of ¢, gg, s, 189,
this act, shall not be entitled to limited liability in respect of its notes ; repealed, and
and the members thereof shall continue liable in respect of its notes in the liability of
same manner as if it had been registered as an unlimited company; but bene en
in case the general assets of the company are, in the event of the company yospect of notes.
being wound up, insufficient to satisfy the claims of both the note-holders
and the general creditors, then the members, after satisfying the remaining
demands of the note-holders, shall be liable to contribute towards payment
of the debts of the general creditors a sum equal to the amount received
by the note-holders out of the general assets of the company.
For the purposes of this section the expression “ the general assets of
the company” means the funds available for payment of the general
creditor as well as the note-holder.
It shall be lawful for any bank of issue registered as a limited company
to make a statement on its notes to the effect that the limited liability
does not extend to its notes, and that the members of the company
continue liable in respect of its notes in the same manner as if it had been
registered as an unlimited company.
7. (1.) Once at the least in every year the accounts of every banking Auditof accounts
company registered after the passing of this act as a limited company shall °f banking
be examined by an auditor or auditors, who shall be elected annually by Cee ae
the company in general meeting.
(2.) A director or officer of the company shall not be capable of being
elected auditor of such company.
(3.) An auditor on quitting office shall be re-eligible.
(4.) If any casual vacancy occurs in the office of any auditor the surviv-
ing auditor or auditors (if any) may act, but if there is no surviving auditor,
the directors shall forthwith call an extraordinary general meeting for the
purpose of supplying the vacancy or vacancies in the auditorship.
(5.) Every auditor shall have a list delivered to him of all books kept
by the company, and shall at all reasonable times have access to the books
and accounts of the company ; and any auditor may, in relation to such
books and accounts, examine the directors or any other officer of the
company: Provided that if a banking company has branch banks beyond
the limits of Europe, it shall be sufficient if the auditor is allowed access
to such copies of and extracts from the books and accounts of any such
branch as may have been transmitted to the head office of the banking
company in the United Kingdom.
(6.) The auditor or auditors shall make a report to the members on the
accounts examined by him or them, and on every balance sheet laid before
the company in general meeting during his or their tenure of office ; and
in every such report shall state whether, in his or their opinion, the balance
sheet referred to in the report is a full and fair balance sheet properly
drawn up, so as to exhibit a true and correct view of the state of the com-
pany’s affairs, as shown by the books of the company ; and such report
shall be read before the company in general meeting.
(7.) The remuneration of the auditor or auditors shall be fixed by the
general meeting appointing such auditor or auditors, and shall be paid by
the company. . i
8. Every balance sheet submitted to the annual or other meeting of the Signature of
members of every banking company registered after the passing of this balance sheet.
act as a limited company shall be signed by the auditor or auditors, and
1082
AppEnDIx VY.
Application of
25 & 26 Vict.
c. 89,
30 & 31 Vict.
ce. 131, and
40 & 41 Vict.
c. 26,
25 & 26 Vict.
c. 89,
30 & 31 Vict.
c. 131,
40 & 41 Vict.
c. 26, and
42 & 43 Vict.
c. 76,
Privileges of
Act available
notwithstanding
constitution
of company.
Short title.
Construction
of acts.
25 & 26 Vict.
c. 89.
30 & 81 Vict.
ce. 131.
40 & 41 Vict.
c. 26.
42 & 43 Vict.
ce. 76.
Accumulated
profits may be
returned to
shareholders in
reduction of
paid-up capital,
THE COMPANIES ACT, 1880.
by the secretary or manager (if any), and by the directors of the company,
or three of such directors at the least.
9. On the registration, in pursuance of this act, of a company which
has been already registered, the registrar shall make provision for closing
the former registration of the company, and may dispense with the delivery
to him of copies of any documents with copies of which he was furnished
on the occasion of the original registration of the company ; but, save as
aforesaid, the registration of such a company shall take place in the
same manner and have the same effect as if it were the first registration of
that company under the Companies acts, 1862 to 1879, and as if the
provisions of the acts under which the company was previously registered
and regulated_had been contained in different acts of Parliament from those
under which the company is registered as a limited company.
10. A company authorised to register under this act may register there-
under and avail itself of the privileges conferred by this act, notwith-
standing any provisions contained in any act of Parliament, royal charter,
deed of settlement, contract of copartnery, cost book, regulations, letters
patent, or other instrument constituting or regulating the company.
THE COMPANIES ACT, 1880.
43 Vict. Cap. 19.
An act to amend the Companies acts of 1862, 1867, 1877 and 1879.
(24th March, 1880.]
BE it enacted by the Queen’s most excellent Majesty, by and with the
advice and consent of the Lords spiritual and temporal, and Commons, in
this present Parliament assembled, and by the authority of the same, as
follows :
1. This act may be cited for all purposes as the Companies act, 1880.
2. This act shall, so far as is consistent with the tenor thereof, be con-
strued as one with the Companies acts, 1862, 1867, 1877, and 1879,
and the said acts and this act may be referred to as the Companies acts,
1862 to 1880:
3. When any company has accumulated a sum of undivided profits,
which with the consent of the shareholders may be distributed among the
shareholders in the form of a dividend or bonus, it shall be lawful for the
company, by special resolution, to return the same, or any part thereof, to
the shareholders in reduction of the paid-up capital of the company, the
unpaid capital being thereby increased by a similar amount. The powers
vested in the directors of making calls upon the shareholders in respect of
moneys unpaid upon their shares shall extend to the amount of the unpaid
capital as augmented by such reduction (f).
(t) See ante, p. 404. It is not neces- Vict. v. 181, §§ 9 and 21, and 40 & 41
sary for the articles to provide for a Vict. c. 26, § 3.
reduction of capital. Compare 30 & 31
43 vicr. car. 19. 1033
4. No such special resolution as aforesaid shall take effect until a ApprNpix V.
memorandum, showing the particulars required by law in the case of & N) sesolution ee
reduction of capital by order of the Court, shall have been produced to take effect till
and registered by the Registrar of Joint Stock Companies. particulars have
5. Upon any reduction of paid-up capital made in pursuance of this been registered.
act, it shall be lawful for any shareholder, or for any one or more of Power to any
several joint shareholders, within one month after the passing of the shareholder
special resolution for such reduction, to require the company to retain, Ber ace
and the company shall retain accordingly, the whole of the MONEYS Hassing of reso-
actually paid upon the shares held by such person, either alone or jointly Jution to require
with any other person or persons, and which, in consequence of such company to
reduction, would otherwise be returned to him or them, and thereupon veer moneys
the shares in respect of which the said moneys shall be so retained shall, a ewan held by
in regard to the payment of dividends thereon, be deemed to be paid up guch perscn.
to the same extent only as the shares on which payment as aforesaid has
been accepted by the shareholders in reduction of their paid-up capital,
and the company shall invest and keep invested the moneys so retained in
such securities authorised for investment by trustees as the company shall
determine, and upon the money so invested, or upon so much thereof as
from time to time exceeds the amount of calls subsequently made upon
the shares in respect of which such moneys shall have been retained, the
company shall pay such interest as shall be received by them from time
to time on such securities, and the amount so retained and invested shall
be held to represent the future calls which may be made to replace the
capital so reduced on those shares, whether the amount obtained on sale
of the whole or such proportion thereof as represents the amount of any
call when made, produces more or less than the amount of such call.
6. From and after such reduction of capital the company shall specify Company to
in the annual lists of members, to be made by them in pursuance of the specify amounts
twenty-sixth section of the Companies act, 1862, the amounts which any sea ale
2 2 elders have
of the shareholders of the company shall have required the company to yequired them
retain, and the company shall have retained accordingly, in pursuance of to retain under
the fifth section of this act, and the company shall also specify in the 8. 5; also to
statements of account laid before any general meeting of the company the ne
amount of the undivided profits of the company which shall have been salsnal to
returned to the shareholders in reduction of the paid-up capital of the shareholders.
company under this act. 25 & 26 Vict.
7.--(1.) Where the Registrar of Joint Stock Companies has reasonable ° ist
cause to believe that a company, whether registered before or after the Power of regis-
: . . 5 : . : trar to strike
passing of this act, is not carrying on business or in operation, he shall oo es of defunct
send to the company by post a letter inquiring whether the company is companies off
carrying on business or in operation. register.
(2.) If the registrar does not within one month of sending the letter
receive any answer thereto, he shall within fourteen days after the expira-
tion of the month send to the company by post a registered letter referring
to the first letter, and stating that no answer thereto has been received by
the registrar, and that if an answer is not received to the second letter
within one month from the date thereof, a notice will be published in
the Gazette with a view to striking the name of the company off the
register.
(3.) If the registrar either receives an answer from the company to the
effect that it is not carrying on business or in operation, or does not with-
in one month after sending the second letter receive any answer thereto,
1034
APPENDIX V.
THE COMPANIES Act, 1880.
the registrar may publish in the Gazette and send to the company a notice’
that at the expiration of three months from the date of that notice the
name of the company mentioned therein will, unless cause is shown to the
contrary, be struck off the register and the company will be dissolved.
(4.) At the expiration of the time mentioned in the notice the registrar
may, unless cause to the contrary is previously shown by such company,
strike the name of such company off the register, and shall publish notice
thereof in the Gazette and on the publication in the Gazette of such last-
mentioned notice the company whose ‘name is so struck off shall be dis-
solved: Provided that the liability (if any) of every director, managing
officer, and member of the company shall continue and may be enforced
as if the company had not been dissolved.
(5.) If any company or member thereof feels aggrieved by the name of
such company having been struck off the register in pursuance of this
section, the company or member may apply to the superior court in which
the company is liable to be wound up; and such court, if satisfied that
the company was at the time of the striking off carrying on business or in
operation (k) and that it is just so to do, may order the name of the com-
pany to be restored to the register, and thereupon the company shall be
deemed to have continued in existence as if the name thereof had never
been struck off; and the Court may by the order give such directions and
make such provisions as seem just for placing the company and all other
persons in the same position as nearly as may be as if the name of the
company had never been struck off.
(6.) A letter or notice authorised or required for the purposes of this
section to be sent to a company may be sent by post addressed to the
company at its registered office, or, if no office has been registered,
addressed to the care of some director or officer of the company, or if
there be no director or officer of the company whose name and address are
known to the registrar, the letter or notice (in identical form) may be
sent to each of the persons who subscribed the memorandum of associa-
tion, addressed to him at the address mentioned in that memorandum.
(7.) In the execution of his duties under this section the registrar shall
conform to any regulations which may be from time to time made by the
Board of Trade.
-(8.) In this section the Gazette means, as respects companies whose
registered office is in England, the ‘‘ London Gazette ;” as respects com-
panies whose registered office is in Scotland, the “ Edinburgh Gazette ;”
and as respects companies whose registered office is in Ireland, the
“ Dublin Gazette.”
(k) A company which is carrying on words, Outlay Ass. Soc., 34 Ch. D.
business merely for the purpose of a 479.
voluntary winding up is within these
THE COMPANIES Act, 1883. 1085
Appunpix V.
THE COMPANIES ACT, 1883.
46 & 47 Vict. Cav, 28 (l).
An act to amend the Companies acts, 1862 and 1867,
[20th August, 1883.]
Be it enacted by the Queen’s most excellent Majesty, by and with the
advice and consent of the Lords spiritual and temporal, and Commons, in
this present Parliament assembled, and by the authority of the same, as
follows :
1. This act may be cited for all purposes as the Companies act, 1883. Short title.
2. This act shall, so far as is consistent with the terms thereof, be Construction
construed as one with the Companies acts, 1862 and 1867. of act.
3. This act shall come into force on the first day of September, one Commencement
thousand eight hundred and eighty-three. of act.
4. In the distribution of the assets of any company being wound up Wages and
under the Companies acts, 1862 and 1867, there shall be paid in priority salary to be
to other debts, — - preferential
(a.) All wages or salary of any clerk or servant in respect of service ae
rendered to the company during four months before the com-
mencement of the winding up not exceeding fifty pounds ; and
(b.) All wages of any labourer or workman in respect of services
rendered to the company during two months before the com-
mencement of the winding up.
5. The foregoing debts shall rank equally among themselves, and, shall Such claims to
be paid in full, unless the assets of the company are insufficient to meet tank equally.
them, in which case they shall abate in equal proportions between them-
selves.
6. Subject to the retention of such sums as may be necessary for the Liquidator to
costs of administration or otherwise, the liquidator or liquidators or official discharge same
liquidator shall discharge the foregoing debts forthwith, so far as the assets upon receipt of
of the company are and will be sufficient to meet them, as and when such BURERIC ON AERES:
assets come into the hands of such liquidator or liquidators or official
liquidator. 7
THE COMPANIES (COLONIAL REGISTERS) ACT, 1883.
46 & 47 Vict. Cap. 30.
An act to authorise companies registered under the Companies act, 1862, to
keep local registers of their members in British Colonies,
[20th August, 1883.]
WHEREAS many companies registered under the Companies act, 1862,
carry on business in British colonies, and dealings in their shares are
frequent in such colonies, but delay, inconvenience, and expense are
(1) This act is repealed except as to Bankruptcy act, 1888, 51 & 52 Vict. c,
Ireland by the Preferential Payments in 26, see ante, p. 717. .
1036
AppEnDIx Y.
Short title and
construction.
Definitions.
Power for com-
panies to keep
colonial
registers.
25 & 26 Vict.
89),
THE COMPANIES (COLONIAL REGISTERS) Act, 1883.
oceasioned by reason of the absence of any legal provision for keeping
local registers of members, and it is expedient that such provisions as this
act contains be made in that behalf:
Be it therefore enacted by the Queen’s most excellent Majesty, by and
with the advice and consent of the Lords spiritual and temporal, and
Commons, in this present Parliament assembled, and by the authority of
the same, as follows: ,
1. This act may be cited for all purposes as the Companies (Colonial
Registers) act, 1883 ; and this act shall, so far as is consistent with the
tenor thereof, be construed as one with the Companies acts, 1862 to 1880,
and the said acts and this act may be referred to as the Companies acts,
1862 to 1883.
2. In this act the term “company” means a company registered under
the Companies act, 1862, and having a capital divided into shares; the
term “shares” includes stock ; the term “ colony ” does not include any
place within the United Kingdom, the Isle of Man, or the Channel
Islands, but includes such territories as may for the time being be vested
in her Majesty by virtue of an act of Parliament for the government of
India, and any plantation, territory, or settlement situate elsewhere within
her Majesty’s dominions.
3. (1.) Any company whose objects comprise the transaction of busi-
ness in a colony may, if authorised so to do by its regulations, as originally
framed or as altered by special resolution, cause to be kept in any colony
in which it transacts business a branch register or registers of members
resident in such colony.
(2.) The company shall give to the registrar of joint stock companies
notice of the situation of the office where any such branch register (in
this act called a colonial register) is kept, and of any change therein, and
of the discontinuance of any such office in the event of the same being
discontinued.
(3.) A colonial register shall, as regards the particulars entered therein,
be deemed to be a part of the company’s register of members, and
-shall be primd fucie evidence of all particulars entered therein. Any
such register shall be kept in the manner provided by the Companies acts,
1862 to 1880, with this qualification, that the advertisement mentioned
in section thirty-three of the Companies act, 1862, shall be inserted in
some newspaper circulating in the district wherein the register to be closed
is kept, and that any competent court in the colony where such register is
kept shall be entitled to exercise the same jurisdiction of rectifying the
same as is hy section thirty-five of the Companies act, 1862, vested, as
respects a register, in England and Ireland in her Majesty’s superior courts
of law or equity, and that all offences under section thirty-two of the Com-
panies act, 1862, may, as regards a volonial register, be prosecuted
summarily before any tribunal in the colony where such register is kept
having summary criminal jurisdiction.
(4.) The company shall transmit to its registered office a copy of every
entry in its colonial register or registers as soon as may be after such
entry is made, and the company shall cause to be kept at its registered
office, duly entered up from time to time, a duplicate or duplicates of its
colonial register or registers, The provisions of section thirty-two of the
Companies act, 1862, shall apply to every such duplicate, and every such
duplicate shall, for all the purposes of the Companies acts, 1862 to 1880,
be deemed to be part of the register of members of the company.
49 vicr. cap. 23.
1037
(5.) Subject to the provisions of this act with respect to the duplicate Arrenprx V.
register, the shares registered in a colonial register shall be distinguished
from the shares registered in the principal register, and no transaction
with respect to any shares registered in a colonial register shall, during the
continuance of the registration of such shares in such colonial register, be
registered in any other register.
(6.) The company may discontinue to keep any colonial register, and
thereupon all entries in that register shall be transferred to some other
colonial register kept by the company in the same colony, or to the register
of members kept at the registered office of the company.
(7.) In relation to stamp duties the following provisions shall have
effect :—
(a.) An instrument of transfer of a share registered in a colonial
register under this act shall be deemed to be a transfer of
property situated out of the United Kingdom, and unless
executed in any part of the United Kingdom shall be exempt
from British stamp duty.
(b.) Upon the death of a member registered in a colonial register
under this act, the share or other interest of the deceased
member shall for the purposes of this act so far as relates to
British duties be deemed to be part of his estate and effects
situated in the United Kingdom for or in respect of which
probate or letters of administration is or are to be granted, or
whereof an inventory is to be exhibited and recorded in like
manner as if he were registered in the register of members kept
at the registered office of the company.
(8.) Subject to the provisions of this act, any company may, by its
regulations as originally framed, or as altered by special resolution, make
such provisions as it may think fit respecting the keeping of colonial
registers.
THE COMPANIES ACT, 1886.
49 Vict. Cap. 23.
An Act to amend the Companies Acts of 1862, 1867, 1870, 1877, 1879,
1880, and 1883. [4th June, 1886.]
WHEREAS it has become expedient to amend the provisions of the
Companies act, 1862, and of the other acts amending the same here- 25 & 26 Vict.
inafter recited, in so far as the said provisions relate to the liquidation. of * 89.
companies in Scotland :
Be it therefore enacted by the Queen’s most Excellent Majesty, by and
with the advice and consent of the Lords Spiritual and Temporal, and
Commons, in this present Parliament assembled, and by the authority of
the same, as follows :
1. This act may be cited for all purposes as the Companies act, 1886. Short title.
2. This act shall, so far as consistent with the tenor thereof, be con- Construction
strued as one with the Companies acts, 1862, 1867, 1877, 1879, 1880, of acts.
and 1883, and the Joint stock companies arrangement act, 1870, and Ae 26 Vict.
c, 89.
1038 THE COMPANIES ACT, 1886.
Appenprx V. the said acts and this act may be referred to as the Companies acts, 1862
80 & 31 Vict, 0 1886.
ce. 131. 3. In the winding up, by or subject to the supervision of the Court,
40 & 41 Vict. of any company under the Companies acts, 1862 to 1886, whose regis-
re Sb 4 tered office is in Scotland, where the winding up shall commence after
°. 76. ° Nich the passing of this act, the following provisions shall have effect :
43 Vict. c. 19. (1.) Such winding up shall, in the case of a winding up by the
45 & 47 Vict. ' Court as at the commencement thereof, and in the case of a
ei a winding up subject to the supervision of the Court as at. the
¢. 104. Aet date of the presentation of the petition, on which a supervision
ER order is afterwards pronounced, be equivalent to an arrestment
ect of ‘ ; ,
diligence within in execution and decree of forthcoming, and to an executed or
60 days of completed poinding; and no arrestment or poinding of the
winding up by funds or effects of the company, executed on or after the
or subject to sixtieth day prior to the commencement of the winding up by
supervision of
eae. the Court, or to the presentation of the petition on which a
supervision order is made, as the case may be, shall be effectual ;
and such funds or effects, or the proceeds of such effects, if sold,
shall be made forthcoming to the liquidator : Provided that any
arrester or poinder, before the date of such winding up, or of
such petition, as the case may Le, who shall be thus deprived of
the benefit of his diligence, shall have preference out of such
funds or effects for the expense bond fide incurred by him in
such diligence.
(2.) Such winding up shall, as at the respective dates aforesaid, be
equivalent to a decree of adjudication of the heritable estates
of the company for payment of the whole debts of the com-
pany, principal and interest, accumulated at the said dates
respectively, subject always to such preferable heritable rights
and securities as existed at the said dates and are valid and
unchallengeable, and the right to poind the ground hereinafter
provided.
(3.) The provisions of sections one hundred and twelve to one
a hundred and seventeen inclusive, and also of section one
ae 20 Vict. hundred and twenty, of the Bankruptcy (Scotland) act, 1856,
iy shall, so far as consistent with the tenor of the recited acts,
apply to the realization of heritable estates affected by such
heritable rights and securities as aforesaid ; and for the pw-
poses of this act the words “sequestration” and “ trustee”
occurring in said sections of the Bankruptcy (Scotland) act,
1856, shall mean respectively “ liquidation ” and “ liquidator ” ;
and the expression “the lord ordinary or the Court” shall
mean “the Court” as defined by this act.
(4.) No poinding of the ground which has not been carried into
execution by sale of the effects sixty days before the respective
dates aforesaid shall, except to the extent hereinafter provided, be
available in any question with the liquidator: Provided that no
creditor who holds a security over the heritable estate preferable
to the right of the liquidator shall be prevented from executing
a poinding of the ground after the respective dates aforesaid,
but such poinding shall in competition with the liquidator be
available only for the interest on the debt for the current half
yearly term, and for the arrears of interest for one year imme-
diately before the commencement of such term.
49 vict. cap. 23. 1089
4, In the winding up of any company under the Companies acts, APPENDIX V.
1862 to 1886, whose registered office is in Scotland, and where the
winding up shall commence after the passing of this act, the general and
special rules in regard to voting and ranking for payment of dividends,
provided by the Bankruptcy (Scotland) act, 1856, sections forty-nine to
sixty-six inclusive, or any other rules in regard thereto which may be
in force for the time being in the sequestration of the estates of bankrupts
in Scotland, shall, so far as consistent with the tenor of the said recited
acts, apply to creditors of such companies voting in matters relating to the
winding up, and ranking for payment of dividends ; and for this purpose
sequestration shall be taken to mean liquidation, trustee to mean liquidator;
and sheriff to mean the Court.
5. Wherever the expression “the court of session” occurs in the said Jurisdiction of
recited acts, or the expression ‘the Court” occurring therein or in this the Lord oe
act refers to the Court of Session in Scotland, it shall mean and include hae a. re
either division thereof, or, in the event of a remit to a permanent
lord ordinary, as hereinafter provided, such lord ordinary, during
session, and in time of vacation the lord ordinary on the bills; and
in regard to orders or judgments pronounced by the said lord ordinary
on the bills in vacation, the following provisions shall have effect :—
(1.) No order or judgment pronounced by the said lord ordinary
in vacation, under or by virtue, in whole or in part, of the fol-
lowing sections of the said recited acts, shall be subject to
review, reduction, suspension, or stay of execution, videlicet, of
the Companies act, 1862, sections ninety-one, one hundred and 25 & 26 Vict.
seven, one hundred and fifteen, one hundred and seventeen, and % 8%
one hundred and twenty-seven, and section one hundred and
forty-nine so far as it authorises the Court to direct meetings of
creditors or contributories to be held, and that portion of séction
two of the Joint stock companies arrangement act, 1870, 33 & 34 Vict.
which authorises the Court to order that a meeting of creditors “ EOee
or class of creditors shall be summoned ; and also sections one
hundred and twenty-two and one hundred and twenty-three of
the Companies act, 1862, so far as they may affect the sections
above enumerated.
(2.) All other orders or judgments pronounced by the said lord
ordinary in vacation (except as after mentioned) shall be subject
to review only by reclaiming note, in common form, presented
(notwithstanding the terms of section one hundred and twenty-
four of the Companies act, 1862,) within fourteen days from
the date of such order or judgment: Provided always, that
such orders or judgments pronounced by the said lord ordinary
in vacation, under or by virtue, in whole or in part, of the
following sections of the Companies act, 1862, shall, from the
dates of such orders or judgments, and notwithstanding any
reclaiming note against the same, be carried out and receive
effect till such reclaiming note be disposed of by the Court,
videlicet, sections eighty-five, eighty-seven, eighty-nine, ninety-
three (except in regard to the removal or remuneration of
liquidators), ninety-five, ninety-six (except in regard to the
power to sell), one hundred, one hundred and eighteen, first
part of one hundred and forty-one, one hundred and forty-seven,
one hundred and fifty (except in regard to the removal of
liquidators and the filling up of vacancies caused by such
Ranking of
claims,
1040
Apprnpix Y.
Winding up
may be remitted
to lord ordi-
nary.
THE COMPANIES ACT, 1886.
removal), one hundred and ninety-seven, one hundred and
ninety-eight, and two hundred and one ; and also sections one
hundred and twenty-two and one hundred and twenty-three of
the Companies act, 1862, so far as they may affect the sections
above enumerated.
Provided that nothing in this section contained shall in any way affect
the provisions of section one hundred and twenty-one of the Companies
act, 1862, in reference to decrees for payment of calls in the winding up
companies, whether voluntarily or by or subject to the supervision of
the Court.
6. When the Court makes a winding up or a supervision order or at
any time thereafter, it shall be lawful for the Court, in either division
thereof, if it thinks fit, to direct all subsequent proceedings in the winding
up to be taken before one of the permanent lords ordinary, and to remit
the winding up to him accordingly ; and thereupon such lord ordinary
shall, for the purposes of the winding up, be deemed to be “ the Court,”
within the meaning of the recited acts and this act, and shall have, for
the purposes of such winding up, all the jurisdiction and powers of the
Court of Session: Provided always, that all orders or judgments pro-
nounced by such lord ordinary shall be subject to review only by reclaim-
ing note in common form, presented (notwithstanding the terms of section
one hundred and twenty-four of the Companies act, 1862,) within fourteen
days from the date of such order or judgment. But, should arreclaiming
note not be presented and moved during session, the provisions of section
five of this act shall apply to such orders or judgments: Provided also,
that the said lord ordinary may report to the division of the Court any
matter which may arise in the course of the winding up. This section
and the immediately preceding section shall come into force from the
passing of this act, and shall include companies then in the course of being
wound up.
RULES oF 1862.
No. VI.
ORDERS AND RULES (a).
GENERAL ORDER AND RULES OF THE HIGH COURT OF CHANCERY
TO REGULATE THE MODE OF PROCEEDING UNDER THE COMPANIES
ACT, 1862, ISSUED BY THE LORD HIGH CHANCELLOR, TUESDAY,
llmx DAY OF NOVEMBER, 1862.
The right honourable Richard, Baron Westbury, Lord High Chancellor
of Great Britain, with the advice and consent of the right honourable Sir
John Romilly, Master of the Rolls, the honourable the Vice-Chancellor,
Sir Richard Torin Kindersley, the honourable the Vice-Chancellor, Sir
John Stuart, and the honourable the Vice-Chancellor, Sir William Page
Wood, doth hereby, in pursuance and execution of the powers given by
the statute 25th and 26th Victoria, chapter 89 (5), and of all other
powers and authorities enabling him in that behalf, order and direct in
manner following :—
Petition to wind up company (c).
1. Every petition for the winding up of any company by the Court, or
subject to the supervision of the Court, shall be intituled in the matter of
«The Companies act, 1862,” and of the company to which such petition
shall relate, describing the company by its most usual style or firm (d).
2. Every such petition shall be advertised seven clear days before the
hearing as follows :—
(1.) In the case of a company whose registered office, or if there shall
be no such office, then whose principal, or last known principal
place of business is or was situate within ten miles from
Lincoln’s Inn Hall, once in the “ London Gazette,” and once at
least in two London daily morning newspapers.
(2.) In the case of any other company, once in the “London Gazette,”
and once at least in two local newspapers circulating in the
district where such registered office or principal or last known
principal place of business, as the case may be, of such company
is or was situate.
The advertisement shall state the day on which the petition was pre-
sented, and the name and address of the petitioner, and of his solicitor
and London agent (if any) (e).
(a) These rules apply to the winding (6) See § 170, now repealed.
up of companies in county courts, the
tegistrar being substituted for the chief
clerk, Any bank may, however, be sub-
stituted for the Bank of England by the
order of the county court judge. See
County Court Rules of 1886, Ord, XLII.
L.C.
(c) See the act, §§ 82 and 148, and
ante, pp. 654 et seq.
(d) See order of 1868, rule 1.
(ce) See ante, p. 655, and the form
of advertisement, infra, in Schedule 3,
No. 1.
*3 x
1041
Apprnpix VI.
1042
Apprnpix VI.
RULES oF 1862.
3. Every such petition shall, unless presented by the company, be
served at the registered office, if any, of the company, and if no registered
office, then at the principal or last known principal place of business of
the company, if any such can be found, upon any member, officer, or
servant of the company there, or in case no such member, officer, or
servant can be found there, then by being left at such registered office or
principal place of business, or by being served on such member or mem-
bers of the company as the Court may direct ; and every petition for the
winding up of a company subject to the supervision of the Court, shall
also be served upon the liquidator (if any) appointed for the purpose of
winding up the affairs of the company (/).
4, Every petition for the winding up of any company by the Court, or
subject to the supervision of the Court, shall be verified by an affidavit
referring thereto, in the form or to the effect set forth in Form No. 2, in
the third Schedule hereto ; such affidavit shall be made by the petitioner,
or by one of the petitioners, if more than one, or in case the petition is
presented by the company, by some director, secretary, or other principal
officer thereof, and shall be sworn after and filed within four days after
the petition is presented, and such affidavit shall be sufficient primd facie
evidence of the statements in the petition (g).
5. Every contributory or creditor of the company shall be entitled to
be furnished by the solicitor to the petitioner with a copy of the petition,
within twenty-four hours after requiring the same, on paying at the rate
of fourpence per folio of seventy-two words for such copy.
Order to wind up company (h).
6. Every order for the winding up of a company by the Court, or
subject to its supervision (2), shall, within twelve days after the date
thereof, be advertised by the petitioner once in the “London Gazette,”
and shall be served upon such persons (if any) and in such manner as the
Court may direct (j).
7. A copy of every order for winding up a company, certified to be a
true copy thereof as passed and entered, shall be left by the petitioner at
the chambers of the judge within ten days after the same shall have been
passed and entered, and in default thereof any other person interested in
the winding up may leave the same, and the judge may, if he thinks fit,
give the carriage and prosecution of the order to such person. Upon such
copy being left, a summons shall be taken out to proceed with the winding
up of the company, and be served upon all parties who may have appeared
upon the hearing of the petition. Upon the retwm of such summons, a
time shall, if the judge thinks fit, be fixed for the appointment of an
official liquidator, and for the proof of debts, and for ‘the list of con-
tributories to be brought in, and directions may be given as to the
advertisements to be issued for all or any of such purposes, and generally
as to the proceedings and the parties to attend thereon. The proceedings
under the order shall be continued by adjournment, and, when necessary,
by further summons, and any such direction as aforesaid may be given,
(f) Ante, p. 656. (i) See the form of order, infra,
(g) Ante, p. 657. Schedule 3, Nos. 3 and 4. °
(h) See the act, §§ 82, 85, 86, 147, (j) See the form of advertisement in
and ante, pp. 684 et seq. ab, No. 5.
RULES OF 1862.
1048
added to, or varied, at any subsequent time, as may be found neces- Aprrrypix VI.
sary (Kk).
Official liquidator (1).
8. The judge may appoint a person to the office of official liquidator
without previous advertisement, or notice to any party, or fix a time and
place for the appointment of an official liquidator, and may appoint or
reject any person nominated at such time and place, and appoint any
person not so nominated.
9. When a time and place are fixed for the appointment of an official
liquidator, such time and place shall be advertised in such manner as the
judge shall direct, so that the first or only advertisement shall be pub-
lished within fourteen days and not less than seven days before the day so
fixed (m).
10. Every official liquidator shall give security by entering into a re-
cognisance with two or more sufficient sureties in such sum as the judge
may approve ; and the judge may, if he shall think fit, accept the security
of any guarantee society established by charter or act of Parliament in
England, in lieu of the security of such sureties as aforesaid, or of any of
them (n).
11. The official liquidator shall be appointed by order (0), and unless
he shall have given security, a time shall be fixed by such order within
which he is to do so; and the order shall fix the times or periods at
which the official liquidator is to leave his accounts of his receipts and
payments at the judge’s chambers (p), and shall direct that all moneys to
be received shall be paid into the Bank of England, immediately after the
receipt thereof, to the account of the official liquidator of the company,
and an account shall be opened there accordingly ; and an office copy of
the order shall be lodged at the Bank of England (q).
12. When an official liquidator has given security pursuant to the
directions in the order appointing him, the same shall be certified by the
chief clerk, as in the case of a receiver appointed in a cause subject to
giving security.
13. The official liquidator shall, on each occasion of passing his ac-
count (r), and also whensoever the judge may so require, satisfy the judge
that his sureties are living, and resident in Great Britain, and have not
been adjudged bankrupt or become insolvent, and in default thereof he
may be required to enter into fresh security within such time as shall be
directed.
14. Every appointment of an official liquidator shall be advertised in
such manner as the judge shall direct, immediately after he has been
appointed, and has given security (s).
(k) Ante, pp. 686, 687. and 9.
(2) See the act, §§ 85, 92, 93, 103, (p) See rule 19.
104, and ante, pp. 701 et seg. (q) See, further, as to accounts in the
(m) See the form of advertisement, Bank of England, rules 36—44 ; and for
infra, Schedule 3, No. 6, and the form the form of direction to open an account
of proposal for the appointment of the there, see Schedule 3, No. 14.
official liquidator, 7. No. 7. (r) See rule 19.
(n) See the form of recognisance and (s) See the form of advertisement in
affidavit of sureties, ib. Nos. 9 and 10. Schedule 3, No. 15.
(0) See the form of order, 26. Nos. 8
3x2
1044
Appgnprx VI.
RULES oF 1862.
15. Where it is desired to appoint provisionally an official liquidator (t)
an application for that purpose may, at any time after the presentation of
the petition for winding up the company, be made by summons, without
advertisement or notice to any person, unless the judge shall otherwise
direct ; and such provisional official liquidator may, if the judge shall
think fit, be appointed without security.
16. In case of the death, removal or resignation of an official liquidator,
another shall be appointed in his room, in the same manner as directed in
the case of a first appointment, and the proceedings for that purpose may
be taken by such party interested as may be authorised by the judge to
take the same.
17. The official liquidator shall, with all convenient speed after he is
appointed, proceed to make up, continue, complete, and rectify the books
of account of the company; and shall provide and keep such books of
account as shall be necessary, or as the judge may direct, for the purposes
aforesaid, and for showing the debts and credits of the company, including
a ledger, which shall contain the separate accounts of the contributories,
and in which every contributory shall be debited from time to time with
the amount payable by him in respect of any call to be made as provided
by the said act and these rules.
18. The official liquidator shall be allowed in his accounts, or otherwise
paid, such salary or remuneration as the judge may from time to time
direct, including any necessary employment of assistants or clerks by the
official liquidator, to which regard shall be had ; and such salary or remu-
neration may either be fixed at the time of his appointment, or at any
time thereafter, as the judge may think fit. Every allowance of such
salary or remuneration, unless made at the time of his appointment, or
upon passing an account, shall be made upon application for that purpose
by the official liquidator, on notice to such persons (if any), and supported
by such evidence as the judge shall require ; nevertheless the judge may
from time to time allow any sum he may think fit to the official liquidator,
on account of the salary or remuneration to be thereafter allowed.
19. The accounts of the official liquidator shall be left at the judge’s
chambers at the times directed by the order appointing him, and at such
other times as may from time to time be required by the judge, and such
accounts shall, upon notice to such parties (if any), as the judge shall
direct, be passed and verified in the same manner as receiver’s accounts.
Proof of debts (w).
20. For the purpose of ascertaining the debts and claims due from the
company, and of requiring the creditors to come in and prove their debts.
or claims, an advertisement shall be issued at such time as the judge shall
direct : and such advertisement shall fix a time for the creditors to send
their names and addresses, and- the particulars of their debts or claims,
and the names and addresses of their solicitors (if any), to the official
liquidator, and appoint a day for adjudicating thereon (2).
(t) See the form of order appointing a (u) See the act, §§ 107, 158, and ante,
provisional official liquidator in Schedule pp. 718 et seq.
3, No. 9; and see further, as to him, (x) See the form of advertisement,
§§ 85 and 92 of the act, and infra, infra, Schedule 3, No. 16.
rule 59,
RULES OF 1862.
1045
21. The creditors need not attend upon the adjudication, nor prove Aprunprx VI.
their debts or claims, unless they are required to do so by notice from the
official liquidator ; but upon such notice being given, they are to come in
and prove their debts or claims within a time to be therein specified.
22. The official liquidator shall investigate the debts and claims sent in
to him, and ascertain, as far as he is able, which of such debts and claims
are justly due from the company ; and he shall make out and leave at the
chambers of the judge, a list of all the debts and claims sent in to him,
distinguishing which of the debts and claims, or parts of debts and claims
are so claimed, are, in his opinion, justly due and proper to be allowed
without further evidence, and which of them, in his opinion, ought to be
proved by the creditors ; and he shall make and file, prior to the time
appointed for adjudication, an affidavit, setting forth which of the debts and
claims in his opinion are justly due and proper to be allowed without
further evidence, and stating his belief that such debts and claims are
justly due and proper to be allowed, and the reasons for such belief (y).
23. At the time appointed for adjudication upon the debts and claims,
or at any adjournment thereof, the judge may either allow the debts and
claims upon the affidavit of the official liquidator, or may require the
same, or any of them, to be proved by the claimants, and adjourn the
adjudication thereon to a time to be then fixed ; and the official liquidator
shall give notice to the creditors whose debts or claims have been so
allowed, of such allowance (2).
24, The official liquidator shall give notice to the creditors whose debts
or claims have not been allowed upon his affidavit, that they are required
to come in and prove the same by a day to be therein named, being not
less than four days after such notice, and to attend at a time to be therein
named, being the time appointed by the advertisement, or by adjournment
(as the case may be), for adjudication upon such debts and claims (a).
25. The value of such debts and claims as are made admissible to proof
by the 158th section of the said act, shall, so far as is possible, be esti-
mated according to the value thereof at the date of the order to wind up
the company.
26. Interest on such debts and claims as shall be allowed shall be com-
puted, as to such of them as carry interest, after the rate they respectively
carry ; any creditor whose debt or claim so allowed does not carry interest,
shall be entitled to interest, after the rate of 4/. per centum per annum,
from the date of the order to wind up the company, out of any assets
which may remain after satisfying the costs of the winding up, the debts
and claims established, and the interest of such debts and claims as by law.
carry interest (6).
27. Such creditors as come in and prove their debts or claims pursuant
to notice from the official liquidator, shall be allowed their costs of proof
in the same manner as in the case of debts proved in a cause.
28. The result of the adjudication upon debts and claims shall be stated
in a certificate to be made by the chief clerk, and certificates as to any of
such debts and claims may be made from time to time. All such certifi-
(y) See the form of affidavit, 2b. Nos. (a) See the form of notice, 1b. No. 20
17 and 18. and the form of affidavit to be made by
(z) See the form of notice, ib, No.19; creditor who has received such notice,
and the form of notice to attend and be No. 21.
paid, 7b. No. 23. (b) See ante, p. 724,
1046
RULES OF 1862.
Appenpix VI. cates shall state whether the debts or claims are allowed or disallowed,
and whether allowed as against any particular assets, or in any other
qualified or special manner (c).
List of contributories (d).
29. The official liquidator shall, with all convenient speed after his
appointment, or at such time as the judge shall direct, make out and leave
at the chambers of the judge a list of the contributories of the company ;
and such list shall be verified by the affidavit of the official liquidator, and
shall, so far as is practicable, state the respective addresses of, and the
number of shares or extent of ‘interest to be attributed to each such con-
tributory, and distinguish the several classes of contributories. And such
list may from time to time, by leave of the judge, be varied or added to,
by the official liquidator (e).
30. Upon the list of contributories being left at the chambers of the
judge, the official liquidator shall obtain an appointment for the judge to
settle the same, and shall give notice in writing of such appointment to
every person included in such list, and stating in what character, and for
what number of shares or interest such person is included in the list ; and
in case any variation or addition to such list shall at any time be made by
the official liquidator, a similar notice in writing shall be given to every
person to whom such variation or addition applies. All such notices shall
be served four clear days before the day appointed to settle such list, or
such variation or addition ( f).
31. The result of the settlement of the list of contributories shall be
stated in a certificate hy the chief clerk; and certificates may be made
from time to time for the purpose of stating the result of such settlement
down to any particular time, or as to any particular person, or stating any
variation of the list (g).
Sales of property (h).
32. Any real or personal property belonging to the company may be
sold, with the approbation of the judge, in the same manner as in the case
of a sale under a decree or order of the Court in a suit, or, if the judge
shall so direct, by the official liquidator ; and upon any such sale by the
official liquidator, the conditions or contracts of sale shall be settled and
approved of by the judge, unless he shall otherwise direct; and the judge
may, if he thinks fit, direct such conditions and contracts, and the abstract
of the title to the property, to be submitted to one of the conveyancing
counsel of the Court, under the second of the consolidated general orders (hh),
and may, on any sale by public auction, fix a reserved bidding; and,
unless on account of the small amount of the purchase-moneys, or other
(c) See the form of certificate, ib. No.
22; and the form of notice to a creditor
to attend and be paid, 2b. No. 23.
(d) See the act, §§ 98 and 99, and
ante, pp. 745 et seq.
(e) See the forms of the list, infra,
Schedule 3, Nos. 25, 29, and 30; and
the form of the affidavit in support, ib.
Nos. 24 and 29; and the form of order
varying the list, ib. No. 32.
(7) See the form of notice, ib. No.
26 ; and of the affidavit of service, No.27.
(g) See the form of certificate, ib. No.
31.
(h) See the act, §§ 94, 95, 103, and
ante, p. 708,
(hh) See now R. S, ©. Order LI.
rr. 7—13.
RULES oF 1862.
1047
eause, it shall, having regard to the amount of the security given by the Appunvix VI.
official liquidator, be thought proper that the purchase-moneys shall be
paid to him, all conditions and contracts of sale shall provide that the
purchase-moneys shall be paid by the respective purchasers into the Bank
of England, to the account of the official liquidator of the company.
Calls (i).
33. Every application to the judge to make any call on the contribu-
tories, or any of them, for any purpose authorised by the said act, shall be
made by summons, stating the proposed amount of such call; and such
summons shall be served four clear days at the least before the day
appointed for making the call on every contributory proposed to be in-
eluded in such call; or, if the judge shall so direct, notice of such intended
call may be given by advertisement (k).
34, When any order for a call has been made, a copy thereof shall be
forthwith served upon each of the contributories included in such call,
together with a notice from the official liquidator specifying the amount
or balance due from suck contributory (having regard to the provisions of
the said act) in respect of such call ; but such order need not be advertised
unless, for any special reason, the judge shall so direct (2).
35. At the time of making an order for a call, the further proceedings
relating thereto shall be adjourned to a time subsequent to the day ap-
pointed for the payment thereof, and afterwards from time to time so long
as may be necessary ; and at the time appointed by any such adjourn-
ment, or upon a summons to enforce payment of the call, duly served, and
upon proof of the service of the order and notice of the amount due, and
non-payment, an order (m) may be made for such of the contributories who
have made default, or of such of them against whom it shall be thought
proper to make such order, to pay the sum which by such former order
and notice they were respectively required to pay, or any less sum which
may appear to be due from them respectively.
Payment in of moneys and deposit of securities (n).
36. If any official liquidator shall not pay all the moneys received by
him into the Bank of England (0), to the account of the official liquidator
of the company, within seven days next after the receipt thereof, unless
the judge shall have otherwise directed, such official liquidator shall be
charged in his account with ten shillings for every 100/., and a propor-
tionate sum for any larger amount, retained in his hands beyond such
period, for every seven days during which the same shall have been so
retained, and the judge may, for any such retention, disallow the salary or
remuneration of such official liquidator.
(i) See the act, §§ 102 and 120, and
ante, pp. 846 et seq.
(&) See the forms of the summons, the
affidavit in support of it, and the adver-
tisement, infra, Schedule 3, Nos. 33—
35.
(1) See the forms of the order and the
notice, ib. Nos. 36 —37.
(m) See the forms of this order und
of the affidavit on which to obtain it, id.
Nos. 38 and 39; and see the form of
affidavit of service of this order,